Q 674. Framing Effect is when our decisions change on the basis of how the information is presented to us. What are the methods to avoid this behavior and instead ensure that we always take data driven decisions which will stand irrespective of how or who presents the information?

 

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You know how sometimes our choices change just because of the way something is said or shown to us? That’s called the Framing Effect. It’s like when a restaurant menu says "95% fat-free" instead of "contains 5% fat"—the first one just sounds better, right? But how can we make sure we’re making decisions based on the real facts, not just clever wording.

Here are some methods to avoid this behavior and have data driven decision making:

Double-Check the Numbers: Always look at the raw data. If someone says, "This strategy improved sales by 30%," find out what the numbers were before and after. For instance, "Our sales went from $100,000 to $130,000." It’s clearer and gives you a real picture.

Ask for Both Sides: Try to see the same information framed in different ways. If a project is presented as having a "90% success rate," ask what the failure rate is. Sometimes, hearing "10% failure rate" can change your perspective and help you make a more balanced decision.

Use a Consistent Framework: Develop a standard method for evaluating information. Whether it’s a spreadsheet or a checklist, having a consistent process ensures that you’re comparing apples to apples. For example, if you’re deciding on a vendor, always look at cost, quality, and delivery time in that order.

Critical Thinking: Always question the context. Why is this information being presented this way? Is there an agenda? For example, if a report highlights how much time a new software saves but doesn’t mention the cost, dig deeper. Maybe it saves time but at a high expense.

Discuss with Others: Get opinions from different people. Different perspectives can highlight biases you might have missed. For example, discuss a potential business strategy with both the finance and marketing teams to get a well-rounded view.

A real-life example:

Imagine you’re at a team meeting, and your boss, Ravi, presents two options for a new marketing campaign. He says, "Option A has a 70% chance of success, and Option B has a 30% chance of failure." They sound different, right? But they’re actually the same. To avoid the framing effect, focus on the underlying data, like past campaign performances, budget requirements, and potential ROI.

By following above mentioned steps, you’ll be better equipped to make decisions based on solid data, no matter how or who framed the information. It’s all about looking past the surface and digging into the real details.

The framing effect is where decisions are made based on how the options are presented, rather than on the options themselves

Methods to avoid framing effect:

A.      Present the information equally

B.      Compare with reference

C.       Provide balanced reporting

D.      Present facts

E.       Present with clear data

Some industry and real-life examples:

 

1.       In one of the grocery markets, I was buying Smoked Salmon fish. On the 200 gm packet costing 30 AED, it is mentioned that 10g Carb whereas on the other packet weighing 100 grams costing 14 AED, it was mentioned 4% carb over 100 gm. Both packets are from the same company but the information is presented differently. If someone has to make a choice basis Carb and cost, the person needs to compare both packets on the same scale.

 

2.       In the hospital before getting into surgery, the Doctor mentions a 97% success rate whereas he should also mention a 3% failure rate. Considering health is extremely critical to human beings, one might decide on alternative medicine rather than surgery when he/she hears 03% failure.

 

3.       Investment consultants present options like a fund has a 15% return whereas presenting like this - a fund has had a 15% return while the market average is 8%. This allows investors to make more informed decisions by comparing standardized data

 

4.       Keep the content in natural language – Instead of marketing buy 01 and get 50% off on the second and many more confusing and complex campaigns to be avoided and a clear picture of what the total AED discount is if the purchase value is this much should be practiced. This reduces the framing effect by straightforward comparison.

 

5.       When reporting on a study, include both the benefits and the risks. For instance, "A new drug reduces the risk of heart attack by 30% but may increase the risk of stroke by 5%”. This reduces the framing effect by helping readers understand the full context

 

6.       When presenting a policy, provide both the benefits and the costs. E.g. The new tax reform will save middle-class families an average of $1,000 per year but will also reduce government revenue by $50 billion annually." This helps voters understand the trade-offs involved without being swayed by emotional appeals.

 

7.       Basic example in corporate board rooms, presenters modify the graph scale to show performance visually appealing even though the performance is low. The presenter should provide the real picture to ensure reducing/eliminating the framing effect, appropriate decisions can be made.

It is a psychological phenomenon in which selection of option differs based on how information is represented - how it is framed or shown. According to this phenomenon, people may be more likely to go with high success rate than if it is advertised as having low failure rate, even though the information is mathematically equivalent.

Techniques to detect framing effect:

There are three techniques for detecting the framing effect i.e. data techniques, analysis techniques, and presentation techniques.

Data techniques: Origin of data along with quality, structure, frequency or gaps identified.

Analysis techniques: Different statistical models / algorithms can be applied and predicted vs actual results were compared.

Presentation techniques: Format to be finalized for discussion and same format to be used for subsequent discussion.

Minimizing framing effect:

There are three ways to minimize the framing effect i.e. diversify, validate, and communicate.

Diversify: Multiple source data need to be verified instead of refereeing one source data. For collecting data, same format to be used.

Validate: Model/ algorithm based statistical analysis to be done to validate predicted data vs actual data.

Communicate: During presentation, objectives need to be communicated clearly with uncertainties and limitation.

The framing effect can significantly influence decision-making, often leading to biased choices. To avoid this behavior and ensure decisions are data-driven and independent of presentation, following are some strategies we can follow :

 

• For awareness Conduct regular training sessions on critical thinking and decision-making to reinforce the importance of objective analysis.
• For structured Decision making use structured frameworks and decision matrices to evaluate options, ensuring that the criteria for decision-making is clear. Also create guidelines to evaluate information, which will reduce the risk of framing effects.
•  One must take data driven approach to emphasize the importance of quantitative data and statistical analysis over qualitative descriptions.
• Seeking diverse perspective with a diverse group of people to get different viewpoints and presentations of the same information can help in neutralizing the framing effect.
• Critical evaluation of sources will help asses the credibility and potential biases of the information source. Trustworthy, objective sources should be prioritized.
• Use of neutral language during presentation which does not imply positive or negative connotations. Avoid emotive or persuasive language.
• Establish a feedback loop to learn from past decisions. Analyze whether past decisions were influenced by framing and what the outcomes were

By implementing these methods, you can create a more objective, data-driven decision-making process that minimizes the impact of the framing effect and other cognitive biases.

 

On 5/31/2024 at 4:58 PM, Vishwadeep Khatri said:

Framing effect can be avoided through some of the techniques that are mentioned below:

Perspective: Several times we are looking at decision to be made from one perspective.  Even though it may look attractive, the option must be looked at from other different perspective e.g. when deciding on projects to go ahead with from a list of projects, project champion may be looking at it from margin improvement perspective only. However, these should also be looked at from other perspectives as well like employee satisfaction, compliance to regulatory laws, impact on the client etc

Data driven approach: When deciding, one should also try to dig out facts by looking at historic data to finalize and identify the right option e.g. while deciding on which Air conditioner to select, one should not only look at the price and configuration but also look at the history of accidents and complaints against the options but doing a research to identify the one with lesser accidents

 

There are 2 winners for this question - Sachin for explaining the methods to avoid framing bias well and Amol for providing some interesting examples. Well done!!