Cognitive Dissonance, What Is It And How To Avoid It

Cognitive dissonance is a kind of bias in human behaviour that can affect our decision making in a negative way. But what exactly is it and is there a way to avoid it at all?

What is cognitive dissonance

Cognitive dissonance is a bit of mouthful so I’ll break it down. Cognitive relates to conscious intellectual activity, whereas dissonance means lack of harmony or agreement.

Literally it means that there is disharmony or disagreement between different intellectual activities.

In practice this often means that there is a conflict between how you feel about something and how you are behaving, or perhaps new conflicting information about current behaviour.

A great example is smoking. Many people know the dangers of smoking, but keep doing it. This is cognitive dissonance.

Cognitive dissonance is often resolved by disregarding or denying the new information (for example, that smoking can cause cancer), or rationalising it (smoking is dangerous but I have good genes so I’ll be fine).

Why it happens

Cognitive dissonance happens when there is uncomfortable tension between beliefs that are held at the same time.

This often happens when our beliefs don’t match our actions.

The tension happens because the new information or belief would require us to change our behaviour, which often can be internalised as part of who we are.

Change isn’t easy, which is why we tend to not do it at all, instead we ignore or deny the information that might compel us to change, or rationalise our behaviour to make the uneasy feeling go away.

According to psychologist Leon Festinger there are three reasons why change can be hard at the face of conflicting beliefs.

It might be hard because the change would involve losing something, or be painful.

It could be hard because what you are currently doing brings you satisfaction otherwise.

Or the change may simple not be possible (but Festinger admits that this rarely is the case).

Psychologically it is important for our identity that there is no internal conflict between our beliefs and our behaviour, which is why if there is conflict, it makes us uncomfortable.

How to avoid it

Since cognitive dissonance is simply the uncomfortable feeling that comes from having internal conflict, there’s really no way to avoid it completely.

What you can do is work on how you react to the feeling and not let it rule your decision making.

General strategy would be to work on accepting that change can be a good thing, rather clinging to old behaviour patterns that new information has proved to not be beneficially to you, or in alignment with what you believe.

And as always with biases and heuristics, the first step of overcoming biased behaviour is to recognise it and realise when it is happening. Then rather than being ruled by the bias, you can make more conscious and informed decision.

Cognitive dissonance in personal finance

When it comes to personal finance decisions, cognitive dissonance could happen, especially at the start of your journey.

Taking control of your finances might require changing some spending habits, the realisation might cause some resistance and cognitive dissonance.

If you’re ready to accept that change is necessary in order to reach your financial goals, the dissonance is resolved in a positive way, if not, you might ignore the advice and it will then resolve in a non-beneficial manner.

You can read more about this bias here. And here you can find my posts about other biases you should be aware of.

Can you recognise a situation in your life where cognitive dissonance has affected your decision making? I’d love to hear in the comments below!