Conventional wisdom says before you make a decision you should make a list of pros and cons, but Chip and Dan Heath say that’s wrong. The brothers are co-authors of “Decisive: How To Make Better Choices in Life and Work.”
“The pros and cons list is a good way of setting up a situation where you’ve got potentially one option that you’re doing thumbs up and thumbs down on,” says Chip. “Good decision-making starts with having multiple options available to you. Good decision-making involves collecting information that may contradict your initial opinions that you can sit at home with your pros and cons list and come up with a beautiful justification for whatever you wanted to do in the first place. What we’re trying to do is widen out the process of making a good decision.”
Dan Heath says one of the classic villains of decision making is what psychologists call “narrow framing” — a temptation to get stuck in making decisions in a “whether or not” frame. Whether or not you should buy an iPad. Whether or not you should quit your job.
“What the research tells us is if we can just generation another option — just one or two — it greatly increases the chance we’re going to make a good decision,” says Dan.
Dan says one of the most important principals of decision-making is to trust the actual experiences of other people over our own instincts.
“We’re always wise to trust the experience of other people over our own intuitions. For instance, if you’re thinking of where you’re going to go out to dinner tonight, you might be wise enough to go onto Yelp and look at the reviews and trust the place that has 100 good reviews over your own judgment about which menu looks good,” says Dan. “When it comes to people’s portfolios, they totally throw that logic out of the window.”
The Heaths say part of being a good decision maker is knowing when not to trust yourself — and figuring out how to not let your emotions get the best of you.
“Often the best thing we can do — especially when it comes to something like retirement — is get out of [your] emotional melee and create some distance,” says Dan.
With recent (post-Minutes) chatter of a gradually-tightening Fed since curtailed by a plethora of Federal Reserve market savants jawboning us back to creditopia – “the liquidity must flow”; we thought a gentle reminder of what Quantitative Easing really is was worthwhile. Whether goldbug, bond-vigilante, or permabull-stock-muppet; two-and-a-half minutes of reality (or comedy) depending on your perspective.
The surge of revenue that showed up unexpectedly in state coffers last month may well be offset by a revenue dip in coming months, according to Gov. Jerry Brown’s administration. The surprise money has been the source of much speculation in the Capitol. Unanticipated tax receipts filled state coffers with more than $ 5 billion beyond initial projections for January — more tax dollars than are allocated to the entire state university system in a year.
The revenue bump was historic. But the question for budget experts was whether lawmakers could begin allocating the windfall toward government programs and tax breaks — or whether the money amounted to an accounting anomaly.
Brown’s budget office now advises in an official cash report that it is probably the latter. The report says the extra money was “likely the result of major tax law changes at the federal and state level having a significant impact in the timing of revenue receipts.”
That is: Taxpayers were paying a share of their bill early, getting income off their books in the hope of limiting exposure to the tax hikes that recently kicked in.
Surprise! Surprise! Surprise!
There is no surprise. Are you surprised by the non-surprise? I am not.
Mike “Mish” Shedlock http://globaleconomicanalysis.blogspot.com
