Note: This is a follow-up to an article I initially wrote back in 2017. Eight years of procrastination later, I’m revisiting the topic.
We make a lot of decisions.
Whether you’re the CEO of a burgeoning startup, a genius at the Apple store, or an incompetent politician trying to snuff out the basic human rights of half the population (wow that escalated quickly), decisions govern our day-to-day lives.
The average adult makes 35,000 decisions a day—that’s about 1,000 decisions per hour. Some of them, such as reading the next word in a blog post require little mental effort. Others, like the decision to end a relationship, require far more intention.
Regardless of the complexity, each decision taps into the finite reservoir of energy our brains have to help us conquer the day. In an attempt to spare capacity, our brains often take shortcuts manifesting in the form of biases. Though the intent is positive, these biases can lead to negative consequences.
Status Quo turned Status Woe
I recently left my employer of three years to pursue a new opportunity. While I’m resolute with my decision now, as I look back, I realize it was harder than I expected. On the one hand, the new opportunity offered career advancement and a higher salary—two things an ambitious individual would want. However, I felt anchored because I loved my team, product, and customers. I had established relationships, clout, and importantly, comfort with my current employer that I was anxious to let go of. In hindsight, I was struggling with the status quo bias.
The status quo bias refers to our tendency to maintain a current situation and oppose actions that may change the state of affairs. It’s a potent bias because it preys on our natural fear of change and can, therefore, severely stunt our sense of adventure. Staying in an unfulfilling job for too long, buying the same types of products, or even opting to live in the same city as your parents are all examples of the status quo bias in action.
Given its direct opposition to growth, it’s important to find ways to avoid the status quo bias. Fortunately, simply raising your awareness of it is a good start. When evaluating a situation, don’t stick to the status quo just because it’s comfortable—only do so when it’s genuinely the best choice. It also helps to reframe the status quo as a net new option on the table. By taking an outsider’s perspective on the situation, you can be far more objective with your own decision-making. Candidly, this is what helped me decide to pursue my new opportunity. Rather than compare the offer to my current job, I assessed both as entirely new options. The rest is, as they say, history.
Key Takeaway: The status quo bias keeps you anchored to familiar situations, often at the expense of growth and better opportunities. evaluate all options objectively, not just the comfortable one.
Too Much Information
Do you ever wonder just how much information you consume each day?
A study conducted by the University of California San Diego found that the average American takes in 34 gigabytes of information every day. To put that into perspective, that’s the equivalent of streaming every episode of Stranger Things, playing over 15,000 hours of Fortnight, or scrolling through TikTok for 94 hours. It’s no wonder they say we’re living in the “information economy”.
We’re inundated with data. And while easy access to information has paved the way for positive gains, it has resulted in more workplaces struggling with the Information Overload bias.
The Information Overload bias occurs when people struggle to make decisions because they’re overwhelmed by the amount of information available to them. It’s particularly prevalent due to our perfectionist society where we feel compelled to get things right, leading us to believe the more information we gather, the more informed our decisions, and the more accurate we will be. Unfortunately, this approach commonly leads to analysis paralysis because it becomes difficult to distinguish what’s relevant and extraneous. This bias costs the US economy an estimated 900 billion dollars a year.
The corollary of this bias doesn’t suggest you throw your curiosity out the window and act solely on intuition. You still want to arrive at an informed decision but to help combat the negative effects of the Information Overload bias, try to time-box your research. For example, if you’re building a new product, allocate a quarter to discovery and then prioritize shipping value. If time doesn’t feel like the right metric for you, consider adopting the philosophy used by the US Marines. They gather enough information to feel 70% confident with the decision at hand because the time it takes to reach 100% confidence won’t significantly improve the outcome.
KEY TAKEAWAY: Too much information can lead to analysis paralysis—set limits on research to make timely decisions.
Loss Aversion
We can’t talk about cognitive biases without including one example about investing. After all, the field of Behavioural Economics studies how our emotion gets in the way of our rational decision-making; investing is the perfect proxy for that.
In February 2020, the stock market nosedived by nearly 35% due to fears of COVID-19. While I’m old enough to remember the financial turmoil of the Great Recession, this was the first time I had real skin in the game. And like many others in my generation who started investing after 2008, this was also the first time I witnessed the market do anything other than go up and to the right. It was gut-wrenching to see my portfolio value cut in half. It was so painful that my behavior began to change. I went from obsessively checking Yahoo Finance every 30 minutes, to avoiding the app entirely. This shift in behavior is common among professionals in the finance industry and is a clear example of loss aversion at work.
In his seminal book Thinking Fast and Slow, author Daniel Kahneman defines Loss Aversion as our tendency to feel the pain of losses more than the pleasure of equivalent gains. For example, the sting of losing $100 is far greater than the joy we experience of gaining $100. Insurance companies and financial advisors deeply understand this bias which is why they often position their services as a means of protecting wealth. Similar to the status quo bias, loss aversion prevents people from assuming risks that can lead to growth. Both biases stem from a fear of losing something—whether it’s comfort, stability, or a tangible asset.
One of my favorite techniques to curb the effects of Loss Aversion is through the Regret Minimization Framework (RMF) popularized by Jeff Bezos. At its core, the RMF is an exercise that asks individuals to project themselves into the future and ask: “Will I regret not taking this action later on?” This mental shift helps reduce loss aversion by focusing on long-term satisfaction and minimizing regret rather than the fear of short-term losses. For example, when deciding whether to invest in a risky venture or take a new career opportunity, using the RMF helps shift focus from the potential for immediate loss to the longer-term impact. By practicing this mindset, we become more comfortable with calculated risks that can lead to growth and success—whether in investing, business, or life in general.
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