Beware the Planning Fallacy

In 1994, 37 psychology students were asked to estimate how long it would take to write their theses. On the bright side (“If everything goes as well as it could”) they estimated an average of 27.4 days; on the dark side (“If everything goes as badly as it could”) they estimated an average of 48.6 days. The average actual completion was worse than the average worst case scenario estimates: 55.5 days. Only about 30% of the students completed the project on the timeline they had predicted.

The study [1] was created to test something called the “planning fallacy,” which researchers Daniel Kahnemann (Nobel Prize in Economics, 2002) and Amos Tversky posited in 1979 [2]. Here's the planning fallacy in a nutshell: When people make predictions about how long a future task will take, they underestimate the time it will actually take. (In another study from the 1990s, people turned their tax returns in a week later than they predicted they would, even though they had an accurate appraisal of how long it had taken them to complete their tax returns in previous years [3].)

Here are the burning questions then, for people like you and me who are constantly trying to negotiate complex lists and difficult decisions about what to say yes to and what to say no to: How do we defeat this tendency? How do we put ourselves in that 30% of students who accurately predicted how long it would take to complete their theses?

This is no small question. When I look at the most stressful periods of my life these past five years, it wasn't really the “big” conditions on my life that made it stressful — e.g., a growing household of children, my job as a teacher. Rather, it was the small- to medium-sized projects that I agreed to: leading this team, sitting on this committee, saying yes to this speaking engagement or that workshop, serving in a program in my community.

In short, it's less the list than it is the decisions. And the decisions about what we say yes to are almost always built on the planning fallacy. My wife Crystal and I have talked about this a lot lately. What is the true cost of that yes? What is the true benefit? What would an outsider say, someone who has no investment in the decision but just wants to see optimal returns on our investments of time and energy?

The point of this post isn't to give you the magic cure for the planning fallacy. I think that can only be done by pursuing wisdom, day after day.

But the first step to beating it, surely, is to know that it exists.

Footnotes:

1. Buehler, Roger; Dale Griffin; Michael Ross (1994). “Exploring the “planning fallacy:” Why people underestimate their task completion times.” Journal of Personality and Social Psychology. 67 (3): 366–381. doi:10.1037/0022-3514.67.3.366.
2. Kahneman, Daniel; Tversky, Amos (1979). “Intuitive prediction: biases and corrective procedures.” TIMS Studies in Management Science. 12: 313–327.
3. Buehler, Roger; Dale Griffin; Johanna Peetz (2010). The Planning Fallacy: Cognitive, Motivational, and Social Origins (PDF). Advances in Experimental Social Psychology. 43. pp. 1–62. doi:10.1016/s0065-2601(10)43001-4. ISBN 9780123809469. Retrieved 2012-09-15.