All Decisions Are Bets

All decisions are bets

Our traditional view of betting is very narrow: casinos, sporting events, lottery tickets, wagering against someone else on the chance of a favorable outcome of some event. The definition of “bet” is much broader. Merriam-Webster’s Online Dictionary defines “bet” as “a choice made by thinking about what will probably happen,” “to risk losing (something) when you try to do or achieve something” and “to make decisions that are based on the belief that something will happen or is true.” I have emphasized the broader, often overlooked, aspects of betting: choice, probability, risk, decision, belief. We can also see from this definition that betting doesn’t have to take place in a casino or against somebody else.

No matter how far we get from the familiarity of betting at a poker table or in a casino, our decisions are always bets. We routinely decide among alternatives, put resources at risk, assess the likelihood of different outcomes, and consider what it is that we value. Every decision commits us to some course of action that, by definition, eliminates acting on other alternatives. Not placing a bet on something is, itself, a bet. Choosing to go to the movies means that we are choosing to not do all the other things with our time that we might do during that two hours. If we accept a job offer, we are also choosing to foreclose all other alternatives: we aren’t sticking with our current job, or negotiating to get a better deal in our current job, or getting or taking other offers, or changing careers, or taking some time away from work. There is always opportunity cost in choosing one path over others.

The betting elements of decisions—choice, probability, risk, etc.—are more obvious in some situations than others. Investments are clearly bets. A decision about a stock (buy, don’t buy, sell, hold, not to mention esoteric investment options) involves a choice about the best use of financial resources. Incomplete information and factors outside of our control make all our investment choices uncertain. We evaluate what we can, figure out what we think will maximize our investment money, and execute. Deciding not to invest or not to sell a stock, likewise, is a bet. These are the same decisions I make during a hand of poker: fold, check, call, bet, or raise.

We don’t think of our parenting choices as bets but they are. We want our children to be happy, productive adults when we send them out into the world. Whenever we make a parenting choice (about discipline, nutrition, school, parenting philosophy, where to live, etc.), we are betting that our choice will achieve the future we want for our children more than any other choice we might make given the constraints of the limited resources we have to allocate—our time, our money, our attention.

Job and relocation decisions are bets. Sales negotiations and contracts are bets. Buying a house is a bet. Ordering the chicken instead of the steak is a bet. Everything is a bet.