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

3D printing might save your life one day. It's transforming medicine and health care.

What can 3D printing do for medicine? The "sky is the limit," says Northwell Health researcher Dr. Todd Goldstein.

Northwell Health
Sponsored by Northwell Health
  • Medical professionals are currently using 3D printers to create prosthetics and patient-specific organ models that doctors can use to prepare for surgery.
  • Eventually, scientists hope to print patient-specific organs that can be transplanted safely into the human body.
  • Northwell Health, New York State's largest health care provider, is pioneering 3D printing in medicine in three key ways.
Keep reading Show less

Forget "text neck." New research suggests humans are growing horns.

Three academic papers from Australia shows sizable bone spurs growing at the base of our skulls.

Surprising Science
  • A team of researchers in Queensland says 33% of the Australian population has sizable bone spurs growing at the base of their skulls.
  • This postural deformity, enthesophytes, results in chronic headaches and upper back and neck pain.
  • The likelihood humans will alter their addiction to this technology is low, so this might be a major consequence of technology.
Keep reading Show less

Scientists turn nuclear waste into diamond batteries

They'll reportedly last for thousands of years. This technology may someday power spacecraft, satellites, high-flying drones, and pacemakers.

Woman looking at a diamond.
popular

Nuclear energy is carbon free, which makes it an attractive and practical alternative to fossil fuels, as it doesn't contribute to global warming. We also have the infrastructure for it already in place. It's nuclear waste that makes fission bad for the environment. And it lasts for so long, some isotopes for thousands of years. Nuclear fuel is comprised of ceramic pellets of uranium-235 placed within metal rods. After fission takes place, two radioactive isotopes are left over: cesium-137 and strontium-90.

Keep reading Show less

Facebook finally unveils its cryptocurrency. What we know about Libra so far.

Facebook was careful to say that Libra is not maintained internally and is instead serviced by a non-profit collective of companies.

Technology & Innovation
  • Facebook has just announced its new cryptocurrency, Libra.
  • Early investors include many of the world's leading companies, implying they will accept Libra as payment
  • The announcement was met with a mixed response, but only time will tell how Libra will be received
Keep reading Show less