The Three Secrets of Wise Decision Making

As the world has become more complex and information more abundant, decisions have become more difficult; as the pace of change and the range of choice have increased, decisions have to be made more often. Yet, most of us still make decisions with no more knowledge about decision processes than our ancestors had in a simpler age, hundreds of years ago.
Thanks to mathematicians, economists, psychologists, and decision analysts, we now know a good deal about decision making. We know something about what constitute good decision processes, and we know that good decision processes tend to lead to good outcomes. For example, those who employ good decision processes tend to get higher grades and earn higher salaries (Larrick, Nisbett, & Morgan, 1993); and, when decision makers' judgments are incorporated into decision models, the models tend to outperform the decision makers, themselves (Dawes, 1979, 1989).

One study (Herek, Janis, & Huth, 1987) evaluated major decisions made by the United States government over several years. For each decision, independent ratings were made of (a) the quality of the decision process and ( the extent to which U. S. objectives were met. The correlation between these two measures was a whopping +.63! (This is better than the correlation between the heights of parents and the heights of their children.) This indicates that, even at the level of governmental decisions, where so many things can go wrong, good decision processes are strongly related to good decision outcomes.

We also know that good decision processes can be learned, and we know something about how to teach them. For example, economics professors and students, who have formal training in decision making, are more likely than others to decide rationally, even when the decisions are not closely related to the content of economics courses (Larrick, Morgan, & Nisbett, 1990). (See also Whimby & Whimby, 1975).
Yet we are not communicating what we know as effectively as we might. At the college level, courses in decision psychology are typically focussed on the presentation of research findings and theoretical explanations of these findings, providing, essentially, declarative, or factual, knowledge. Instruction in good decision-making practice is ancillary, at best, and actual practice in decision-making skills, rare in such courses. While courses of this kind are necessary, they aren't sufficient. Only the exceptional student can pass from declarative knowledge to procedural, or performance, knowledge without help.