Decision Tips
Know your values and priorities.
If you don’t know where you’re going, every road will get you nowhere.
—H. Kissinger
Dee Moore was proud of her newfound decision-making skills and so was her husband. For instance, when at a restaurant, Dee no longer drove everyone around her nuts spending 15 minutes or more trying to make up her mind on what she was going to eat. Dee attributes her new ability for making faster decisions to focusing on goals. “I know it sounds silly,” Dee commented, “but I realized my problem was that I went into restaurants with no preconceived idea of what I wanted to eat. So I felt I had to carefully scrutinize everything on the menu.” The new, goal-oriented Dee described her revised approach to restaurant ordering: “Now when I go into a place, I try to come up with general ideas of what I’d like to eat and what I wouldn’t beforehand. So I might say ‘I don’t want beef or chicken, but I want something spicy,’ or ‘I want something light, with a lot of greens.’ This approach allows me to quickly eliminate a good portion of items on most menus.”
Dee has come to recognize what career and financial advisors have been preaching for decades—you gotta have goals! Without clear and consistent goals, you will continually have trouble making rational decisions in a timely manner. Moreover, when you see people who seem to make inconsistent decisions or who dwell for what seems like an eternity before being able to make up their mind, more often than not the problem can be traced to an absence of clear goals. Regardless of whether it’s a mundane decision, such as ordering in a restaurant, or a major decision, such as choosing a career, failure to have clear goals almost always leads to disappointing outcomes.
Rationality implies consistency, and clear goals are necessary to be consistent. A friend of mine has had half a dozen different jobs in the past ten years. He’s sold cellular phones in a retail store, conducted training seminars, been a substitute teacher in a high school, and repaired cameras. He’s 46-years old and has a college degree in English and a master’s degree in fine arts, yet he’s clearly lost. He tells me he doesn’t know what he wants to do. He’s not even sure what he’s good at. Because he has no clear goals, he wastes a lot of time actively pursuing every job he hears about—even when he’s barely qualified. Meanwhile, his erratic career path has begun to turn off prospective employers. In a society that values goals and consistency, my friend’s lack of a clear career path is rapidly beginning to cut off job opportunities.
The failure to plan ahead has been described as the single greatest impediment to efficient decision making.
The failure to plan ahead has been described as the single greatest impediment to efficient decision making.1 Most people seem to have difficulty looking beyond the near term. This tendency may be most evident when it comes to financial decisions. As noted in Chapter 15, “I Want It, and I Want It NOW! The Immediate Gratification Bias,” people find it easy to run up large credit card balances because they can’t see the long-term implications from their need to satisfy immediate desires. Many people also find it impossible to save toward retirement. The result is that a huge segment of the population has acquired a “lottery mentality.” They have pinned their future on winning the lottery, making a killing in the stock market, inheriting a fortune, winning a huge legal settlement, or so on.
We all have a bias toward the known. When assessing options, we tend to give more weight and substance to that which is more concrete and vivid at the expense of options that are intangible and ambiguous.2 Hence the power of the immediate doughnut versus the long-term satisfaction of losing weight. This bias underscores why we need goals. Without them, we tend to be shortsighted, focusing on options that provide relatively certain outcomes and undervaluing long-run consequences.
Why do we have so much trouble creating and staying with goals? The answer is conflict. Conflict isn’t relevant in the purely rational decision process. It’s merely assumed that we will select the alternative that provides the highest value. But in the real world, it’s often difficult to make decisions because of conflicts. What provides the highest value isn’t necessarily obvious. For instance, how do we trade off costs against benefits, risk against value, or immediate satisfaction against future discomfort?3 If one alternative is clearly superior in all essential respects to others, there is no conflict, and the decision choice is easy. But that’s rarely the case. For instance, no potential spouse will be perfect. You consider personality, intelligence, physical appearance, interests, values, finances, and other relevant criteria in the people you date. Then you decide which criteria are more important than others, and you make tradeoffs. The key point here is that the clearer your goals, the easier it is to resolve conflicts and make tradeoffs. As with my friend who has difficulty making career choices, if you don’t have goals and priorities in looking for a spouse, every option looks viable.
If you don’t know what you want to accomplish, it’s difficult—if not impossible—to make rational decisions. So you need to know your goals and preferences. You can start by assessing your values and priorities. What’s important to you? Avoid being influenced by societal pressures and social norms. Try to get inside yourself to see what makes you happy. For instance, just because everyone you know says that success means owning a big home on a couple of acres doesn’t mean that’s your definition of success. You might be happiest in a downtown condo that allows you the convenience of urban living and worry-free travel. After you know your values and priorities, you can derive your goals. Where do you want to be in a year? 10 years? 30 years? The clearer and more specific you can be in defining your goals, the easier it will be for you to assess whether the decisions you’re making are leading you toward those goals. And the easier it will be to eliminate options that lead you away from those goals. Finally, regularly test your alternatives against your goals for consistency. You want to stay on track. To do so, you need to check whether your decisions are consistently moving you closer to your goals.
Know your values and priorities.
Know your goals.
Test alternatives against your goals for consistency.