If you care about making good quality decisions, financial or otherwise, it's valuable to understand the ways in which our decision-making can go wrong.
Daniel Kahneman and many others in the behavioural sciences have shed light on a great many cognitive heuristics in recent decades. These heuristics can lead to biased decision making.
These biases are unconscious, in the sense that they take place automatically and without us knowing. They are difficult to reign in, even if we want to. They are significant barriers to thinking clearly.
Two related heuristics/biases that are topical at the moment are "confirmation bias" and "motivated cognition".
Confirmation bias relates to our tendency to interpret evidence in a way that confirms our existing beliefs. Motivated cognition describes a similar process where we have an emotional reason for wanting to reach a conclusion, and we construct a narrative or set of explanations to justify that conclusion.
They are topical because of a couple of hot news stories.
- One relates to the public spat between Taylor Swift and Kanye West. West's wife uploaded a video to Snapchat, recording a telephone conversation between the two. West read the lyrics to a song he was developing, asking for her permission to use the line "me and Taylor might still have sex". He didn't, however, mention the following words "I made that b!7(# famous", or let her know about the music video to the song, with includes a Swift lookalike lying naked in bed next to him and a number of other celebrity lookalikes.
The reality is: if you had a view either way about any of the parties involved, there's a good chance that the brouhaha confirmed your views. If you hated Swift then you probably hate her more. If you hated Kanye then you probably hate him more.
- And the other hot news story? Well, of course, it's the US presidential election, which is well and truly underway now that Clinton and Trump are the confirmed nominees for the Democratic and Republican parties.
As Christine Aschwanden from FiveThirtyEight explains, "There's probably nothing that will change Clinton or Trump supporters' minds". For many people, the political narrative will confirm the beliefs or conclusions that they already hold.
As Eliezer Yudkowsky explains elsewhere, "Politics is the mind-killer". Given the stakes, it's unfortunate that it's one of the better examples of confirmation bias and motivated cognition out there.
So what can we do?
Well, there's a degree to which we need to accept this. We can't help being human.
And I guess these tendencies can be valuable, if we harness them to reinforce beliefs that, while not necessarily 100% accurate, are instrumentally valuable for our happiness and success (especially where they do not detract from the happiness and success of others).
But in terms of the dark side of these biases?
Motivated cognition, as a bias, increases my conviction that managing conflicts of interest is very important. If you have skin in a game, it's hard not to let it influence the beliefs, narratives, and conclusions that you come to. I suspect it's easier to address the "motivated" part than the "cognition" part.
More broadly, I suspect that it helps to have an understanding that you are susceptible to these flaws in your reasoning. It certainly increases my conviction that your sense of identity and meta-beliefs are important. For example, I subscribe to the view that you should have "strong opinions, weakly held", and that being able to change views isn't a sign of flip-flopping, but a sign of a strong character. Because changing your views, in the face of confirmation bias and motivated cognition, can be very hard to do.