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  • Elena Talavera

The Planning Fallacy



It is commonly said that time is money, and it is that controlling time is one of the phenomena that is beyond human capacity. This limitation makes it so precious. Knowing how and in what to use our time will be an essential determinant to develop healthy habits, and consequently enjoy a better quality of life. In light of the new year, in which many people take these dates to make resolutions and set goals, making a realistic plan about the time we estimate to achieve our objectives -whether in the short, medium, or long term- will be key to achieving them in a satisfactory way. However, our estimates are not always accurate, which affects the perception on our performance and therefore, motivation. In the academic literature, this phenomenon is known as The Planning Fallacy. In this article, we will address this concept, its mechanisms, as well as some tricks to avoid falling into this cognitive trap.

The Planning Fallacy was first introduced to the literature by Kahneman and Tversky in 1979. These authors described this phenomenon as the people’s tendency ‘‘to underestimate the time required to complete a project, even when they have considerable experience of past failures to live up to planned schedules’’ (1982a, p. 415). In other words, individuals tend to remain optimistic about their current projects even when exposed to information that shows otherwise. These thought patterns are nurtured by a series of optimistic and underestimation biases. To identify some examples in our day to day, it is required that two independent, but related facts are given. In the first place, predictions of current task completion times must be more optimistic than the beliefs about the distribution of past completion times for similar projects. And secondly, the predictions of the current task completion times must be more optimistic than actual outcomes.


Now that we have described this fallacy, it is important to note the mechanism underlying people’s optimistic forecasts. Kahneman and Tversky (1979) explained these through the inside versus outside analysis of the planning fallacy. This analysis is based on a metaphor that illustrates how people perceive a planned project. One the one hand, an inside view of a task is based on singular information, i.e., aspects of the activity that may require shorter or longer competition times such as the difficulty. On the other hand, an outside analysis relies on the distributional information, this is the way the current activity may fit into a group of related tasks. Therefore, the two approaches for time prediction differ in whether people consider the target task as a unique case or as an ensemble of similar tasks. To explain the planning fallacy using this analysis, Kahneman and Tversky (1979) claimed that people fail in incorporating the outside information in their competition time estimates. This is because individuals tend to generate predictions based on the information they have at hand. And it is with the information available at that moment, when they generate future predictions, without considering possible obstacles or other factors that can get in the way.

Now that we know the mechanism that governs this cognitive tendency, we will offer some tips to cope with it and become more successful in reaching your goals:

  • Observe the task to be planned from outside. To do this, take into consideration not only aspects related to the task itself, but also events that may happen and are beyond our control (unexpected obstacles, delays, interruptions, etc.)

  • Look at the project through the glasses of pessimism for a moment or apply Murphy's law and think about what circumstances things might happen. This will give you a more objective view of the process and will help you to control for certain cognitive shortcuts, such as optimism biases.

  • Divide large tasks into smaller ones. By dividing a larger project into smaller tasks, measuring the progress of lighter activities would be much easier. Furthermore, the tasks to be completed would be more manageable and flexible to be adapted -if necessary- based on your performance.

  • Finally, if we really want a more external view of it, we can always ask someone impartial to give us their opinion on the proposed plan. Also, you can also make use of apps, such as StepApp, which thanks to its artificial intelligence system will estimate the time it will take to perform a task, and would adapt it according to your performance and motivation throughout the process.

We conclude this article, paraphrasing John Landis Mason who said:

“Gain control of your time, and you will gain control of your life”.

References:

Kahneman, D., & Tversky, A. (1979). Intuitive prediction: Biases and corrective procedures. TIMS Studies in Management Science, 12, 313–327.


Kahneman, D., & Tversky, A. (1982a). Intuitive prediction: Biases and corrective procedures. In D. Kahneman, P. Slovic, & A. Tversky (Eds.), Judgment under uncertainty: Heuristics and biases (pp. 414–421). Cambridge: Cambridge University Press.

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