You are here

How to Make Better Decisions

+ enlarge
 

A new book sheds light on how much control we have over the choices we make.


Why do investors sell their most valuable stocks and hold onto those declining in value? How does an airline pilot decide the right course of action when trying to land a disabled plane?


Science writer Jonah Lehrer tries to tackle these questions—and more like them—in his newly released book How We Decide. Drawing on both recent and long-established findings in neuroscience, Lehrer portrays the brain as a highly complicated machine constantly working to solve daily puzzles and problems, often without the conscious consent of its owner.

In Depth: How to Make Better Decisions
Lehrer argues that the better we understand the brain’s biological prerogative, the better able we are to make the right decisions. This includes everything from choosing which cereal or car to buy to knowing when to cut our losses in the stock market. In the end, he says, humans have the power to short circuit trouble-causing impulses and to free themselves of repeating mistakes.


The Brain’s Biological Mandate
Modern scientists have been studying the brain in earnest for decades, but only the recent advent of powerful imaging and scanning technology has allowed them to look closely at brain function as information is processed. Such insight has confirmed what researchers suspected: The brain loves to predict outcomes and is rigged with a neurotransmitter known as dopamine to enable this process.


“At a very deep existential level, we love to know what’s going to happen next,” says Lehrer.


Dopamine neurons are instrumental since they track expectations and outcomes, surging when we enjoy a positive experience and decreasing when we are disappointed. This trigger is both a blessing and a curse, however. It teaches the brain to make decisions based on an inherent reward, but the pursuit of that satisfaction can spin out of control into addiction or otherwise harmful behavior.


Playing slot machines, for example, can deliver a high reward and engage the brain’s neurons in trying to solve the logic of the winning combination. But slot machines are also fundamentally unpredictable. Developing an obsession with them can waste your time and money.


The good news is that dopamine neurons are also programmed to learn from their mistaken predictions. The lessons are even more powerful, says Lehrer, when errors are not just noticed, but rigorously analyzed time and again. Without this constant monitoring, the brain is prone to repeating its poor choices.


When presented with a choice or problem, the brain calls on several distinct parts to analyze the incoming information. There are emotional and rational responses, and even contrarian ones, which is why humans prize certainty. The brain is built to generate different reactions at once.


There are many conditions that influence the decision-making process, but one of the most important may be mood. In a 2006 study, cognitive neuroscientist Dr. Mark Jung-Beeman evaluated how 79 happy and unhappy participants solved word problems. Those with a positive attitude solved 20 percent more puzzles than their less happy counterparts.


While those in bad moods can still solve problems, says Jung-Beeman, anxiety may narrow their perception of potential solutions. A positive outlook, however, tends to widen it.


The Emotional-Rational Balance
Jung-Beeman, who is a professor at Northwestern University, has also studied the process of creative decision making and found that good outcomes are often the result of using both insight and analysis. Insight and intuitive thought seem to develop suddenly, while our rational thought tends to work more like a calculator, making comparative assessments of data.


Both approaches recruit somewhat different parts of the brain, and knowing when to alternate between the two is a learned talent.


For the airline pilot trying to land a disabled plane, a frequent subject of Lehrer’s book, making choices under pressure requires listening to the intuition alerting the brain to a potential problem. But what’s also necessary is clearing the mind of panicked thoughts so that it can recall previous mistakes and zero in on a short list of good solutions.


Most of us rarely face such harrowing decisions, but we do struggle to make basic, daily choices. That may be because the “rational brain,” known as the pre-frontal cortex, can handle just four to nine separate pieces of data at once before it begins to oversimplify the problem and focus on irrelevant details as a way of narrowing the choices. The unconscious brain, in contrast, processes much more information than that and is often the source of instincts and emotions that influence our decision making.


The limitations of the rational brain mean that we need to learn to identify when we are gravitating toward the wrong solution, says Lehrer. Studies of consumers weighing numerous factors, for example, have shown that excessive analysis led to worse decisions than when relying on intuition to make a final choice. The opposite was true for those considering just a few factors: Analysis served them far better than instinct.


It’s simple advice, but decisions often remain difficult when the brain distorts our perception of the potential risks. Loss aversion, or the tendency to irrationally fear loss, has led to many bad decisions, according to Lehrer. Examples include poor choices among investors who often sell high-performing stocks and keep ones that have decreased in value because they fear absorbing the loss of the worse stocks.


Dr. Antonio Damasio, director of the Brain and Creativity Institute at the University of Southern California, has found this phenomenon can be averted with reflection and practice. Where financial losses are concerned, performing a simple calculation that demonstrates a relative gain is often enough to convince the mind that a risk is worthwhile.


But like with everything in neuroscience, applying that insight to everyday life is all about timing and context.


“In light of our financial collapse,” says Damasio, “loss aversion looks pretty good to me.”

For more on this topic, see In Pictures: How to Make Better Decisions


Comments

Loading comments...