How to make a good decision in private life

When making an important decision, such as buying a house or car, there may be many factors and alternatives to consider. A good process makes it more probable that the decision will be a good one, although it is not guaranteed. Some of the impact of the decision is connected with uncertainty and probabilities. There are many things that are uncertain in the future. Anyway, it is valuable to think through the goals, criteria, weights, and scores. Conserning goals, who should the outcome be good for? Just yourself or your family as well? What are their interests?

Every good decision process let you choose among several alternatives. A classic mistake is to think that "this problem only has one solution."

Conflicting goals
Even single decision makers will have conflicting goals most of the time. There may be goals for work that conflict with private life. Then you need to chose the option that best fit the goals.

To be able to compare the alternatives you have to decompose the goals into concrete and measurable criteria. Such criteria is well-known from product comparisons in magazines and on the web. For instance, PC's are compared on disk size, memory size, processor speed, etc. To get from goals to criteria, you can ask: What does this involve? And, to move from criteria up to goals, you ask: Why is this important?

Different weights
Finally, you can make a choice when you have decided how important each criteria is for you. Some criteria is a must, and alternatives that do not meet the requirement, are left out. For other criteria you have to judge how each alternative scores. A simple multiplication of the weight and score is normally satisfactory. Other more complex value functions include the Prospect theory by Daniel Kahneman where loss is more critical than gain.

Even for a simple decision it will be overwhelming to juggle all this facts and comparisons in your head. You will need to use a spreadsheet or a decision support system, such as calc3.com, for this. The method outlined above is called Multi Criteria Decision Making. However the basic process is age old.

A private person is charactized on this page as one who makes decisions for private life. This is quite similar to making a choice in small businesses. We would like to add that a framework for structuring the decision tasks does not substitute for sound judgement and even intuition for what is right. However, it gives clarity, illuminates the intuition, and enables learning. Read more about how calc3.com can be used as a decision support system.

 

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