- The planning fallacy occurs when we believe future events will follow the best-case scenario.
- Even plans that anticipate pitfalls and problems often underestimate just how many mishaps can arise.
- You can correct the planning fallacy by assuming its presence and adjusting for it with an outside view.
Here was my Monday plan: Wake up at six, and exercise first thing. Then help my son get ready for school. Once he’s out the door, I shower and enjoy breakfast and coffee as I respond to emails. Next, I write an article between mandatory team meetings. The afternoon is set aside for emails and research. After work, cook dinner, help my son with his homework, and maybe crack open that novel I’ve been meaning to start.
In short, I aimed to crush it. I’m sure you’ll agree that sounds like a fabulous plan. I’m also sure you know how well it actually went.
I hit the snooze button too many times and skipped my workout. My son forgot his homework (again!) and barely made it to school on time. I had to double-check some facts in my article and barely finished, pushing my emails and research into Tuesday. And dinner was take-’n’-bake pizza because my recipe of choice called for milk that we did not have.
My Monday had fallen prey to the planning fallacy, the tendency to underestimate the amount of time a task or project will require. And I am far from alone. People, teams, businesses, and whole governments regularly run afoul of this cognitive bias — whether concerning something as simple as a daily schedule or something as complex as a multi-billion-dollar project.
To save ourselves time, money, and heartbreak, we need to recognize why the planning fallacy manifests, and what we can do to best prepare for it.
No plan survives first contact with reality
Psychologists Daniel Kahneman and Amos Tversky coined the term planning fallacy to describe forecasts that are unrealistically close to the best-case scenario. In other words, whenever we form a plan, we tend to assume two things: first, we’ll execute every step flawlessly, and second, outside influences will have a negligible impact.
We don’t adequately anticipate the many pitfalls, setbacks, and mishaps that can arise — if we give them any consideration at all.
That’s exactly what happened to my Monday. I assumed I had too much control over my day and disregarded my past experiences of snooze buttons, articles running long, and milk-less refrigerators. I intended Monday to be the exception to the rule. And, of course, it wasn’t.
“One interesting thing that the existence of the planning fallacy reveals is that in general, our intuition thinks that we’re exempt from statistics,” Julia Galef, co-founder of the Center for Applied Rationality, said in an interview. “But the more steps you have in whatever project or task you’re working on, the greater the chance that in one of those steps, you’re gonna hit a snag, and it’s gonna turn out to be atypical.”
Such compound probabilities can not only ruin your daily or weekly schedule: They are the reason so many large work or government projects overrun their projected costs and timelines.
In a famous example, the Sydney Opera House began construction in 1959, but construction crews ran into unforeseen problems immediately. For example, they discovered the land was made of loose alluvial deposits rather than sturdy sandstone as assumed. The weight of the roof also kept changing as its construction transitioned from blueprints into reality.
The Opera House’s first construction stage wasn’t completed until 1963 — the original estimate for the entire project. It wouldn’t officially open until October 20, 1973, more than a decade late and millions of dollars over budget. (Which kind of puts my Monday mishaps into perspective.)
How to counter the planning fallacy
No one can ever be free of the planning fallacy. It’s part of humanity’s cognitive makeup. The best we can manage is practices that serve as mental ballast — something to weigh down our overinflated optimism. You’ll find that stability is not in pessimism but in rationality.
Here are five ways to better anticipate the planning fallacy and create more realistic plans. While these will be written toward personal schedules and projects, they can be adjusted to help teams forecast realistic plans, too.
1. Seek the “outside view”
Also known as “reference-class forecasting,” the outside view doesn’t plan for the task or project at hand. Instead, it considers how similar ventures have traditionally gone in the past and uses that data to create a base rate. You can then use that base rate to make a more realistic plan.
If you do this, Kahneman notes, your forecast will be much more accurate than if you take the “inside view” — that is, only considering your own case and ignoring the experiences of others.
In his book Thinking, Fast and Slow, Kahneman shares an anecdote of the outside view in action. At one point in his career, he led a team tasked with creating a curriculum and corresponding textbook on judgment and decision-making. His team estimated the project would take one-and-a-half to three years to complete.
Out of curiosity, Kahneman asked the team’s curriculum expert if their estimates matched the experiences of other teams. They did not. According to the expert, no team he knew of completed a similar project in less than seven years. Most took up to 10 and that was disregarding the 40% failure rate.
Kahneman and his team went for it anyway and encountered all the “unknown unknowns” they had failed to anticipate. Team members got divorced, they succumbed to illnesses, there were bureaucratic delays, and so on. The project was ultimately completed after eight years. Note how this timeline was well beyond their inside view but within the intervals set by the outside view.
“The argument for the outside view should be made on general grounds: if the reference class is properly chosen, the outside view will give an indication of where the ballpark is, and it may suggest, as it did in our case, that the inside-view forecasts are not even close to it,” Kahneman wrote of the experience.
2. Timebox your tasks
Once you have a base rate for the project — even an informal one — you can create a timeboxed calendar. That is, set specific times on your calendar to work on the project. When added together, these times should match the time set by the outside view.
An important note when it comes to timeboxing: Don’t think of your timeboxes as obligations. The unanticipated and distracting can (and will) still happen. As Nir Eyal, the author of Indistractable, points out, it should be an iterative process. He recommends you approach your plans and schedule as a scientist rather than a drill sergeant. Rather than demand a specific performance, experiment and learn as you go.
“[Timeboxing] doesn’t mean that you have to rigidly enforce every single thing you say you’re going to do,” Eyal said in an interview. “However, […] by creating a time-boxed calendar, you can look at it and say, ‘Aha, everything that’s on my calendar is traction. Anything that is not what I plan to do is a distraction.’”
As a bonus, the more you timebox specific tasks, the more data you’ll collect. These data will show you how long it takes, on average, for you to complete certain tasks. Using that information, you can create a personal base rate on which to judge future iterations of similar tasks.
3. Cushion your timeboxes
Even with the outside view and timeboxing, you should always add a buffer to be safe. This is a practice known as “time cushioning” or “schedule padding,” and it’s incredibly useful when paired with the outside view.
Say you think a meeting will last for 30 minutes. Instead of timeboxing exactly 30 minutes of your day, set aside 45 minutes or an hour. If the meeting runs over, then you have that cushion as a backup. If it’s within the planned 30 minutes, then you have extra time blocked out to recoup and re-energize. Take a refreshing walk, answer some emails, or maybe crack open that novel. The time is now yours.
Leadership strategist Dan Pontefract recommends time-cushioning alongside practices such as prioritizing, outsourcing tasks you don’t have the time or talent for, and — the big one — learning to just say no when it’s appropriate.
“It’s your time. Commandeer it back!” he said in an interview.
4. Forecast multiple projects ahead
Of course, projects don’t appear in order of importance like widgets on an assembly line. They ebb and flow based on the demands of life and work. Sometimes, those demands are few and far between. Other times, they come crashing down all at once.
For this reason, Roger Martin, former dean of Rotman School of Management, recommends that you don’t just plan for individual tasks. You should also map out your larger projects in advance.
If you see that multiple projects are cresting simultaneously, then the likelihood that problems will compound across your various projects increases exponentially. By predetermining that, you can prioritize projects based on their importance and urgency, pushing less immediate ones out to a later date.
“The other thing I think it’ll do is help you manage your home life better,” Martin said in an interview. “I think you can plan your life better instead of freaking out when you’re just unbelievably busy, and you can say, ‘[…] I didn’t do enough peak-shaving to spread it out. I’ve learned for the next time, but I can manage this.’”
5. Find self-compassion
Of course, you can never anticipate all the unknown unknowns. There will always be surprises and unforeseeable pitfalls, whether you’re planning an individual task or a multistep project. That’s just how it goes. All of these experts have fallen into the planning fallacy, including Kahneman — and he coined the term.
But don’t let your lack of perfect planning discourage you, and don’t spend even more time chastising yourself for not being productive enough. You just had unrealistic expectations that need to be recognized and reexamined for future plans.
It’s the one thing everybody’s Mondays have in common with the Sydney Opera House. And while your next Monday probably won’t be a UNESCO World Heritage Site, that doesn’t mean your accomplishments on that day — the planned and the unplanned — can’t be the foundation for something great.
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