A Day Late and a Dollar Short: The Planning Fallacy Explained

Why do we systematically underestimate the amount of time or money we are going to spend on a given project? 

One of the most universal and robustly demonstrated cognitive biases is the planning fallacy.  If you’ve ever underestimated how long it would take you to finish writing that paper you’re working on or finish moving or get to your destination, then congratulations, first of all you’re a human being and that makes you subject to the planning fallacy.


So why does this happen?  Why do we systematically underestimate the amount of time or money we are going to spend on a given project?  

One piece of the puzzle is the fact that our intuitions aren’t very good at thinking about compound probabilities.  So here’s what that means.  If you think back to the last time you were late completing some errand that you were running and you also think back to how you formed your prediction of how long the errant would take – if you’re like most people, you probably thought briefly about the various steps that make up the task of running an errand like getting ready to go, driving to the store, finding the thing I’m looking for, waiting in line, getting in my car and coming back home.

If you’re like most people you probably envisioned a typical occurrence of each of those steps - so a typical amount of time it takes you to get ready to go or a typical amount of time it takes you to find parking.  That’s what formed your rough estimate of the amount of time the whole errand would take.  And in most cases you’re going to be correct about your typical estimate.  That’s what makes it typical.

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 going to hit a snag and it’s going to turn out to be atypical. 

That probability that the whole thing is going to be atypical in some respect goes up the more steps you have in the process.  And it goes up faster than our intuition would predict.  One way to tell that this process is partly responsible for the planning fallacy is that when scientists ask people how long would you expect this project to take you if it progressed in a typical fashion, people give estimates that are almost identical to the estimates that they give when scientists ask how long would you expect this project to take if nothing goes wrong. 

In Their Own Words is recorded in Big Think's studio.

Image courtesy of Shutterstock

Stand up against religious discrimination – even if it’s not your religion

As religious diversity increases in the United States, we must learn to channel religious identity into interfaith cooperation.

Sponsored by Charles Koch Foundation
  • Religious diversity is the norm in American life, and that diversity is only increasing, says Eboo Patel.
  • Using the most painful moment of his life as a lesson, Eboo Patel explains why it's crucial to be positive and proactive about engaging religious identity towards interfaith cooperation.
  • The opinions expressed in this video do not necessarily reflect the views of the Charles Koch Foundation, which encourages the expression of diverse viewpoints within a culture of civil discourse and mutual respect.
Keep reading Show less

How expectation influences perception

These prior beliefs help us make sense of what we are perceiving in the present.

Mind & Brain

For decades, research has shown that our perception of the world is influenced by our expectations. These expectations, also called "prior beliefs," help us make sense of what we are perceiving in the present, based on similar past experiences.

Keep reading Show less

NASA's idea for making food from thin air just became a reality — it could feed billions

Here's why you might eat greenhouse gases in the future.

Jordane Mathieu on Unsplash
Technology & Innovation
  • The company's protein powder, "Solein," is similar in form and taste to wheat flour.
  • Based on a concept developed by NASA, the product has wide potential as a carbon-neutral source of protein.
  • The man-made "meat" industry just got even more interesting.
Keep reading Show less

Where the evidence of fake news is really hiding

When it comes to sniffing out whether a source is credible or not, even journalists can sometimes take the wrong approach.

Sponsored by Charles Koch Foundation
  • We all think that we're competent consumers of news media, but the research shows that even journalists struggle with identifying fact from fiction.
  • When judging whether a piece of media is true or not, most of us focus too much on the source itself. Knowledge has a context, and it's important to look at that context when trying to validate a source.
  • The opinions expressed in this video do not necessarily reflect the views of the Charles Koch Foundation, which encourages the expression of diverse viewpoints within a culture of civil discourse and mutual respect.
Keep reading Show less