Today’s post comes from Elsie at Gundo Money, head over to her blog and check it out if you aren’t already a reader!
A couple years ago I started watching this show called Brain Games. If you haven’t seen it, the show is full of all kinds of little tests and illusions for your mind. My favorite episode dealt with the tendency for people to over or underestimate things.
The host Jason Silva would ask participants, “How many pages do you think are in the bible? Give me a range.”
The participant would think for a while, then say “I’d say between 500-700.”
“That’s wrong, but try again,” Jason would say.
“Ok, I’d say between 200-1000,” They’d attempt
“Nope, there are 1,281 actual pages in the bible.” Jason would say triumphantly.
This happened over and over with many different people. First they’d choose a smaller range then larger and larger. It was surprising how confident people could be in their wrong answer, after all how hard is it to give a range of possibilities?
Turns out we often go through life with the illusion that we know. We know about our finances, we know how to make good investment decisions, or we know some general thing about the world. We have certain beliefs about how the world works and what we know that never really get challenged. Because of this, there is a huge tendency to be over-confident when we’re most likely wrong.
If you were buying a car for $18,000 and the dealership told you they made a calculation mistake. It would actually cost $18,400. You probably wouldn’t freak out.
What if your favorite coffee shop changed the price of your latte from $4 to $8. You’d be outraged.
Obviously those two money decisions are essentially the same. After all, money is money no matter how much we’re talking about. However, we don’t tend to think about that. We make irrational decisions like this all the time.
Not only do we act irrationally, we constantly oversimplify and smooth over issues. You may think you know how a bicycle works but I dare you to draw one that’s mechanically correct. I’m willing to bet your brain decided it wasn’t terribly important and moved on.
The brain doesn’t like to have a fuzzy picture, so it’ll fill in those missing pixels with what it thinks should be there. The craters in known information are filled with the sticky epoxy gum of our assumptions. Once that gum is in place it can be really, really hard to realize that information you thought was right was actually your assumption.
The brain is always trying to help us solve problems and in doing so, it makes us wrong a lot of the time.
Black and White
Another way the mind helps us be wrong is it categorizes things. The truth is that every new situation and new person we encounter is unique. If the brain were a central processor it could have a unique file cabinet for each “thing” in our lives.
Unfortunately the brain is not a computer and it could not possibly store all the crap it encounters. It has to throw a lot of things out, and it has to place things in categories. This person is good, that person is bad. A home is a good investment, a rental is a bad investment.
The truth is each new experience gives us new information about the world, and it helps us navigate the rest of our lives. In a sense, life teaches you how to live it.
One thing that I’ve noticed about young people is we tend to live in a very black and white world. What I mean is, things are one way or the other. There isn’t much room for gray area. As we get older and smarter, though, we learn that life is full of nuance.
This is why it seems the more educated a person is about a subject the more likely they are to not give you a straight answer. I have a question I love asking new acquaintances: how come the west side is always the nice part of any city?
Most people try and give me an answer like the coast is always west or you can see the sunset in the west. When I asked a friend who has a masters degree in urban planning he said, “well I would dispute that the west is always the nicer part. Plenty of cities are planned around rivers, such as New Orleans, and the nice part of town is far away from the levee.”
Instead of answering the question, he questioned the question.
There’s nothing wrong with having a polar point of view. But it does mean that when confronted with new information that directly contradicts your beliefs, you’ll ignore or justify it away.
The Illusion of Expertise
Here’s where I really make you trust me
People tend to read online blogs and newspapers as if there were some expertise in it. The truth is that we do the best we can with the information we have. We are not experts by any means and for the most part we share what’s been effective within the scope of our experience.
Occasionally someone will post something on my blog post and I’ll think to myself “yeah, that’s a good point you’re probably right.”
People get the incorrect idea that if you know about something, you’re seldom wrong. But knowledge and wisdom come not from being right all the time, but from continually questioning one’s own information and making changes based on new information.
One of my favorite podcasts did an episode on forecasting, which is people’s ability to predict future outcomes based on present information.
Turns out the best forecasters are not experts, they are people who are actively open-minded. They can read into a situation with less bias, and make decisions based on what they’ve learned not what they expect will happen.
Do You Know?
I’ve observed in life that most of the people who think they know all the time are uneducated. This must be why “I know” is the favorite phrase of many a five-year-old.
This brings me to the most honest and forward-thinking statement there is.
I Don’t Know
The phrase “I don’t know” has intense power. When you come to “I don’t know” you’ve surrendered. You’ve admitted that you don’t have all the answers. Any time you question your own opinion you leave space for new information.
I don’t know is a starting point to find out. In a way, I don’t know is fearless and courageous. People who can regularly use this phrase admit that they learn.
After all, experts didn’t just get the information from osmosis. They started where everyone starts. At the beginning.
This brings me back to the fact that we think we know, but we seldom go looking for a concrete answer. We live for years thinking the lyrics to that song were “rock the catbox,” or that your college loan interest rate is 6%. It’s amazing how much misinformation the lazy mind will take on without further investigation.
We can combat this by being actively open-minded and constantly questioning our judgement.
The solution to that brain game I opened with is to make your estimation range huge. “I’d estimate there are between 1 and 1 million pages in the bible.” Because most of the time you just don’t know. What’s worse, you don’t even know how much you don’t know. Always assume your perspective is off or you are operating on faulty logic because you usually are.
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