The Freakonomics Approach to Decision Making
November 18, 2022
It is predictable an economist like Steven Levitt would apply statistics to the process of making life’s big choices, but one may be surprised at the simplistic solution he has deduced. Levitt, an economist at the University of Chicago, hosts the “Freakonomics” podcast. Freethink explains how a “‘Freakonomics’ Study Offers Simple Strategy for Making Tough Decisions.” The study had each participant make a binary choice, to make a change or not, with a coin toss and report back. Levitt found a trend in the results. Writer Stephen Johnson reports:
“Most surprising were the results on well-being. At both the two and six-month marks, most people who chose change reported feeling happier, better off, and that they had made the correct decision and would make it again. ‘The data from my experiment suggests we would all be better off if we did more quitting,’ Levitt said in a press release. ‘A good rule of thumb in decision making is, whenever you cannot decide what you should do, choose the action that represents a change, rather than continuing the status quo.’ The study had some limitations. One is that its participants weren’t selected randomly. Rather, they opted in to the study after visiting FreakonomicsExperiments.com, which they likely heard about from the podcast or various social media channels associated with it. Another limitation is that participants whose decision didn’t play out well might have been less likely to report back on their status after two and six months. So, the study might be over-representing positive outcomes. Still, the study does suggest that people who are on the margin of a tough decision — that is, people who really can’t decide which option is best — are probably better off going with change.”
Perhaps. Johnson concludes with an old trick for checking your gut instinct that also involves a coin flip? Go ahead and toss that coin, then see which side you find yourself hoping it will land on. Will either of these methods really point to the best decision? Is Mr. Musk using them to inform decision making at Twitter? Are the results reproducible?
Cynthia Murrell, November 18, 2022
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