Cognitive Bias: Planning Fallacy

Cold War Clock by  ckaiserca
Photo by Charles R. Kaiser, original here. Creative Commons license.

The planning fallacy is simply the human tendency to underestimate task-completion times. Finding real-world examples of this cognitive bias is easy, from the smallest everyday task to huge governmental undertakings.

One side effect of badly estimating task-completion times is cost overruns; if something is going to take longer than planned, you often have the option of throwing more resources at it in the hope that it will be done on time. One example of this is the Canadian gun registry program:

The project which was meant to cost approximately $119 million ended up costing over a billion dollars to implement. Documents obtained by the Canadian Broadcasting Corporation now estimate the program cost at $2 billion.

The way I see it, part of the cause of this problem is the fact that humans are very goal-oriented, and so when we try to visualize what is involved in executing a task, we focus on what is most important with regard to reaching goals. This can often mean that we overlook less important parts of the process that are nonetheless time-consuming.

What’s important to reach goals and what’s time-consuming are rarely in perfect overlap.

An example might be someone who’s thinking about going to the store to get some food. That person might try to estimate the time it will take by visualizing getting in the car, driving to the store, picking up pasta boxes, some fresh vegetables, etc. But there are many other elements in the process of getting food at the store that aren’t as important from a goal perspective but that can take quite a bit of time; waiting at red lights on the road to the store, walking around the store to locate the items that we want to buy, waiting for minutes in line to pay for items, walking to and from a vehicle in the parking lot, etc.

For repetitive tasks such as going to the store, we usually avoid the problem by using our past experience as a guide. How long does it usually take to go the store? That’s usually a good estimate.

But for one-off tasks, we can’t rely on past experience and so we should be particularly careful about the planning fallacy, especially if the task is complex and requires concerted actions by many people.

This might all seem very obvious, and yet this is still a frequent problem at all levels, from individuals to corporations and governments. We all pay for wasted resources and cost overruns via higher product prices and higher taxes.

Source: Planning Fallacy at Wikipedia

See also: Rationality Resources

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