How To Make Better Decisions In Uncertain Times
Shaky ground can make us feel less secure in our choices. Peter Atwater, author of the new book “The Confidence Map,” offers a clear framework to find a way forward.
In times of uncertainty, it becomes difficult to make informed decisions. Forces beyond our control can paralyze us or at least make it hard to see through the noise. Amidst murky economic forecasts, the algorithmic distillation of information online, the never-ending debate about whether climate change is even happening, how can we feel sure about anything? And what should we focus on to make sound decisions in the face of such chaos?
According to Peter Atwater, the answer is simple: confidence. Atwater is financial expert, consultant, and adjunct professor of economics at the College of William & Mary. He parlayed a successful Wall Street career forecasting the effects of consumer confidence on financial markets into the study of confidence as the chief driver of decision-making. His new book, The Confidence Map: Charting a Path From Chaos to Clarity, presents what he teaches his economics students: an understanding of how external forces and emotions affect confidence can help us make better decisions in every aspect of our lives.
“Problems require focus in order to resolve them, so we naturally focus in when we don’t have confidence,” says Atwater. “As a result, we block out everything around us that isn’t critical and familiar to us in that moment.” This myopic tendency stymies us. But so too can overconfidence. Atwater’s suggestion of drawing out a confidence map — in which you chart your own feelings in terms of high or low control and certainty — is an easy way to stay ahead of certain troublesome thinking and make more informed decisions. “You can identify not feeling certain or in control, but there’s no sense of weakness or shame about it,” he says. “It becomes a very objective, nonjudgmental way to start the conversation.”
Fatherly spoke with Atwater about making decisions in uncertain times, the importance of confidence in decision making, and why it’s crucial to “challenge the reasonableness” of feelings.
You write that most people misunderstand confidence. What do they get wrong about it?
When I ask my students what confidence means to them, they’ll point to LeBron James and Beyonce as examples. They associate confidence with what it looks like, the impression that you know what you’re doing.
But confidence is not a one-and-done thing; life moves you around, and it’s natural to not be confident all the time. It’s not a sign of weakness, but I think as a society, we associate not feeling confident with weakness. Once people understand this, they begin to realize that anytime things feel uncertain, or like they’re not prepared, they're going to naturally feel unconfident. And that’s okay.
Confidence is a funny word because when you say, ‘I am confident,’ you’re not talking about right now, you’re really talking about the future. It’s all about your view ahead of what’s coming. Where I came down in defining confidence was that we needed two things: We needed to feel certain that things were predictable, and we needed to feel that we had a sense of control, that we were prepared. And if we have those two things, then we feel confident about what’s going to happen.
But you’re not saying it’s okay to control other people, right, like a boss or spouse who might be controlling in general?
No, although I see that in entrepreneurs frequently. They have to have a clear sense of control that they’re the ones behind the wheel. You get a lot of authoritarian figures with that mindset, and that, to me, suggests a level of vulnerability: that unless they have absolute control, they don’t feel like they have any control at all. People should have a sense of preparedness that allows them to work with others in a collaborative way, not in an extreme, hierarchical way.
In your book, you write that our level of confidence distorts how we see the world, but that distortion isn’t necessarily a bad thing. Why?
I think we’re fitted with variable-lens goggles, and the lens on them moves in and out as a function of how we feel. And here I think it’s helpful to remember that the opposite of confidence is vulnerability, or feeling powerless and uncertain.
I use the example of a bear outside your tent. In those moments, our natural physiological response is ‘I must focus.’ There’s a problem and problems require focus in order to resolve them, so we naturally focus in when we don’t have confidence. As a result, we block out everything around us that isn’t critical and familiar to us in that moment.
When the bear is outside, what matters to me is me, not you. I don’t care about anyone else when my own confidence is threatened, when my safety and security feels vulnerable. And so my social priorities change, and as a result I’m less willing and interested to deal with people who are different from me. We’re naturally more xenophobic when we lack confidence.
I think it’s helpful to remember that the opposite of confidence is vulnerability, or feeling powerless and uncertain.
You talk about vulnerability in relation to the COVID-19 pandemic, and how that psychological distance affects how we make decisions. Could you speak to that?
We tend to quickly sort of disregard things that are abstract when we lack confidence. If what matters to most of us are things that are familiar, organizations like the World Health Organization might as well be on Mars when our confidence is low. They’re highly abstract in all sorts of dimensions.
So what happens in terms of our decision-making is we’re not paying any attention to things beyond our immediate horizon, and as a result we’re likely to make decisions where we’re not thinking about the implications to others, to other places, or to the future. When we lack confidence, we need to remind ourselves to widen the lens, to think about, for example, If I do this, what’s the downside to me or to somebody else? And to be very aware that when our confidence is low, high impulsivity and high emotion can lead us to make decisions that are very black or white without considering the broader implications and consequences.
Your book hinges on the idea of the confidence map to help people remain confident and make better decisions. So, what is a confidence map? How do you make one?
The confidence map is a square divided into four boxes, or quadrants, in which people can chart their feelings about experiences or events in terms of high or low “certainty” and “control.” For example, a passenger on an airplane typically will feel low control and high certainty that they’ll get to where they’re going. Turbulence on the flight, however, can shake people’s certainty about their safety and ability to reach their destination.
In my class, I’ll ask students simply, ‘Where are you today?’ And what’s remarkable to me about that experience is how quickly and easily we will locate ourselves on the quadrant as if it’s a fact. You can identify not feeling certain or in control, but there’s no sense of weakness or shame about it. It becomes a very objective, nonjudgmental way to start the conversation. When my students are worried about a test or project, their feelings of control and certainty are low, but they know that if they’re prepared, those feelings are temporary. The map shows, okay, there’s something going on here; what do we need to do about that situation?
If you can make decisions that reflect the possibility of good and bad outcomes, you’re likely to make healthier decisions.
Where is the best spot on the confidence map when it comes to making sound decisions?
The best location, if you can do it, is to try and remain in the middle. To be open to the fact that you don’t have control in everything and open to the fact that life can be uncertain. And if you can make decisions that reflect the possibility of good and bad outcomes, you’re likely to make healthier decisions.
What would you say to someone who might think, Well, Peter Atwater is an expert, and he says that we make decisions based on our feelings, so I’m just gonna keep following my gut like I always have?
I do think feelings are valid but would say it’s also important to appreciate that your feelings can be wrong. They can lead to poor choices. We need to look at them objectively, not emotionally. I don’t want people to ignore feelings, but rather to look at them, accept them as they are, and challenge the reasonableness of them.
I don’t want people to ignore feelings, but rather to look at them, accept them as they are, and challenge the reasonableness of them.
You write about how overconfidence often leads to poor decisions. This isn’t surprising. But why is that?
We make our worst decisions at the two extremes of confidence. That focus when we don’t have confidence, which I talked about a little while ago, evaporates when we’re confident. We don’t have to focus. It’s kind of like driving on a straight road on a clear day: You get to your destination and you’re like, how did that happen? You weren’t paying any attention because you didn’t have to, and that’s true when we feel really confident.
The consequences when we’re not paying attention is that our sense of invulnerability is really high, so we naturally take more risks. We take the most risks at a time when we’re paying the least amount of attention. You can see how that’s a really horrible pairing.
How can someone be better prepared for overconfidence?
I always recommend that we step back and come up with what I jokingly call a bingo card of characteristic things we would do when we’re overconfident. I’ve done this with executives, asking, ‘What would the business look like if you were feeling overconfident?’ We all laugh about it, but then they start to realize they’ve actually done some of the things on the list, so we need to be careful not to do them again. And If you can just come up with a list of 10 or 12 things that would go along with feeling overconfident, having that list will make you more aware of the need to be more careful.
The other thing I would say is simply observe the speed in which you make decisions, because the faster you make a decision, the more likely you are to be either overconfident or woefully under-confident, particularly when it’s a big decision.
We forget that the future is inherently unknown. If you’re certain you know what’s coming, you’re kidding yourself.
How does under-confidence lead to poor decisions?
When we’re really under-confident, we think the world sucks and it’s never gonna get better. It’s a very strident, absolute story we’re telling ourselves, that the outcome is only gonna be this. So at both extremes we imagine a very clear outcome, good or bad, and we are incapable of considering an alternative that things could work out. And we forget that the future is inherently unknown. If you’re certain you know what’s coming, you’re kidding yourself.
Lastly, would you say that it’s important in general to become more comfortable with the reality of uncertainty?
To get comfortable with the idea of uncertainty and powerlessness as recurring but temporary events in our life, yes. I think that rather than being confident, we should strive to be resilient. To realize that we’re going to experience all sorts of moments where we don’t have certainty and we don’t have control, and that’s natural and it’s temporary. We shouldn’t get swept up into the emotion. Life is an airplane ride. What we fail to appreciate is in the motion that we’ve already experienced, we’ve learned a lot. We remember this horrible thing that happened, but we should pause for a minute and say, ‘Wow, I made it back from that, and I learned this, and I’ve recovered.’