We should begin by recognizing our limitations; the human brain is not an omnipotent supercomputer. Moreover, even if it were, there’s the “problem” that every cost is also a benefit from a different perspective. As a result, when making decisions in uncertainty, more information, time, and calculations are not better. In fact, taking too much information into account can backfire, leading people to overthink the problem and choke.
Sian Beilock and Thomas Carr’s work shows this at work in an educational setting.1 If we are anxious about a math problem, we consider too many possibilities, which can consume our scarce working memory and keep us from solving the problem at hand. We’re so worried about getting it right that we get it wrong.
Imagine deciding whether to buy a house. What states, cities, or neighborhoods to consider? How much can you really afford to pay? To answer this question, we might need to know what the economy will look like in five years; whether the stock market will grow or shrink; whether our jobs will remain secure; whether unexpected expenses will occur; whether we’ll remain married and continue to need a house; whether we’ll continue to want the costs of home ownership, and so on. The list is almost endless, and each of the pieces of information above have their own inherent uncertainties and risks.
This doesn’t mean we should buy a house at random, or not buy a house at all. Instead, I would argue for a very different approach.