One of the reasons my posting has dropped off recently is that I’m facing a major decision in my life, and I’m doing all I can figure out the optimal course of action given my work, family life and personal goals. That, and we’ve kicked off a couple of new projects and work is fairly frantic, of course.
The decision in question is whether to take up an offer to do a doctorate in scenarios and decision-making, something I’ve wanted to do for some time. (Yes, I am aware of the irony). As I’d be working with a supervisor I greatly respect at a good school, my gut is telling me to take the offer, on the basic premise that most details can be worked out one way or the other later. Meanwhile, my family are more circumspect, pointing out that this would mean significant sacrifices to my free time and therefore their time with me, not to mention a host of travel and income effects.
There are some clear challenges in making this kind of decision. In Nudge, Thaler and Sunstein point out that decisions that are rare, and/or where feedback is not prompt are particularly difficult to make. One explanation for this is that there is little opportunity to practice and it takes a long time to judge whether you’re on the right track or not – hence the realisation of whether it was the right decision can take some time. Thaler and Sunstein go on to say that “there might be fewer philosophy Ph.D.s driving cabs if choices about graduate school came with practice trials, but at age thirty-five it’s hard to ask for a ‘do-over.'” (Thaler and Sunstein, 2009, p 82).
This last point touches a nerve. Do the expected benefits of a PhD in Management Research outweigh the direct and opportunity costs? And what methodology should be applied to judge these?
Clearly, a “good decision” (as distinguished from a “good outcome”, to acknowledge the role of chance and forces out of one’s control) requires a thorough appreciation of the complete option set. Equally, decision-making theory prescribes a system for judging the relative values of benefits and costs, discounted appropriately by both time and risk. I’d also add that scenarios be used to judge to stress-test both extreme and unusual combinations of events, to ensure strategic robustness and psychological preparedness.See Lifehacker for some options along these lines.
But who has the time for that except when actually DOING their PhD on decision-making? As Nudge points out, Nobel Laureate Henry Markowitz, a founder of modern portfolio theory, was once asked about how he allocated his retirement account. His answer? “I should have computed the historic covariances of the asset classes and drawn an efficient frontier. Instead, I split my contributions fifty-fifty between bonds and equities.”
Me, I started down this road, and realised quickly that the expected value of the decision to undertake the PhD was heavily sensitive to certain assumptions and scenarios; namely, the utility of the degree to my subsequent career path. Were a combination of personal choices and luck to turn me in one direction, a PhD would add little, and the choice would have a negative value (i.e. I’d pay to avoid doing it!). Were life to lead another path, a PhD would be highly valuable. One might argue that the decision to do a PhD heavily influences that path, which is true, but it adds to rather than completely shifting the future option set.
After getting frustrated with trying to model my future self in Excel, I rang my best friend for advice. His response was simple:
“Start at where you want to be in a completely ideal world in 20-30 years time. If a PhD will contribute significantly to that, do it. If it won’t, don’t. And, if you do decide to take on the challenge, do it well, enjoy the slog for the difference it will make to your future self and make the most of the journey.”
I don’t know about you, but I think this is good advice for decision-making. Naturally, you should still recognise and hedge against the down-sides of any major decision, as well as appreciating that your concept of your self in an ideal world will change over time. But given that I have a fairly good view of how I want my life to look aged 70, this approach has enabled me to get a lot more perspective on this juncture in my life. I just wish that life decisions like this felt a bit less like jumping off a cliff!