Confirmation Bias, What Is It And How To Avoid It

Confirmation bias affects our decision making and can lead us to make less than optimal ones. But what is it and is there a way to avoid it?

What is confirmation bias

Confirmation bias is a phenomenon where we put greater value on information that supports our existing beliefs compared to information that goes against them.

An example would be how you might be a huge fan of someone, a celebrity maybe, but some negative information about them starts to come out. Confirmation bias could easily have you dismiss this new negative information because it doesn’t fit in with your positive view of this person.

Confirmation bias can easily lead to bad decision making because you’re only willing to consider information that already fits into your worldview, rather than something that challenges things you already believe in.

In 1979 there was a study where the test subjects were given two false studies, one for capital punishment and one against.

Both studies had equally convincing objective statistics, though fully falsified.

After reading both studies the test subjects were asked their opinion on capital punishment.

The result was that after reading the studies, the test subjects upheld their original view of capital punishment, showing confirmation bias.

“Groupthink” is also a type of confirmation bias.

When groupthink happens in a, well, group of people, it becomes more important to upkeep the harmony between the members of the group rather than optimising decision making.

This means that opposing views are not voiced, or that emerging new information regarding a choice the group has made is dismissed if it goes against the decision.

Modern technology can make confirmation bias worse because of the filter bubble effect.

The filter bubble effect refers to the algorithms that are used by websites.

The aim is to show us what we are interested in, but it also means that our existing views are not necessarily being challenged as the internet only shows what we like and already believe in.

For example, you and your friend could use the exact same search terms on Google and get different results based on what Google thinks is of the most interest to you.

This has the power to warp your view of the world.

Why it happens

It is thought that one of the reasons why confirmation bias happens is because it is simply easier and quicker for our brain to draw these conclusions.

Doing research and weighing up information requires brain power, it is easier to just relate new information to an existing belief rather than start questioning yourself.

Another reason is that it protects our self-esteem.

It doesn’t feel nice to be wrong! So we tend to hold on to our existing beliefs a bit harder than we maybe should in some cases.

Can you avoid confirmation bias

This bias is hard to fully avoid because it happens early on and very subconsciously in the decision making process. Even before you know you are making a decision.

But as always with biases and heuristics, the first step to avoid them affecting your decision making is to be aware of them in the first place.

Acknowledge that if you have already formed an opinion, that alone might affect how you process new information about that opinion.

One way to try to eliminate confirmation bias is to have another individual, or more, as an objective sounding board for your decision process.

Discussing your thoughts with someone else can help you see what otherwise might be hidden from yourself.

You can also consider how you have behaved in the past and what kind of decisions you have made in the past. Would you still do the same if you know better?

Confirmation bias in personal finance

Financial decisions can be complex and feel overwhelming. No wonder we might rely on mental short cuts to make the decision making easier!

Common confirmation bias that might happen in personal finance would be the belief that one might not be good with money, so they won’t even try.

Or that investing is only for certain people so they won’t even look into it.

When it comes to investing decisions, you might feel strongly about a company and believe in them, so you dismiss indicators that tell you that you’ve made a bad investment choice.

The main thing is to keep an open mind to all new information and consider them objectively.

If the information creates a strong emotional reaction, you put a pin on it and reflect on why you might feel that way. It could help recognise if your behaviour is biased.

You can find my posts about other biases and heuristics here.

Can you think of a moment your decision making was affected by confirmation bias? I’d love to chat in the comments!