Adulting is hard. Life throws too many complex situations at us. And among those a few critically important for your life quality – what to study, what career path to choose, whom to marry, how many kids to have(if any), where to live, what house to buy, etc.
The issue is that making such decisions often requires considering too many factors, and there are many uncertainties involved. If you don’t get these decisions right, it can lead your life down a path you didn’t want. And in most cases, by the time you realize you made the wrong decision, time has already passed – you’re doing the job you hate, you’re already with the wrong partner, or you’ve become your own plumber, cleaner, or yard guy (not by choice!). Therefore, it is important to get it right – decision that aligns with your nature, and goals.
To do so, you can use a simple yet powerful framework: the Multiplication Method. Many experts, from scientists to Entrepreneurs use to make decisions that involves uncertainty. Neil deGrasse Tyson, the famous American astrophysicist had even used to it to decide whom to marry (Link)
Thankfully, my wife Meeta didn’t discover it before deciding to marry me! 🙂
Let’s get to it.
What is “Multiplication Method”, and how to use it? (A step-by-step guide)
Multiplication Method is a simple framework that helps you to methodically consider possible options, factors that affect the decision, and finally make a rational decision based on those factors. Here is what you need to do:
Step 1: List down the decision that you need to make along with available options.
Example:
A couple of years ago, I received an offer for a job in California while I was comfortable with my life & job in Boston. My initial instinct was to reject the offer from California because of high taxes, and safety issues. But I decided to brainstorm a little more, and use this simple framework to decide.
Decision to be made: Which job should I choose.
Available options: 1. Job in Bay area, California or 2. Continue with the job in Boston, Massachusetts
Step 2: List down all the factors that you need to consider before taking the decision.
Remember that output of any model is as good as its inputs. Therefore, you should spend time to think about, and come up with a comprehensive, and well thought-out list that may apply.
Continuing with the example:
After spending a lot of time, I came up with the following factors: Weather, Rent, Taxes, Compensation, Safety, Social Life, Job Prospects.
Step 3: Rate each factor out of 10 for each available options.
Rate each factor from 0-10. The most important thing is that you are true to yourself while scoring each factor. For factors you don’t know much about might require little research.
Continuing with our example:
FACTOR table with rating for each factor from 0 to 10.
Step 4: Multiply all factors to get the total, compare the total, and pick the winner
Now that you have thought about each factor, and rated them out of 10, multiple each factor to come up with total. Once you have the total, compare the score, and pick the winner. The advantage of this multi-factor multiplication method is that most of the time you will have a clear winner.
Back to the Example:
As you can see in the table above, California was the winner by a huge margin. It also made me realize that my initial instinct of taxes and safety was guided by fear, and that bias was blocking me to give weights to all the factors involved, and take a balanced decision.
It’s been almost 2 years in California, and I am glad I took the plunge.
Nuances
Even though this framework is simple, and straightforward. There are a few nuances that I want to point out –
Why multiplication instead of addition?
Because we want to remove the option completely if any of the factor has the value of 0. This would help you totally remove options that are not viable. Addition won’t let you do that.
What if its a collective decision, and not just mine?
If it involves more than one decision maker, do the following:
- Do steps 1 & 2 together – Collectively decide what are the available options, and what factors need to be considered.
- Do steps 3 & 4 individually – Rate each factors, and multiply to get the total score for each option individually.
- Come back for Step 5 – For each option, calculate an average score using the individuals score, to come up with the final score. And then go with the highest score.
Final Comment
Over the past two years, I’ve successfully applied this framework to various complex decisions, such as:
- Should I continue renting or buy a house?
- How should I optimize position sizing in my investment portfolio?
- Several career-related choices.
This framework has consistently delivered, and surprisingly, helped me uncover hidden biases. Confident in its value, I’m excited to share it with you, knowing it can similarly benefit your decision-making.
Go try it out.
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