The No-Nonsense Guide to Life and Business

Common wisdom will tell you that “you choose” what, how, and where to be in life. The truth is that reality is much more complex than that. We are biased to think that “we” make rational choices, while “others” don’t.

Understanding human biases is crucial to understand ourselves as well. Here few biases that could shape your perspective in life:

  • What you see is not all that is. We tend to believe to understand the world more than we actually do. For example, if I ask you “are people in California happier?” chances are that you will answer,  “Of course they are”. One of the reasons for such answer (beside the favorable economic condition) is based on the weather. In other words, in our mind we tend to associate weather with happiness or good mood. Unfortunately weather does not really count when it comes to happiness. Indeed, if you have been exposed all your life to a sunny weather, chances are that you don’t even notice it anymore. Therefore, people in California statistically speaking are not happier than people in Norway (it is actually the opposite Does sunshine make us happier? – BBC News). This happens because we create associations (wrong ones!) in our mind that don’t have any statistical foundation. This in turn generates a strong reality’s misperception. As you can imagine this misperception increases the chances to make wrong choices in regard to our future.
  • Most of success is due to luck (sorry to give you a bad news). Let’ try to pick one of the two alternatives: is the author of a best-seller book a genius and therefore his book successful? Or the best-seller book became successful and therefore the author is considered a genius? I believe that the second is the most reliable choice. I am not saying that the author of a book cannot be a genius. What I am saying is that success makes you even smarter (perceptually speaking) than you are. For example, would anyone speak about Steve Jobs if Apple wasn’t so successful? I guess not. Of course, Steve Jobs was a very smart individual. But does he really deserve all the credits he had? Of course we must give credit where credit is due. None can deny how stubborn, tenacious, and perseverant Steve Jobs was. But my question is “was Steve Jobs a visionary because he invented the future?” or “the future unfolded in a way that made Steve Jobs look like a visionary?” How many stubborn, tenacious, and perseverant people you know that unfortunately did not make it? For me those people deserve credit as much as who eventually succeed.
  • We are not good decision-makers (sorry for the second bad news). Another huge bias we humans have is about decision-making. Most of us (including myself) believe to take many of our life decisions based on pure intellect and rationality. The truth is that we don’t! What if I told you that a person smile or frown could influence you at the point of changing your perspective on things? Or that you can be primed (subtly influenced) by messages that you don’t even realize they exist? Of course, you and me do not realize to have been subtly influenced (or manipulated). Therefore, we make up an amazing rational explanation for why we acted the way we did (we practically fool ourselves).
  • None can tell you how the future will unfold. Unless someone will come up with a time machine.  We love to believe that there are persons (so called experts) that have capabilities that others don’t. To avoid generalization, there are certain fields in which experts are really so. Wine or food tasters could be two examples. Those people could have trained their palates at the point to feel any subtle aroma or flavor that we don’t even realize they exist. Although, when it comes to future events, don’t get fooled by the so-called “experts”. Daniel Kahneman in his book “Thinking, Fast and Slow” tells the story of his encounter with a Wall Street fund manager. Kanheman, analyzed the correlation between the firm’s and the market‘s results. Throughout a period of seven years he found out that the correlation was almost zero. In other words, the performance of the firm was mainly due to luck (although they were getting fat bonuses). Skills had nothing to do with it. This brings us to another lesson: Be aware of false experts who pretend to know how the future will unfold (they are a bunch of charlatans).

Those are just some of the biases that affect us on a daily basis. Be aware of them to avoid wrong decisions in the future.

SUGGESTED READINGS:

Thinking, Fast and Slow: Daniel Kahneman: 9780374533557: Amazon.com: Books

Blink: The Power of Thinking Without Thinking: Malcolm Gladwell: 9780316010665: Amazon.com: Books

 

Published by

Gennaro Cuofano

Gennaro Cuofano, International MBA. Creator of The Four-Week MBA Community and Content Marketer/Business Developer at WordLift