Sunday, September 23, 2018

The One Bias That Can Cost You Everything

“You should meditate, it’s really good for you.”

Experts say that slowing down and tuning out carries real professional benefits — like improved focus, creativity, and better relationships with your peers.

It’s funny. The minute I hear that word, “meditate,” I get a negative reaction inside. It’s like a forced time-out, I find it authoritarian, and in the end the whole exercise is more stressful than it’s worth.

But you have to learn to slow down. For instance, today is Friday. Rather than trying to get ahead of the game by cramming more and more work into the weekend, consider that you will burn out and turn more and more useless if you don’t learn how to take a break.

Similarly, in reacting to negative stimuli — like interpersonal conflict or fear-provoking situations — consider the benefit of thinking before you react. Consider that you actually can control your reactions, rather than saying or doing something rash and potentially costly. (At the bare minimum, you can teach yourself to recognize that you’re feeling stressed, and use that moment of observation to count to ten in your brain.)

All of this sounds so obvious. But fear and uncontrollable jealousy lead people to do unwise things, like investing in risky stocks (or cryptocurrencies) without thinking it through. After all, they “reason” — really they’re just reacting — “everyone else” seems to have gotten rich doing so, and they’re missing out.

Of course, when the market goes the “other way,” nervous investors react accordingly, and sell off before it’s strategically wise to do so. This is a cognitive issue; the likelihood is that you, and most others, will overreact to bad news. In “Does the Stock Market Overreact?” De Bondt and Thaler put it this way:

“In revising their beliefs, individuals tend to overweight recent information and underweight prior (or base rate) data.”

Basically, when seemingly bad news hits, we have trouble controlling our knee-jerk impulse to sell: Our brains interpret recent bad news as somehow more important than the entire base of information about the company that existed beforehand.

It gets worse. More recent research by Piccoli and Chaudhury, “Overreaction to Extreme Market Events and Investor Sentiment,” shows that our tendency to exaggerate bad news about a stock is amplified when people are already feeling negative about it:

“In addition to confirming prior evidence of overreaction, we find much stronger overreaction when investor sentiment is low rather than high.”

If you consider that people view their relationships as investments, as well, what can happen when a single piece of distressing information arrives? It can devastate, a nuclear bomb, ruining years of positivity over absolutely nothing that matters in the long run.

It’s odd. In America, we frequently hear that “you should trust your gut,” because your first instincts are a condensation of the skills you’ve accumulated over a lifetime. But your thinking can be distorted by the accumulated events in your life, specifically the human tendency to see in future events a reflection of past patterns.

In other words, your so-called knowledge may be nothing more than bias, reinforced over time.

The importance of reflection, not just individually but as a group, is why I keep going back to the vital importance of “double-loop learning” to psycho-social health. This fancy-sounding concept, introduced by organizational theorist Chris Argyris, is really nothing more than the maxim that we should question our assumptions.

Although in the moment it may seem that slowing down is the last thing we should do — that fight-or-flight response sends our adrenaline pumping — it turns out that just the opposite is true. Reflection, then action is far more helpful to our professional health than banging out that angry email, for example, or temporarily alleviating anger with those famous words: “You’re fired!”

The truth of the matter is, while fear is a critical part of the human survival toolkit, we also benefit from slowing down at times.

Unless one is in a true crisis situation, not all fears or feelings are necessarily to be trusted, or to relied upon automatically.


By Dr. Dannielle Blumenthal. Opinions are the author’s own. Public domain. Creative Commons photo via Pixabay.