Science of decision making

This principle is one of the most and least intuitive things that we do or at least ought to do. We all do this in places where we should not and not in places we ought to. And there is not much science to it. Most decisions we make do not come under the purview of science and rationality. But it involves a systematic process, and an almost sure result makes it has some commonalities with science, hence the title.

This is an idea that I have been hearing a lot and even telling a few people about this. But I did not embrace this fully until recently. And now I know that this idea works splendidly.

The BIG Idea
When you have at least some control over the outcome, then take the decision that you will have the absolute minimum regret in the long run (say 20 or 30 years).

This principle works because we are naturally hard-wired to make decisions based on least regret. I have already touched on this in a previous article. Another term for this is FOMO – Fear of missing out. But when we make crucial decisions, our slow brain takes over, making us ignore this principle. This tendency also makes us vulnerable to adept marketeers and designers, who exploit this fallibility. More on it later.

When we do deliberate thinking, we are practically bypassing our hard-wired tendencies. And that is a good thing in most cases. But when it comes to making crucial decisions, our instinct seems to perform just a bit better, not because it works better, but you would not regret it as much if it went south. But for the most part, we cannot help but deliberate through our choices. That is what makes our life miserable.

The problem here is that the metric of the quality of major decisions is hard to pin down. The metric can be expressed in neither monetary nor temporal terms. If that is the case, a simple cost-benefit analysis should do. But it does not.

The figure below explains how this thumb rule should be enacted.

Systemizing this principle for making crucial things that you can do. And trust me, it always works.

If you think about it, indecision and overthinking is easily the most common cause of making people miserable. When you are in a corner to make a crucial decision, but you can’t due to short-term interests, you get miserable. It is as simple as that. When you are in a job you hate, in a bad relationship, or stuck in a corrosive situation, this is what is happening.

And making these life decisions are difficult because a lot is at stake. Delving into thinking about the problem full-time puts you in a vicious cycle where thinking leads to more thinking which leads to depression. This is where the framework I suggest comes in handy. Completely disregard everything other than what you would think about this decision in 20 years, or better when you are 80 years old, and make the judgment call. Very simple, practical, and super effective.

 Another crucial detail in this idea definition is the part that says about the control about the outcome. Because we are swindling ourselves in another different area because of the principle of least regret; Stock market. I have seen a lot of people who are ceaselessly whining about not buying bitcoin or Google stock or Reliance stock when it was cheap. This is also what makes people buy lottery tickets and get addicted to gambling, even social media in a way.  Because we think we will regret losing huge profits.

But as anyone should know, this is senseless. We all regret not buying google stock back in 2002 when it was unbelievably cheap, but the point is there were hundreds of small tech companies with dreams of making it big, just like Google. And we have no control over whether that company will be successful or not. To frame it in a better way, there are hundreds of young IPO companies whose shares you can buy now, and in 20 years one or two will become behemoths, So, in 20 years, is it meaningful to regret not buying that stock back then?

This is the allure in the Stock market, lottery, and gambling. In all honesty, in this case, we are doing it to ourselves; no one has to deliberately create FOMO in you.

Most common crucial decisions that people of our age are facing include, being stuck in a bad job, desire to start a company, being in a bad relationship (Family, Friends, and Romantic interests), or even worse and sillier things. Better decisions can be made just by sticking to our regret minimization framework, rather than by thinking about that stuff for days, or worse months.