Do you see your life as a portfolio of choices?

University of Chicago behavioral science professor Erika Kirgios explains how differently we make decisions when we look at our choices as a portfolio.

Life is full of repeated decisions. Day after day, we choose what to eat, who to socialize with, where to travel, who to hire, whether and how to exercise and so on.  What’s fascinating is how often we consider these choices in isolation – deciding what to eat for lunch as if we won’t make the same decision again tomorrow.  

But our choices tend to change quite dramatically when we recognize these recurring decisions are part of a larger portfolio.  That’s the focus of this month’s newsletter. 

Part of my motivation for choosing this topic was the realization that I’ve been writing this newsletter for nearly four years and have published over forty issues.  Yet, I approach each month’s topic in isolation. Moving forward, I’m considering a different approach…

This Month’s Recommended Listens and Reads

• A Checklist for Making Good Decisions: In this recent episode of Choiceology, we share the story of a video game co-designed by BU marketing professor Carey Morewidge that’s been proven to reduce decision biases as well as a checklist for improving your decisions courtesy of Duke management professor Jack Soll.

• Tracking New Year’s Resolutions: The Washington Post followed dozens of readers who set New Year's resolutions to learn what it takes to succeed, and I enjoyed weighing in on how well the takeaways they gathered aligned with the science.

• 8 Productivity Books Used by Experts: When the New York Times asked me to share my favorite book on how to boost productivity, I was delighted to reply, and I was even more delighted when they put my pick at the top of their list of recommendations from experts.

• Behavioral Science Insights for the UN:  Earlier this month, I had the pleasure of spending time at the United Nations and answering leaders’ questions about how behavioral insights can be applied to pressing global challenges. While some of the most exciting proceedings were closed, one keynote I delivered as part of the UN’s Behavioral Insights Week is now on YouTube if you’re curious.

Q&A: Choice Bracketing

In this Q&A from Choiceology, Erika Kirgios, an assistant professor of behavioral science at the University of Chicago’s Booth School of Business discusses classic decision making research on choice bracketing and her own scholarship examining its implications in the workplace.

Me: I was hoping we could start by just defining choice bracketing. What is it exactly?

Erika: Choice bracketing is the idea that when we make decisions, very often in life we have the option between thinking pretty locally about an individual choice or thinking more globally. So, for example, I might think locally about whether to buy coffee in the morning, and that means today I wake up, I realize that I'm in a rush to get to work. Should I stop at Starbucks, or should I make myself a coffee at home? And there are all sorts of reasons why I might decide that stopping at Starbucks makes more sense, but if I look back over the course of a whole week or a whole month or a whole year, will I think differently about those individual choices to go get coffee and buy it from Starbucks rather than make it at home? Maybe so, and that kind of local-versus-global thinking can apply in all sorts of decision-making contexts because we very often make repeated choices and think about each of those choices individually more commonly than we're thinking about the aggregation of those choices.

Me: So in the context of the Starbucks example you gave, I guess if I were thinking globally about it, I might think, "wow, that's a really big expense if I do that every day," but if I'm thinking locally, I might think, "it's going to save me time, and it'll taste better than what I can make at home." Is that kind of the idea?

Erika: Exactly. That's exactly right.

Me: Could you describe some of your favorite research that demonstrates people think differently when they bracket their choices narrowly versus broadly?

Erika: One study that's kind of canonical in this space and that everybody thinks of when they think about choice bracketing is the decision between snacks. So some researchers went to their classes and told their students, "We'll bring you a free snack every week for the next three weeks," which is an amazing treat. And they either had their students decide in week one what snack they wanted for the next three weeks, or they decided every week what snack they wanted that week. So either you're thinking globally—you're deciding what snacks you want in a three-week period—or you're thinking locally, what snack do I want this week? And then the next week, what snack do I want this week? And so on and so forth.

Me: And just to clarify, in both cases, I can make three different choices or the same choice over and over again, right? It's just the researchers varied the timing of when the choice happened - either people made all the choices together at the beginning of a three week period, say, in early March or they made them once a week over the course of the month. Am I thinking about that correctly?

Erika: That's exactly right. So, for example, I might give you a list. I might say, "I, as your professor, am doing this wonderfully kind thing for you. You can decide whether you want a bag of potato chips, a Twix bar, a Snickers bar, an apple, or a bag of pretzels," and you either say which of those five items you want on week one, two, and three all at the same time on March 1st, or you make a decision on March 1st between those five items, another on March 8th, and another on March 15th." And what they find is that when people make all three decisions at the same time, so they're thinking globally about the decision, they choose a lot more product diversity. So you're more likely to choose an apple and a Twix bar and a bag of chips. But if you make those choices separated over time – a choice on March 1st, a choice on March 8th, and a choice on March 15th – then you're more likely to choose a Twix bar every single time.

Me: Erika, why is it that we think differently about choices when we make a series of them that will take effect in the future versus when we make them one at a time?

Erika: When you're making many choices at once, you can make trade-offs between choices that you can't make when you're just making one choice at a time. So, for example, if you're deciding what to eat on a given day, you're trying to maximize lots of things, like how tasty it is, how healthy it is, what mix of nutrients you're getting, whether you have enough carbs in the meal and proteins in the meal. (I keep thinking of food now, I must be hungry!)  But if you're making your meal plan for the whole week, you might be able to balance some of those trade-offs better and say, "OK, this is a day where I'll have more carbs. I'm going on a run the next day. Then the next day I really want to prioritize getting more proteins in my meal." And you can make those trade-offs in a wiser way when you're thinking globally than locally.

And instead, when you're thinking locally, what you might do is say, "What's the best individual choice? Even though it requires me to sacrifice all sorts of things." OK, I'll make that choice and then I'll make it over and over. But actually, probably it would be better if you thought about the trade-offs and made a balanced set of decisions across a period of time.

If you think every day individually about the decision to go to the gym, it's very obvious to you that going to the gym can bring you some discomfort. Maybe it's annoying. Maybe you feel like you don't have a lot of time. Maybe the idea of getting on the treadmill is just exhausting to you, and you're like, "OK, losing one gym visit, not that big of a deal." But again, if you think about it over the course of a month, a year, 10 years, you might think very differently about the cost versus benefits of going to the gym.

Me: That makes a lot of sense.  I want to turn to talking about a related bias that we've studied together, Erika, which is the isolated choice effect. And I was wondering if you could first just define what that is and explain how it relates to choice bracketing.

Erika: Oh, absolutely. So the isolated choice effect is the idea that when people make a hiring decision or a promotion decision in isolation, so they're just responsible for making one hiring choice, they're much less likely to prioritize and think about and choose diversity than when they're making a collection of choices.

So, in one study run with Edward Chang and Aneesh Rai, who are two of our incredible collaborators, we have people come to take our experiment and we tell them, "You're a hiring manager at this major tech company, and you're trying to put together a new innovation team," and we either tell them "Your responsibility is just to select one person for this team," let's say the head software engineer or the product manager or the UX designer, or "You're going to be responsible for staffing up the whole team."

So, for each role, we showed people three potential candidates, and what we find is that people are systematically more likely to include women in the team, and they include more women when they make five decisions all at once than when we aggregate together five decisions made by different people.

Me: Thanks for describing that.  I’m still really fascinated by those findings.  What would you recommend people do differently now that they know about the power of choice bracketing?

Erika: I think when you're thinking about your own life and your own individual decisions, I think there's a lot of value in thinking about when global properties of your decisions might matter. So, is this a decision that could become a habit? And in that case, I should think globally about what kinds of habits I do and don't want to build. Or is this a decision that contributes meaningfully to a bigger team or a bigger endeavor, a bigger effort? In that case, I want to think about it within the context of that bigger global effort or team, right? I think about this when I'm hiring people or when I'm choosing, for example, PhD students. I think about not just that individual, but what's the team? What's the cohort going to look like? How can I build a team or a cohort that's going to be best able to support each other?

One thing that I try to stress is when my team and I are all going off and making individual choices that will end up affecting each other, it is worth having at least a meeting or a person responsible for looking at what the totality of those decisions look like.

Me: So, in short, to put this in investment speak, is it fair to say life is a portfolio? And that means we need to think about our choices not just as individual picks, but about how they'll affect our life portfolio?

Erika: Absolutely.

Me: I really like that as a place to end.  Erika, thank you so much for taking the time to talk with me.

Erika: Of course. Thank you.

This interview has been edited for clarity and length.

To learn more about Erika’s work on choice bracketing, listen to the episode of Choiceology where we dig into the topic or check out our joint research on the isolated choice effect.

That’s all for this month’s newsletter. As usual, I plan to take a break from Milkman Delivers over the summer, but I’ll be back with fresh content before you know it!  And in the meantime, if you’re itching for more behavioral science insights, consider checking out my back catalog.

Katy Milkman, PhD

Professor at Wharton, Host of Choiceology, an original podcast from Charles Schwab, and Bestselling Author of How to Change

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