How Changing Predictions Affect Our Decision-Making

June 28th, 2016  |  Source: PS Magazine

A 30 percent chance of rain—or climate change disaster, or sports win—means different things to people if it’s down from 35 percent or up from 25.

If you heard on the radio this morning that there was a 30 percent chance of rain, would you pack an umbrella? Now, what if that estimate represents a revision over the previous night’s forecast—down from 40 percent, say, or up from 20 percent? According to a new study, revisions like that affect how we subjectively perceive probabilities—and maybe how we make decisions about everything from umbrellas to climate change.

In theory, weather predictions and the like represent the most current information, and if we want to make the best decisions, we ought to base those decisions on the most current information—not on that information plus whatever forecasters thought yesterday.

But that is not how we human beings think about probability. In reality, psychologists Sam Maglio and Evan Polman point out, we experience probabilities more as a kind of psychological distance: The higher the probability of an event, the nearer and more important the event seems. What’s more, if probability estimates are going up, then perhaps there’s a kind of psychological momentum. That is, maybe we’ll think that estimates will keep going up, and events will keep getting closer and more significant. The same might go in reverse when estimates are revised downward.

“The perception of an event may feel different and influence behavior and action regarding those events.”

To test that idea, Maglio and Polman recruited 76 people walking around a university campus and told them that scientists had initially estimated either a 20, 30, or 40 percent chance that climate change would drive barn swallows to extinction by 2050. “However, this estimate was recently revised to a 30% chance of extinction,” Maglio and Polman told the passers-by, who then reported, on a seven-point scale, how close they felt the possible extinction was.

Those who were told the estimate had been revised upward reported feeling it was about 11 percent closer than those who’d been told there was no change, and 36 percent closer than those who’d been told the estimate had been revised downward—despite the fact that everyone was told the current extinction probability estimate was 30 percent.

That same basic result held up for climate change, weather forecasts, belief in the existence of alien life, male birth control pills, and sleep-improving pillows. In a field experiment in Chicago sports bars, the researchers found that their revisions to estimates of the Blackhawks’ chance at a Stanley Cup win affected bartenders’ estimates of liquor sales. And, in an experiment conducted in an urban farmer’s market, slightly revising upward an estimate of the probability of a defect in an expensive wine led people to choose a much less expensive, lower-quality wine.

“In all, our research sheds light on whether revising the probability estimate of an event changes the psychological meaning of that event,” Maglio and Polman write in the Journal of Personality and Social Psychology. “Although the final probability estimate can arrive at the same point after an increase or decrease, the perception of an event may feel different and influence behavior and action regarding those events.”




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