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(image credit: Motihada)

More power to the imagination

In praise of an underrated and underused mental instrument in decision-making

There is more to economics than the economy. Much of human interaction is a form of trading: we give something up, and we get something in return. Every time we do such a thing, a trade-off is being made. When we are making such trade-offs consciously, we can usually justify our choice based on using reason to evaluate the gains and the sacrifices, even if we have to work with limited information, and if we cannot possibly compute all the possible consequences.

We make many choices unconsciously too, of course — out of habit, or applying a simple heuristic, for example. The trade-offs in such choices still exist, but they do not necessarily reflect an expressed preference, whatever economists who adhere to revealed preference theory may say.

Not enough reasoning

But reasoning — or appearing to reason — is not necessarily evidence of a balanced consideration of costs and benefits. The legend of Faust describes the economic transaction between the central figure and the Devil, in which Faust trades his immortal soul for unlimited knowledge and worldly pleasures. He does not do so on a whim, but the story nevertheless paints him as someone driven by the short-term benefits, neglecting the longer term — eternal even — costs of the deal.

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Not all decisions require a burning platform (photo: via Wikipedia)

Now, sometimes we don’t have the luxury of patiently deliberating the possibilities that lie ahead of us and weigh up the pluses and minuses. In organizational change, the phrase ‘burning platform’ is often to refer to a highly compelling reason to do something different (or differently). It has its origin in the Piper Alpha explosion in July 1988. When an oil platform is on fire behind you, you don’t worry about how long you might survive in the cold North Sea water 15 stories below. When a decision genuinely involves life and death, your System 1 rightly takes over. You just jump.

Misusing our System 1?

Sometimes a single issue can come to dominate our powers of reason to such an extent that it feels as if it must be pursued no matter what. We may think we are still reasoning, but often we are deluding ourselves. On a small scale, cravings can cause this to happen. We know that we should not open and scoff a third bag of crisps, or that we should not have another large glass of pinot noir, because we will regret it tomorrow — when we step on the scale, or experience the painful fireworks of a hangover. And yet, they become the most important thing in the moment, the thing that must happen at all cost, and we reason that the extra crisps or wine won’t make that much difference, really.

On a large scale we find issues like — how can we avoid the subject — Brexit. But let’s not look, for once, to the pros and cons of Leaving or Remaining in the EU, nor even to the content of the draft Withdrawal Agreement (WA) — the binding treaty that will secure the divorce after a 45-year marriage. Let’s cast our eye instead to the politics in the House of Commons, the lower chamber of the UK’s parliament.

When prime minister Theresa May unexpectedly lost her majority in the early elections she had called in May of 2017, she needed support from outside her party to form a minority government. She got it from the Democratic Unionist Party, which seeks to keep Northern Ireland within the UK (against the slow, but persistent trend towards unification of the whole of the island of Eire). As the agreement was struck, the DUP said, “The alternative [to a Conservative government] is intolerable. For as long as Corbyn leads Labour, we will ensure there’s a Tory PM.”

Now, that general confidence-and-supply agreement is in peril. The DUP, with just 10 MPs, was able to gain significant concessions from the government in return for their support. But they are now refusing to back the WA because of the notorious backstop relating to the border between Ireland and Northern Ireland. This will not only jeopardize the disproportionate influence on policy they have, but also increases the chance of new elections, which may well lead to the Corbyn government they called ‘intolerable’ not much more than a year ago.

On the other side, we have Labour which, under Jeremy Corbyn, is in favour of a united Ireland, and hence diametrically opposed to the DUP. Yet Diane Abbott, the shadow Home Secretary, said in a radio interview last week: “At this point we don’t agree with the DUP on the issues at stake, but in this parliamentary turmoil you can’t necessarily rule anything out. People in [Abbott’s constituency] Hackney sent me to parliament to get rid of the Tories, and if it’s all about getting rid of this Tory government, you have to do what it takes.” Maybe not quite a pact with the devil, but it comes close.

But it might be wrong to attribute these two cases of intense focus on a single issue to the dominance of System 1. There is plenty of reasoned justification involved. But what we may be observing here is the failure to imagine the full consequences of all the options.

1, 2 and 3

Maybe System 3, as Leigh argues, can (and does) make decisions autonomously, alongside Systems 2 and 1, depending on the situation. Another possibility is that the three cognitive systems work together and come to some kind of consensus — with sometimes only one or two of the three systems actively engaged. But whichever model you consider (and we need to recognize that these systems are just part of a model, not actual reality), one thing is clear. Unless we have a good detailed idea of the possible outcomes of a decision, we can only work with the present information — and that is not always a good predictor of the future.

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Imagining a quicker commute is not that easy

We do not always use that System 3 as much as we could. It takes effort, and it can lead to unpleasant cognitive tension — we may say “I can’t imagine” something, but that often means we don’t want to imagine it, because it makes us feel bad. So our System 1 responds to the immediate situation, and/or our System 2 calculates the costs and benefits of the options as they are presented here and now. With more input from our System 3, we could more thoroughly evaluate not just the end states, but also the path to get there in the different possibilities ahead of us.

Whether it is imagining a quicker journey into work, or the outcome of a momentous political decision, we may well be better off by giving more power to our imagination.

Originally published at koenfucius.wordpress.com on November 30, 2018.

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Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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