Ep 226: Making Better Decisions

Episode Summary

Decision-making expert Eric J Johnson, author of The Elements of Choice, joins us to discuss how our choices are often influenced by external forces without our knowledge. He also describes different kinds of decision-making and explains how memory affects our choices.

Show NotesParenting ScriptsInterview TranscriptGuest Bio

Full Show Notes

We make thousands of choices every day–what to eat, what to wear, which email to send first, even how much creamer to put in our coffee. It might seem like we’re making these choices of our own accord, but we often don’t realize how many forces are influencing each and every choice we make. Everything from corporate marketing to peer influence can shape our decisions in profound and surprising ways!

This is especially true for teenagers, who are making some early and important decisions like where to go to college or what career to commit to. If we want teens to make smart choices, we’ll have to teach them to spot all the ways their decisions are being influenced by those around them.

To help us understand how external forces affect our decision-making process, we’re talking to Eric J. Johnson, author of The Elements of Choice: Why the Way We Decide Matters. Eric is a Professor of Business and Director of the Center of Decision Studies at Columbia Business School. He’s also the President of the Society for Judgment and Decision Making and The Society for Neuroeconomics at Columbia! An expert on the science of decision-making, Eric is here to help us understand the nuanced influences that affect every choice we make.

In our interview, we’re discussing the different kinds of decision-making and their advantages. We also break down the way external factors influence our choices, and the significance of memory in our decision-making.

Integrative Vs. Comparative Choices

Why do we each make unique choices, and what are the consequences? These are just a few of the questions Eric asks in his research as he attempts to learn more about the decision-making process. In our interview, he lays out two common types of analysis: integrative and comparative.

Integrative decision-makers take in the whole picture, ingesting and evaluating all the details and analyzing every bit of information. In contrast, comparative thinkers tend to look at the most essential component of each choice, and make a decision based on that comparison. 

To help us understand, Eric describes an experiment in which participants were offered forty dollars immediately or fifty dollars if they could wait a while. Integrative thinkers might measure the availability of the forty dollars over the time spent waiting for the extra ten, and choose to walk away with forty. Comparative thinkers may simply see the dollar amounts and pick the higher one, he says, waiting for the fifty.

How does this play out for teenagers? Eric explains that these are common methods of decision-making when it comes to choosing a college. Some teens might use integrative reasoning to evaluate the whole experience–student body size, campus environment, quality of facilities–while comparative thinkers might just compare the stats of the school’s post-grad employment rates or cost of attendance. If you want your teen to think one way or the other, it might be best to push them in the direction of integrative or comparative thinking.

These choices aren’t made in a vacuum, however, and there are plenty of influences on our decisions. Eric and I are breaking down the many ways our choices are manipulated, often without our own knowledge.

Who Controls Our Choices?

Although we might not realize it, we’re often swayed in our decision-making by those who are presenting us with choices. Oftentimes, they make certain choices easier or more straightforward than others, leading us to choose that option to save time and energy. Eric uses the example of an autofilled box on an online form. If the box is already checked, we often don’t even bother to read what we’re agreeing to. The same goes for things like medical forms or advertisements.

For teens looking to choose a college, there are quite a few forces influencing their decision. Eric and I talk at length about how parents, peers, pop culture and colleges themselves all exert influence over how kids pick which school to attend. If kids simply hear about certain colleges more often, they’re likely to apply to those schools…even if they aren’t really the best option for your teens’ particular life plans. This is especially true for students who come from lower income backgrounds, and simply aren’t encouraged to explore pricier or high-ranking schools quite so often.

Additionally, about 50% of U.S. students also have to pick a high school, especially in New York City, Eric explains. In NYC, students are forced to pick from thousands of schools within the city to find the right fit. Eric explains how this demonstrates a common conundrum in decision-making. To make the right choice, the chooser can’t be overwhelmed with too many options, but they need enough options to make sure they pick something that’s the right fit. This means the pool of choices needs to be manageably small–but not too small! In the episode, Eric explains how this issue is solved for New York City High Scholers and beyond in the episode.

There are a few other things that affect our decisions–including memory. Eric explains all the ways memory changes the way we make choices.

Why Memory Matters

Eric illustrates the significance of memory in our decision-making by telling a story about Ben Franklin. When Ben was approached by a friend and asked how to make a decision, Ben advised his friend to weigh the pros and the cons of each choice–but to do so over a day or two instead of in a single moment. 

If we write a list in ten minutes, our brains are likely suppressing one choice in favor of the other. If  we give our brain time to remember all the details, we can make a better choice…instead of one based on what we remember at the current moment. In the episode, Eric and I talk about how teens can practice this method in their daily lives.

You might notice the phenomenon of memory play out when you’re reading a list of options on a menu or guide. Whichever option is first typically takes root in your memory, with the others fading into obscurity in your mind as they go on. This is commonly seen in elections, Eric explains, where whomenever is first on the ballot typically wins. 

The order of options affects our choices in other ways as well. If a menu is listed by price, we take notice of the prices and make our decision that way. If something like wine is instead listed by quality, we might choose quality over costliness. 

In the end, our choices are manipulated by plenty of different forces. But by educating ourselves and our families on the science of decision-making, we can learn to gain control over our decisions and make the choices that are truly best for us.

In the Episode…

Chatting with Eric was both fun and enlightening! On top of the topics discussed above, we also talk about:

  • How we can encourage teens to invest
  • Why informing kids about scholarships is essential
  • How we can help teens spend their money wisely
  • Why parents should change the way they present choices to kids

Thanks for listening! If you want to find more from Eric, head over to theelementsofchoice.com. Don’t forget to share and subscribe, and we’ll see you next week!

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Parenting Scripts

Word-for-word examples of what to say to your teen

1. Encourage teens to slow down when making a decision (1 of 2):

“Over a day different things will come to mind—advantages of the first option and advantages of the second option.”

-Eric J. Johnson

2. Encourage teens to slow down when making a decision (2 of 2):

(Members Only)

3. Explain the power of inhibition in decision-making:

(Members Only)

4. Warn teens about manipulative forces:

(Members Only)

5. Explain interest to teens:

(Members Only)

Complete Interview Transcript

Andy: You have written a book that I love called The Elements of Choice: Why the Way We Decide Matters. And it really has got me thinking about a lot of the big choices that we make as teenagers and how we make some big decisions in those years that really shape the whole course of our lives. And we don’t think too often about the way those choices are presented to us and how that can make a big influence on what we decided and ultimately where we go in our life. And so really love that. Can you talk at all just about how’d you get into this topic or why are you writing a book about the way that we make decisions?

Eric: Andy, it’s really been fun because I’ve been teaching about decision-making for a number of years now. And what was fun about this is realizing about halfway through that 30 years or so, that actually the way you present choices to people was one of the big tools that we used to study choice. And then a light bulb appeared, and other friends thought the same thing too. And saying, if you can change what people choose, you actually can help them choose better, presenting them choices in a way that works. So that was sort of the highlight when I first started doing this.

I’ll tell you a story that’s pretty relevant to your audience was a president and a foundation I was visiting and he said, oh, I got it. It’s like my three-year-old. I actually had to ask her, I’d fight with her terribly, do you want to go to bed? And she’d say no. Then I started asking her, do you want to fly to bed or do you want to bounce into bed? And then all of a sudden she made a choice and there were no more fights. Now your audience has older kids, but that is a relevant story I think.

Andy: I love that. Yeah, yeah, yeah. So many times we don’t even realize it, but we’re encouraging a choice or making it hard to make a choice when if we presented things differently it might go a little different.

Eric: That’s right. And the other thing is often we present choices and do these things to the people we’re trying to help without realizing we could be helping them do better or maybe we’re accidentally helping them do worse. So it’s actually something we’re doing all the time without realizing it.

Andy: Here’s something I’ve found really fascinating. You do these eye tracking, these experience with an eye tracker, looking at how kind of the path that people follow when they’re trying to assess a couple different options of which one they should go with. And as presented on the screen, there’s these kind of two components of each choice. And so the differences, are they kind of comparing one to the other and then one to the other. Or are they looking at the whole both components of choice one and thinking about those and then going over to both components of choice two and thinking about those. And I thought this was really interesting. Can you talk a little about what’s the difference and why? Why does that even matter what path that people’s eyes are taking as they’re considering a choice like that?

Eric: Really interesting question and part of it is, let me just step back to put it in context. For some of your listeners, they may know the famous marshmallow experiments were done by my friend, the late Walter Michelle, where he’d give you either one marshmallow an hour or two marshmallows later. And these choices are essentially like that. They’re since you get an Amazon gift certificate for say $40 now or $50 in two weeks. So it’s like that you have something really good right now or really better, but you have to learn to wait. And so that’s the setup and that’s why it’s so interesting that the way people choose helps decide what they’re going to pick. And most of us think is that waiting in that case is better. Why? Because you’re going to get more money. And actually if we calculate interest rates, it’s a really good—

Andy: Yeah, yeah. It’s a great return on your one week of waiting or whatever. Yeah.

Eric: Exactly. So what we were interested in is we noticed people did this one of two ways. As you said, they, well, let me make it more explicit. They look the $40 and it looks at the fact they can get it now something we call integrating and then they look at the $50 and say it’s a week, or they compare the $40 to the $50 and the fact they have to wait a week so we can use a machine or you can actually do this also with their mouse tracking and see what they’re looking at, which of those two paths they follow. In the book, I call these plausible paths because that’s really what it is. Sort of like in a supermarket, you have to figure out what path you go through. All decisions are like a supermarket. You got to figure out which aisles you go through.

So here the people who compare the money turn out to be a lot more patient than the people who look at the money and think about the time. And our thought is that if we look at the $40 and thinking about it now I’m done. I know what I’m going to do with the $40 and when I eventually get around to look at the 50, I go, well, yeah, that’s a little bit more money. But when I compare the money, I go, oh my God, I’m losing $10 by not waiting. And so that’s why the path, how you make the comparison, really how you’re thinking about the decision makes a big difference.

Andy: Interesting. Yeah. And that same pattern plays out in all kinds of decisions that we make? Probably. Integrating versus comparing.

Eric: No, but think about a decision and probably a decision we can talk about more later, kids deciding what college should go to.

Andy: Yeah, yeah, yeah. I mean that’s one kept thinking about throughout the book.

Eric: They can fall in one college or they can start doing comparison and those are two different ways of approaching that decision.

Andy: Right, oh yeah. I mean because yeah, you go to a visit and you go to a school and you learn all about the school and you start really picturing yourself there and you really integrate everything about that one place and then you go look at the next one and you do a whole thing and learn all about that one. And it strikes me that a lot of the ways that we are programmed to… Or that we typically go about a college search is kind of that integrating technique.

Eric: And that’s partly a good example of what I mean when I talk about choice architecture, choice design. The whole process is built to make thinking about being at one place easier and make it harder to compare. So I mean my niche just went through this situation, this and it was basically clearly she was falling in love with whatever her college she had visited last. And then you sort of say, well, but you want to be this wanted this major, it’s not so good there. But it was such a pretty campus and I’m not saying pretty campuses are important, but it was more important to her because she saw the whole experience at once.

Andy: I think that’s so interesting and it just really gets me thinking about that or even thinking about what our options are as teenagers and it feels a lot limited sometimes or I definitely felt that as that now looking back it’s like wow, I could have done so many things. The world is totally open to me and there’s a million things I could have been doing as a teenager that put every would’ve inspired me or that could’ve been cool. But for some reason I wasn’t even thinking outside of the box. It was just so focused on school and then there’s a couple extracurriculars that are available through school. There’s a few sports that everyone’s doing, there’s a couple different kind of after school activities you could do. And that’s it. That’s what there is.

Eric: That’s right.

Andy: Yeah. It’s interesting to really start thinking about what options are available and then the way we consider those options is so important.

Eric: And think about this that somebody’s usually deciding, conscious, your own conscious, which of those options you see. So that I know from my own college choice, one of my classmates said, oh, you’re really underselling yourself. You can consider these other schools. And I came from a family, I was first generation college, so to me, obviously going to the state school was the obvious thing to do and probably the most likely thing to do. And I ended up actually going to the state school and having a good time. If I had had different parents who didn’t have the background my parents had, or if I had someone to say, well, you could try these other schools, I might’ve included them. So even then this who without knowing it, people were influencing me simply by pointing out options that I didn’t know existed. And I think for lots of choices for teenagers, the biggest thing that determines those choices is knowing they have options.

Andy: Just being aware.

Eric: And so, kids who come from first generation college backgrounds have very different choice sets than other kids whose parents have gone to college for many decades.

Andy: When you’re talking about the plausible paths, do you talk about fluency?

Eric: Yes.

Andy: And then you also talk about memory. How do those things factor into the path that we’re deciding when we’re making a choice?

Eric: Well, let’s start with fluency because it really fits well into the Amazon gift certificate or marshmallow study we were just talking about. It turns out that we know these paths make a difference. You can be more patient if you compare. So one of the things we’re interested in is that because people compare are different. And so we started doing is making it easier or harder to do some kinds of comparisons or some kind integration. So that’s what we mean by fluency. What’s easy for you to do? What path is easiest? And that’s one of the way the people who present choices can influence us. They make certain kinds of information easier to see than others. And so in that case, we just literally would delay seeing the information by… Psychologists have this term milliseconds, so thousands of a second. So we delay it by half a second and we change their strategy.

And what’s interesting by changing their path, we actually make them more patient. So one of the things that’s really powerful is by making some information easier for people to click on the web or to read on paper, you actually have influenced their plausible path. And the point which is really serious is that will have some effect on what they choose. So that’s fluency. And it turns out we’re pretty lazy, particularly at the beginning of decisions. We decide how we’re going to make a decision and it’s all over. We stick with that. It’s like a GPS.

Andy: Well, especially when there’s something with so many options. But we have to find a way to just get rid of a bunch of options and sort of narrow it down and focus or something.

Eric: And the more complicated the choices, the bigger this influence of fluency is so that’s right. So that’s really important. And so you often end up putting little costs in the way of somebody. I can tell you one example, I don’t even know if it’s in the book, but it’s actually quite relevant to retract about college choice. Turns out the state of Michigan essentially told a bunch of kids who were essentially not well off that all of them would’ve gotten scholarships, they were poor enough, they would’ve gotten scholarships, University of Michigan, but nobody applied. What the program did was say you have a scholarship, which they all do anyway, but making that sort of the option that what they knew about doubled, if I recall correctly, the number of kids who went to Michigan. So these things… And it’s not when they didn’t give you the scholarship at first that they had thought this, oh, this keeps you pulled down. That was the way it was always done. So by just making you thought saying if you get good enough grades, you’re in with a full scholarship. It changed kids’ college behavior a lot.

Andy: I’ve been thinking about a lot during high school. I just really struggled in high school and finding what was felt authentic to me and feeling bored and kind of trapped and I don’t know, wasn’t doing what I wanted to be doing, but this is just kind of what we have to be doing. And I really saw it as like, hey, there’s the public school, the go to and then there’s one private school. And I thought about actually ended up spending a couple years at each of them and I was like, that was the extent of, I thought that the options that were open to me at the time, because I got to graduate from high school and these are my two choices and I don’t really like either of them that much.

And now kind of thinking back to that, I’d realize how limited I was thinking in terms of just what other… I guess even just really alternative things I could have been doing or anything I guess. But that already sort of blocked off everything else and made it a choice of fact. I have to choose between these two places and then the classes that are offered to me there, and then here’s what we have to do to graduate. And so I guess here’s what I got to do. So this is what I got kind of, and I just wonder how we can help our kids to expand their thinking or possibility somehow.

Eric: Yeah. So Andy, did anyone ever say… We’d love that person to be the guidance counselor school. They usually have hundreds of kids that they’re “counseling”.

Andy: They’re so overwhelmed.

Eric: But someone like that could say what schools are you’re thinking and then add say, oh, you might think of X, Y, or Z. In my case, someone said, oh, you’re going to go… You’re thinking about going to Montclair State, which was a perfectly fine local college. But I ended up going to Rutgers, which was for me a much better fit. So that person who suggested that in the set could make a big difference. If you had had an aunt or an uncle or a parent saying, oh, write down three more schools. There might have been a change, a different Andy out there. This is a perfectly great Andy, obviously.

Andy: Yeah, I like that. Even just having someone who even just pushes you to go add some more to that list or think through some more kind of possibilities or more options. But then it’s like where do you even go to find those and how that will influence what. I remember looking up lists of what’s the best party schools, and what’s the schools with the best weather? Because I don’t know, these are the things that are important to me at 17 years old. I’m like, oh, sunshine and fun. So it’s like whatever was coming up on Google when I searched the best party schools, best weather, that was what I was adding to my list of mental options.

Eric: And what comes up on Google, it seems like a party school can change and of course you can change too.

Andy: Yeah, yeah, totally.

Eric: There’s a great story. We’re talking a lot about college choice now, but apparently if you wouldn’t remember, but Doug Flutie was this eventual NFL quarterback, famous, but he’s very famous. He was at Boston College and he threw a pass that was very famous. That year, the number of people who applied to Boston College went up 70%. Now that maybe made it a slightly better party school for a year, but even if that’s what you were looking for, other schools are still great party schools. And you mentioned memory, it’s what comes to mind because now when you say, gee, where I should go to college? Oh, there’s BC [Boston College] Because that’s where Flutie went.

Andy: And I think that’s also a big factor too is… Or if you’re in the communities that you’re in or your parents and friends and the people at school have mentioned certain colleges or mentioned certain careers often as the good things or the good jobs or the good things that you should be wanting then, when you think of, yeah, what do I want to do? Those things are going to be just come to mind more easily or something. And well actually there’s a little thousands of colleges, there’s an infinite number of things you could do for your career. But we kind of think of these five options as being kind of what comes to mind for us that are this the things we’ve been most exposed to or that we’ve heard more often or something. And it’s hard to break out of that, I guess.

Eric: Yeah, I mean I think it’s interesting because a lot of what we think of when we think about role models or family tradition actually work this way. It’s the people you see where did they go to school. And unintentionally this is the point, it’s unintentionally, they’re basically becoming choice architects. They’re saying… By the sweatshirts they wear, they’re suggesting schools and it’s throughout all sorts of choices teens make, but the that’s a really good example.

Andy: Well, and there might be actually a lot of that instinct as a parent, you kind of want your kid to go to the school you went to, if you had a good time there and it’s an important part of your identity and who you are. How cool would that be to carry on the legacy and have them kind of follow in your footsteps or it really makes you proud if they want to be in the same career as you kind of, or do some of the same things as you. And so I think we kind of also then unconsciously sort of present choices in such a way to get them to choose that.

Eric: That’s right. And sometimes you might have had an okay experience at the school, but still it’s a school that your daughter or son would know about.

Andy: You talk about Franklin, Joseph Priestley was asking for Franklin’s advice on an important choice. And this is, I remember reading Benjamin Franklin’s autobiography and he kind of talks about the system in there of pros and cons. And I’ve seen it referenced a number of times, but you bring it up kind of a different aspect of it. Why do you think it’s important to look at how Benjamin Franklin made important decisions?

Eric: If there’s a quote that’s about Franklin, that people know about, it’s this quote—and Priestley was essentially trying to decide whether to take a job or not—and [Franklin] said…. Of course, luckily they were writing letters so we know what it was. If it had been phone calls, we wouldn’t have known any of this. But he wrote a letter saying, what should I do, Ben? And he said, I can’t tell you what you should do, but I can tell you how you should decide. And the advice, which is pretty famous, it sometimes even called Franklin’s rule, is you write down on a piece of paper, all the goods and bads are one option, and then all the goods and bads for another option. And that makes sense. Then he asks you to weight them a little bit like what we were doing earlier when we’re comparing the gift certificates, we can look at how much fun school A is or what friends of mine are going to school B.

So we have that list, but what is hidden in that and never printed when people have that quote is see something else is over a day, different things will come to mind. Advantages of the first option and advantage of the second option. And that’s really what a great story about how memory influences choice. It’s not just remembering the schools, but also remembering their advantages or disadvantages or if we’re thinking about jobs, advantages and disadvantages. And when we think about one, we tend to suppress the other. When I’m thinking about A, I don’t think about B. In fact I try hard not to think about it.

So I think this is actually really relevant when kids are trying to make decisions about what to buy, one thing they often do is they say, oh, I really want to go to that concert or really want to do this. And what they’re not doing is saying, but I could use that money, same money to do something else. And so what Franklin said is basically wait a day, keep scribbling, and then once you’re done with the list, after a couple days, then you make the decision. And so I have friends, adult friends who sort of say, I’ve saved them lots of money because whenever they’re going clothes shopping, they go and say, yes, but I could use that money to do something else that would be better. And so they actually do a better job. So that’s the equivalent of sort of Franklin telling Priestly, write down the goods and the bads of both options, but spread that time out over a couple days.

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About Eric J. Johnson

Eric J. Johnson is the author of The Elements of Choice.

Eric is also  a faculty member at the Columbia Business School, where he is the inaugural holder of the Norman Eig Chair of Business, and Director of the Center for Decision Sciences. 

His research explores the connection between behavioral decision research and economics. He typically examines the choices  made by consumers and  managers and how these decisions affect public policy, markets and marketing.

He also studies how decision-making operates when it comes to organ donation, the choice of environmentally friendly products, and investments. The National Science Foundation, The National Institutes of Health, The Alfred P. Sloan and Russell Sage Foundations, and the Office of Naval Research have supported his research.

Eric’s work has  appeared in The New York Times, The Wall Street Journal, Money, Discover, Business Week, CBS and NPR. His research has been published in Science, Psychological ReviewHarvard Business Review, The Journal of Economic Theory, and many other places. He has co-authored two other books: Decision Research: A Field Guide and The Adaptive Decision-Maker.

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