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How Cognitive Bias Affects Your Career Decisions

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A large and growing body of research, suggests that our reasoning processes are far from perfectly “rational.” Over the past few decades, studies have pointed to a number of cognitive biases that affect our decision making in general, and there’s no reason to believe this doesn’t include career decisions. This means that an important part of designing a process for choosing a high impact career has been looking into the extent to which these biases tend to affect peoples’ career decisions, and what can be done about them.

It turns out that we likely don’t know as much as we think we do, and our judgements can often be mistaken in ways that affect our career decisions negatively. Just being aware of this also doesn’t help much. Rather we need to be more sceptical of our decisions than we might be inclined to be, and take a more systematic and evidence-based approach to career choice.

Our key observations and recommendations

Here I’ll summarise the key points of this post, before going into more depth and outlining the evidence behind each in more detail.

The main ways in which biases impact on career choice:

  • We think too narrowly about what our options are and how to compare them
  • We have a tendency to continue on paths that are no longer beneficial, and resist change even when it’s the best option
  • We’re likely to misjudge how likely we are to be successful in different career paths
  • In general, we put too much weight on gut judgements, and too little weight on evidence

The main problems these cause:

  • People end up in careers where they have less impact than they otherwise could: missing options that aren’t obvious, neglecting relevant considerations, continuing in low impact paths for long periods of time, and misjudging impact in terms of chances of success and where skills are most useful.
  • People end up in less satisfying careers than they could: missing plausibly good options, misjudging or missing the factors relevant to satisfaction, and reluctance to leave a job despite it not being enjoyable.

The best ways for dealing with this:

  • Broaden your horizons by using a framework for generating ideas, talking to other people and thinking through some reasons what you currently think might be wrong
  • Be systematic: list the factors relevant to your decision and try using a formula
  • Learn from mistakes, but make sure you’re not just staying on a path just because it’s consistent with your previous experience to do so.
  • Take a more evidence-based approach: look at base rates, predictors of success and job satisfaction, try to estimate and quantify the impact of different paths
  • In general, question your intuitions and always check them using the above methods
  • Justify your decision to someone else: ideally to multiple others. We’re incredibly good at justifying things we want to believe to ourselves, but other people are more likely to spot biases and flaws in our arguments. (Although it’s worth noting that if we’re so good at rationalising to ourselves, we may be pretty good at doing so to other people: so whilst this is a helpful tool, it’s not necessarily a foolproof one.)

Cognitive biases in career choice

Narrowmind

1) We often think too narrowly when considering what options are available to us, and what’s important in comparing them.

What’s the evidence for this?

There’s evidence that in decision making, we “narrow frame” in two ways: first, we think too narrowly about what options are available to us. Second, we think too narrowly about what our objectives are in comparing those options. This is supported both by direct studies, and by the existence of more general biases: the availability heuristic, causing us to focus on options that are readily available; anchoring, a tendency to overweight the first piece of information given; status quo bias, an irrational preference for the current state of affairs, and the sunk cost fallacy, the tendency to assign more weight to options we’ve already invested time and effort into.

Why is it a problem for careers?

If you don’t consider all your options, how can you be sure you’ve chosen the best one? If people consistently fail to think through all the opportunities available to them, it seems highly plausible that many could be in better suited and higher impact careers than they are currently.

As explained above, it’s not just about missing options: it’s about how you compare them. If you neglect an important consideration when comparing options, you might end up favouring the wrong one for the wrong reasons. There’s risk of a compound effect here: first thinking too narrowly about what options are available to you, and then on top of this thinking too narrowly about how to evaluate this already limited set of options, your chances of choosing a suboptimal career are greatly increased.

What can you do about it?

Take some time to broaden your horizons. Using a framework such as our 5 types of career (or even better, multiple different frameworks) to generate options early on will help ensure you consider a wide range of alternatives. Widen your perspective by talking to and comparing options with other people: the more diverse the range of people you consult, the better. As well as thinking through the pros of each of your options, think too about why they might not be so great: what are some reasons you might be wrong about this option?

60-wrong-way-610x457

2) We often continue on paths or in careers for too long when it would actually be more beneficial to change.

What’s the evidence for this?

A bias known as the sunk cost fallacy: a tendency to continue doing something that’s no longer beneficial simply because we’ve already invested a lot of time or money in it. This is irrational because the time or money is already spent, and therefore irrelevant to the decision you’re now making: they are sunk costs.

Why is it a problem for careers?

Suppose you’ve spent years working and studying to get a dream job, only to realise you could be doing something completely different that would have much more impact. The thought of abandoning all those years’ effort is hard, right? It’s tempting to continue with what you’ve already invested in, hoping things will improve. But you can’t get the years you’ve spent already back: and by continuing you’re probably just wasting more. Abandoning sunk costs in your career can be incredibly difficult, but it’s important if you want to make as much difference as possible. You need to be able to identify when your preference for a certain career is for good reason, and when it’s just because of past commitments.

What can you do about it?

The bad news is that it doesn’t seem like simply knowing about the sunk cost fallacy, thinking hard about it, or talking it over with people, will help very much. The good news, though, is that sunk costs can be fought if you try hard enough and think about your decisions in the right way:

  • Ignore the past: think about where you are now, the qualifications and experience you have, as if they just appeared from nowhere.
  • Think about the future: make a list of the pros and cons of each of your alternatives from now own.
  • Justify your decision to someone else: it’s much harder to justify biased decisions to someone else!

Success-next-exit

3) We’re likely to misjudge our chances of success in different career paths

What’s the evidence for this?

When judging our chances of success, we tend to use something called the representativeness heuristic: asking “how much do I seem like the sort of person who would be successful in this field?” The problem with this approach is that, no matter how much you look like the kind of person who would be successful, if the chances of anyone succeeding in your field are low, you’ll likely be overestimating your chances. This is known as base rate neglect: neglecting to consider the underlying probabilities or base rates. No matter how much you seem like the sort of person who would single-handedly find a cure for cancer, your chances of doing so are minute simply because the chances of anyone doing so are so small.

There’s also evidence from studies that we tend to be overconfident in general: most people think they’re better than average, and underestimate the time it will take them to complete a given task.

Why is it a problem for careers?

Being successful in whatever you do is obviously crucial to making an impact. The existence of base rate neglect plus overconfidence suggest that we’re likely to overestimate our chances of finding a cure for malaria, becoming head of the world’s most cost-effective charity, or completely revolutionising academic incentives, to give a few examples. But this doesn’t mean that no-one should do these things. What we need is to be able to accurately judge our chances of success: aiming high, but not too high.

What can you do about it?

The suggested approach should help you judge your chances of success in a given field or career:

  1. Work out which factors (personality traits, skills and abilities) are most relevant to success in the field you’re considering
  2. Find ways to objectively measure yourself on these factors
  3. Given this information, narrow down your reference class to those similar to you
  4. Get your “base rate” from this class

For more detail on how to do this, see an earlier post on how to judge your chances of success.

Trsut-your-gut

4) Although conventional wisdom emphasises the importance of “going with your gut” in career decisions, we should be sceptical of at least some of our intuitive judgements.

What’s the evidence for this?

There’s a large body of research that’s emerged over the past couple of centuries in what’s now known as the “heuristics and biases” tradition, investigating the shortcuts (heuristics) that underlie our intuitive judgements and how they can go awry (resulting in biases.) Most gut judgements are based on rules of thumb, which when applied in the majority of situations allow us to make surprisingly accurate judgements with little time and effort. However, when we apply these shortcuts blindly, they can sometimes go wrong. This is a well established phenomenon across a variety of situations, so it seems pretty likely to impact our career decisions. Research also suggests that intuitions are most likely to lead us astray when we’re less experienced, the situation in which we’re making decisions is highly unpredictable, and we don’t get good feedback on our choices. Career choice arguably fits all three of these criteria most of the time.

Why is it a problem for careers?

The key point here is that if we let gut judgements guide our decisions without questioning their basis, we’re operating somewhat blindly. If we don’t know what shortcuts underlie our judgements, then we can’t be sure what factors are guiding our decisions. For any big career decision, there will be a number of different important factors to consider, and it’s highly unlikely that the rules of thumb we use implicitly will manage to incorporate them all. This means if you just “go with your gut”, it’s pretty likely you’ll be missing some important considerations, which in turn means your decision might not be as good as it could be. If you want to be sure you’ve chosen the career where you can have the most impact, the career you’ll enjoy the most, or the career where you’ll be most successful (or like most of us – all three!) you need to make sure you go through all the relevant considerations. Your “gut” can’t do this (at least, not all of the time.)

What can you do about it?

Double-check your intuitions against more systematic methods and by getting more evidence. You might, for example, try explicitly listing all the factors that are important for your decision, and then attempt to score different options on these factors and compare them. Even if you don’t necessarily use this to determine your decision, it will likely highlight some factors that your first impressions miss, and flag the areas where you need to get more information.

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About the Author

This article was written by Jess Whittlestone of 80,000 hours. 80,000 is a platform that intensively researches into how graduates can make the biggest difference possible with their careers, both through overall career choice and within a given field. They work with academics at the University of Oxford, and have given one-on-one coaching to over 200 people. see more of Jess’s work.

Entrepreneurship

Women on Top in Tech – Daphne Ng, CEO of JEDTrade

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(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Daphne Ng is the CEO of JEDTrade, a blockchain technology company focused on trade, supply chain, and financial inclusion projects in ASEAN. She is also the Scretary-General at ACCESS and Exco. of Singapore Fintech Association

What makes you do what you do?
I was introduced to blockchain technology in 2016 after I left my corporate banking career after 10 years. It was my mentor who first got me interested in this technology, which I then went on to delve further into, on its potential applications in the lending and trade finance space – domains where I came from.

How did you rise in the industry you are in?
Being in the space for 2 years and actively involved in the ecosystem, I was able to bring on the projects, network and a good degree of thought leadership in this vertical. Early on in the startup journey, our team faced many challenges. And to me, the key to rising above failures are two essential factors – resilience and support. While resilience is innate, I received a lot of help be it in terms of connections or advice. ‘Nobody succeeds without help’ rings very true for me.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
From the start, I focused on my domain expertise in trade finance and the application construct of how blockchain and DLT can be applied to these use cases. Also, my strategy from the start was to build a technology company made up of 80% tech and engineers, which is also our key competitive advantage today. At the end of the day, deliverables are about strategy and execution, which includes building and leading an ‘A’ team.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work?
I have many mentors, which includes our company advisors (all of whom are well-known in this industry) and mostly informal mentors I meet via my connections, and on various occasions and circumstances. Creating opportunities also means putting myself in the right place, at the right time. And in my case, these were mostly organic and genuine friendships formed from the initial connection.

How did you make a match if you and how did you end up being mentored by him?
To me, a match in values is very important. It also takes humility to ask for help and be willing to listen to advice, which is important in order for mentorships to be successful – be it formal or informal.

Now as a leader how do you spot, develop, keep, grow and support your talent?
I love this question! I am passionate about building strong teams and helping my people grow. I abide by the 3Rs when identifying talents: resourcefulness, resilience and right values. And then I invest in the ‘potential’ and this means giving them room to lead, make decisions and take risks.

Do you consciously or unconsciously support diversity and why?
My support of diverse talents, skillsets and characters can be seen in the make-up of our core team – all helming specific roles and each bringing their own value to the table. We need the sum of all parts to build a great company.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?
Great leaders emerge in times of failures and challenges, never abandoning the team, and always putting the team’s interests before her own. And I consciously live by these mottos every day.

Advice for others?
My advice to other entrepreneurs: be resolute and dare to be different. If you are going to follow others, then you will end up on the same path as them. No right or wrong; but I would rather chart my own path. This June, we are officially launching our blockchain project, Jupiter Chain (www.jupiterchain.tech), which have garnered much interest in the industry, even before we made it public. We believe this project is the epitome of marrying innovation with practical implementation, and we want to be the first to truly operationalize blockchain for our ecosystem projects in this region.


If you’d like to get in touch with Daphne Ng, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/daphne-ng-%E9%BB%84%E7%91%9E%E7%8E%B2/

To learn more about JEDTrade, please click here.

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Callum Connects

Jace Koh, Founder of U Ventures

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Jace Koh believes cash flow is the lifeblood of your business. Understanding it will enhance your ability to run and manage your business.

What’s your story?
My name is Jace Koh and I am the Founder of U Ventures. I’ve always been inclined towards investment and entrepreneurship. I’ve played a hand in starting businesses across these industries – professional services, cloud integration, software and music. I believe that succeeding in business is tough, but that’s what makes the rewards even sweeter.

What excites you most about your industry?
Everything excites me. These are my beliefs:

  • Why is accounting important?
    The accounting department is the heart. Cash flow is like blood stream, it pumps blood to various parts of the body like cash flow is pumped to various departments and/or functions in a business. It is vital to the life and death of the business.
  • Is accounting boring?
    Accountants are artists too. They paint the numbers the way they want them to be.
  • What makes a good accountant?
    A good accountant can tell you a story about the business by looking at the numbers.
  • Why is budgeting and projection important?
    Accountants are like fortune tellers, they can predict the numbers and if you wish to understand your business and make informed decisions, feel free to speak to our friendly consultants to secure a meeting.

What’s your connection to Asia?
I was born and raised in Singapore, and here’s where I want to be.

Favourite city in Asia for business and why?
Singapore is my favourite city. We have great legal systems in place, good security and people with integrity. Most importantly, we have a government that fosters a good environment for doing business. I recently went for a cultural exchange programme in Hong Kong to learn more about their startups. I found out that the Hong Kong government generally only supports local business owners in terms of grants. They’ve recently been more lenient and changed the eligibility to include all businesses that have at least 50% local shareholding. But comparing that to Singapore, the government only requires a 30% local shareholding to obtain government support. In the early days of starting a business, all the support you can get is precious. It’s great that we have a government that understands that.

What’s the best piece of advice you ever received?
The best time ever to plant a tree was 10 years ago as the tree would have grown so big to provide you with shelter and all. When is the next best time to plant a tree? It is today. Because in 10 years time, the tree would have grown big enough to provide you shelter and all.

Who inspires you?
Jack Ma. His journey to success is one of the most inspiring as it proves that with determination and great foresight, even the poorest can turn their lives around. I personally relate to his story a lot, and this is my favourite quote from him, “If you don’t give up, you still have a chance. Giving up is the greatest failure.”

What have you just learnt recently that blew you away?
I’ve faced multiple rejections throughout my business journey, and recently came across a fact on Jack Ma about how he was once rejected for 32 different jobs. It resonated very deeply and taught me the importance of tenacity, especially during tough times.

If you had your time again, what would you do differently?
Nothing. I live a life with no regrets. Everything I do, regardless of whether it is right or wrong, happy or sad, and regardless of outcome, it’s a lesson with something to take away.

How do you unwind?
I love to pamper myself through retail therapy and going for spas. I also make a conscious effort to take time off work to have a break outside to unwind as well as to uncloud my mind. This moment of reflection from time to time helps me see more clearly on how I can improve myself.

Favourite Asian destination for relaxation? Why?
Taiwan! Good food with no language barriers and the people are great!

Everyone in business should read this book:
I don’t really read books. Mostly, I learn from my daily life and interactions with hundreds of other business owners. To me, people tell the most interesting stories.

Shameless plug for your business:
We’re not just corporate secretaries, we’re “business doctors.”
U Ventures is a Xero certified advisory firm that goes beyond traditional accounting services to provide solutions for your business. You can reach us on our website: http://uventures.com.sg/

How can people connect with you?
Converse to connect. You can reach me via email at [email protected] or alternatively, on LinkedIn here: https://www.linkedin.com/in/jacekoh/

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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