Recency bias explains our tendency to focus on recent experiences when deciding. Recency bias influences our decisions by giving more weight to recent events. We naturally give preference to more current experiences.
It explains why we tend to ignore base rates when making important decisions.
Given our awareness of this cognitive bias, you might expect it not to cause us problems. But, it does.
Our modern world is one giant recency bias bubble.
Social media feeds us live news and updates. Our brains face so much recent information, that we have no capacity for the lessons from history. Overwhelmed, but without knowing it, decisions everywhere are being influenced by recency bias.
Here, I hope to try and give you some tips to overcome this bias.
What is Recency Bias?
Recency bias, also known as the recency effect fools our cognition. Hence, we know it as a cognitive bias that prompts us to believe future outcomes will mirror recent ones.
Recency bias changes our logical and objective thoughts.
We ignore statistical probability and history. Instead, we place more weight on experiences fresh in our memories. You can see this fallacy at work when we call current footballers the greatest of all time. We conveniently forget great players from the past.
We don't appreciate the misjudgement recency bias creates when we decide. We place far greater emphasis on current events without realising it. These experiences create reference points, which we then use to inform our decision-making. Often these experiences aren't relevant. But, because of the recency effect, they are top of mind and they heavily influence our thinking.
We make decisions without giving fair weight to older information. Our choices naturally decline in quality as a result.
Why does Recency Bias Affect us?
Our ancestors passed on their experiences.
Over time, they learned that recent events were more helpful in keeping them alive. Over hundreds of years, this behaviour became intuitive. When you think about it, the recency of seeing animal tracks was a warning our ancestors needed to heed.
Today, we don't need the same instinct to survive. But our bias towards recent events and experiences continues.
Through studies of human behaviour, we have been able to give names to the way we think and act. We now know enough to explain what recency bias is and show how it affects our decisions.
Recency Bias Examples
Recency bias occurs even in simple tasks like food shopping. This can cause us to alter our shopping habits and change how frequently we buy different items.
Example: Recency bias in decision-making.
In a household of four, the volume of regular items you consume won't change that much. There exists enough data to tell you how much milk, eggs, toilet rolls, etc. you need to buy to keep the house stocked up. Even though the data has history, you remember there only being one toilet roll left. Using this information, you change how many you will buy when you next go shopping.
Recency bias has influenced your decision of how many toilet rolls to buy. The historical data has enough insight to include the weeks you use fewer toilet rolls. But your mind can't comprehend accepting this because of your more recent experience.
Recency bias in decision-making occurs with the opinions we form. This exposure to recent information can change deeply held knowledge.
Example: Recency bias in decision-making.
Stock markets go up and down. History reveals a trend of boom and bust cycles with the underlying trend being positive. In periods of boom, when stock prices rise, investors forget about cycles. The ongoing upward movement of the price increases their confidence. They ignore the risk the boom will end.
The irony is that the opposite thinking occurs in a bust. The rapid losses and change in momentum tend to get exaggerated in people's minds. The underlying trend hasn't changed. Recency bias has fooled them into forgetting this. They have simply let the current phase of the cycle guide their thinking.
How to Overcome Recency Bias
Recency bias will lead you to make wrong decisions. So, it is a natural desire to want to know how to avoid recency bias.
To lessen the impact of recency bias, there are five steps you can take. Each one gives you a chance to improve the quality of your decision-making.
- Awareness — Be aware of recency bias and how it works. Now you've read this article, you've ticked the first box.
- Reflect — Take time to reflect on decisions and consider all the information available. Look further back to see if there are patterns or data points you may be ignoring or undervaluing.
- Research — Research to put events in context. Understand the full history and statistics behind an event. Don't rely on what you remember of it.
- Discuss — Seek outside perspectives to balance your viewpoint. Getting input from others can highlight events you've over-weighted.
- Systemise — Institute reminder systems and processes. Study past data and earlier decisions to proactively prevent recency bias.
It's important to slow down the way you make decisions. Using a decision-making process prevents you from making quick judgements. The quicker the decision, the more likely recency bias will appear.
Taking a thorough, balanced approach helps minimize the impact of recency bias.