In a world driven by choices, we often find ourselves at crucial crossroads where the true breadth of alternatives is obscured. Whether it’s deciding on an educational investment or choosing between risky medical procedures, the ability to weigh all available options is paramount. Yet, time and time again, we fall victim to a cognitive bias that I call alternative blindness—a tendency to forget or overlook the second-best options that could be superior.
The MBA Fallacy: A Case of Alternative Blindness in Education
In today’s world, pursuing an MBA is often seen as a surefire way to boost one’s career. The brochures and advertisements promise a financial windfall, with the supposed benefits of the degree easily outweighing the hefty price tag. Yet, the decision to pursue an MBA is rarely as clear-cut as it may first appear. Beyond the glossy brochures and attractive statistics, several critical oversights commonly lead to alternative blindness—the failure to consider alternative paths that may better suit an individual’s financial and career goals.
The first fallacy is the swimmer’s body illusion. This concept highlights how an MBA program tends to attract career-oriented individuals who are already on the path to earning above-average salaries. These high-achievers possess the ambition and work ethic that often lead to career success regardless of the degree. In other words, the MBA does not cause people to be successful—it attracts people who are already inclined to do well. Thus, the financial premium touted by the university is not solely the result of the MBA but a reflection that those drawn to these programs are already primed for success in the workforce.
Next comes the opportunity cost of pursuing an MBA. The standard MBA program typically spans two years, during which a student is not earning any income, thus resulting in a significant loss of potential earnings. For many professionals, a $100,000 or more loss in salary over two years is a realistic estimate. When you factor in the $100,000 tuition fee, the total cost of the MBA is closer to $200,000. This amount could be invested elsewhere, yielding returns that would likely exceed the promise of a future salary boost. For example, $200,000 invested wisely in stocks or real estate could generate far more wealth over the same 30-year period than the projected additional $400,000 earned from the MBA.
Additionally, projecting future earnings from an MBA is inherently speculative. The claim that graduates will earn an additional $400,000 before retirement is an overly simplistic estimate that fails to account for the unpredictability of the job market. The global economy, industry-specific trends, and even the value of the MBA itself could change dramatically over 30 years. Who can predict whether the MBA will continue to hold the same weight or whether entirely new career paths will emerge that require different qualifications?
Finally, the concept of alternative blindness comes into play when individuals fail to consider the many other educational opportunities available. Instead of committing to a full MBA, other avenues could offer a similar career boost at a fraction of the cost. Shorter, more focused programs—such as industry certifications or specialized executive courses—may offer significant returns without the time and financial burden of an MBA. By failing to explore these alternatives, individuals unknowingly limit their career options and miss out on the possibility of a more tailored educational experience.
Finance and Investment: Ignoring the Second-Best Option
Alternative blindness is not limited to education. It also permeates the world of finance and investment, where individuals often make choices based on incomplete comparisons. When evaluating investment opportunities, people are inclined to assess their options in isolation without considering all the alternatives that might be available. This narrow focus can lead to suboptimal decisions, especially regarding managing wealth.
Consider an individual with a small amount of money sitting in a savings account, earning a mere 1% interest. When they seek advice from an investment broker, the broker recommends a bond with a 5% return. This sounds like a great deal, especially compared to the paltry 1% offered by the savings account. But here’s where the potential for alternative blindness kicks in. By focusing only on the bond and savings account, the individual is overlooking other investment options that may provide higher returns or better align with their financial goals.
For example, stocks may offer a much higher return over the long term, albeit with greater risk. Real estate, too, could provide both capital appreciation and rental income, offering a better return on investment than the bond. Mutual funds, exchange-traded funds (ETFs), or even alternative investments like peer-to-peer lending may offer opportunities for diversification and yield returns that outperform the bond. The key to making an informed decision is not to compare the bond with the savings account but to consider the broader universe of investment options and select the best combination of risk and reward.
Warren Buffett, one of the world’s most successful investors, is known for his disciplined approach to evaluating investment opportunities. For Buffett, deciding is not about finding the best investment in isolation but comparing all available options. He famously said, “Each deal we measure against the second-best deal available at any given time—even if it means doing more of what we are already doing.” This philosophy ensures that he doesn’t get overly attached to any investment and is always looking for opportunities to provide the best returns relative to alternatives. By constantly comparing opportunities, Buffett ensures he’s making the most optimal choice.
For the average investor, the lesson is clear: don’t settle for a good investment just because it’s better than the current option. Always widen your scope and compare it against all other alternatives to find the one that offers the greatest potential. Doing so increases your chances of making decisions that truly benefit your financial future.
Government and Infrastructure Projects: The Cost of Narrow Thinking
Alternative blindness is also prevalent in government decision-making, particularly regarding large infrastructure projects. Politicians, city planners, and other decision-makers often advocate for projects that seem like good ideas at first glance but fail to consider the full range of alternatives. This narrow thinking can lead to wasted resources and missed opportunities for more impactful investments.
Take, for example, a city that plans to build a new sports arena on a vacant plot of land. Proponents of the arena argue that it will bring significant economic and social benefits, creating jobs, boosting local businesses, and providing a recreational space for the community. On the surface, these arguments seem convincing. However, they fail to consider what might be lost by choosing the sports arena over other potential uses for the land.
What if the land could be used to build a school, a hospital, or affordable housing? These alternatives could have a far greater and more direct impact on the community’s well-being. In addition, selling the land and using the proceeds to reduce the city’s debt or fund other important infrastructure projects might be a more efficient use of resources. Yet, due to alternative blindness, the focus remains solely on the sports arena, while other potential investments are ignored.
In politics, it is common to focus on the immediate benefits of a proposed project, such as a sports arena or convention center, without fully considering the opportunity costs. The real value of the land is not in the arena itself. Still, what could be done with it otherwise. Politicians and city planners need to broaden their view and consider not only the direct benefits of a project but also the long-term effects of the alternatives that are foregone when a decision is made. This broader perspective would ensure that resources are allocated to projects with the greatest and most lasting impact on the community.
Healthcare Decisions: Choosing the Lesser Evil
Healthcare decisions often involve life-and-death stakes; alternative blindness can significantly impact the outcome. When faced with a difficult diagnosis, patients are frequently presented with a limited set of options—usually framed as “the best treatment” versus “doing nothing.” This binary thinking can lead patients to make decisions based on incomplete information, failing to explore other viable alternatives that may be less risky or more aligned with their values and preferences.
Imagine a patient diagnosed with a terminal illness and given the option of undergoing a high-risk surgery with a 50% chance of success. If the surgery works, the tumor is removed, and the patient may survive. If it fails, however, the patient could die soon after. The other option is to forgo surgery, accept the diagnosis, and prepare for a certain death shortly. On the surface, this seems like a straightforward choice: surgery offers a 50% chance of survival while doing nothing guarantees death.
But this view ignores other possibilities. What if a less invasive surgical option is available at a different hospital? While it may not remove the tumor entirely, it could slow its growth, giving the patient more time to explore further treatments. Perhaps there are alternative therapies, such as radiation or chemotherapy, that could shrink the tumor and extend the patient’s life. Even lifestyle changes or palliative care could improve the quality of life. The key is not to see the decision as simply a choice between two extreme options but to consider all available treatments and strategies.
Alternative blindness in healthcare can be devastating, as it forces patients to choose between a limited set of options without fully considering all possibilities. By expanding the scope of choices and looking beyond the immediate prognosis, patients can make more informed decisions that better align with their circumstances and desires. Life is often messier than a simple “either-or” decision, and the best choices are those that recognize the complexity and range of options available.
Conclusion: Expand Your Horizons
The next time you face a major decision, take a step back and ask yourself: What are my alternatives? It’s easy to get caught in the simplicity of binary choices—especially when the options are packaged neatly with appealing benefits or dire consequences. But the reality is that life is full of complex choices, and the best decision often looks beyond the obvious.
By broadening your perspective and considering the second-best options, you might find that the solution you sought was far better than the one you imagined. Open your eyes to the alternatives—because the best answers are rarely the ones that are presented to you first.
This article is part of The Art of Thinking Clearly Series based on Rolf Dobelli’s book.