TDL Perspectives: What Are Heuristics?

Julian Hazell, an Associate at The Decision Lab, sat down with Sekoul Krastev, a Managing Director, to learn more about his perspective on heuristics.

Some topics we covered include:

  • What are heuristics?
  • Why do they exist?
  • Are they good or bad?
  • How do they apply in the real world?
  • How were they discovered?

Julian: Let’s start with the basics. What are heuristics?

Sekoul: A heuristic is a simple rule that we use to solve more complex problems. They are mental shortcuts that allow us to make a decision about something without having to take a quasi-infinite amount of time to consider every single aspect of it. 

Julian: Can you give an example?

Sekoul: A common example of a heuristic in the decision-making literature is the availability heuristic. The availability heuristic is the tendency to view events or instances that are more salient as representative of an entire group. For example, if you’re thinking about the likelihood of dying on a plane due to a plane crash, you might think about all the times you’ve seen plane crashes appear in the news.

Now, plane crashes are very unlikely to happen. By some statistics, it would take 15,000 to 30,000 years of flying once a day to be in a fatal plane crash. Nevertheless, when you think about the likelihood of your plane crashing, you won’t recall all the flights that had ever been successful; instead, you will likely focus on the ones that did crash. 

This is the availability heuristic. It means that the events that are easiest to recall, and in this case, those that are emotionally salient, replace the process of forming a statistic about the likelihood of something happening.

Julian: Would we be better off without heuristics?

Sekoul: Heuristics are often talked about in the context of behavioral economics as irrational or biased ways of thinking or making decisions. Without heuristics, however, it would be very difficult for us to make any kind of decision or to function at all. 

Take the example of deciding between buying apples versus oranges at the supermarket. You might have a heuristic that you always buy oranges. That might be a habit that you’ve developed. Now, if you were to pull away from that and actually analyze the situation and think about every single factor that should go into that decision, it’s likely that you would never actually reach a decision. 

You might think about the prices of the two, the macronutrients, every single experience you’ve ever had with apples, every single experience you’ve ever had with oranges, et cetera. In order to avoid wasting resources or potentially having to face a problem that is completely unsolvable, the brain takes shortcuts. It basically uses heuristics in order to save us time and energy and to make the world simpler for us so that we can make more complex decisions faster.

Julian: What makes heuristics so important? When do they have the greatest impact?

Sekoul: What makes heuristics impactful is how useful they are in our decision-making process. At the same time, heuristics can sometimes lead to suboptimal decisions. So because they’re imperfect shortcuts to solving problems, they do sometimes lead us to make mistakes. 

So, for example, you might think about discrimination as a type of heuristic, rather than thinking about it as something where people deliberately want to hate on a group. Another way to explain it and the way that the psychology literature might explain at least some types of discrimination is through the concept of a heuristic. 

Rather than trying to understand a group of people, one might instead think about every salient instance that that group contains or that is contained in the news regarding that group, and then formulate a mental shortcut that evaluates the group based on certain characteristics. 

That evaluation is obviously not fair because you’re taking a very small data set that’s been filtered through the media and using it to evaluate a whole group. And in those cases, that can lead to poor decisions at an individual level, but more importantly, it can lead to systemic problems.

Julian: Very interesting. I’d like to get at the nuts and bolts a bit more. Why do heuristics exist? 

Sekoul: Heuristics are a cognitive tool we use to facilitate decision-making. Essentially, our brains are optimized to, as far as we know, solve problems in a finite amount of time. When we’re faced with a decision such as the example of choosing an apple versus an orange, we tend to have a time limit that’s set by our brain during which the brain wants that decision to happen. 

So it’s very likely that as time goes forward, we use a simpler kind of rule to make that decision to the point where we might ultimately make it completely random. So what happens in the brain as we face a decision, we start by deliberating on it, and as time goes forward, we gravitate towards a simpler solution that ultimately unblocks us.

Julian: Can we really avoid using heuristics?

Sekoul: As we touched upon earlier, heuristics are a useful tool for our brains to save energy and time. Without heuristics, we would not be able to solve many of the complex problems that we’re required to solve. As the world around us becomes more and more complex, heuristics actually become more and more prevalent and become larger and larger shortcuts. 

One example of this is in the political sphere. If we’re in 20,000 BC, our social circle might be composed of a group of, let’s say, 100 people. If we have to choose a political leader between two of those individuals, we might go for someone that we know better and think about our memories of that person and ultimately make a decision based on some heuristics, but also some deliberate thought.

In today’s context, where we have no personal relationships with political leaders, know very little about what they actually do on a day-to-day basis, who they are as people, what decisions they’ve made politically, the complexity of the decision of choosing who to support is much higher than before. 

So with that complexity comes a greater need for shortcuts. Something like political parties is, for many partisans, a heuristic that simplifies that problem. So, rather than understanding the individuals supporting what that person has done or is likely to do, we might make the much simpler decision of always supporting a particular political party.

Julian: Hypothetically, what would the world be like without heuristics?

Sekoul: Without heuristics, the brain would have a very hard time solving even the simplest of problems. If we just think about someone asking us, do you want to go out for lunch? That’s a question that might be solved quite easily with a heuristic. The heuristic might be something like if it’s after twelve o’clock, then I’ll say yes. 

On the other hand, if we don’t have a heuristic, even simple questions like that might paralyze us. One might, for example, weigh the downside of interrupting their current task against their hunger and the likelihood of getting hit by a car as they go to the restaurant. There’s an almost infinite number of factors that could be counted in almost every decision. Without heuristics, everyday life would be complicated to the point of paralysis.

Julian: Can we attribute moral qualities to heuristics? Are there instances where they are definitively good or bad?

Sekoul: Heuristics can be both good and bad at the same time. Because they allow us to function in the world and solve complex problems, they’re ultimately responsible for much of the progress that we make as individuals, groups, and as a society. At the same time, some problems need to be thought about more deliberately and our tendency to use heuristics rather than considering evidence is something that holds us back as individuals, as groups, and as a society. 

What distinguishes a good from a bad heuristic at the end of the day is our set of aspirations as a society, our values, and our moral system. The way that we judge the outcomes of our decisions is ultimately what should decide whether a more deliberate process is required. 

In the context of a complex issue such as discrimination, for example, we might, as a society, decide that being more deliberate and evidence-based is a better approach than simply using heuristics and discriminating against a particular group. In other cases, things may be more difficult to determine.

Julian: Okay, what about specific cases where we can isolate the effect of heuristics and decide how to adjust our behavior to accommodate them?

Sekoul: Well, on the other hand, in corporate settings, for example, speed is often important. In other cases, accuracy is very important. So depending on the consequences of a given choice, a combination of more deliberate and careful thought based on evidence will compete with heuristic, rule-based decision-making.

Rather than thinking about whether heuristics are good or bad, it’s important to think about the overall choosing process. Figuring out when evidence can be incorporated into decision-making without stalling the process is part of what applied behavioral scientists do, both on internal company projects and external projects facing clients. 

Julian: Let’s talk about how heuristics apply in the real world.

Sekoul: Behavioral scientists research the details of the heuristics we use every day. In applied work, they try to harness heuristics to make life more fair, efficient, and rewarding. For example, when a bank builds a product, they want to remove as much friction as possible from the customer experience. 

Heuristics will expedite the decision-making and reduce the effort of using the service. On the other hand, there are instances where the user must deliberately make a decision. Here, creating an interface that has users acknowledge, and work around, their heuristics will make a more effective product. 

There are places where friction should be reduced and heuristics should be used. There are other places where friction should be increased and the use of evidence should be higher and the use of rules lower.

As a whole, heuristics are a very influential concept in decision science and something that governs our lives as individuals, as groups, and as a society. The extent to which we use them influences the speed and quality of our decisions. At the same time, we must be somewhat deliberate with the heuristics we do use, even in cases where we do rely on rules, being more deliberate about the rules that we rely on as something that ultimately leads to outcomes that are aligned with our preferences.

Julian: This has been an insightful look into one of the core areas of behavioral science. Thank you for your time.

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