Making Better Predictions
Every time you make long-term plans based on more than just your own behavior, you need to remember how unpredictable the world is. It can be hard not to get carried away, especially if you have a lot of “good” data to base your plans on. The Collaborative Fund Blog lists 12 things to consider when making plans and projections . Although the blog is mostly about investment projections, these principles should be kept in mind with any planning. Our favorites:
“Your willingness to believe a prediction depends on how much you need it to come true.”
This is the filter that we apply to all kinds of knowledge; This is why people cling to bad political beliefs or fall in love with charlatans who promise miraculous cures. And that can make you rely on predictions that give you good results. Don’t mistake some news for truth just because you screwed up if it’s wrong.
For example, don’t tell yourself that drinking is good for you because you’ve read several carefully selected studies. Research has shown fairly consistently that alcohol causes cancer , and while it’s okay to decide if a risk is acceptable, you should be aware of the risk.
“Predicting other people’s behavior depends on understanding their motivations, incentives, social norms and how all of these things change.”
You can only achieve your goals by figuring out what other people’s goals are. And this is a very difficult task. “It’s partly difficult to predict something like the economy,” says Morgan Housel of the Collaborative Fund, “in part because you have seven-figure economists educated in private schools who are trying to understand the spending behavior of the entire population, 78% of whom live. from paycheck to paycheck. “
This is one of the many reasons why organizations need to be as diverse as the population they serve. Countless failed consumer products, services, nonprofit programs, and government programs can be traced back to an all-male or all-white team that could not predict the needs and wants of people unlike them. There are so many things that you cannot guess what other people want, that you don’t even know what you don’t know.
In your personal life, this means that you should not rely on your own desires to predict the desires of your loved ones. This means thinking about what might motivate your employer to promote or fire you. It means thinking about what might offend or inspire someone whose life experience is different from yours.
These principles are not surprising, but you can spend most of your life ignoring them if you are not paying attention. So read the entire passage to refresh yourself.
Psychology of Prediction | Cooperation fund