This is my third and last installment inspired by Daniel Kahneman’s excellent book, Thinking Fast and Slow and I’ve decided to tackle optimism.
“Most of us view the world as more benign than it really is, our own attributes as more favorable than they truly are, and the goals we adopt as more achievable than they are likely to be. We also tend to exaggerate our ability to forecast the future, which fosters optimistic overconfidence. In terms of its consequences for decisions, the optimistic bias may well be the most significant of the cognitive biases,” Kahneman wrote.
To be sure, there are many upsides to optimism. Optimists are more resilient to failures, are less likely to be clinically depressed, have stronger immune systems, take better care of their health, and are, in fact, more likely to live longer.
However, consider what happens once you veer into overconfidence territory, where you fail to realistically predict what is actually about to go down.
The bias makes us believe we have substantial control of our lives (life-coaches, don’t come after me) and makes us underestimate the obstacles. This is great for entrepreneurship, where despite the fact that only 35% of small businesses will survive for five years, entrepreneurs aren’t deterred from making the leap.
Think about home remodeling projects, for instance. What was the difference between what was initially projected and what you actually ended up spending? American kitchen remodeling was expected to on average to cost $18,658 in 2002 but actually cost $38,769, according to the New York Times.
Kahneman coined a wonky acronym related to this, WYSIATI, which stands for What You See Is All There Is. Ok, it’s not the catchiest but the guy did win a Nobel Prize so bear with me. WYSIATI refers to the mind’s tendency to only see stuff it has seen, dubbed “Known Knowns.” The mind rarely sees the so-called Known Unknowns – things that we know are relevant but for which we have no information. And forget about the Unknown Unknowns – things we don’t know are relevant for which we have no information.
When planning projects, Kahneman recommends conducting a premortem session where we could consider not only what we know but also what we may not know before jumping into implementation to help us avoid these common pitfalls.
*Photo Courtesy of Stephen Hansen*