Don’t Change Your Thinking, Change Your Environment

Often in our pursuit to improve our decision-making and habits, we tend to overthink. This is a function of our environment – where we’re bombarded with too much information (TMI) – and a function of our critical thought processes, where we’re prone to overanalyze and over process.
Take, for example, dieting. There are books and articles on developing self-control and inner strength to overcome our urges. We’re counseled to train our brains to do this and that when faced with difficult choices. Processing all this information can be exhausting, and it’s why so many people fail at dieting. It’s too complicated.

The problem of TMI in dieting is the same problem that plagues investors. Too many voices and too many choices often lead to the wrong decisions when it comes to investing. There may be a simple solution for those paralyzed by TMI and driven to distraction.

​​Sometimes, the simplest solution to dieting is to hide or not buy unhealthy foods. If unhealthy foods are out of sight, they’ll be out of mind – no need to struggle with temptation if it is eliminated. Instead of undertaking the more arduous task of reprogramming your thinking, you can change your environment. By taking proactive steps to rearrange the architecture of your choices, you can influence the outcome of your decisions.

This concept of redesigning or rearranging your environment to influence your choices was discussed by Samuli Reijula and Ralph Hertwig in their 2020 paper, “Self-nudging and the citizen choice architect,” where the term “self-nudging” was introduced in the context of improving our decision-making.

Reijula’s and Hertwig’s article introduces incorporating personal self-nudges: proactive interventions that enable people to design and structure their decision environments to reduce the chance of failure. In the food example, a self-nudge would be to stock the pantry with junk food. Through self-nudges, we can become architects of our decision-making environments.

Self-nudging eliminates the need to overthink or overanalyze. It is a tool for reducing the opportunities to fail and, in the process, enhances personal autonomy. In investing, self-nudging can mean eliminating choices to narrow down options and opportunities to just be able to make a decision.

For those potential investors overwhelmed by all the noise, advice, and marketing about where you should put your money, there’s another tool along the lines of self-nudges to eliminate rash or ill-advised decision-making. This device is called “critical ignoring” – a term coined by educational psychologist Sam Wineburg.

Critical ignoring helps people control their information environment by filtering and blocking out nonessential and misleading information. Online, critical ignoring is just as important as critical thinking. Scienceofboosting.org. One application of critical ignoring is using it to deal with online trolls. Because trolls feed on attention, use the “do not feed the trolls” heuristic: Don’t respond directly to trolling – don’t correct, debate, retaliate, or troll back. It would be more effective to block trolls and report them.

In investing, critical ignoring could be applied to ignoring investment advice or suggestions from sources with no track record of success. For example, in the summer of 2021, crypto was all the rage and trading at sky-high levels. Celebrities even got into the game. To name a few celebrities, Matt Damon, Tom Brady, and Kim Kardashian were all paid to endorse crypto and crypto exchanges. Those celebrities are staying out of the crypto spotlight now that crypto has crashed. If you want to apply critical ignoring to investing, an easy first step is to ignore the advice of people who know nothing about investing.

Concepts like self-nudging and critical ignoring are designed to save humans from themselves.

​​Because humans are so prone to making rash decisions based on external factors, they tend to go along with something because of what someone else said instead of analyzing a situation on their own. Instead of rational decision-making, social factors such as peer pressure or the fear of missing out often force us to make decisions against our best interests.

Rash or peer-influenced decisions usually don’t turn out well. Rash decision-making negatively impacts many critical areas of our lives, including finances, relationships, and physical and emotional health.

As another new year approaches, everyone starts reflecting on another year gone by. Then they turn their sights to the future to set goals for themselves and devise a game plan for achieving them. Achieving these goals often means eliminating, modifying, or implementing specific behavior to maximize our chances for success.

This year, take control of your investing environment. Implement self-nudges like removing the temptation to invest in highly speculative assets. This may mean deleting the Robinhood app from your phone – and that makes trading in speculative assets so accessible and easy.

​​In addition to self-nudges, critical ignoring is also another valuable tool for avoiding bad investment decisions by ignoring unsound investment advice and investment buzz and hype.



Mike Ayala has owned and operated mobile home parks since 2007, and has been active in construction and management since he was 15 years old. He graduated from the Associated Builders and Contractors 4-year project management program at age 22 and then became a licensed instructor. He is also the host of the Investing for Freedom podcast.