Why Life Decisions Are Hard

Life decisions are hard - Should I quit my job? Should I break up? Should I propose? There are significant potential downsides to both making a decision to change and not to change. So we go back and forth without making a decision. What if there was an easier way? What if someone else could make the decision for you? 

That's exactly what Steven D. Levitt from the University of Chicago and the author of Freakonomics set out to find out. What if people used a coin toss to make the decision for them? Would they be happier with the result?

Methodology

Approximately 23,500 participants were recruited through www.FreakonomicsExperiments.com. The participants were given a menu of life decisions from which they could choose, or they could design their own. These were decisions that they were having trouble making. Important decisions were ones such as "Should I quit my job?" or "Should I break up?" Less important questions where ones such as "Should I go on a diet?" or "Should I splurge?" 

The participants then did a virtual coin toss: Heads meant "make a change" and tails meant "don't make a change". If the result of the coin toss was to make a change, they were encouraged to do so within the next two months. The participants were surveyed two months and six months after the coin toss.

Results

Less important decisions didn't affect later happiness. With regard to important decisions, participants who made the change as instructed by the coin toss reported greater happiness six months following the toss, equal on average to about 2 points on a 1-10 point scale.

Job quitting and breaking up showed a significant increase in happiness, 5 points and 2.5 points, respectively. Starting a business and moving also showed greater happiness six months later, 5 points and 3 points, respectively. High income earners tended to show greater happiness following the important decision than low income earners.

Implications

What keeps us from not being able to make a life decision is often fear of losing what we have. This is called loss aversion, a cognitive bias that describes why the pain of losing is twice that of the benefit of gaining. And this aversion gets stronger as the potential loss grows. All choices carry risk and the loss aversion bias can prevent us from making good life decisions.

Fear of loss activates an aversion mechanism in the brain

Fear of loss activates an aversion mechanism in the brain that includes the amygdala, a brain region implicated in emotional processing especially fear, and the insula, which anticipates aversive events. The amygdala activation is pre-conscious, meaning that no cognition is involved. It also involves the striatum, which activates for gains and deactivates for losses. Recent research using resting-state brain activity has found that loss aversion may be a stable trait: The strength of activity in the striatum and insula at rest was correlated with loss aversion during explicit choices.

I'm not advocating that we start making important life decisions by flipping a coin. But if it moves us out of indecision, which can be painful in itself, having an impartial person make the decision for us, or flipping a coin, might be something to consider. This study shows that, on average, people were happier making the change.

References

Canessa, N., Crespi, C., Baud-Bovy, G., Dodich, A., Falini, A., Antonellis, G., & Cappa, S. F. (2017). Neural markers of loss aversion in resting-state brain activity. NeuroImage, 146, 257–265. doi: 10.1016/j.neuroimage.2016.11.050.

Levitt, S. D. (2021). The Impact of a Coin Toss on Major Life Decisions and Subsequent Happiness. The Review of Economic Studies, 88(1), 378–505. doi: https://doi.org/10.1093/restud/rdaa016

Related posts: