Outcome Bias: Don’t Judge a Decision Only by the Outcome

In Super Bowl XXXI, New England Patriots Coach Bill Parcells had his team kick off to the Green Bay Packers near the end of the third quarter, having just narrowed the Packers lead to 27-21.  The Packers’ Desmond Howard, who had nearly broken kickoffs for large gains earlier, took this one and raced 99 years for a score that would put the game away. It was a classic NFL coaching blunder.  Or was it?  If the Patriots had tackled Howard deep in his own territory and shut the Packers down or recovered a Howard fumble, Parcells would have been lauded rather than lambasted.  With a bad outcome, the decision was labeled bad.  This is a classic example of the outcome bias, which is what happens when we evaluate a decision after we know the outcome.

A teen who says she can text and drive – ‘I’ve done this before and never had an accident’ - also succumbs to the outcome bias.  If the outcome has been good, her decisions must have been OK she says. Not necessarily.  Over 3,000 deaths a year and thousands more crashes come from distracted drivers, so she’s been lucky not a good decision maker. 

The outcome bias was first labeled by Jonathan Baron and John Hershey in 1988. In one of their experiments subjects were asked to judge the quality of a doctor’s pre-operation decision making in hypothetical situations involving a risky surgery with known probable outcomes.  Those subjects who were told the patient died faulted the doctor’s thinking and decision making but those told the operation worked praised the doctors’ decision abilities.  Clearly, they judged the physicians after they knew what happened.

The outcome bias thus improperly evaluates someone’s decision making process.  That can lead to multiple problems. At its simplest, as these cases demonstrate, judging by the outcome alone ignores the quality of the decision making itself – if it even considers it.  It elevates the part luck can play in a decision outcome and underestimates the value of critical thinking skills.  It downplays the importance of gathering facts, reasoning carefully and inviting contrary opinions.

When the outcome bias leads to praising the ability of people who achieved good outcomes, it can delude them (and others) into believing in their own decision making prowess and invincibility.  Adolph Hitler prided himself on his intuition because of his success in Western Europe and then ignored his generals’ concerns about invading Russia. The result proved to be an unwinnable two-front war and Germany’s defeat. 

The outcome bias may also hinder learning because it discourages those with good outcomes from questioning their decision process, its real or potential flaws and how they can improve in future decision making. People who have good outcomes rarely find a need to question themselves and may even react with anger against those who do. 

At the same time, a bad outcome can lead to the conclusion that someone is just a bad decision maker, when in fact a bad outcome may be due more to chance or unforeseeable factors.  A couple that bought a home in 2006 may have made a thoughtful investment but could not have foreseen the housing bust that devalued that purchase during the Great Recession in 2008. 

Encouraging unethical or even illegal behavior is another danger that accompanies those prone to the outcome bias.  If an individual considers an outcome good, he may run the risk of concluding that however he got there was worth it, regardless of morality – that the end justified the means. 

The outcome bias should also make us wary of drawing quick conclusions about the quality of a decision and the decision making process. When the U.S. invaded Iraq in early 2003, Saddam Hussein’s forces were quickly overwhelmed and President George W. Bush famously declared “Mission Accomplished.”  He was lauded for a decisive victory and smart decision making which led to that outcome.  Yet within a year an insurgency would tie down American forces, lead to some 4,700 U.S. and allied troop deaths and the deaths of over 100,000 Iraqis.  The war would drag on for seven years.  What appeared to be a good decision making process and outcome was not.  The outcome bias can foster dangerous short-term thinking. 

We see this not just in world politics but in business, where the corporate focus on short term profits – that enable leaders to tout great outcomes - leads to long-term financial losses, as in Wells Fargo’s mismanagement of mortgages, auto loans and depositor accounts. 

The best way to avoid the outcome bias is to use a good decision making process, one that gathers facts, questions assumptions, generates and evaluates options and brings in disparate and outside views.  Another useful step is to withhold judgment until the impact of time and the implications and consequences of actions, especially unanticipated consequences, become clearer. 

Photo Credit: Desmond Howard courtesy of espn.go.com