Optimism Bias and the need to hold your horses

When looking to our future, we tend to inflate the good stuff and downplay the bad…

Our inclination to be too optimistic leads us to unswervingly exaggerate the expected success of our investments, the chances of achieving our plans or even make us believe that we are less likely to have an accident while drunk driving when compared to our friends.

Over the years researchers in the University College London have found rich evidence of optimism bias. Tali Sharot and colleagues conducted a study asking people to guess how probable was it that they’d experience a certain bad outcome, such as Alzheimer’s disease,  in their lifetime. Then they were shown the actual average chance of actually suffering such outcomes.

When asked afterwards to estimate a second time the chances of these bad events occurring, they found that people who received information more positive than their initial thoughts were more likely to reduce their new estimate to closely match it.

However, those who received information worse than their original estimate tended not to change their estimations very much. Thus, this showed that people changed their beliefs selectively in light of only positive information, indicating that we’re biased towards believing only the positive.

In another study, people were asked to imagine experiences both desirable, such as A lottery win, an awesome date etc, and undesirable such as ending a relationship or losing one’s wallet. Researchers found that their mental image of the positive events was more intense and vivid than the negative ones.

It could be that we are an optimist for good reasons. People who are optimistic not only spend less time pondering over but its also been shown that optimists save more are more healthy, take more vitamins and more readily adopt a low-fat diet. And deliberately choosing to ignore information that we don’t really want to hear, whilst embracing the good stuff can be dangerous, it can also be adaptive, and may help us avoid mental health issues such as depression. Going further, were it not for the Optimism Bias, it’s suggested that we might otherwise all be mildly miserable!

So how does is this bias relate to you in everyday life?

Managing projects:

We all in some respect manage a project in one way or another. Whether it be organising a holiday trip with family or actually designing a product at work. Here it is crucial to negate the potentially huge costs of the optimism bias when estimating the expected time to complete a task or project. We are bad at sticking to these estimates, as always tend to think it’ll take a lot less time than it actually does.

Thus, as project manager, remember to factor in a proportional Optimism Bias multiplier into estimations given. Governments have this problem so often that the UK government have a detailed document outlining a 5-step approach of how to factor the bias into the planning of large projects.

How can you limit this bias?

Use other biases to limit the effects: There are two good ways of reducing the Optimism Bias (Jolls & Sunstein, 2006):

First by making use of the Availability Heuristic (make past bad events more easily accessible from one’s memory) and use Loss Aversion (highlight losses that are likely to occur because of these bad events). Incorporating these two concepts into product design or marketing collateral can go a long way towards helping reduce the risks of this bias.

Make negative events obvious

In Germany, they designed a  drink-driving game to persuade drunk drivers to take taxis home instead. They decided to place these urinals in bathrooms and designed them such that each urinal controls the car. The drunker you are, the slower you drive, and the game ends with a crash, and a prompt to take a taxi home instead. The aim here was to make the negative effects of a certain action clear to the individual, and offer a clear, safer alternative. Even though this example may not be most appropriate for your work, the key takeaway to remember is that making something obvious will negate the effects optimism bias.

Context Matters

As always, the context matters. The effect of this bias is not totally uniform across everyone. The Optimism Bias doesn’t seem to work in for people suffering through depression. This is worth remembering if you’re designing solutions for such individuals. Interestingly, because of the absence of unrealistic levels of optimism, those with mild depression are actually much more accurate at predicting future events, seeing the world ‘as it is’, rather than perhaps how optimists like it to be. Perhaps having someone with dull opinions can make your products more bias proof!

Further Reading

Debiasing through Law PDF (Jolls &Sunstein, 2006)

Neural mechanisms mediating optimism bias Article(Sharot et al., 2007) 

Nudge – The Piss Screen Blog post (Thaler & Sunstein, 2008)

Nudge: Improving decisions about health, wealth and Happiness Book (Thaler & Sunstein, 2009)

How unrealistic optimism is maintained in the face of reality PDF (Sharot et al., 2011)

 

Thanks to Kieran Lynam for the picture.

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