What It Is And How To Overcome It

The way information is presented often determines how we perceive that data and the conclusions we draw from it. This cognitive bias is known as the framing effect, and it has a major impact on the decisions we make every day.

Understanding how to use and abuse the framing effect is the stock-in-trade of advertising agencies and political spin doctors, but this bias also impacts how we process just about every piece of information we receive. The context or “frame” in which choices are presented can significantly affect decision making and judgment.

For instance, people might react differently to a statement about a medical procedure’s success rate (“This procedure has a 90% success rate”) compared to its failure rate (“This procedure has a 10% failure rate”), even though the information conveyed is identical. By the same token, a presentation that emphasizes the potential benefits of a proposed deal is almost certain to be received more favorably than one that emphasizes its risks.

This bias is rooted in human psychology, where perceptions of gains and losses heavily influence choices. Research by Daniel Kahneman and Amos Tversky, who first identified the framing effect, shows that individuals tend to avoid risks when a positive frame is presented but seek risks when faced with a negative frame.

Negative Impacts on Decision Making

The framing effect can lead to misjudgment of risks and benefits. For example, in medical decisions, a patient may opt for a treatment with a “90% survival rate” but reject it if it is presented as having a “10% mortality rate.” This distortion can result in suboptimal health choices and anxiety.

The way data and statistics are framed can lead to biased policymaking as well. For instance, emphasizing the “cost of action” versus the “cost of inaction” in climate change debates can sway public opinion and legislative priorities, sometimes leading to delayed or inadequate responses to critical issues.

Of course, the framing effect also has a significant impact on consumer behavior. Advertisements often exploit this bias by framing products in a way that highlights benefits over drawbacks. For instance, a yogurt brand might market itself as “97% fat-free” rather than “contains 3% fat,” impacting consumer preference despite both statements being equivalent.

Investors and financial planners can be swayed by framing too, affecting financial markets. For example, describing an investment as having a “70% chance of profit” versus a “30% chance of loss” can lead to different choices, potentially impacting financial stability and growth.

But the framing effect can impact business decisions in less obvious ways, as well.

Xerox developed many of the technologies behind the personal computer revolution; its Star workstation was the first commercially available computer to offer a bit-mapped display, windows-based graphical user interface, icons, folders, Ethernet networking, e-mail, and a mouse. But Xerox saw itself as a copier company, and because it failed to see beyond that frame, it marketed the Star as a “document management machine” and only sold it as part of a “personal office system” that cost between $50,000 and $100,000 when it was launched in 1981.

Not surprisingly, Xerox sold few of these workstations and never became a player in the computer business.

Companies such as Apple and Microsoft looked at the technologies Xerox pioneered through a different frame and used them to dominate the computer industry.

5 Ways to Overcome the Framing Effect

While the framing effect can lead to suboptimal decisions, there are steps we can take to overcome it and limit its negative impact:

1. Awareness and Education: The first step in overcoming the framing effect is awareness. Educating individuals about cognitive biases can help them recognize when they are being influenced by framing. This can involve training sessions, workshops, or incorporating bias recognition into educational curricula.
2. Critical Thinking and Analysis: Encouraging critical thinking and promoting analytical skills can mitigate the framing effect. When faced with a decision, individuals should be trained to evaluate the underlying data rather than the presentation. Red teaming and Red Team Thinking offer specific tools and techniques to do this, but asking questions like, “What is the actual information being conveyed?” and “Are there other ways to interpret this data?” can also help reframe the context.
3. Use of Balanced Frames: In communication, especially in professional and policy-making contexts, presenting balanced frames can reduce bias. This means showing both positive and negative frames side by side to provide a complete picture. For instance, presenting both “90% survival” and “10% mortality” rates together ensures that individuals see the full context.
4. Structured Decision-Making Processes: Implementing structured decision-making processes that rely on empirical data and standardized methods can reduce the impact of framing. Tools like decision trees, flowcharts, and checklists can help individuals follow a logical path that minimizes bias.
5. Peer Review and Collaboration: Collaborative decision making and peer review can also help counteract the framing effect. Diverse perspectives and critical feedback can identify and correct biases that individuals might overlook. In organizations, fostering a culture of open dialogue and critical assessment can improve decision quality.

The framing effect is a pervasive cognitive bias that can significantly impact decision making across various domains, but by understanding its mechanisms and adopting strategies to mitigate its influence, individuals and organizations can make more rational and informed decisions.