I’m a biased person. I struggle to overcome psychological tendencies that distort my perception of reality and decision making. For me recency and confirmation biases are the two most powerful and deceiving.
Recency bias is my tendency to look at what happened last and wrongly think it’s going to happen again even though statistics say otherwise. This skews investing decisions and causes people to buy in a roaring stock market just because it’s going up. It likewise prevents people from buying when stocks are cheap for fear the market will go further down. Recency bias makes people bet on a team because it won its last game and bet against a team because it lost its last.
Confirmation bias on the other hand is the tendency to see things in a way that confirms beliefs. I have to avoid selecting information that merely supports my views. I have to guard against interpreting evidence to make it support my opinions. Research shows that the bias is strongest for outcomes people want to happen, especially emotional issues and deeply rooted beliefs. I can’t eliminate this bias entirely, but I can manage it by honing critical thinking skills. In these days of misleading news and mass information on the Internet, we don’t teach these skills enough.
Confirmation bias leads me to overconfidence, poor reasoning and boneheaded decisions. For instance, if I’m missing a dessert in the refrigerator and find a likely sweet-eating suspect, I may only see evidence that confirms my suspicions.
Confirmation bias is distorted and amplified by echo chambers. If everyone around me thinks the same, it creates a room where my opinions rebound off the walls and reinforce my own bias. It may make me feel good to say something that echoes back from another person in agreement, but I’m just fooling myself if I don’t challenge it. I create my own echo chamber if I gravitate to same-thinkers. For example, I may believe a person is a good politician just because everything I hear from my same-thinking group reconfirms my opinion. It’s called groupthink. It can be wrong-think.
That’s why people watch CNN or Fox News. It entertains by confirming their beliefs. People hear what they want to believe and uncritically tell the person next to them, “Exactly.” It feels comforting to have beliefs confirmed, rightly or wrongly. It feels good to have others agree with you.
You have to make yourself a little uncomfortable to challenge beliefs. Investor Charlie Munger looks hard to disprove his own beliefs. To do this he reads widely to challenge what he thinks, to make sure he’s seeing reality. Otherwise his investment decisions are bad.
Keep an open mind. Put yourself in shoes of people who think differently and see if they don’t have a point. It’s harder than you think but important to ensure that you’re not fooling yourself.
If everybody around you believes in eating lots of meat and diary products, you may think that a vegan is an oddball. But faced with evidence that diet is causing your high cholesterol, you may discover you’re the real nut.