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Overcome Your Cognitive Biases: The Planning Fallacy with Julia Galef, President of the Center for Applied Rationality
The Planning Fallacy
One of the most universal and robustly demonstrated cognitive biases is the planning fallacy. If you’ve ever underestimated how long it would take you to finish writing that paper you’re working on or finish moving or get to your destination, then congratulations, first of all you’re a human being and that makes you subject to the planning fallacy.
So why does this happen? Why do we systematically underestimate the amount of time or money you are going to spend on a given project. Well, one piece of the puzzle is the fact that our intuitions aren’t very good at thinking about compound probabilities. Here’s what that means. If you think back to the last time you were late completing some errand that you were running and you also think back to how you formed your prediction of how long the errand would take – if you’re like most people, you probably thought briefly about the various steps that make up the task of running an errand like getting ready to go, driving to the store, finding the thing I’m looking for, waiting in line, getting in my car and coming back home.
Adjust your estimate
Again if you’re like most people you probably envisioned a typical occurrence of each of those steps. So a typical amount of time it takes you to get ready to go or a typical amount of time it takes you to find parking. And that’s what formed your rough estimate of the amount of time the whole errand would take. In most cases you’re gonna be correct about your typical estimate. That’s what makes it typical.
But the more steps you have in whatever project or task you’re working on, the greater the chance that in one of those steps you’re gonna hit a snag and it’s gonna turn out to be atypical. So, that probability that the whole thing is going to be atypical in some respect goes up the more steps you have in the process. And it goes up faster than our intuition would predict. One way to tell that this process is partly responsible for the planning fallacy is that when scientists ask people how long would you expect this project to take you if it, you know, progressed in a typical fashion, people give estimates that are almost identical to the estimates that they give when scientists ask how long would you expect this project to take if nothing goes wrong.
One interesting thing that the existence of the planning fallacy reveals is that in general our intuition thinks that we’re exempt from statistics. So we know the people in general are biased but we don’t think that we’re biased. We know that in general people who win the lottery aren’t as happy afterwards as they expected to be. But still we’re sure that we, if we won the lottery, would be just as happy as we expect to be. And, sure enough, when we predict how long some task will take, we may know that yes, in the past I’ve underestimated how long tasks take but this case is different because in this case I have all these various reasons to be optimistic.
Don’t assume that you’re exceptional
And similarly when, for example, starting a business you have all of these particular features of the situation that are unique to that situation and those are the features that are salient to you, not the general statistics about people starting businesses. So you may say to yourself, yes, of course I know that in general when someone starts his own restaurant, for example, his chances of still being around five years later aren’t great but, you know, my case is different because I have this, this great idea for a restaurant location, I have all of these people who have encouraged me to do it and, you know, I’ve also heard that Polish food is trendy these days.
And that all may be true but it’s also true that all of those other people whose businesses failed had their own unique reasons to believe that they should be optimistic and that the statistics that you’re rejecting are made up of individual people, all of whom rejected statistics.
One of my favorite science fiction authors, Douglas Adams, captured this phenomenon beautifully when he wrote that, “Human beings are unique in their ability to learn from other people’s experiences as well as in their utter disinclination to do so.”