This is all too stressful! Part 1

Annie has just changed jobs and is moving to a new house. She is stressed. That is not an opinion but her own words. Maddie is taking another round of her law exams. She has revised more than anyone I know, she has worked hard, but still she is stressed. Some people use stress as a motivator and for others it is debilitating.

Today I am writing about stress. Today is Part 1 and it will finish tomorrow.

(It’s a bit of a cheat. I have already written it but today I am going to Bertie’s first birthday party and, so my time today will be limited. The whole is already very long and easy to split. it is good to have a piece in the bank! A stress mitigation strategy?)

Stress is a consequence of the situation you are in and that can often be traced back to, and is a consequence of, a decision you have made. Part of my approach to managing stress is to try and understand why and how I make any decision.

This doesn’t mean that I make better decisions than anyone else but that afterwards if the world is falling apart around me, I know that if I had to do the same again, nothing would be different. Believe me, that is a solace.

So, in the first section I will talk about how we make decisions and in Part 2, tomorrow, I will discuss how I use this understanding to manage stress.

I have always been fascinated by the processes of decision making. I used to lecture at Universities on the principles of investment appraisal. These are the processes we use to understand if a capital investment will be profitable.

Most of it is clever arithmetic and when you get the right data, structured in the right way it comes down to number crunching. I wish it was so simple, but there are always problems.

It was Alfred Korzybski, the Polish-American scholar who said: “the map is not the territory” and never was that clearer than in investment appraisal. We can prepare all the scenarios we like but it is only in retrospect can we assess the quality of the analysis. To complete an analysis in an orderly time the problem always must be simplified.

Not only do we simplify the amount of available data, but it is all estimated, giving another source of error. On large capital projects, we may have to estimate the future profit recovered from an investment over a twenty-year period. How well can we forecast and what accuracy is there?

To mitigate against forecast inaccuracy, in the jargon, we develop ‘what-if’ analysis. (I was once listening to an American expert lecturing who instead of using this common phrase, in a deep Texan drawl instead coined ‘suppository analysis’ which raised the quip from the audience ‘and he knows where he can put that.)

The final problem is that most of the literature on formal investment appraisal is based on the assumption of rational behaviour. An assumption proved to be wrong by among others behavioural economist, Daniel Kahneman, Nobel Economics laureate.

Think of a simple game of chance. I have a coin and I will give you odds of two to one on it being a head. I will put down my stake of two pounds and you will put down yours of one pound. Heads and you take it all and tails and it is all mine. This is a game very much in your favour. On my courses I had no shortage of takers, but as I upped the stakes to ten pounds, a hundred pounds or even a thousand pounds the number of takers reduced, and everyone wanted better odds. The risk of losing a thousand or more pounds became far too great even though chance says nothing has changed. Will anyone bet their house with me?

I have been banging on about formal investment appraisal because this is the gold-plated end of decision making. I get paid thousands of pounds to make these assessments but what about making day-to-day decisions in your personal life?

Few decisions are taken with anything like all the information available. In fact, rarely do you have that luxury. However carefully you process data to make decisions there will always be gaps, and the gaps need to be identified and understood as carefully as you manage the data you have.

When you buy some clothes on Amazon, eBay or a trader’s own web site you know they may not fit, or maybe you won’t like the colour and it may be a real pain to return, but still you take that risk and buy.

What you have done when you buy on-line is take in and absorb as much data as is available, and then you just have to make a decision. If it’s buying clothes, you have a chance to do some research. You can check the size guide and the references on the site but sometimes there is no opportunity to process much data before you make a decision. These become impulsive decisions.

You are just leaving the office when someone says: ‘fancy a drink?’ There is not a lot of data to process. Who else will be there? Will I still get a train home? Can I afford it?

How do we make these decisions? In truth, not always as well as we hope. According to Daniel Kahneman, we have two ‘brains’.

Of course, not two brains but two modes of thought: “System 1” is fast, instinctive, and emotional while “System 2” is slower, more deliberative, and more logical. They are not always in agreement.

While his book, Thinking Fast and Slow, describes the cognitive biases associated with each type of thinking, in the book’s first section, Kahneman describes the different ways the brain forms thoughts.

The following is extracted from: (,_Fast_and_Slow)

Our brains are comprised of two characters, one that thinks fast, System 1, and one that thinks slow, System 2.

System 1 operates automatically, intuitively, involuntary, and effortlessly—like when we drive, read an angry facial expression, or recall our age while System 2 requires slowing down, deliberating, solving problems, reasoning, computing, focusing, concentrating, considering other data, and not jumping to quick conclusions— like when we calculate a math problem, choose where to invest money, or fill out a complicated form. These two systems often conflict with one another.

Thinking slow affects our bodies (dilated pupils), attention (limited observation), and energy (depleted resources). Because thinking slow takes work we are prone to think fast, the path of least resistance. “Laziness is built deep into our nature,”. We think fast to accomplish routine tasks and we need to think slow in order to manage complicated tasks. Thinking fast says, “I need groceries.” Thinking slow says, “I will not try to remember what to buy but write myself a shopping list.”

 People on a leisurely stroll will stop walking when asked to complete a difficult mental task. Calculating while walking is an energy drain. This is why being interrupted while concentrating is frustrating, why we forget to eat when focused on an interesting project, why multi-tasking while driving is dangerous, and why resisting temptation is extra hard when we are stressed. Self-control shrinks when we’re tired, hungry, or mentally exhausted. Because of this reality we are prone to let System 1 take over intuitively and impulsively. “Most people do not take the trouble to think through. “Intelligence is not only the ability to reason; it is also the ability to find relevant material in memory and to deploy attention when needed,”. Accessing memory takes effort but by not doing so we are prone to make mistakes in judgment.

To illustrate this I have copied out examples of some of the areas covered by each ‘System’

System 1: Fast, automatic, frequent, emotional, stereotypic, subconscious. Examples (in order of complexity) of things system 1 can do:

  • see that an object is at a greater distance than another
  • localize the source of a specific sound
  • complete the phrase “war and …”
  • display disgust when seeing a gruesome image
  • solve 2+2=?
  • read a text on a billboard
  • drive a car on an empty road
  • come up with a good chess move (if you’re a chess master)
  • understand simple sentences
  • connect the description ‘quiet and structured person with an eye for details’ to a specific job

System 2: Slow, effortful, infrequent, logical, calculating, conscious. Examples of things system 2 can do:

  • brace yourself before the start of a sprint
  • point your attention towards the clowns at the circus
  • point your attention towards someone at a loud party
  • look out for the woman with the grey hair
  • dig into your memory to recognize a sound
  • sustain a higher than normal walking rate
  • determine the appropriateness of a behaviour in a social setting
  • count the number of A’s in a certain text
  • give someone your phone number
  • park into a tight parking space
  • determine the price/quality ratio of two washing machines
  • determine the validity of a complex logical reasoning

It’s a long list but it does illustrate that we have two quite different ways of thinking. The skill is to give yourself time to recognise when you are using System 1 or System 2 and with this knowledge you should make if not improved but conscious decisions.

Now you will be asking how does this help you manage stress. Well that is for Part 2!!