einhundert – 100 – one hundred
The other day I have shared with you this gigantic Cognitive Bias Codex. It contains 189 different biases. So far I have written about 100 biases that make you do dumb things with your money. So, bear with me. I am merely half way there in gathering awareness about those hidden flaws in my own thinking.
Anyhow, this 100-milestone justifies – in my biased eyes – a revisit of my personal Top Bias:
Bias Bias is the stubborn belief that we are less biased than we really are.
Everyone is prone to cognitive errors. Some, more than others, but no one is exempt. Coming to terms with the idea that you are your own worst enemy is the single most important thing you can do to become better in managing your money.
Daniel Kahneman, who won the Nobel Prize in 2002 for his work studying cognitive psychology, once said, “I never felt I was studying the stupidity of humankind in the third person. I always felt I was studying my own mistakes.”
Everyone wants to think they are rational and that biases are things that afflict other people.
But then we are all part of that SORRY SPECIES CALLED HUMANS.
We can’t lift more than our own weight, if that. We’re lousy swimmers and can’t hold our breath very long under water. We don’t run very fast. Exposed to the sun, we burn. Poorly dressed in the cold, we freeze. We bruise and cut easily. We’re unconscious one-third of the time. Our young take forever to mature. We can’t smell predators coming. We can’t fly.
We would be extinct were it not for our brains. Our unique advantage is a three-pound organ, wrinkled to maximize crucial surface area, sucking up a disproportionate amount of oxygen and energy, and thinking, thinking, thinking, to keep the slow-running, poor-swimming, non-flying, easily chilled or overheated weakling to which it’s attached from meeting what would otherwise be its fate.
But that “… brain is designed with blind spots,” Caroll Tavris and Elliot Aronson write in their book “Mistakes Were Made (But Not by Me)“. And one of its cleverest tricks is to confer on us the comforting delusion that we—personally—do not have any. “This is why so many of us are not only bad with money, but make the same mistakes over and over again.”
We suffer from bias bias when we’re not only blind to the obvious, and also blind to our own blindness.
For the smart ones among you, be aware: the smarter you are, the more blind you are to your own biases.
In conclusion, we are twice as biased as we think we are (and four times if you disagree with that statement). And if you read this, not realizing I’m talking about you, you’re definitely suffering from bias bias. However, when you realize you are as biased as everyone else, you’ve won the game.
Humility is the ultimate antidote of biases and the most rational people are those who realize how irrational they can be.
“We can either allow ourselves to be pulled along through life by our instincts and habits, by our impulsive feeling mind. Or we can slow down and be more conscious of our choices. To have any influence at all over our futures or the futures of others, we must stop believing everything we hear and think and question the validity of our lazy assumptions. We must break the happy trance of our present beliefs and create new thinking patterns.”— Tom Asacker