The Art and Challenge of Making Good Decisions

Life is a series of decisions.  Living a satisfying, happy life, then, depends on our ability to make good decisions. Should we meet some college friends in Fresno for a rare get-together even though we’re three months into a get-out-of-debt program and the cost of the trip would set us back a few steps? Should we buy Brand A that’s known for its durability or Brand B that has a much cooler design? Harvard Psychologist Daniel Gilbert, author of “Stumbling on Happiness,” says if we’re relying on our own minds to answer such questions, we’re destined for disappointment. An Elusive Goal The first problem in making good decisions is our emotional end-goal: happiness. It’s what we all hope to achieve with our decisions.  The problem, Gilbert points out, is that happiness is a highly subjective, multi-faceted, and ever-changing emotion.  It’s inherently difficult to achieve a goal that’s difficult for us to define. A Defective Goal-Seeking Device Our second problem has to do with the tool we use in trying to predict which decisions will work out best: our imagination. Gilbert points out that we are the only creatures that can imagine the future, and we naturally rely on this ability when making decisions.  We run mental what-if scenarios, trying to imagine what life will be like if we take this course of action or that. But having the ability to imagine the future doesn’t mean we’re good at it.  And in fact, Gilbert says we’re just plain lousy at it.  That’s because our imagination suffers from three shortcomings: realism, “presentism,” and rationalization. Realism:  What’s really true and what’s in our heads are often two very different things. When we remember something, Gilbert says, we don’t remember objectively.  We fill in certain details and leave others out.  We’re not much better with present experiences, which is why different witnesses to the same car accident often have different explanations for what happened. So, if we’re expecting a future experience to unfold just like a similar past or present experience, our misremembered past and misperceived present make it highly likely that we will misimagine the future. Presentism: Most of us have a tough time imagining a tomorrow that’s much different than today.  And we have an especially hard time imagining that we will ever feel, want, or think differently than we do now. That’s why shopping when we’re hungry tends to make us buy more than we should and shopping when we’re full may make us buy less than we need. It’s also why someone who loves living where there are four distinct seasons may resist moving to a city where the seasons don’t change as much. Rationalization: It seems reasonable to assume that the more money you make the happier you will be.  However, research shows that there’s a certain point on the income scale where happiness tends to level off. Reasonableness, therefore, turns out to be a fairly unreliable predictor of how we will feel about the future. One Step That Helps Ensure a Good Decision Given the number and complexity of reasons why it’s so difficult to accurately imagine the future, Gilbert’s decision-making advice at the end of the book is surprisingly simple: Ask someone else who made a similar decision how it turned out for them. Thinking of buying a red sports car?  Ask the owners of red sports cars whether the experience of owning one has lived up to their expectations. Thinking of moving your family to France for a summer?  Find some families who’ve made that decision and ask whether they’d do it again. As simple as this suggestion is, Gilbert says we tend to resist using it as much as we should.  That’s because we think we’re unique.  How could someone else’s experience tell us that a particular sushi restaurant, summer vacation spot, or SUV will satisfy our unique desires?  We’d rather gather facts and put our imaginations to work. However, research clearly shows that relying on other people’s experiences is far more likely to lead to satisfying decisions than relying on our own imagination. Can you think of a decision you made that turned out far differently than you imagined?  By the same token, how have the recommendations of others helped you make better decisions? Photo by  General Wesc Related Articles: My Best and worst financial decisions Open your mind (Part 2) 8 Money Questions That Have a Lasting Impact on Your Finances Will Money Buy Happiness? Who Cares! 10 Minutes, 10 Months, 10 Years | Review 9 Tips from Warren Buffett Are you a good steward? Matt is the author of three personal finance books published by NavPress, including his latest, Money and Marriage: A Complete Guide for Engaged and Newly Married Couples . Matt has been featured in USA TODAY, U.S. News & World Report, and many other media outlets. He blogs at Matt About Money . When he isn’t reading or writing about money, Matt enjoys hanging out with his wife and three young kids. You can also find him on Facebook and Twitter . The articles on this site are for entertainment purposes and should not be taken as financial advice. Please contact a financial professional for specific advice regarding your situation. Also, many of the CPF articles help us pay the bills by using affiliate relationships with Amazon, Google, eBay and others. Find out more here .

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The Art and Challenge of Making Good Decisions

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