OVERVIEW

     The first part of the book discusses "cost-benefit analysis" 
-- the comparative evaluation of a list of available 
alternatives.  Though the method of cost-benefit thinking was 
developed for economic situations, it often can usefully be 
extended to other types of choices -- into science and into 
psychotherapy, for example.  But in some choices -- such as your 
choice of loyalties, or what to do with your life, or whether it 
is worth the effort needed to make yourself happier -- cost-
benefit thinking may cause more damage than benefit.  
     Chapter 1 presents the framework for making cost-benefit 
evaluations, and illustrates its use when the outcomes are rather 
certain and where all the important consequences occur within a 
single period.  That is, these first types of situations are 
unencumbered with the two most important sources of difficulty in 
evaluation -- uncertainty, and delayed effects.  But the power of 
the intellectual framework is shown by its easy handling of such 
complexities as the pricing of several products whose sales 
affect each other. 
     Chapter 2 presents the concept of time discounting which 
enables us to appropriately weigh together incomes and outgoes in 
various future periods, and then add the set of them into a 
single overall sum.  That sum is called the "present value" of 
the stream of future revenues and expenditures.  This idea is at 
the core of decisions about investments and other actions taken 
in the present that will have ramifications long into the future.  
It is the single most important and powerful idea in all of 
managerial decision-making. 
     The negative elements connected with an alternative -- call 
them "expenditures" when they are monetary, and "costs" otherwise 
-- are easy to deal with conceptually.  But they are difficult to 
handle psychologically and organizationally, which often causes 
firms and individuals to reach disastrously wrong decisions.  
Chapter 3 describes devices to avoid these cost pitfalls. 
     Uncertainty is a key difficulty in decision-making.  Chapter 
4 presents intellectual machinery for dealing with uncertainty in 
a systematic fashion when valuing and comparing alternatives.  
     People sometimes enjoy uncertainty, and some even are 
willing to pay for it in gambling.  More commonly, though, 
uncertainty is a negative consequence that people will purchase 
insurance to avoid.  Chapter 5 explains how to allow for risk 
when you prefer avoiding uncertainty.  
     The cost-benefit analysis presented in Chapters 1 to 5 
presupposes that you have a single criterion of success on which 
to compare the various alternatives.  In ordinary business 
situations, money profit -- or more accurately, the present value 
criterion -- serves as the goal, and hence the measure of 
success.  But in many of life's situations you have more than one 
goal in mind.  Chapter 6 provides some devices to integrate 
multiple goals for organizations and individuals. 
     Part I also assumes that you know your goals.  But often 
when we make tough decisions in our personal and professional 
lives we find that we are not sure of our goals.  The two main 
inputs into choosing goals are a) our desires, the satisfaction 
of which constitute benefits for us, and b) our human and 
physical resources, which enable us to work toward satisfying our 
desires.  Part II tackles the problem of assessing our wants and 
capacities, and then selecting goals based on that knowledge.  
Chapter 21 deals with desires, Chapter 22 deals with capacities, 
and Chapter 23 discusses setting the goals. 
     Part III analyses the processes of creating ideas, 
developing alternatives, and obtaining sound knowledge of the 
world around you.  Chapter 31 offers techniques for developing 
ideas by recourse to experience and imagination, and also 
techniques for eliminating inferior ideas from further 
consideration.  A key issue is whether radical ideas with far-
reaching consequences will be considered further, or whether the 
scope will be limited to less far-reaching adjustments where no 
attempt is made to do an overall analysis; this sort of "myopic" 
adjustment process is known as "muddling through" -- inelegant, 
but often the most effective way of doing things.       
     Knowledge can usefully be categorized as a) tacit -- such as 
knowing how to ride a bicycle, b) applied -- such as knowing how 
to fix a bicycle, and c) abstract -- such as as understanding why 
the rider and bicycle don't fall down.  This book is mainly about 
abstract and applied knowledge.  The first place to turn for such 
knowledge is where it may already exist --libraries and experts.  
Chapter 32 tells you how to mine those resources. 
     Casual observation adequately provides most of the 
information we need for our work and personal lives.   But when 
casual observation is insufficient, and when experts and 
libraries do not yield the answers you need, you must turn to 
scientifically-disciplined research for reliable knowledge.  
Chapter 33 presents the basic principles of scientific research.  
Violations of these same principles are much the same as the 
errors we make in drawing everyday conclusions, as will be 
discussed in Chapter 45.  And many of the same scientific 
principles are the converse of the logical fallacies that have 
been discussed by philosophers since the ancient Greeks.  This is 
a nice example of how the same principles of thinking appear in 
several different contexts. 
     Chapter 34 takes up the special scientific problem of 
estimating the probabilities of uncertain events.  
     Part IV discusses the mental operations that we may (or may 
not) apply to the new knowledge that we obtain.  Classification, 
discussed in Chapter 41, is more important and more difficult 
than it is usually given credit for.  Classification, together 
with the related operation of measurement, molds the crude 
material of observation into forms that we can analyze.  
     Chapter 42 explains the nature and use of deductive methods 
-- which include both logic and mathematics -- to draw new and 
useful conclusions from existing information.  An important 
special topic is how to calculate complex probabilities from 
simple estimates.  
     Chapter 43 provides a set of principles for forecasting 
accurately.  It also points out the main causes of error in 
prediction of economic and social phenomena.  
     Chapter 44 discusses and analyzes the concept of causality, 
which is sometimes difficult to determine, and occasionally 
difficult to interpret.  
     Unbiased and error-free thinking is impossible in principle, 
and perfect rationality is not even a good standard of 
comparison. Chapter 45 discusses a variety of pitfalls that may 
ensnare our thinking, and especially our judgments.    And 
Chapter 46 focuses on some of the most frequent and most 
troublesome of these pitfalls.  Both Chapters 45 and 46 also 
offer some guides around the pitfalls so as to arrive more 
closely at mental clarity. 
     The entire business of creating ideas, obtaining relevant 
information, evaluating the alternatives, and drawing conclusions 
-- the subjects of Parts III and IV -- is a back-and-forth 
process, rather than a neat series of steps, even though it is 
necessary to neaten up the process when presenting it here in on 
the printed page.  And Parts I, III, and IV together might be 
entitled "Business Decisionmaking in a Hundred Easy Pages", or 
equally well, "Groping Your Way Toward Bliss and Away From the 
Abyss". 
     Part V addresses our emotions.  It asks:  How can we deal 
with our feelings so that we fill our lives with more excitement, 
pleasantness, and serenity, and less anger, sadness, and fear?  
Psychological science has made important new strides in the last 
two decades, some of the new work bringing up to date the wisdom 
of the ages.  These new advances are reported here. 
      Chapter 51 discusses the biological origin of 
psychologically- induced feelings, which center on the 
comparisons a person makes concerning him/herself, in conjunction 
with the degree of control over the situation that the person 
senses being able to exert.  It also shows how the various 
feelings are related to each other.  
     Chapter 52 discusses the nature of sadness and depression, 
which follow upon habitual negative self-comparisons together 
with a sense of helplessness.  And Chapter 53 discusses devices 
that an individual can employ to banish sadness and depression.  
     Anger, the subject of Chapter 54, is a two-edged sword.  
Unlike sadness, it can hurt others as well as yourself.  The 
cultivation of anger is seldom a productive strategy.  In 
contrast, Chapter 55 is about the cultivation of joy and 
serenity.  
     What happens between one person and another is the subject 
of Part VI.  First come principles for understanding others in 
relationships with us.  Then comes discussion of raising 
children, and managing groups and enterprises, including some 
solid new scientific findings about the most effective modes of 
achieving cooperation.  Political processes at various levels are 
covered next (not included in this draft).  Discussion of the 
nature of the key managerial question in very large organizations 
and governments -- the degree of decentralization --then follows. 
     Law, and ethics, and how one may best live one's life within 
those frameworks, are the subjects of Part VII (not yet written).  
The number of questions is large and the number of answers is 
small, of course.  Yet it is important to raise the questions, 
and even sketchy answers can be better than unthought-out 
actions. 
     Part VIII studies the appropriate modes of thought for a 
wide variety of particular intellectual and action situations.  
The situations range from artistic creation to advertising to 
poker to prayer to sports.  Each chapter elucidates the sort of 
thinking appropriate for one such situation, and compares it with 
the sorts of thinking appropriate for different sorts of 
situations. 
     The concluding chapter picks up some of the common threads 
that run through the earlier discussions.  These ideas include 
the need for both order and disorder, rather than just for more 
order (a beneficial tension arises from moving between them, and 
from alternately increasing and decreasing each of them); the 
related idea of moving between poles rather than remaining at 
some golden mean; the existence in every thinking activity of a 
hierarchy of levels of analysis, each level influencing the level 
below, from which fact follows the necessity of dealing 
sequentially with various elements of a problem, rather than 
trying to figure out everything at once; the necessity of being 
anchored to the purpose of the activity, and the dispelling of 
confusion that comes from going back to that purpose and asking, 
"What am I trying to do?"; the balance between control and free 
flight of the mind that is necessary in types of thinking ranging 
from mystical meditation to designing an experiment in 
advertising research. 
page # thinking overviw% 11-30-49