Habits You Can Adopt to Reduce Bias
The animated G.I. Joe mini-series, A Real American Hero, ran during the mid-1980s. The popular half-hour program follows an elite team of soldiers as they battle the evil Cobra organization in its quest for world domination. After each episode, a public service announcement (PSA) notoriously ran, in which a G.I. Joe hero saves a viewer-age kid from trouble. The children found themselves caught in scenarios such as their clothing catching on fire, unthinkingly about to leave with a stranger, or lying to a friend. In each case, the G.I. Joe soldier imparts words of wisdom, telling the children what they should do to avoid these risks in the future. Invariably, the children respond, “Now we know!” And the soldier confirms that, “knowing is half the battle.”
Every parent understands, however, that telling a child not to play in the street or to heed some other advice only goes so far. Similarly, you likely know that you should save more money each month, spend within your limits, and stay invested in the market even when it drops to disheartening lows. Yet, executing those plans when they count is difficult. You may plan to lose weight, but when you’re invited out for dinner at the new French restaurant in the city, that commitment is hard to maintain.
Now that you are aware of how and when biases affect your choices, you may believe that you are less susceptible to these influences. Understandably, awareness of how biases impact your decisions provides a feeling of confidence that you’ll make better decisions in the future. If your confidence leads you to believe that awareness is enough to prevent recurrence, however, you’ve fallen prey to yet another bias, aptly called the G.I. Joe Fallacy.
The only way to correct for these influential biases is to adopt new habits. To do that, you need to know what habits are effective and how to implement the necessary safeguards for when, inevitably, old patterns arise. The following sections outline many of these practical habits that you can adopt for that very purpose.
You can purchase a copy of Unbiased Investor: Reduce Financial Stress & Keep More of Your Money (2022) online here or at your favourite bookstore. You can also find the Unbiased Habits Checklist free of charge here.