The Decision Architect: How budget officers can reduce the impact of bias and noise for better decision making.

• Author: Riis, Jason
• Position: RETHINKING BUDGETING

Organizations benefit from decision architecture. Budget officers can be the decision architects of local government by building on four job responsibilities that allow them to reduce the impact of well-known problems of bias and noise in human decision processes.

Government leaders make decisions for a living. With good decision-making, they can greatly improve the lives of their constituents and further their own careers. But decision-making is messy. It is often done by groups, so there are conflicting points of view. It is usually time constrained, so there isn't time to consider everything. There is always uncertainty, usually more than we realize. And it is done by humans, so it comes with the myriad well-documented cognitive biases (1,2) and inconsistencies (i.e., "noise") (3) in human thought.

Budget officers are positioned to help government officials reduce the negative impact of bias and noise in decision processes. Helping people avoid bias and noise is sometimes called "decision architecture." (4) Budget officers can be good decision architects because they are likely to possess four broad perspectives and skill sets. Each of these can be further developed through engagement with the ideas of behavioral science:

The Budget Officer's Four Job Responsibilities as a Decision Architect

Widen the option set: The budget officer's role in budget preparation gives them a bird's-eye view on the wide set of activities the government must pursue. They can thus help decision-makers see the big picture and find a wider set of possible solutions.

Test assumptions: The budget officer's examination of calculations and projections gives them a unique perspective on the assumptions and uncertainties of project proposals. They can thus help decision-makers identify uncertainties and test assumptions before overinvesting.

Find high-value options: Budget officers see which trade-offs are being made and which ones may still need to be considered. They can help decision-makers choose highest-value options.

Foster trust in the process: Budget officer's ethos of objectivity (if not neutrality) puts them in a position to foster trust in good decision processes.

Responsibility 1 Help decision-makers see a wider option set

Budget officers have a great mental model of government spending. They can see the big picture as well as the devil in the details. They are able to see budgetary needs that are being ignored (because they have seen line items cut, or they see them in budgets of other governments). This mental model allows them to help decision-makers see blind spots. Decision-makers often narrow in too quickly on specific ideas. Sometimes they let the urgent be the enemy of the important, and they miss glaring needs and opportunities as a result. Budget officers can help widen the view.

Establish the decision need: Budget officers can help establish a decision need, for example, by encouraging decision-makers to develop rainy-day funds. What will the government do if there is a recession and tax revenue declines sharply and unexpectedly? What will they do if there are emergency spending needs? The budget officer can frame the problem and present it in a timely manner so that stakeholders feel the risk and urgency to act now (risk communication). They can show decision-makers that such a fund can be created with reasonable effort by showing that other municipalities have managed to do it. (5,6)

Reduce unearned power of defaults: Humans tend to stick with the status quo, or the "default," when making decisions. The budget officer has a decision architecture opportunity by ensuring that default options do not get more priority than they deserve. In budgeting, last year's budget often serves as the default that anchors next year's budget. This can backfire in certain cases, such as when the government needs to make budget cuts or change the type of services it provides to the community. (7) Zero-based and priority-driven budgeting (8) are well-established techniques to reduce the power of the default.

Avoid whether-or-not decisions and find more options: Many organizations find themselves making "whether-or-not" or "go-no-go" decisions. While simple decisions have obvious appeal, research has shown that this framing often artificially narrows the option set. People fail to consider other available options, and they fail to consider the opportunity cost of new programs. (9) Because of the sunk cost effect, they may fail to consider options to scrap or revise failing programs. Decision architects can help by encouraging consideration of new options. This can include finding bright spots (10)--programs or parts of programs that have been successful--and asking, "Might we instead consider doing more of that bright spot program?" Decision architects can also help bring people together to collaborate on option generation. For expensive programs, it is...