More Rational Resolutions: To Reach Goals, Be More Logical and Take a Scientific View of Your Emotions

More Rational Resolutions

To Reach Goals, Be More Logical and Take a Scientific View of Your Emotions

ANGELA CHEN

Dec. 30, 2013 7:09 p.m. ET

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Can “goal factoring” help you keep your New Year’s resolution to hit the gym every day in 2014? “Goal factoring,” a method of designing better plans, is one of the techniques taught by the Center for Applied Rationality, which hosts three-day workshops that teach attendees how to use science-based approaches to achieve goals. A November workshop in Ossining, N.Y., instructed 23 participants on how thinking about one’s future self as a different person can help goal-setting and why building up an “emotional library” of associations can reduce procrastination.CFAR, a Berkeley, Calif.-based nonprofit, is prominent in the growing “rationality movement,” which explores the science of optimized decision-making. In recent years, books about decision-making and probability theory—including “Predictably Irrational” by Dan Ariely, who writes a regular column for The Wall Street Journal, and “Thinking, Fast and Slow” by Daniel Kahneman —have been best-sellers. Websites like Overcoming Bias and Less Wrong serve as communities for those who believe the best way to be effective, whether in changing eating habits or changing the world, is to actively look at the lessons of science and hard data. The movement draws on some of the same research as economists who argue that investors behave irrationally.

Very smart people often make irrational decisions, says University of Toronto psychologist Keith Stanovich. This leads to, say, physicians choosing less effective medical treatments or governments spending millions on unneeded projects. In 2013, Dr. Stanovich received a $1 million grant from the John Templeton Foundation to develop a rigorous “rationality quotient” test similar to an IQ test. Dr. Stanovich, who sits on CFAR’s advisory board, hopes to have such a test ready in two years. He hopes the test will encourage people to learn to be more rational.

For individuals, the odd secret of rationality is its reliance on emotions, proponents say. “People are always really surprised at how much time we spend at the workshops talking about our feelings,” says CFAR President Julia Galef, who has a statistics degree from Columbia University. “Rationality isn’t about getting rid of emotions, but analyzing them and taking them into consideration when making decisions,” she says.

Attendees, who each paid about $4,000 to participate in the Ossining workshop (meals and lodging included), learned a technique called “pre-hindsight” that uses emotional cues to create more foolproof plans. It works like this: Imagine that six months have passed, and you haven’t achieved the body of your dreams. How surprised are you? The less surprised you are, the less likely it is you will succeed at your goal. Then think in detail about each reason you wouldn’t be surprised if June comes and the number on the scale hadn’t budged. Each reason—whether “I don’t have time” or “I don’t like running in the mornings”—is a possible cause of failure. Using the surprise level to anticipate these is crucial to creating a plan to address each weak point.

Similarly, goal factoring can help determine whether shelling out $40 a month at the YMCA is the best way to get in shape. This involves mapping out the motivations (health, stress relief, weight loss) behind doing something (going to the gym), and questioning whether there is a more effective way to achieve the same things. Goal factoring could lead a person to realize that, given time and interests, an hour on the treadmill is unrealistic, but a weekly soccer tournament with friends is doable.

Other lessons include “structured procrastination.” The idea is that if you’re going to procrastinate, you might as well procrastinate by doing something that works toward another goal—for example, procrastinate on starting a work project by watching a TED talk you’ve been meaning to catch or starting a book you’ve wanted to read.

If it seems like the rationalists are overthinking the decision-making process, consider the audience, Ms. Galef says. Most workshop participants have been software engineers, entrepreneurs, students or scientists. In one session, the instructor asked whether anyone present hadn’t written a computer program. No hands went up.

Can rationality exercises actually teach us to act more rational day to day?

Psychologist Dr. Kahneman, who won a Nobel Prize in economics for research into decision-making in 2002, says it is very difficult to overcome our split-second irrational reactions. “Much of it is automatic,” he says. “Preferences come to mind and emotions arise, and we’re not aware that we’re making [decisions and assumptions] and therefore cannot control them.”

Organizations can generally make gains by adopting rational procedures enforced from the top, but Dr. Kahneman is skeptical of how much individuals can change.

Dr. Stanovich is more optimistic. It is true that automatic biases can’t be removed, he says, but people can train themselves to slow down and question these biases, and learn other mechanisms—even something as simple as deliberately thinking of the effect of the opposite decision—that may counteract such biases.

Max Tegmark, a physicist at the Massachusetts Institute of Technology, says he “already had a high level of rationalism” but found the CFAR workshop useful.

“I had this huge to-do list with over a thousand things on it, and I found I wasn’t looking at it very often because whenever I did, I just got this depressing feeling of being overwhelmed by my failure to accomplish stuff,” says Dr. Tegmark. After the March workshop in Berkeley, Calif., the 46-year-old developed an improved system for tackling emails by writing a program that responds to routine emails with automated messages. He also got better at staying on track with long-term projects. “I learned that if I want Max to do something in December, I should think about December Max as a different person,” he says. Instead of just putting a reminder to do something in a few months, he’ll plan ahead and send email reminders and incentives for his “future self.”

Another March attendee, Estonian computer programmer and Skype co-founder Jaan Tallinn, says the workshop helped him improve his fitness plan. After analyzing his actions, Mr. Tallinn, 41, realized that he was avoiding exercise mostly because his routine was too long. He designed a shorter routine with different exercises that he finds it easier to stick to. (Mr. Tallinn is an investor in the Machine Intelligence Research Institute, which is affiliated with CFAR.)

That individuals—as well as markets and corporations—don’t always behave rationally is a tenet of behavioral economics.

Scholars of behavioral economics, including Dr. Kahneman, have attempted to tease out the factors behind individuals’ and investors’ shifting risk tolerances and decisions.

Behavioral economics, which has gained ground among academic economists over the past several decades, departs from traditional notions by assuming that individuals don’t always behave rationally and act in their own best interests. Thus we have market bubbles in which investors inflate stocks or homes way above their rational value.

Another practitioner of behavioral economics, Yale University Professor Robert Shiller, shared the 2013 Nobel in economics and was among those warning of frothy home prices before the real-estate bust. Finance “follows precise mathematical relations,” he told the Nobel panel after learning of their decision, “but there’s an element of imprecision that reflects human nature.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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