Here’s a fancy word that belongs in your vocabulary (if it’s not already there): “counterfactual.” Think of counterfactual as a “what if” question. It’s the mature version of the little kid repeatedly asking, “why?” In other words, instead of just asking, “why is the sky blue,” a counterfactual might be “what if the sky were green,” or “what would happen to the Earth if the Sun suddenly switched off?”
According to the internet, counterfactual is defined as, “Relating to or expressing what has not happened or is not the case.”
Annie Duke draws on “Back to the Future” and calls it “mental time travel.” Remember how Doc warns Marty not to talk to himself because small changes can create wildly different or alternate worlds? These are counterfactuals. They are the separate paths that could happen / could have happened.
Niall Ferguson was recently with Sam Harris on the Waking Up podcast discussing (amongst other things) his new book, “The Tower and the Square.” That’s a topic for another day, BUT… Harris stated that any value statement included a counterfactual. He gave the example about how he worries about Trump now, but rarely thinks about what would have happened if Clinton had one the election.
Ferguson responds by saying that he absolutely must think through those scenarios. How would Trump voters have responded if he lost? Would she have been impeached? After the next round of congressional elections, could Trump be impeached? He calls on historians and anyone who cares enough to explicitly state their counterfactuals. To do so would be to share the odds they placed on events and outcomes. That’s way more insightful than just their flat interpretation, right?
What Duke and Ferguson are getting at is the need to NOT be so certain. That’s pretty uncomfortable for our monkey brains to handle. Counterfactuals force us to think through alternate scenarios, even if we give them low weightings. Let’s end with Duke’s non-fancy solution: she says we should just call it thinking in bets.
So try this: next time you’re asked to do something, give it odds. Ask how much you’d wager on that outcome and why. Dead certain you’ll be on that call tomorrow? Why? What would make you miss it? The point is not to generate paralysis, but to realize the range of potential outcomes that we’re actually dealing with. What if the sun suddenly switched off?
In the words of Howard Marks, “risk means more things can happen than will happen.” Remember to state your counterfactuals, and strive to think in bets. If nothing else, I promise you will be immediately humbled, and that’s not such a bad thing.