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How do you make decisions? Do you make them based on how you feel about things, or what you know? You likely answer that it is a bit of both. But that you mostly base important decisions on a reasoned assessment of relevant information you have gathered. Really? You need to be clear because emotional decisions can be very costly.
It’s well known that we go about life making conscious decisions in two distinct ways. For everyday, repetitive tasks, or for situations that require a sudden response, we follow instincts and habits. We are not even aware we are making decisions.
For other occasions we become aware of alternatives and take a more considered approach. We try to assess information and project the different possible outcomes of alternatives. Then we choose and act.
At least that’s what we like to think we do.
Is this Really What Happens?
This model of how we behave gives rise to a number questions. An obvious one is how do we decide which situation confronts us. After all, if we get into a habit we may act without noticing that something is different in our surroundings.
Furthermore, as Nobel Prize Winner Daniel Kahneman pointed out in his bestselling book Thinking Fast and Slow, we are biased towards following the first approach as it requires little effort. It’s ‘lazy brain’ decision making.
And if this rational – conscious or unconscious – approach is all there is, what role, if any, do our emotions play?
How many times have you heard people say they are acting on ‘gut feeling’ or ‘instinct’? Have you done this?
The chances are that they are aware somewhere in their brain that they need to take a reasoned approach, but they have not done so. Instead, they have reached a decision based on some process that they are not even in a position to articulate.
Their decisions are emotional decisions. Because if they are not basing their decisions on a reasoned assessment of the information available to them, they are either relying on a memory of what worked in a previous ‘similar’ situation or on how they are feeling at that time.
Emotional Decisions and Taking Responsibility
This lazy brain approach is dangerous for two reasons. First, there is every chance the situations and consequences are not similar, even if there may be superficial similarities.
Second, relying on feelings when reasoning is required means you are projecting your internal emotions onto the outside world.
But the outside world that is providing you with the information input into your decision is oblivious to your feelings. It neither knows nor cares how you are feeling.
This is not to say that there are not people out there who know and care about how you feel. There are. But they are probably not in control of the information that you must use when reaching a decision or the outcome that is produced. If they were, they would probably act in your interests so that it did not matter what you decided.
This does happen at times in your life. Think of when you were a young child. There was no need for you to reason. You simply reacted to a feeling in your body by expressing it and the world around you – your parent or guardian – reacted in your interests.
It’s similar for someone who is incapacitated. But for most of our lives the world does not treat us like this. It treats you as if you have taken responsibility for your life. It treats you as if you have taken this responsibility.
The second reason that this is a dangerous approach is that you are making decisions that will impact on your life without bothering to assess your circumstances properly. This is what is meant by gathering and assessing relevant information.
The problem is that, whether you want it or not, you live in a competitive environment. For all but a small minority, what you get out of life is related to the effort you put in.
This is true of material outcomes, but it is also true for psychological outcomes. Of course, we all start from different places and it’s much more of a struggle than for others. But no one said life was fair.
The point is that if you are not using the faculties at your disposal – your ability to perceive the world, to process this information and to project outcomes – you are putting yourself at a disadvantage relative to others around you.
And apart form the few around you who can be relied on to act in your interests, you are competing with others.
Making emotional decisions where reasoned decisions are required is the opposite to taking responsibility. And if you don’t take responsibility for your life, well, someone else will do it for you and you can take the consequences.
Inputs to Emotional Decisions
If your decisions are not based on a rational assessment, to the best of your ability, of the information around you, they are based on emotions.
Four emotions dominate this process: Greed, Fear, Hope, and Regret. It is worth having a closer look at these to see how they act.
Being aware of these emotions and how they affect your thinking is a first step to gaining clarity on the way you actually make important decisions and also provides a way to look at the likelihood of getting the outcome you desire.
What is Greed?
Greed is commonly defined as an excessive desire for money, power or some other advantage. But this strikes me more as a description of a personality trait than of an emotion.
When making decisions, think of greed as an excessive focus on achieving, and for your decisions to lead to, an immediate and unrealistic gain.
When greed dominates, all a person will focus on is how much they will benefit from pursuing a particular course and how much more they could get by continuing to make similar decisions.
Sounds OK, but there is a major fallacy with this type of reasoning.
Blindly pursuing more of what you want closes your eyes to the risks that might be attached. These risks may cause you to lose what you are pursuing, to lose what you have, and to fail to see other opportunities or ways to act.
Greed will also cause you to fail to take the wider impact of your decisions into account. This will soon make it more difficult to achieve an outcome as others will begin to react to you to inhibit your success.
Notice that this assessment of greed does not mention any idea of sharing or fairness. It is based only on your self-interests. Once we bring fairness into the argument we are adopting a moral stance or an outside standard of some sort. Of course, you should take these issues into account, but that is a different argument and one that I will leave up to you and your moral compass.
What is Fear?
Fear is defined as a distressing emotion that is caused by a feeling of impending danger, which results in a survival response. Fear arises and persists regardless of whether the threat is real or imagined.
As a survival response, fear does not allow for the type of assessment that is required to determine if the source of the fear is real or imagined.
Fear is probably the most powerful of all human emotions. Fear can lead people to drastic action and can have fatal consequences. Greed and hope will seldom lead to such an outcome.
If a decision maker becomes afraid, they will either act too quickly, or will delay both the decision and the action. If unchecked, fear leads to panic, and panic leads to poor decision making. It can also be contagious with implications for those around you.
However, some fear can be good. If you have made a decision and then realise that you made have made a mistake, fear can be a powerful force to overcome the inertia that can arise when you need to revise your decision.
More often, it stops you from making a correct decision, particularly if a similar situation has arisen in the past and led to a bad outcome. Fear of a repeat will certainly cloud your assessment of the possible outcomes.
Even if you have certainty that a bad outcome will not be repeated, fear based on a bad memory will often be enough to stop you from pursuing a possible course of action.
Fear can be important with big decisions and is not always bad. But fear can inhibit even trivial decisions as, for example, casual social interactions.
The best way to handle fear is to think things through and come up with a plan. Then trust your plan. Commit to implementing it. The decision to act in some manner is then not you – you are simply implementing a plan.
But if fear has become generalised in your surroundings you need to reassess any plan. Never go against a panic. Don’t let your own feeling of fear rise, but do react to the increase in general fear. Get away from panic. The herd will always determine the outcome in a panic.
Truly understanding fear is a key piece in understanding how emotions affect decisions.
What is Hope?
Hope is a feeling of expectation and desire for a certain thing to happen. It’s an individual’s desire to want or wish for a desired event to happen.
Hope may be the most dangerous of all human emotions as it can be utterly divorced from reality. It is purely internal in its origin and probably not even based on prior experience.
Hope make be based on desiring an impossible outcome or it may arise from a real possibility. But decisions should not be based on the possible. Just about anything is possible. Your job is to identify what is probable. Hope prevents you from doing this.
Hope can be a supporting act for greed. When greed blinds a decision maker to risk, hope can act to suppress fear and prevent a reassessment of the situation.
But the herd does to care what you hope for. This emotion, perhaps more than any other, has the least impact on your ability to determine an outcome.
Keep hope for when you have made a decision and for the parts of life you cannot control. Of course, you hope things will turn out as you wish. It’s only human to hope that luck is on your side. Hope is your comfort blanket.
What is Regret?
Regret is defined as a feeling of sadness or disappointment over something that has happened or been done, especially when it involves a loss or a missed opportunity.
The negative implications of this emotion are obvious. It is only natural to regret a past failure or outcome. It is also human nature to feel regret when an opportunity is missed.
But that’s the past. There are no opportunities there. Learn from the past, but do not drag it into the present. And do not project it onto the future. There are unlimited opportunities there.
The only upside to regret is if you learn from it. This means not repeating the mistakes you made in the past. But do not let it translate into fear or greed.
Recognise Your Emotions to Improve Your Decisions
As humans, it is normal to experience these four powerful psychological elements when making even minor decisions. The important thing is to be aware that these emotions are always within you. And you have an in-build bias towards acting on them.
This recognition is to first step towards being disciplined enough to overcome them and to base decisions on a rational assessment of the information you have and the outcomes that are probable from various courses of action.
If you achieve this you will find that the outcomes of your decisions will be much more to your advantage irrespective of the situation.
Making emotional decisions, taking the ‘lazy brain’ approach, can seem like an easy way to go through life. But it will often lead to outcomes that make life more difficult.
Sometimes we have to act on emotions. This arises where we have insufficient information or where we cannot assess outcomes properly due to many unknowns and unknowables.
Some of life’s biggest decisions fall into this category. Choosing a life partner is one such decision. This does not mean that we do not use our rational faculties but our emotions usually, and correctly, dominate.
We know what a minefield such decisions can be.
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Andrew Dawson is an experienced business consultant with a particular interest in how people operate when working in big and small organisations. He writes especially about how people think, make decisions and behave in business and finance when faced with uncertainty and he draws on his considerable experience to set out how they can do better. He generally finds there is no need for deep personal or organisational change when faced with challenges. Instead, small incremental and consistent improvements realise potential.
