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Bias from Self-Interest — Self Deception and Denial to Reduce Pain or Increase Pleasure; Regret Avoidance (Tolstoy effect)

We can ignore reality, but we cannot ignore the consequences of reality.

Bias from self-interest affects everything from how we see and filter information to how we avoid pain. It affects our self-preservation instincts and helps us rationalize our choices. In short, it permeates everything.

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Our Self-Esteem

Our self-esteem can be a very important aspect of personal well-being, adjustment and happiness. It has been reported that people with higher self-esteem are happier with their lives, have fewer interpersonal problems, achieve at a higher and more consistent level and give in less to peer pressure.

The strong motivation to preserve a positive and consistent self-image is more than evident in our lives.

We attribute success to our own abilities and failures to environmental factors and we continuously rate ourselves as better than average on any subjective measure – ethics, beauty and ability to get along with others.

Look around – these positive illusions appear to be the rule rather than the exception in well-adjusted people.

However, sometimes life is harsh on us and gives few if any reasons for self-love.

We get fired, a relationship ends, and we end up making decisions which are not well aligned with our inner selves. And so we come up with ways to straighten our damaged self-image.

Under the influence of bias from self-interest we may find ourselves drifting away from facts and spinning them to the point they become acceptable. While the tendency is mostly harmless and episodical, there are cases when it grows extreme.

The imperfect and confusing realities of our life can activate strong responses, which helps us preserve ourselves and our fragile self-images. Usually amplified by love, death or chemical dependency, strong self-serving bias may leave the person with little capacity to assess the situation objectively.

In his speech, The Psychology of Human Misjudgment, Charlie Munger reflects on the extreme tendencies that serious criminals display in Tolstoy’s novels and beyond. Their defense mechanisms can be divided in two distinct types – they are either in denial of committing the crime at all or they think that the crime is justifiable in light of their hardships.

Munger coins the two cases the Tolstoy effect.

Avoiding Reality by Denying It

Denial occurs, when we encounter a serious thought about reality, but decide to ignore it.

Imagine one day you notice a strange, dark spot on your skin. You feel a sudden sense of anxiety, but soon go on with your day and forget about it. Weeks later, it has not gone away and has slowly become darker and you eventually decide to take action and visit the doctor.

In such cases, small doses of denial might serve us well. We have time to absorb the information slowly and figure out the next steps for action, in case our darkest fears come true. However, once denial becomes a prolonged measure for coping with troubling matters, causing our problems to amplify, we are bound to suffer from consequences.

The consequences can be different. The mildest one is a simple inability to move on with our lives.

Charlie Munger was startled to see a case of persistent denial in a family friend:

This first really hit me between the eyes when a friend of our family had a super-athlete, super-student son who flew off a carrier in the north Atlantic and never came back, and his mother, who was a very sane woman, just never believed that he was dead.

The case made him realize that denial is often amplified by intense feelings of love and death. We’re denying to avoid pain.

While denial of the death of someone close is usually harmless and understandable, it can become a significant problem, when we deny an issue that is detrimental to ourselves and others.

A good example of such issues are physical dependencies, such as alcoholism or drug addiction.

Munger advises to stay away from any opportunity to slip into an addiction, since the psychological effects are most damaging. The reality distortion that happens in the minds of drug addicts leads them to believe that they have remained in a respectable condition and with reasonable prospects even as their condition keeps deteriorating.

Rationalizing Our Choices

A less severe case of distortion, but no less foolish, is our tendency to rationalize the choices we have made.

Most of us have a positive concept of ourselves and we believe ourselves to be competent, moral and smart.

We can go to great lengths to preserve this self-image. No doubt we have all engaged in behaviors that are less than consistent with our inner self-image and then used phrases, such as “not telling the truth is not lying”, “I didn’t have the time” and “others are even worse” to justify our less than ideal actions.

This tendency in part can be explained by the engine that drives self-justification called cognitive dissonance. It is the state of tension that occurs, whenever we hold two opposing facts in our heads, such as “smoking is bad” and “I smoke two packs a day”.

Dissonance bothers us under any circumstances, but it becomes particularly unbearable, when our self-concept is threatened by it. After all, we spend our lives trying to lead lives that are consistent and meaningful. This drive “to save face” is so powerful that it often overrules and contradicts the pure effects of rewards and punishments as assumed by economic theory or observed in simple animal behavioral research.

The most obvious way to quiet dissonance is by quitting. However, a smoker that has tried to quit and failed can also quiet the other belief – namely that smoking is not all that bad. It is the simple and failure-free option that allows her to feel good about herself and requires hardly any effort. Having suspended our moral compass only once and found rationales for the bad, but fixable, choices gives us permission to repeat them in the future and continue the vicious cycle.

The Vicious Cycle of Self-Justification

Carol Tavris

Carol Tavris and Elliot Aronson in their book Mistakes Were Made (But Not by Me): Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts explain the vicious cycle of choices with an analogy of a pyramid.

Consider the case of two reasonably honest students at the beginning of the term. They face the temptation to cheat on an important test. One of them gives in and the other does not. How do you think they will feel about cheating a week later?

Most likely their initially torn opinions will have polarized in light of their initial choices. Now take this effect and amplify it over the term. By the time they are through with the term two things will have happened:
1) They will be very far from each other in their beliefs
2) They will be convinced that they have always felt strongly about the issue and their side of the argument

Just like those students, we are often at the top of the choice pyramid, facing a decision whose consequences are morally ambiguous. This first choice then starts a process of entrapment of action – justification – further action, which increases the intensity of our commitment

triangle

Over time our choices reinforce themselves and towards the bottom of the pyramid, we find ourselves rolling toward increasingly extreme views.

Consider the famous Stanley Milgram experiment, where two thirds of the 3,000 subjects administered a life threatening level of electric shock to another person. While this study is often used to illustrate our obedience to authority, it also a demonstrates the effects of self-justification.

Simply imagine the scenario of someone asking you to do the favor inflicting 500V of potentially deadly and incredibly painful shock on another person for the sake of science. Chances are most of us would refuse it under any circumstances.

Now suppose the researcher tells you he is interested in effects of punishment on learning and you will have to inflict hardly noticeable electric impulses on another person. You are even encouraged to try the lower levels of 10V yourself to feel that the pain is hardly noticeable.

When you come along, suddenly the experimenter asks you to increase the shock to 20V, which seems like a small increase, so you agree without thinking much. Then the cascade continues – if you gave 20V shock, what is the harm in giving 30V? Suddenly you find yourself unable to draw the line, so you simply tag along with the instructions.

When people are asked in advance whether they would administer shock above 450V, nearly nobody believes they would. However, when facing the choice under pressing circumstances, two thirds of them did!

The implications here are powerful – if we don’t actively draw the line ourselves, our habits and circumstances will decide for us.

Making Smarter Choices

We will all do dumb things. We can’t help it. We are wired that way. However, we are not doomed to live in denial or keep striving to justify our actions. We always have the choice to correct our tendencies, once we recognize them.

A better understanding of our minds serves as the first step towards breaking the self-justification habit. It takes time, self-reflection and willingness to become more mindful about our behavior and reasons for our behavior, but it is well worth the effort.

The authors of Mistakes Were Made (But not By Me) give an example of conservative William Safire, who wrote a column criticizing (then and current) American presidential candidate Hillary Clinton’s efforts to conceal the identity of her health care task force. A few years later Dick Cheney, a Republican (conservative) candidate whom Safire admired, made a similar move to Clinton by insisting on keeping his energy task force secret.

The alarm bell in Safire’s head rang and he admits that the temptation to rationalize the occasion and apply double standards was enormous. However, he recognized the dissonance effects and ended up writing a similar column about Cheney.

We know that Safire’s ability to spot his own dissonance and do the fair thing is rare. People will bend over backward to reduce dissonance in a way that is favorable to them and their team. Resisting that urge is not easy to do, but it is much better than letting the natural psychological tendencies cripple the integrity of our behaviors. There are ways to make fairness easier.

Making Things Easier

On the personal level Charlie Munger suggests we should face two simple facts. Firstly, fixable, but unfixed bad performance is bad character and tends to create more of itself and cause more damage — a sort of Gresham’s Law. And, secondly, in demanding places like athletic teams, excuses and bad behavior will not get us far.

On the institutional level Munger advises to build a fair, meritocratic, demanding culture plus personnel handling methods that build up morale. His second piece of advice is severance of the worst offenders, when possible.

Munger expands on the second point by noting that it is not in any case possible to let go our children, but we must therefore try to fix them to our best ability. He gives a real life example of a child, who had the habit of taking candy from the stock of his father’s employer with the excuse that he had intended to replace it later. The father said words that never left the child:

“Son, it would be better for you to simply take all you want and call yourself a thief every time you do it.”

Turns out the child in this example was the dean of University of Southern California Business School, where Munger delivered the speech.

If we are effective, the lessons we teach our children will serve them well throughout their lives.

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There is so much more to touch on with bias from self interest, including its relation to hierarchy, how it distorts information, how it feeds our desire for self-preservation and scarcity, how it impacts group preservation, its relationship to terrority etc.

Bias From Self-Interest is part of the Farnam Street latticework of mental models