Avoiding A Bad Case Of Hindsight Bias
Monday Morning Quarterback. noun informal. 1. a person who passes judgment on and criticizes something after the event.
Or, put another way: someone with a bad case of hindsight bias.
Have you ever thought about the outcome of a big game… or a vote on legislation… or even a weather forecast coming true and thought: “I knew it all along”?
Once we know the outcome of a situation, it’s easy to weave a narrative through those data points to reach the conclusion that this outcome was inevitable. But the truth is, we usually didn’t “know it all along” – it just feels that way.
That “inevitable” feeling can hold us back from learning from our experiences and becoming better decision-makers. It can also lead to a general overconfidence in our personal judgment.
One example we explored in Escaping 1980 was USDA’s Payment In Kind (PIK) program, perhaps the most infamous supply control program in modern history. Record corn, soybean, and wheat crops in 1981 and 1982 and slowing exports made for a bad combination. USDA launched PIK in an attempt to counter market-deflating overproduction by paying farmers to take acres out of production.
You probably know the rest of this story. By 1983, stocks had fallen due to drought and commodity prices had rallied, making PIK seem like a bad idea. The program faced widespread criticism. But ultimately, a case can be made that PIK was a well-intentioned effort that was sidelined by problems that could not be foreseen.
They say hindsight is 20/20. But hindsight bias can cloud our ability to effectively evaluate the quality of a decision made in the past. It also diminishes the role that chance plays.
Let’s start by reflecting on 2020 – a truly “unprecedented” year in every sense of the word. Was marketing corn during the summer a good decision? Of course, we now know that prices improved later in the year. But how could we have known this would happen?
Another way to think about it:
“Successful people understand risk for what it is and don’t make revisions in hindsight. Go with the odds, not the gods.”
Or consider the 2016 election – did friends or family (or perhaps yourself!) join in on the chorus of “I-told-you-so’s” who claimed to know that Trump would be victorious despite such low odds?
To combat hindsight bias, take a moment to “go back in time” to consider the information you had when you made the decision. What uncertainties did you face at that time? Think through how outcomes that didn’t happen could have occurred to counteract the inclination to throw out information that doesn’t fit with your internal narrative about the situation. Despite how it may feel, remember that there were many more outcomes possible than the one you ultimately made and the implications you observed.
With a dose of self-awareness, you can prevent yourself from becoming the next Monday Morning Quarterback.