Good Choice, or Good Outcome?

The outcome of a decision has no bearing on whether or not it was good.

What makes a decision good or bad? The idea that a decision even can be good or bad tacitly implies that the one making the decision has agency and capacity. If they aren’t allowed to make decisions, or are incapable of properly evaluating their options for some reason, then it can’t make sense to have value judgements about their behavior. A subtle consequence of this is that it’s only possible to evaluate the decision based on the information that was available at the time. Note though, available doesn’t necessarily mean possesses. We can fault someone even if they don’t have the relevant information, but only if there was a reasonable path to acquire it that they were aware of but failed to pursue.

Considering the Outcome is Hindsight Bias

A logical consequence of these requirements is that the outcome of your decision is wholly irrelevant to whether or not it was a good one. This must be the case. After all, the outcome is itself information and by definition it must exist in the future where the decider doesn’t have access to it.

That might still seem wrong or confusing. We all have experienced the moment after making a bad call where it’s suddenly so obvious why we shouldn’t have done it. But consider carefully what you’re actually reflecting on. You didn’t mess up because something bad happened, you messed up because you already had the information required to know you shouldn’t have done that.

Let’s review some examples to flesh out this nuance.

Considering Risk

Pretty much everyone knows that you shouldn’t cut towards yourself or too closely to your other hand. Yet most people also have cut themselves while doing this. A single slip of the hand is all that stands between you and stitches. But most of the time nothing bad happens, so you lull yourself into taking shortcuts or being careless. Yet, the fact that you made it unscathed doesn’t change whether or not you should have done it. If you were asked “should you cut towards yourself or away from yourself?”, your recent success wouldn’t change your answer.

Some decisions are a little more complicated. It’s possible not to know that the exact behavior is a bad idea, but it’s also possible to self discover that fact by considering other information you do know. For example, someone from the south might know about black ice. But they do know that as it gets colder the road gets more slippery, they know that they should increase following distance when conditions are suboptimal, and they know that conditions can change rapidly.

In fact, this is exactly how I ended up in my first and only car accident. It was my first winter in North Dakota, and I drove down a paved road that was perfectly clear from plowing a short distance to pick up food. On the way back, I traveled along the same road driving normally. When I came to stop at the light, I suddenly hit black ice and couldn’t stop. I ended up rear ending a truck at low speed in the lamest accident ever. There was plenty of time for regret between the time it became clear I would hit the truck and actually hitting it.

I didn’t know just how bad black ice could be. I never suspected I’d be getting into an accident in that situation, my guard was down. Upon further inspection, what happened was water had been spilled into the road while I was in the store and then quickly froze. In retrospect, I can say it was a stupid choice to start braking as late as I did. But not because I crashed. If no one had been there and I skidded further than I wanted to go it still would have been stupid. Even if there ended up being no ice it wouldn’t have been smart! There was no upside, and it’s not like I didn’t know there can be ice in the road or that you can’t stop when there is.

Finally, some events are just unprecedented and thus not the fault of that person (though maybe someone else in the world did screw up). Consider plane crashes that resulted from a bug in a computer system that the pilots were never trained on. When they go to do the right things, they’re actually the wrong things because of what the buggy system is doing. That doesn’t change wether or not they made the right decision.

The Role of Luck

In my experience, this is the most common one for people to fall victim to. If I liquidate my 401k and buy lottery tickets, then win, did I make a good decision? Of course not. This is an absurd proposition. It wasn’t good, it was lucky. We all know that getting a lucky break is a good thing, and unfortunately sometimes the goodness of luck gets transferred onto the evaluation of the decision itself. A good decision by its nature must be replicable and applicable to others in the exact same situation. So watch out for that. The bigger the luck, the easier it is to make this mistake.

Spurious Connections and Silver Linings

Here’s a controversial one. Was it a good decision to go $100K into debt to attend a middling out of state public school because that’s where you met your spouse? Well, we need to be a bit more precise. In this case, the reason money comes up is probably because the question of good financial decisions was raised. In that case this wasn’t a good financial decision, obviously. But this is a really uncomfortable topic for people, because it can lead to feeling a need to put a dollar value on having met your partner.

The quality of a decision can depend on the area in which we grade it, so it can be good by some measurements and bad by others. It would be perfectly legitimate to say “It was a good decision for me, because I enjoyed it, got value, and I’m ok with what the costs were in exchange”. That’s great, more power to you. But that has no relevancy to whether or not it was a wise financial decision. Yes, value is subjective as show in that example quote, but financial value of substitute products isn’t. If you can get the same product or service but at a lower cost, then you made a bad financial choice by overpaying.

We can’t ignore the bad outcomes of a choice by pointing to the silver lining or making spurious connections. In the case of finding a partner for instance, for this logic to hold then at a minimum it must be the case that there is no other person in the world they could have met and been happily married to. It also presumes the relationship will never go so south in the future that it ends up being a net negative experience at some point.

Decision Quality is Dependent on the Decider’s Context

The other thing that can trip people up is that a decision good for one person and not another. It can even change depending on what stage of their life the decider is in. Suppose in the example from before that while one person went into massive debt, their partner didn’t. Their partner was fortunate enough to have parents that were both willing and able to completely pay for their tuition and living expenses. So, in that person’s world the price wasn’t actually a relevant factor. They were spending someone else’s money that wasn’t fungible (meaning, if they went to a cheaper school their parents wouldn’t have cut them a check for the difference).

In this hypothetical, it wasn’t a bad choice for the parent’s either because they had the means and they got happiness out of being able to provide their child with an opportunity, to pick a college without concern for money, that they themselves weren’t able to experience.

Don’t Get Discouraged

This might be starting to feel a little negative. Wow, even if I enjoy my life and how it’s played out I still may have been making bad decisions? I don’t see it that way. We can (and should) always be happy and thankful for our good fortunate where it occurs. But this cuts both ways. If you’re proud or take credit for the good things you aren’t responsible for, you necessarily must take credit for the bad things too. And this can be extremely damaging, because often the worst things that happen to us in life are totally outside of our control. Beating ourselves up over it is just adding insult to injury.

It’s also really important to be able to identify where you do and don’t have agency in life. You don’t want to waste time struggling in areas where it won’t make a difference, nor do you want opportunities where you could have improved things for the better pass you by. For these reasons, you’re better off accurately reflecting when your decisions were good and when they weren’t.