E21: Professor Barry Schwartz: Psychology & Decision Making in a Complex World

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Episode Summary:

Listen to the full episode on iTunes (and please leave a rating to help the podcast reach more people):  E21: Professor Barry Schwartz: Psychology & Decision Making in a Complex World

  • There is no neutral way to present options to people.
  • You always push people into one direction when presenting different options.
  • Therefore you should push them in the direction that makes them live happier, healthier and more fulfilling lives with enough money saved up when they retire.
  • In other words, use the science of psychology & decision making to help people who are by large imperfect decision makers make more perfect decisions.
  • The abundance of choice: Unfortunately, the general assumption is that if some choice is good more choice is better.
  • We never tested this assumption until recently.
  • Recent evidence suggests that the abundance of choice today makes us paralysed instead of liberated.
  • People are generally making worse decisions today compared to 20-30 years ago because the current abundance of choice makes the decision making process too complicated.
  • Examples of important choices that make the decision making process too complicated today:
  • 1) University graduates become overwhelmed with the choices they have therefore they don’t know what to do after they’ve graduated. As a result they put their life on hold while hoping that one day they wake up knowing what to do for the rest of their life.
  • 2) Romantic relationships: Dating apps like tinder enable you to quickly see 1,000+ potential dating partners. This leads to intimate relationships where each partner is waiting until something better comes along. This makes it difficult to build deep and fulfilling relationships.
  • 3) High school students choosing an university: They have the choice to study anywhere in the world and they can get information about every single university. They get a feeling that they can make the perfect choice but in reality they can’t process all those choices.
  • The question is then, can an abundance of choice keep your mind sharper? Absolutely however there are better and more meaningful cognitive tasks that can keep dementia and Alzheimer’s at bay.
  • Top advice for life from Barry Schwartz:
  • 1) Soft skills are becoming increasingly important: We have an increasing need for skilled nurses because a bigger percentage of the population is becoming old.
  • 2) Be humble: There’s always someone out there who is smarter than you. Chances are high that whatever you think about a situation is wrong. You have a lot to learn from other people.
  • 3) There are worse things in life than making mistakes: We mostly learn how to do things right by doing things wrong. We must be courageous enough to take risks. That’s where new ideas and breakthroughs come from.
  • 4) Wise people in leadership and management positions need to be empathetic to be able to see the perspective of people they work with. In addition, they need to be less judgemental and embrace failure to allow their employees to take more risks.
  • 5) The most transferable skills are virtues of character: honesty, integrity, perseverance.
  • 6) Hire what you can’t train: Companies should hire based on attributes they don’t know how to teach. If you need a financial analyst don’t hire someone who is good at financial analysis and has poor virtues of character. Hire the person with a good character because you can train financial analysis anyways.
  • 8) Be mindful of what you spend your time on: We’ve developed all these time saving devices but people are busier than ever. It can take months to arrange something as simple as a dinner for 3 couples because people are so busy today. People are busy doing a lot of things they shouldn’t be doing because they don’t know what they should focus on. They bump into things in the world that look interesting but end up being a waste of time.
  • 9) Be mindful when using social media: Social media can be malignant if not controlled because people are only sharing the best images from their life. This “perfect image” of other peoples’ lives can lead you to feeling jealous and inferior. In addition, there are a lot of fake news on social media and it becomes increasingly difficult to distinguish the real news from the fake news.
  • Barry recommends controls to spread fake news and to prevent people from encountering machine produced content.

– Oskar Faarkrog

We are right now creating the Future Skills Program which will be an online video course covering decision-making, career, and risk-management, with weekly homework and evaluations.

* Why decision making and risk management? Because better decisions and risk management equal better finances, better relationships and an overall better life.

* Decisions are the foundation of everything you do and the outcome you eventually get.

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