All of these seem like big decisions. They have large stakes buying a house is the largest financial transaction and most of us make. Different choices send our lives down very different paths is anyone who starts a new business recognizes acutely.
Have you ever faced a big decision?
That seems like an easy question right! You’ve probably bought a car or a house. You may have decided whether to proposed your spouse or except a proposal. You may have decided whether to quit her job start a business or go back to school and you may have decided how much to save for your retirement decades in your future or how much draw from her retirement savings right now.
All of these seem like big decisions. They have large stakes buying a house is the largest financial transaction and most of us make. They have a long time horizon when we invest in our education or save for retirement. The benefits of our decision can be felt decades later and they all carry significant risk. Different choices send our lives down very different paths is anyone who starts a new business recognizes acutely.
How did you make that big decision?
Did you spend hundreds of hours listening the advantages and disadvantages of each option determining the numerical weight of each of those factors and using a mathematical formula to calculate which outcome led to greater expected utility?
We do tend to spend a lot of time on what seem like big decisions, but that time is usually spent gathering information before the decision. If you are buying a home you might spend most of your time touring potential homes, but when you enter a home that feels right you don’t spend hours calculating its expected utility.
There’s just too much information available in one of these big decisions for us to process it all, so people adopt simple rules that emphasize some information and ignore the rest. The big decision becomes much smaller.
There are no big decisions
Regardless of whether you are buying a house or a cup of coffee the processes that underlie your decision or similar. The same brain systems help you anticipate potential rewards evaluate potential risks and compare one option with another you don’t have any sort of special module in your brain the turns on for decisions that really matter for those big decisions.
This claim that there are no big decisions is purposefully provocative. I know you can readily think of counter arguments: how could buying a house be the same as a cup of coffee you might say “I spent months researching and touring homes and days agonizing over the final decision, it takes me one minute to buy my regular cup of coffee every morning”.
I want to be clear therefore as to what I’m not claiming and what I am claiming. I’m not claiming that all decisions are equally important and I’m not claiming that all decisions take equal amounts of time or evoke equal emotional responses, but I am claiming that seemingly big decisions and seemingly small decisions share common processes.
Big decisions are just small decisions on a larger scale, quite literally.