The Planning Fallacy - How Our Optimism Leads Us Astray
/The test was simple. The participants, all non-exercisers with the goal of adding workouts to their weekly routine, were asked to write down how many hours they planned to spend in the gym over the next two weeks.
Each participant entered in the amount of time they planned to spend in the gym. Then they recorded how much actual time they spent there to see if it matched up. After careful calculation, the participants planned to spend about 20 hours on average over the next two weeks in the gym.
If you’re like most people, you’ve probably gone through a similar planning process at some point. And you probably won’t be shocked when I tell you that the average time actually spent in the gym wasn’t even half of that!
But that’s not the most shocking finding in the study. After the 2 weeks were up, the researchers asked the participants to plan how much time they were going to spend in the gym over the subsequent 2 weeks. Rather than learning from their own behavior, the participants planned to spend even more time in the gym over the next 2 weeks!
In their minds, the previous 2 weeks were an anomaly. And their “true selves” were going to show up and make it to the gym for 25 hours this time! [1]
WHY DO WE DO THIS?
This experiment reveals what researchers call “The Planning Fallacy”. As humans, we are incredibly optimistic by nature so when we set plans, we overestimate our own abilities.
Psychologist Roger Buehler discovered this in 1994 when he did an experiment with psychology students. 37 students were asked to estimate how long it would take to finish their Senior Theses. [2]
They were to make 3 predictions.
First, if everything went as well as it possibly could – which averaged 27.4 days.
Second, if everything went as poorly as it possibly could – which averaged 48.6 days.
And finally, what they thought would actually happen – which averaged 33.9 days.
The average actual completion time was 55.5 days – a whole week longer than if everything went as poorly as it possibly could!
Buehler theorized that the reason we do this is because we are all wishful thinkers [3]. We want to believe that things will work out for the best, so even our worst planning scenarios aren’t that bad. This is why despite a 40% divorce rate, newly weds believe they have a 0% chance of divorce, and despite a 30% chance of getting cancer, the average person only believes they have a 10% chance.
HOW CAN WE BEAT THE PLANNING FALLACY?
Although there are many proven advantages to being optimistic, the planning fallacy is dangerous. What do you think the chances are that those exercisers were able to establish their new habit of exercise after 4 consecutive weeks of not hitting their planned goals?
Chances are those exercisers felt like failures with every planned workout missed. Yet, if they had planned on even doing 5 hours of exercise over a 2-week period it would have been a big improvement over nothing!
Luckily, there is a way to beat the planning fallacy through a process called reference class forecasting.
REFERENCE CLASS FORECASTING
Reference class forecasting is taking the results of the past and using them to predict the future. If the non-exercisers had used the results from their first 2 weeks of exercise as a realistic approach to their next two weeks, they would have used this method. [4]
The key with reference class forecasting is to avoid the trap of thinking that the future is going to be “special”. The non-exercisers believed that the next 2 weeks would be somehow different than the last 2, leading to their unrealistic plans. So when we plan for the future, we need to understand that it will be much more like the past than our natural optimistic projections.
CONCLUSION
We are an incredibly optimistic species. Our optimism has helped us dream big dreams and accomplish incredible things. But sometimes our optimism about the future can leave us feeling like a failure when we don’t live up to our own unrealistic expectations. To avoid this, we need to look to past results as the best predictor of the future. Then, if we end up doing better than we have in the past, it will give us more confidence as we move toward our goals – just don’t take that confidence too far!
Sources
- Zauberman, Gal, and John G. Jr. Lynch. "Resource Slack and Propensity to Discount Delayed Investments of Time Versus Money." Journal of Experimental Psychology: General 134.1 (2005): 23-37.
- Buehler, Roger, Dale Griffin, and Michael Ross. "Exploring the "planning Fallacy": Why People Underestimate Their Task Completion Times." Journal of Personality and Social Psychology 67.3 (1994): 366-81.
- Pezzo, Mark V., Jordan A. Litman, and Stephanie P. Pezzo. "On the Distinction between Yuppies and Hippies: Individual Differences in Prediction Biases for Planning Future Tasks." Personality and Individual Differences 41.7 (2006): 1359-371.
- Flyvbjerg, Bent. "Curbing Optimism Bias and Strategic Misrepresentation in Planning: Reference Class Forecasting in Practice." European Planning Studies 16.1 (2008): 3-21.