It’s that time of the year again

It’s that time of the year again, when avalanches of New Year’s resolutions are launched with idealistic plans for drastic self-improvement in 2016.

We resolve to quit drinking, smoking, or both.  We resolve to help others and to spend more time with our friends and family.  We resolve to finally get out of debt and immediately into building up a neat retirement nest egg.  We resolve to make it into the Guinness Book of Records for the most T-Shirts worn at once. Planning Fallacy

We are great planners, but, regrettably, we are experts only at  planning, not on  planning.

Why is that?

Because we have the tendency to underestimate the amount of time and effort it would take to complete such massive tasks.

Unlike most cognitive biases, there’s a good de-biasing heuristic (= practical method) for this planning fallacy and the employment of the undermentioned would work for a lot of personal planning scenarios:

Use an “outside view” instead of an “inside view”.

People tend to generate their predictions by thinking about the particular, unique features of the task at hand and, thereafter, by constructing a scenario on how they intend to complete that task.  This is what we usually think of as planning.

Because when we want to get something done, we have to plan out where, when, how; to figure out how much time and resource it would require; to visualize all the steps from beginning to successful conclusion.  All of this is our “inside view” which, of course, doesn’t take into account unexpected delays and unforeseen catastrophes and has more resemblance with wishful thinking.  Thus, we lose our objectivity.

The first intuitive counter measure would be to visualize the “worst case”.  But, often, this still isn’t enough to counteract our optimism and overconfidence—we simply can’t visualize enough of “Murphy’s Law Cases”.  Reality, it turns out, usually delivers results somewhat worse than the “worst case”.

The better counter measure would be to take the “outside view”: One purposely avoids thinking about the special, unique features of the project at hand, and asks how long it took to finish similar projects in the past.

This is counter-intuitive, since the inside view has so much more details, there’s a temptation to think that a carefully tailored prediction, taking into account all available data, would give better results.  But experiments have shown that the more detailed the subjects’ visualization, the more optimistic (and less accurate) they become.

So there’s a rather dependable way to fix the planning fallacy in case you’re doing something broadly similar to a reference class of previous projects: Simply ask how long they have taken in the past without considering any of the special properties of your project.  Better yet, ask an experienced outsider how long similar projects have taken them.

“How long did it take you to get out of debt?” is a rather sensitive question, won’t you agree?  So, it would definitely be better to ask more positive questions, like “How long did it take you to build up your retirement nest egg?” and “When did you get started?”

You would probably receive an answer that sounds hideously long and one that clearly reflects no understanding of the special reasons why your particular nest egg would take less time to build up.

But this answer is accurate.

There is no get-rich-quick-scheme that works consistently for anyone other but the scammer behind the scheme.

Hence, take care of the planning fallacy and you would be ready to take on the implementation of your New Year’s resolutions with confidence and flexible optimism.

By the way, the current record for “Most T-Shirts Worn At Once” stands at 227.  Invite some friends over with their great T-shirt collections and go for it. 227 t-shirts

Just don’t lose sight of your other (more important?) goals.


Incidentally, did you manage to implement any of your previous year’s resolutions?



“Not every change is an improvement, but every improvement is necessarily a change.” — Eliezer Yudkowsky

“There is a tendency in our planning to confuse the unfamiliar with the improbable.  The contingency we have not considered seriously looks strange; what looks strange is thought improbable; what is improbable need not be considered seriously.” — Nate Silver

“Never put off till tomorrow what you can do the day after tomorrow.” — Mark Twain


  1. Hi Andy,

    HNY2016 to you and your family.

    The inside tells you “why and what”, the outside tells you how it is done!


    • Hi Rolf,

      Nicely put. Important is to always take different views/perspectives into account.

      All the very best for you and your family for a happy 2016.

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