As a species we are shockingly bad at making decisions

Last night Lionel Messi advised me to shave with Gillette’s razor. This was in a TV ad, and was presumably in exchange for a lot more money than I will see this year. Rationally, there is no reason why I should accept advice on the best razor from a man just because he is astonishingly good at guiding a light spherical object past defenders and goalkeepers. Being good at football does not necessarily mean that you are a good judge of a quality razor, even if you are not being paid to recommend one. This marketing campaign is one of a huge number that exploit a weakness in our reasoning that is called the halo effect.

Here the halo effect is the problem that if someone has one outstanding ability, for example is a very talented sportsperson or is a beautiful actress, we almost can’t help ourself overestimating all their other abilities. Somehow we find it very hard to shake off the idea that as Messi is so great at what he is known for, that he must be generally great at everything else, e.g., picking a razor. This is irrational, we have no evidence that being good at football makes you good at lots of other things.

I read about the halo effect in Irrationality by Stuart Sutherland. This is over 200 pages of evidence of our rubbish decision making. It is written with a very engaging and an appropriate dry wit at the parade of human folly he describes. I really enjoyed it, and it was pretty educational.

Choice of razor is no big deal, but the Chancellor of the Exchequer George Osborne recently announced plans to allow people to decide what they want to do with their pension pot when they retire. They will not have to buy an annuity. It sounds almost obvious to give people choice about what to do with their money but I fear that the problem is that the chances of someone making the right decision about how a large sum of money will support them for maybe 20 plus years are less than 50%. Most of us a pretty poor at those sorts of decisions.