Does uncertainty excite you, or does it freak you out?
Not knowing for sure what’s going to happen in the future keeps life interesting. It means our fates aren’t sealed; there are possibilities yet to unfold. But it also can be scary as heck. And our brains might be hardwired to avoid it entirely.
Previous studies of human behavior have shown that people avoid uncertainty when it comes to gaining something—they’d rather take a $100 bill sitting in front of them than be given a 50 percent chance of winning $200. But the findings also suggest that people do opt for uncertainty when it comes to losing something—they’d rather take the 50 percent chance of losing $200 than definitely lose $100. That’s called the “prospect theory.”
New research takes a fresh spin on this tried and true idea: It says that whether we’re winning or losing, when we’re making choices that will impact us in the future, we want the outcome to be certain rather than ambiguous. We’d rather make a final decision now than try to weigh what will be best for us down the road.
Though the prospect theory holds true for immediate decisions, like if you’re playing roulette in Las Vegas, trying to look into the murky future to determine the best path might be too overwhelming.
“People really don’t like the complexity and cognitive load of making decisions under uncertain circumstances,” said Jeffrey Pfeffer, researcher and professor at the Stanford Graduate School of Business, to the university.
Understanding how we deal with uncertainty over time is important because most decisions we make don’t have immediate outcomes, lead researcher Dave Hardisty of the University of British Columbia Sauder School of Business pointed out.
He gave the example of making environmentally friendly choices as consumers. We don’t know for sure what the implications of climate change will ultimately be. Should we invest in expensive but environmentally friendly technology, like solar panels, electric cars, smart home gadgets and special light bulbs? Or should we maintain the status quo? After all, we probably won’t even live to see the outcome of our actions.
“People are more likely to choose a more simple option—exactly what they’re going to be getting,” he said.
With Hardisty and Pfeffer’s new finding in mind, Hardisty characterized what we are doing for the environment in an interesting way.
“This may sound a little weird, but people often ask, ‘Why aren’t we doing something about climate change?'” he said to Rewire. “I’m actually impressed that we’re doing as much as we are. From a rational economic perspective we shouldn’t be doing anything. …
For the record, I’m an environmentalist, but from this rational economic perspective, (being environmentally friendly) is not going to effect us now so much—it’s in the future, so who cares about them, there’s uncertainty.”
If the uncertainty of the future is causing us to make decisions that are possibly detrimental to our future selves—decisions that are made primarily to avoid that uncertainty—and “if you want to try to be making more long term choices… try to do what you can to reduce the uncertainty of the future,” Hardisty said.
Waiting to make a decision rather than rushing to one is one strategy. If you wait a while, some of the future’s uncertainties might clear themselves up naturally.
In the consumer world, expectation management can help, Hardisty said. He’s working on new research that he hopes will encourage more environmentally friendly purchases.
When people are shopping for appliances and lightbulbs, for example, they might not choose the environmentally friendly, energy-efficient option because it’s more expensive and unclear how much it might cost them down the line.
In this new research, “we try to make the future more concrete and salient, those future losses—we calculate for people the 10-year energy cost” and put the cost on the product’s packaging.
“People can compare between products (and that) makes the future less uncertain and more concrete for people,” he said. “That is effective for nudging people to choose more energy-efficient products.”
Katie Moritz is Rewire’s senior editor and a Pisces who enjoys thrift stores, rock concerts and pho. She covered politics for a newspaper in Juneau, Alaska, before driving down to balmy Minnesota to help produce long-standing public affairs show “Almanac” at Twin Cities PBS. Now she works on this here website. Reach her via email at [email protected] Follow her on Twitter @katecmoritz.