Making better decisions.

AuthorKavanagh, Shayne
PositionThe Bookshelf - Decisive: How to Make Better Choices in Life and Work - Book review

Decisive: How to Make Better Choices in Life and Work

Chip Heath and Dan Heath

Crown Business

2013, 336 pages

Chip Heath and Dan Heath are the authors of a series of New York Times Best-Selling Books on business psychology, communication, and transformation. This review covers the third in their series, Decisive, which is about improving decision making. This topic has obvious implications for public finance, as policy and financing decisions are often complicated and difficult.

The authors begin by highlighting some examples of humanity's less-than-impressive decision-making track record: from the business world (83 percent of corporate mergers and acquisitions fail to create value for shareholders), to career choices (40 percent of senior-level hires fail within 18 months), and personal choices (the reader can probably supply his or her own examples here). The common approach to improving decisions in business is often "analysis." However, even the most technically elegant and thorough analysis is useless if it isn't part of a decision-making process that fully considers the results of the analysis. In fact, the authors cite research showing that process matters more than analysis in making good decisions by a factor of six.

Decision-making processes are bedeviled, though, by what the authors term "The Four Villains of Decision Making":

  1. Narrow framing--limiting the options we consider, most commonly by seeing choices as an "either/or" situation when it is in fact possible to expand our options beyond this binary choice (for example, thinking about how we might pursue both of the options or consider entirely different options).

  2. Confirmation bias--seeking out information that confirms our pre-existing beliefs, or interpreting information in ways that support our beliefs.

  3. Short-term emotion--being swayed by emotions that are temporary. Making decisions while angry is a common example of this.

  4. Overconfidence--having too much faith in our predictions. Human beings are terrible at predicting the future. One famous study by political scientist Phillip Tetlock showed that even credentialed experts do little better than pure chance when trying to predict future events in the field of their expertise. Yet, people generally maintain an undue amount of confidence about their forecasts.

To foil these villains, Decisive offers the WRAP decision-making process:

* Widen your options.

* Reality-test your assumptions.

* Attain distance before...

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