Why Decisions Fail Without Second-Order Thinking

The consequences of consequences occur in the long term

Photo by Helena Lopes on Unsplash

“The best way to examine the long-term consequences of our decisions is to think things through. This is called use second-order thinking.”(Farnam Street)

Sound decision-making is a prized skill in this complex and uncertain world.

Many decisions fail because people failed to think through the likely consequences. These decisions are made based on first- order thinking.

We latch on to a solution that first comes to our mind.

We don’t consider the consequences of consequences, which is second- order thinking.

People using second- order thinking always ask the question, “And then what?” or “What then?”

Why do many government policies fail?

Governments are formed by politicians, but run by bureaucrats.

The bureaucrats are not known for deep thinking. They’re also risk-averse. They want to keep their jobs at any cost.

Bureaucrats like to impose bans because they get an opportunity to exercise their power over the helpless citizens.

The ban is always done in ‘public interest.’ Who can oppose a public cause?

Take the plastic ban. It’s easier to ban plastic bags than find a suitable substitute for them.

Here, in the city where I live, single use plastic carry bags are banned. I agree, it’s a good move because people throw them away indiscriminately. They plastic bags choke the water bodies. Animals and marine creatures die after eating them.

They banned single use plastic bags suddenly, one fine morning. Nobody thought about making alternatives available. It took some time before cloth bags became available.

There was utter chaos during the first few months after the ban. Shouldn’t they have waited until cloth bags were readily available?

The bureaucrats are not good at second order thinking.

They cannot entirely ban plastic because it’s still used for packaging groceries, milk, bread, etc.

The local body collects plastic bags and other used plastic objects like tins, bottles, twice a month. This is a welcome move.

I understand they are sending the plastic waste to a neighbouring state. I have no idea whether they recycle the waste.

Is it even possible to recycle the entire plasitc waste?

This npr.org article says,

“Waste management experts say the problem with plastic is that it is expensive to collect and sort. There are now thousands of different types of plastic, and none of them can be melted down together. Plastic also degrades after one or two uses. Greenpeace found the more plastic is reused the more toxic it becomes.

New plastic, on the other hand, is cheap and easy to produce. The result is that plastic trash has few markets — a reality the public has not wanted to hear.”

Cameras to catch traffic offenders

My state installed AI- cameras to catch traffic offences like overspeeding, driving without using seat belts, riding two-wheelers without wearing helmets, etc.

The ostensible reason was to improve road safety.

There’s tangible evidence that road accidents and deaths came down significantly after the installation of the cameras.

However, the government is short on money and has not paid the company that maintains the cameras and issues challans to the violators.

So, a well-intentioned scheme and effective scheme is at the risk of being discontinued simply because the prodigal government has no money.

The government collected huge amounts as fines from the violators. Shouldn’t this amount be used to sustain the programme? Shouldn’t the amount be channelled into a dedicated bank account opened for this purpose? The government has no answers to these questions.

Second-order thinking is important in our personal and professional lives too.

For example, we sometimes struggle to decide whether to buy a new house or stay in a rented one. We need to examine the second-order consequences of paying the mortgage EMI if we choose buying a house as the option. Are our jobs secure? Have we accumulated enough savings? What if we lost the job and lost the home also?

Businesses need to use second-level thinking while going for mergers and acquisitions or diversifying their product portfolio.

Sometimes, some decisions are first- order negative and second-order positive if we think through them. Risk-taking involves ignoring the negative first-order consequences and boldly embracing the positive second-order consequences.

Second-order thinking does not paralyse decision-making; it only considers the unanticipated consequences of our actions, even if our intentions are good.

Second-order thinking does not promise an error-free decision making; it only minimises the long-term risks of first-order thinking.

Thanks for reading!