As humans, we are prone to misjudgments. We have a flawed lens of the world around us. Countless biases – from past observations, experiences, and evolutionary traits – dominate our way of thinking.
Mental processes that helped us survive 10,000 years ago are still with us today. Such obsolete programming does us no favors. As we age, these biases resonate deeper within us. They become difficult to notice, and even more difficult to overcome. If we fail to check our false beliefs and misjudgments, we are putting our future potential at risk.
I wanted to gain a deeper understanding of biases and misjudgments, specifically, how to combat these limiting beliefs. Enter Charlie Munger.
Charlie Munger is vice chairman of Berkshire Hathaway, the conglomerate run by Warren Buffett, and is a big believer in mental models as a way to standardize and sequence our way of thinking. Over the years, Munger has routinely spoken about the downfalls of human misjudgment. Harrison Barnes pieced together these speeches, where Munger goes into thorough detail on 25 common biases and tendencies that can have a negative impact on us.
By understanding these common biases, you will come to improve your decision-making and judgement. You will understand yourself better. Most important, such understanding will unlock your long-term potential.
This advice applies to everyone, from entrepreneurs, to executives, to anyone looking to understand their thinking patterns and the inherent flaws they are working to overcome. Understanding our thought process is mandatory for consistency and sharp reasoning. If we remain unaware of our biases, we are accepting our flawed self as unchangeable.
I will focus on five of these misjudgments, as trying to attack too much too soon would be an overwhelming experience. The italics that follow are Munger’s direct quotes from the text.
1) Social-Proof Tendency
“The otherwise complex behavior of man is much simplified when he automatically thinks and does what he observes to be thought and done around him. And such followership often works fine. For instance, what simpler way could there be to find out how to walk to a big football game in a strange city than by following the flow of the crowd. For some such reason, man’s evolution left him with Social-Proof Tendency, an automatic tendency to think and act as he sees others around him thinking and acting.”
Social-Proof tendency is also known as the herd mentality. When we are uncertain, we follow the actions of those around us. The herd mentality is hardwired into our DNA. Thousands of years ago, we closely mirrored the behaviors of others to stay alive.
Today, this tendency is much closer to being obsolete than useful. We now we use the people around us as a measuring stick for our own lives – which leads to anxiety, envy, and unhappiness. We look at the quality of life of other people and get down on ourselves if we aren’t on their level (think things such as car, home, job, etc.).
Technology hasn’t helped matters, as we now have the ability to compare ourselves to the ENTIRE WORLD. Social-proof is also widely prevalent on social media. Mediums such as Facebook and Instagram fuel a never-ending comparison to those we know, and worse, those we don’t know. 100 years ago, people were exposed to very few people throughout their lives, due to the limited technology of the time. Today, we are connected globally, and subconsciously compare ourselves to the BEST people around the globe. This is destructive, and social-comparison can be downright depressing if not held in check. We can never completely do away with it, no matter how hard we try, but we must keep our focus internally, rather than on other people.
This vicious cycle consumes many people, paralyzing them into inaction. Such people live their entire lives within a confined sphere of safety – never venturing too far from their comfort zone and rarely offering a dissenting opinion or idea. They follow the crowd to their grave. Do this and settle for average. This limiting belief will ensure you never achieve your full potential.
2) Bias from Liking/Disliking
“The tendency to especially like oneself, one’s own kind and one’s own idea structures, and the tendency to be especially susceptible to being misled by someone liked. Disliking distortion, bias from that, the reciprocal of liking distortion and the tendency not to learn appropriately from someone disliked.”
Liking bias is also known as the “blind eye” bias. This is a natural human response. When we love someone, we often overlook their faults and weaknesses. We lose our sense of judgement and rationality. We give a “pass” to these special people when they make a mistake. When this becomes a problem is when those mistakes snowball into a trend. If we aren’t careful, we’ll be taken advantage of in these situations.The people we love can be motivated by selfish reasons that do not have our best intentions in mind. When we are clouded by love (or hate), we can be deceived, tricked, or goaded into poor decision making.
Disliking bias can also cause issues, as our contempt for someone can cause us to go out of our way to get even, or prevail over this person. This dislike is often completely unfounded. We hear what we want about a person and rarely get the complete set of circumstances before we cast judgement.
Both of these conditions can have a negative effect on our judgement. Because it’s impossible to completely subdue our emotions towards those we like/dislike,we must stay aware (and in control) of the biases we hold towards such people. In the off-chance our perception does becomes compromised, we must realize this and withdraw from the situation to reflect clearly on the situation.
3) Excessive Self-Regard Tendency
“We all commonly observe the excessive self-regard of man. He mostly mis-appraises himself on the high side, like the ninety percent of Swedish drivers that judge themselves to be above average. Such mis-appraisals also apply to a person’s major “possessions.” One spouse usually over appraises the other spouse. And a man’s children are likewise appraised higher by him than they are likely to be in a more objective view. Even man’s minor possessions tend to be over appraised. Once owned, they suddenly become worth more to him than he would pay if they were offered for sale to him and he didn’t already own them. There is a name in psychology for this over appraisal-of-our-own-possession’s phenomenon: the “endowment effect.” And all man’s decisions are suddenly regarded by him as better than would have been the case just before he made them.”
It is a near universal tendency to hold ourselves in the highest of regards. We believe strongly in our personal abilities, and are envious when someone beats us at anything. We believe ourselves to be better looking than we are, our opinions hold more weight than those of others, and we think we are right far more than we are wrong. We blame everyone aside from ourselves when a situation goes bad. We cling dearly to our possessions. And we hate to even contemplate someone close to us doing better in life.
This bias towards excessive self-regard feeds our false perceptions. We must acknowledge that we’re not perfect. Just like everyone else, we have flaws. Most people struggle mighty with self-confidence. Beneath the built up exteriors and the safeguards we’ve put in place, lie self-doubt and occasional loathing. We must strive for greatness, but understand that we will make mistakes. We must be honest with ourselves and understand that sometimes we screw up and make errors. It’s up to us to learn from such mistakes, and trudge forward smarter and more aware. Always measure progress against yourselves.
4) Availability-Misweighing Tendency (Retrievability)
“This mental tendency echoes the words of the song: “When I’m not near the girl I love, I love the girl I’m near.” Man’s imperfect, limited-capacity brain easily drifts into working with what’s easily available to it, and the brain can’t use what it can’t remember or what it is blocked from recognizing because it is heavily influenced by one or more psychological tendencies bearing strongly on it, as the fellow is influenced by the nearby girl in the song. And so the mind over weighs what is easily available and thus displays Availability-Misweighing Tendency.
The great algorithm to remember in dealing with this tendency is simple: An idea or a feat is not worth more merely because it is easily available to you.”
Blame our imperfect (and inefficient) brains for this bias. We overweight information we can retrieve quickly, which is information we see most often.
Let’s use the news as an example. What kinds of stories do you tend to see? If you’re like me, at least 80% of news is negative, often violent. This is by design, as such content is more apt to get (and keep) people’s attention. This repetitive exposure begins to affect us by creating misjudgments.
We then believe that the world is a dangerous, deadly place because we’ve been bombarded with negative content. This content is the first thing our brain goers to when it retrieves information. Our brains are using purposely slated information to give us an incorrect lens of the world. We are unaware that the world is the safest it has ever been, and that violent events and tragedies are magnified by design. This leads to a host of negative feelings, and causes collective chaos and chronic pessimism.
We must understand that our brains are lazy, designed to retrieve the most readily available information. We can’t stop this process, but what we can do is be aware of it. Take time to question your beliefs.
Are these based on all the facts?
Do I need to know more before I make a determination?
It’s wise to take a step back and ask ourselves if what we believe is actually true, or a result of what we are most often exposed to.
5) Inconsistency-Avoidance Tendency
“The brain of man conserves programming space by being reluctant to change, which is a form of inconsistency avoidance. We see this in all human habits, constructive and destructive. Few people can list a lot of bad habits that they have eliminated, and some people cannot identify even one of these. Instead, practically everyone has a great many bad habits he has long maintained despite their being known as bad. Given this situation, it is not too much in many cases to appraise early-formed habits as destiny. When Marley’s miserable ghost says, “I wear the chains I forged in life,” he is talking about chains of habit that were too light to be felt before they became too strong to be broken. The rare life that is wisely lived has in it many good habits maintained and many bad habits avoided or cured. And the great rule that helps here is again from Franklin’s “Poor Richard’s Almanack: “An ounce of prevention is worth a pound of cure.” What Franklin is here indicating, in-part, is that Inconsistency-Avoidance Tendency makes it much easier to prevent a habit than to change it.”
Munger uses bad habits to illustrate the inconsistent-avoidance tendency. Many of us know we have bad habits, but fail to do anything about them. Our self-discipline is weak and fails us before we make a permanent improvement. When we develop too many bad habits, they can begin to have negative consequences on our life. We accept these bad habits as “part of us” because they are so hard to break after festering for so long.
Habits are a form of change, and we are resistant to change at all costs. Again, blame the brain. All change, both big and small, startle us into submission. Our apprehension to change is something that all great men work adamantly to overcome. It is never easy, but we must embrace change to advance growth. There is no other way.
The above tendencies are only a glimpse into the many biases and misjudgments that plague our mindset.
We can’t be cured of all biases. We can only be aware of them, and work to build mental models to guide us.
Being able to draw upon your own framework of understanding will set you apart from 99% of people who go through life in a fog.
Our great separator from other species is our ability to think deeply. We are able to contemplate the future and reflect on our past actions.
We must use this ability to reason to create logical steps that help guide our biases and misjudgments. Being aware of our brain’s desire for safety and routine is the first step in unlocking a greater understanding of our fallacies. This process never ends. For us to make well-thought out decisions, we must stay aware of our tendencies to be average, and work hard to fight this at all costs.
P.S. Make sure to read the full transcript of Munger’s speeches here.
If you like this article, and want more of them, be sure to sign up to my weekly e-mail list.