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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.

Callum Connects

Agnes Yee, Legal & Compliance Recruiter of Space Executive

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Agnes Yee started Space Executive in Singapore, which is a hub for businesses in some of the world’s fastest growing economies.

What’s your story?
After graduation, I joined a design media company as a Business Development Executive, during the era when ‘reading a magazine online’ was unheard of. I believe that laid the foundation for being unfazed by rejections.

I fell into recruitment pre-GFC and rode the highs and lows in the early years. A decade later, I decided to set up my own recruitment company, partly because I could. I’m acutely aware of the face that being an Asian female in Singapore is sometimes a privilege, and that many women in the world are living a very different existence.
Thereafter, we joined Space Executive as part of a merger. I am currently the Partner of Space Executive, a recruitment company focused specialist disciplines, including Legal, Finance, Digital, Sales and Marketing and Change. We also run Space Ventures, a venture capital business, which invests in seed and pre-series A businesses.

What excites you most about your industry?
On a daily basis, we’re influencing how one spends a third of their day. It is interesting how the Internet has transformed the industry, and I’m excited to see how we can harness technology to bring us to the next phase of this business.

The VC is an extension of applying our skills and experience in reading people. We very much invest in the people as much as the idea. Being a native Singaporean, it’s been exhilarating watching Southeast Asia becoming a hotbed of ideas; and young entrepreneurs simply daring to dream.

What’s your connection to Asia?
I’m a born and bred Singaporean. I love that I speak both English and Mandarin, grew up playing with Indian friends and eating Malay food.

Favourite city in Asia for business and why?
Singapore for the low barriers of entry to set up a business, but has to be China (and Hong Kong) for their hunger and constant innovation.

What’s the best piece of advice you ever received?
青春不要留白 which translates to ‘Don’t waste your youth.’

Who inspires you?
Anyone who has gone against the grain.

What have you just learnt recently that blew you away?
It wasn’t recent but reading the article on https://waitbutwhy.com/2015/12/the-tail-end.html never fails to blow my mind how little time we have left. Charting our lives in weeks, and realising I only have enough time left to enjoy 60 Christmas turkeys, read 300 books (all if I’m lucky); and mostly, I’m left with the last 5% of the time that I spend in-person with my parents.

If you had your time again, what would you do differently?
I’m cognisant that every decision I made in life has brought me to where I am today, and I wouldn’t change one thing. But I’d really like to have had more time to travel.

How do you unwind?
Exercise and wine.

Favourite Asian destination for relaxation? Why?
Trekking any mountain in Asia. It brings us back to the most basic. To overcome elements of nature and our own mind.

Everyone in business should read this book:
Start with Why, Simon Sinek

Shameless plug for your business:
Space Executive started in Singapore, a hub for businesses in some of the world’s fastest growing economies. We assist organisations in accessing a targeted and specialised, and often times transient talent pool.

Out of Singapore, we have recruited across 14 countries; and have embarked on our global expansion plans with offices in Hong Kong and London this year, and US, Japan and Europe in the following years.

Space Ventures provides funding, management and financial guidance to young businesses with original ideas. We have invested in peer to peer lending platforms, credit scoring, social media education, and other start-ups spanning diverse industries. We are always interested in hearing more about new ideas.

How can people connect with you?
https://www.linkedin.com/in/agnesyee/

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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Chrystie Dao-Szabo, Founder of iPayMy

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Chrystie Dao-Szabo founded iPaymy for Business – a secure and easy to use
platform enabling SMEs to pay rent, salaries, invoices, and even corporate tax using the credit cards they already have in their wallet today.

What’s your story?
I’m Chrystie Dao-Szabo, and I’ve worked as an international banker for over 22 years. During that time, I travelled through Asia, Australia and Europe, and everywhere I saw how my clients struggled with managing their finances and keeping cash around.

I wanted to use my experience to help them, but I also knew the solution they needed didn’t exist yet. This pushed me to give up on my secure career, and instead look into the innovative world of FinTech for an answer.

This is how I founded iPaymy – at its launch, a platform to help consumers pay their monthly expenses using their credit cards. We’ve grown a lot since, and today, iPaymy for Business is a platform that allows business owners to use their credit cards to pay for rent, salaries, invoices and taxes, freeing up their cash for business-critical operations.

What excites you most about your industry?
What excites me most about FinTech is it’s culture of constant disruption, thanks to cool and innovative products and services coming out every day.

What’s your connection to Asia?
I was born in Vietnam, grew up in Australia and worked in Asia, Europe and Australia. Being raised by traditional Vietnamese parents meant that deep down I was still an Asian at heart, so I have a strong connection with the region.

Favourite city in Asia for business and why?
Singapore of course. It’s easy to do business, English is the main language, and the infrastructures like public transportation are great. Also, the government supports local innovation in multiple ways, like giving grants for SMEs and FinTechs.

What’s the best piece of advice you ever received?
Keep giving, and one day you will receive.

Who inspires you?
My parents. My father had a successful business in Vietnam just before the fall of Saigon in 1975. After the war, my father was sent to a re-education camp for three years, which meant my mum had to bring up two young kids – a 3-year-old, me and my 4-year old brother on her own.

In 1980, we all fled Vietnam on a boat and arrived in Sydney, Australia via refugee camps in Indonesia and Singapore. There, my parents had to start over with nothing to their names and only AUD 50 given to them by the Australian government.
They went on to build several businesses in Australia!

What have you just learnt recently that blew you away?
The number of young and smart people who have carved out successful careers by founding their own startups (or joining really cool ones). When I was starting out my career, doing any of these was not a viable option; it was either working for an accounting firm, an insurance company or a bank.

If you had your time again, what would you do differently?
If I were starting out my career now, I would choose the path of joining a startup as you get to learn so much about running a business and how to assemble a winning team.

How do you unwind?
I like travelling to a beach or a resort destination and just relaxing by the pool or beach. I also like to unwind after work with a glass of champagne or wine, and a bowl of truffle fries.

Favourite Asian destination for relaxation? Why?
Thailand. I love the people and the spicy Thai food.

Everyone in business should read this book:
The E-Myth. It’s a book series that dismantles common myths about entrepreneurship in different industries.

Shameless plug for your business:
With iPaymy for Business, SMEs can pay rent, salaries, invoices, and even corporate tax using the credit cards they already have in their wallet today. SMEs love iPaymy because it works like a credit card, but pays like cash.

iPaymy’s secure and easy to use platform reliably delivers payments to vendors while freeing up cash and providing access to interest free credit. Forget the delays and aggravations that come with traditional SME financing options. Schedule recurring payments, manage invoices, set payment reminders, and monitor payment status all from one dashboard.

It’s never been easier for SMEs to meet monthly payment obligations while keeping cash available to fuel growth, bridge receivable gaps, and make immediate investment in the supplies, services, and expertise needed to drive a growing business forward.

How can people connect with you?
You can find me on LinkedIn or contact me by email.
My LinkedIn: https://www.linkedin.com/in/chrystiedaoszabo/
My email: [email protected]

Twitter handle?
https://twitter.com/ceedeees

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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