“I think unconscious bias is one of the hardest things to get at.” Ruth Bader Ginsburg
The truth is, many of us make decisions based on tradition rather than facts. Some tradition-based decisions, like how to celebrate holidays, can bring joy and connect us to our familial roots. When it comes to business or managing personal finance, blindly accepting tradition can lead to numerous mistakes and even yield dire consequences. We all have biases- the conscious or unconscious forces which nudge us to show favoritism towards or away from something or someone. Bias impacts the world in which we live. It affects personal finance, health and wellness, and business.
Consider some recent research from Sylvia Ann Hewlett, an economist and the founding president and CEO of the Center for Talent Innovation:
Employees at large companies who perceive bias are nearly three times as likely (20% vs 7%) to be disengaged at work. Gallup estimates that active disengagement costs U.S. companies $450 billion to $550 billion per year.
Those who perceive bias are more than three times as likely (31% to 10%) to say that they’re planning to leave their current jobs within the year.
Bias appears to sap innovation. Those who perceive bias are 2.6 times more likely (34% to 13%) to say that they’ve withheld ideas and market solutions over the previous six months.”
Behavioral Biases are prevalent in investor behavior. In the published research, Odean (1998) and Barber and Odean (1999) it was demonstrated that investors tend to, “hold on to the losers and sell the winners”.
To be the best in business and life, it’s important that we question our own personal biases and the status quo around us. I’m not sure who originally told the following folk tale about blindly following tradition. I hope you enjoy my version:
One day while a father was cooking a pot roast, his daughter asked about the recipe. He lovingly recalled the way his mother taught him how to cook the family favorite. He carefully shared about the importance of proper seasoning. He described how the garlic melts in the oven as it caramelizes and marries its sweetness to balance the bitterness of the herbs. He took time to highlight the importance of vegetables, just as his mother had lectured him about vitamins and nutrition. He didn’t take too long before a mouth-watering description of delectable pan sauce from the roast drippings. Before too long, and before the father explained too much to the young child, his daughter interrupted with a simple question. After watching him, she asked, “Dad, why do you cut the ends off of the roast?” “Well”, said the father before a pregnant pause. “That’s how my mother taught me.” “But why?” asked the child with an innocence and curiosity. “I don’t know. Why don’t you ask your grandmother?” The father dialed his mother, who was excited to receive the call, and connected the curious and the wise family members. The grandmother enjoyed recounting the recipe and took a mental journey to the warm fond memories that occurred during the difficult years of the Great Depression. Before drowning in nostalgia, the child piped up, “Grandma, why did you cut the ends of the roast before putting it into the oven to cook?” “Well dear child, that’s how my mother taught me the recipe. It always came out so delicious that I never questioned her authority. We can ask her this weekend when we visit her at the nursing home.” The hope for the truth behind the family tradition pacified the inquisitive mind for the moment, particularly as the incredible scent of a roast undergoing complex changes of the Maillard reaction wafted tantalizing through the air. That weekend the young girl was excited to visit her elderly great grandparents. The time was a delicately precious moment of four generations gathering. The father provided a warning and reminder to take it easy on her great grandparents as dementia provided a cognitive haze, which at times obfuscated reality with a fog as thick as a hearty chowda. The child’s boundless energy couldn’t be dampened and she bounced, hopped, and skipped towards the mothball scented, artifact adorned room. With unbridled joy and excitement, she hopped next to the elders and blurted the question that had been burning inside for days, “WHATSUPWITHTHERECIPIEFORTHEROASTITSSODELICIOUSBUTWHYDOESEVERYONECUTTHEENDSOFF????!!!?!?!?!
The great grandparents flashed a loving smile and with a twinkle in their eyes said, “Hi sweetie, its so great to see you.”
Their attention was quickly diverted to the lovely smell from the containers of food the family brought for lunch. The piquant scent triggered memories which transported the geriatric couple to youthful times. Their eyes gently closed to clarify the vision, then they began to tell the story of how the special roast came to be. Not a detail was missed, from heartfelt emotions, to the detailed design of the kitchen. There was municipal water, a modernization which brought joy by making life in the kitchen so much easier. The family was fortunate enough to have a gas stove, a luxury that eliminated the need to labor over a hot wood fire. The icebox, with a fresh ice block from Harvey the ice deliveryman, contained the ingredients for the special holiday meal. The eager child couldn’t bear another moment and politely interrupted, “Um, excuse me. Why do the ends of the roast get cut off?” Without missing a beat, the elderly storytellers simply stated the truth, “We always cut the ends of the roast off because our stove was small and the roasting pan that we owned was small. The meat was cut to fit the pan. We made delicious steaks with the pieces. That reminds me of a recipe…..” The remaining three generations looked at each other and began laughing uncontrollably. They simultaneously realized how truly silly it was to perpetuate the tradition of cutting ends off of a roast just “because that’s how I was taught”.
When it comes to accepting status quo, Albert Einstein offers pertinent advice, “If I had an hour to solve a problem and my life depended on the solution, I would spend the first 55 minutes determining the proper question to ask… for once I know the proper question, I could solve the problem in less than five minutes.”
For additional reading:
Psychology Today offers 12of the most common biases that affect everyday decisions:
One of my favorite books on behavioral science is Thinking Fast and Slow by Daniel Kahneman. He’s respected as the father of behavioral economics and was awarded the 2002 Nobel Memorial Prize in Economic Sciences.