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Acknowledging uncertainty to empower decision-making

Investment behavior

Acknowledging uncertainty to empower decision-making

Oct 30, 2020

We may pursue certainty in all things, but neuroscience reveals the limits of knowing.

At a glance

  • The ways in which the human mind has evolved to deal with our world have resulted in an aversion to uncertainty and ambiguity
  • Certainty, and the comfort of feeling that we are right, can be enemies to informed decision-making and assessment of risk
  • The rewards of making 'correct' decisions can create habits that oppose risk or innovation
  • Acknowledging the limits of what we feel we know can open us up to new possibilities

It is hard to watch today's highly partisan public discourse without wondering if an unwarranted sense of certainty will be our ultimate undoing. We are constantly exposed to absolute statements of certainty, as well as our own feelings of knowing what is right or wrong.

The human mind has evolved to help us make sense of the world around us, and we are naturally averse to uncertainty – we crave the concrete and run from ambiguity. The coronavirus crisis, which has created a host of new complexities to navigate and decisions to make, has brought this into sharp relief.

However, perhaps an open-minded scepticism would be a preferable point of view, paving the way for greater awareness, mental flexibility and a willingness to contemplate alternative ideas before making decisions.

If there is a single take-away from this discussion, it is that we must incorporate into our everyday lives what neuroscience is telling us about the limits of knowing. Humans are complex decision-making organisms. We don't know how our thoughts arise or how to consciously control them, yet we persist with the seemingly hard-earned irrefutable belief that our thoughts are correct, certain and beyond doubt. Understanding these processes can help us open up our minds to other possibilities – other ways to manage our affairs and wealth-management choices beyond sticking to the familiar patterns that simply satisfy our sense of certainty.

To overcome this 'certainty epidemic' and expose ourselves to new opportunities, we need to address the profound difference in how certainty feels from what neuroscience tells us that certainty actually is.

Understanding the science of certainty

To get a feeling for the difference, let me briefly present the memory study that first triggered my decades-long fascination with the science of certainty. But first, to set the stage, try to remember where you were on 11 September 2001. Ask yourself how certain you are of those memories. If you have a high degree of certainty that you can remember time and place vividly, keep that feeling in mind as you read the Challenger study.

In 1986, within a day of the space shuttle Challenger explosion, a psychologist at the US-based Emory University who was studying 'flashbulb memories' (the recall of highly dramatic events) asked his class of 106 students to write down exactly when and where they were when they heard about the explosion, as well as how they felt about it.

Two and a half years later, the students were again interviewed, and their new recollections were compared with their original journal entries. Twenty-five per cent of the students' updated descriptions were strikingly different, and more than half had lesser degrees of error. Less than 10 per cent had all the details correct.

Despite having been taught how memory morphs over time, the majority of students expressed a high level of confidence that their newer recollection was more accurate. But the most stunning and puzzling comment came from a student who, upon looking at his original journal, said, "That's my handwriting, but that's not what happened."

My question at the time was whether this comment was merely a reflection of the student's fear of being wrong and a misplaced sense of pride in his present memory being correct, or whether there is a more basic and perhaps less psychological explanation?

As a neurologist, I was reminded of the quarter-century studies of neurosurgeon Wilder Penfield. When he electrically stimulated conscious patients' brains, he could elicit strong feelings of knowing in the individuals – even when the patients denied experiencing any associated conscious thought. (For the purposes of this discussion, I am using 'a profound feeling of knowing' and 'the feeling of certainty' interchangeably.)

How do we know when we are right?

Though a free-floating feeling of knowing unattached to any actual knowledge initially made little sense, once I looked further, confirming evidence was everywhere. As a universally recognisable example, consider the 'a-ha' moment – that wonderful feeling of absolutely knowing something. Sadly, as we all know, we cannot consciously trigger an 'a-ha'; it simply happens to us in the way that we feel love or anger.

Further cognitive science research has confirmed my initial suspicion. Though the feeling of knowing (or certainty, if you prefer) might feel like a conscious conclusion resulting from the weighing of various evidence and lines of reasoning, it is an involuntary sensation that arises from subliminal brain mechanisms beyond our conscious control.

Having read the above paragraphs, do you still have the same degree of confidence in your memory of your experiences surrounding the September 11 terror attacks? If, like most people, you still feel your recollections are fairly or wholly accurate, you can appreciate the subjective disconnect between how we sense our minds at work and the contradictory conclusions drawn from neuroscience – the very essence of cognitive dissonance.

We feel ourselves thinking, so say that we are consciously thinking. We feel ourselves manipulating ideas into complex lines of reasoning, so believe that these arguments are the result of conscious deliberation. We feel ourselves determining what is right or wrong, so believe that our feelings of certainty are hard-won rational conclusions. Taken together, these feelings become the basis for the nearly universal belief that humans are rational agents capable of knowing when they are right.

These processes tend to lead us favour the known over the unknown – which, in a world bedevilled by uncertainty as the pandemic unfolds, seems comforting but could direct us towards decisions about our future and legacy that miss opportunities.

Why certainty is so satisfying

To counter this notion, let me suggest an overly simplified but nevertheless useful schema – that a thought can be broken down into two separate but interrelated components: a subliminal brain calculation and an involuntary feeling about the calculation.

First, there is the subliminal element, the computational component whereby the brain subconsciously carries out various calculations, such as driving home on autopilot. While you are completely swept up in considerations about your retirement fund, for example, your brain subconsciously plans the route, steers the car, brakes for stop signs and pulls up to your home. Unless your attention is redirected to your driving, this subliminal brain activity leaves no conscious impression.

The second component, the involuntary feeling, is the various mental sensations that collectively tell us how we feel about that calculation. Just as our eyes and ears provide information from the outside world and our bodies give us visceral status updates, such as hunger and thirst, our brains generate mental states to give us a sense of its subliminal calculations. We feel our thoughts as strange or familiar, difficult or easy, morally sound or disgusting, right or wrong.

To get a sense of why such a system evolved, consider the following scenario. You are strolling on the Serengeti plain when a lion suddenly charges. There's no time for weighing of options; you seemingly reflexively bolt for the nearest tree. When the lion slinks away, you are thrilled and pride yourself on having made the correct decision. It's a good feeling generated by the brain's reward system (the mesolimbic dopamine system).

The first time you escape a charging lion by running up a tree, you will conclude that your spontaneous reaction was an excellent strategy. But what about next time?

As an isolated system, reason is doomed to the perpetual self-questioning that arises out of not being able to know what you don't know. The solution: to experience a feeling of being right so immediate and powerful that any lingering doubts and 'yes, but' are silenced. But for this feeling to work, it must feel like the result of conscious deliberation that rationally eliminates alternative possibilities. How clever – an involuntary sensation that feels just like a thought.

And just as trickles of water can morph into rushing streams, successful repetitions lead to hard-to-change patterns. Feelings of certainty become indelibly linked to thoughts; contrary points-of-view don't have a neurobiological chance. It's here where we realise that, in practical terms, this can keep us from making decisions that might benefit us in the long run, or lead us to miscalculate risk, which has implications for wealth planning, investment decision-making and overall financial health.

Humans are pattern-recognisers; successful predictions lead to a hypertrophied sense of knowing – an exhilarating pleasure not to be taken lightly.

Conversely, the feelings of not knowing – uncertainty, doubt and/or ambiguity – tend to be unpleasant experiences. In experiments with monkeys, failure to make proper predictions leads to sharp drops in reward system dopamine levels.1 Behavioural economists such as Nobel laureate Daniel Kahneman have repeatedly shown that the pain of loss far outweighs the pleasure of winning. All the more reason for us to cling to strategies that we know, whether or not they are the wisest or most rewarding.

Acknowledging the limits to knowing

Accepting the experience of a mind as a composite of subliminal mental sensations raises the thorny problem of how to deal with the unavoidable downside of sensory systems – perceptual illusions. Much of present-day cognitive science is devoted to unravelling such sensory misapprehensions, from phantom limb pain to optical illusions. Of greatest personal interest is our faulty perception of cause and effect that creates the unshakeable sense that we are consciously generating and manipulating our ideas.

We experience an idea followed by the sense that the idea is correct and feel that this was a conscious conclusion. However, often it is the combination of an idea and a feeling of likelihood of correctness that ushers a thought into consciousness; this is the biological underpinning of both innate and acquired biases. Hunches and gut feelings are two further everyday examples.

There are no easy solutions, but acknowledging that our feeling of knowing is subject to all sorts of perceptual mischief is a good place to start. We cannot train ourselves to see the sleight of hand that makes it impossible to win at Three Card Monte, but we can tell ourselves that we are being deceived and not to trust what we see. The same should apply to feelings of certainty.

This dependence on certainty can keep us from making decisions that would benefit us in the long run, or lead us to miscalculate risk, which can obviously impact financial decision-making.

Yes, we can learn to distinguish between subjective impressions and objective data. We can better hone our scientific and statistical skills, but we are still left with the more basic problem of how to know when our innate biases tilt the evidence and influence our decisions. By understanding the ways in which uncertainty affects us – and the mechanism behind certainty – we are better placed to manage our responses and explore how they influence our judgement and decision-making.

In the end, we remain in that murky nether land of being prey to our own mythologies as to how our minds work. If we continue to believe in man's rationality being sufficient to know when our ideas are beyond dispute, we are likely to disregard contrary points of view. By contrast, F. Scott Fitzgerald once wrote, "The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time and still retain the ability to function."

Emphasising knowledge as a set of beliefs as opposed to irrefutable fact is essential to changing one's mind and/or the minds of others. Hearing myself saying "I believe" where formerly I would have said "I know" serves as a constant reminder of the limits of knowledge and objectivity.

Robert A. Burton, M.D., is the former associate director of the department of neurosciences at the University of California, San Francisco Medical Center at Mount Zion. His books include On Being Certain: Believing You Are Right Even When You're Not and A Skeptic's Guide to the Mind; What Neuroscience Can and Cannot Tell Us About Ourselves.

1 "From Conditioning Monkeys to Drug Addiction: Understanding Prediction and Reward", Cognitive Neuroscience Society, June 2013

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