How To Make Better Decisions. 3 Mental Models To Consider
We can all learn to think better
Our lives are made up of millions of decisions: when to wake up, what to eat, who to date, where to work, and etc. In fact, it is estimated that an adult makes about 35,000 conscious decisions in a day — that’s a freaking lot — but I reckon many of these are trivial.
Decision making can be quite tricky. As Harvey Cox rightly puts it, “not to decide is to decide”. Essentially, we can’t evade decision-making once we are conscious and alive. And because all decisions have consequences we must endeavor to make the right ones or at least attempt to based on the information available to us — what I call optimized decision-making.
Our brain already tries to do this. It tries to optimize this process based on the information we feed it by building mental models of what can be done and how it can be done better.
Scottish Psychologist Kenneth Craik is credited with proposing the term mental models in 1943 in his essay the Nature of Explanation where he asserts that the mind constructs “small scale models” to reason and anticipate future events. An extract is found below:
“If the organism carries a ‘small-scale model’ of external reality and of its own possible actions within its head, it is able to try out various alternatives, conclude which is the best of them, react to future situations before they arise, utilize the knowledge of past events in dealing with the present and future, and in every way to react in a much fuller, safer, and more competent manner to the emergencies which face it.”
So what are mental models?
Mental models are simply concepts or constructs about how the world works. People have likened mental model to apps on a smartphone. They are apps for our brains, influencing an actions, perceptions and biases. Modern day billionaire investors like Charlie Munger and Ray Dalio have acknowledged the role of mental models/principles in optimizing their decision making. They believe it helps us think better.
Mental models can be extremely effective or dysfunctional depending on the whether the input is true and compatible with established beliefs, principles and processes.
Mental model: Belief + Observability +Predictive Power
Like apps, you could occupy your phone with the least useful or the most useful depending on what your goals are. Like apps, there are thousands of mental models from all of life’s disciplines. The choice is ours. Note however that in every system there are core and ancillary processes. For starters, it may be more prudent to get the core elements as they serve as good foundations to build on.
Here, I discuss the 3 models that have helped me think better and make optimal decisions faster in terms of goal setting and allocating resources. I consider these part of my core in this area. Feel free to add up or draw my attention to one you believe should definitely have made the list.
1. Pareto Principle or the 80/20 Rule
Named after economist Vilfredo Pareto, this principle sheds light on the unequal relationship between inputs and outputs. It states that 20% of the invested input is responsible for 80% of the results obtained. Specifically, 20% of your activities account for 80% of your results.
If this is so, the question for those that want to get the best results should be,what 20% activities can guarantee or bring me close to this 80% of my goal? Of course, this ratio is not set in stone in real life . But the skew is the gist of the matter. If you want to fix your life, check the inputs.
Personally, this has helped me prioritize and allocate my resources — the most precious being time. When I get sidetracked, I ask myself:how does this count towards that 80%? Try it!
2. Eisenhower Matrix
In this age, there are literally hundredths of things clamoring for our time. We can drown in all that noise and lose our focus. The Eisenhower matrix is a tool that helps to drown out the noise and up your productivity and focus. It is made of four quadrants, helping you prioritize activities by urgency and importance.
The next time you feel overwhelmed, this should help you along the way. Like Eisenhower puts it,“What is important is seldom urgent and what is urgent is seldom important.”
3. The 10/10/10 Rule
This tool was developed by American business writer Suzy Welch. She describes this same method in her 2009 book, 10–10–10: A Life-Transforming Idea”. The rule requires the consideration of decisions in three time frames. To do so, one must ask the following:
- How will we feel about it 10 minutes from now?
- How about 10 months from now?
- How about 10 years from now?
Depending on the answer given especially in questions in the longer time horizons, one can make a better decision. Personally, I tend to consider another similar model if the outcome is unclear in the 10–10–10 analysis.
Bonus Model: The First, Second or Third order consequence
One of such is considering the second and third order consequences of my decision as proferred by billionaire investor Ray Dalio in his book, “Principles: Life and Work”.
What do I mean by second and third consequences? I explain this using a recent decision I had to make over the Christmas holidays.
So, my best friend had twins a year ago and due to her residing in a small town in France, I hadn’t found time to visit because I study in Scotland and had to collect data throughout the earlier part of last year. She however calls to let me know on Christmas day that she is in London for three days. She just informs me without asking me to come visit. Knowing my friend, this was a silent invitation — more like a trap.
Thus, I had a three day window to see her or postpone it for later. What to do?
My immediate decision: “I don’t feel like going. I will make time to see them later”. I feel lazy and tired and traveling over the Christmas holidays was something my body didn’t want to do.
1st order consequence: Relax at home and have a good time. No long travel times and no money expended.
Second order: I miss the opportunity to meet my friend and her kids and the quality time we could have.
Third order: Not a positive sign of goodwill towards a best friend.
In short, I will regret not having gone later. So I took the trip and I had a great time.
Let me know about what you think of these models. I will share some more from time to time as I uncover their usefulness and applicability in optimizing decisions and thinking better.