It is probably safe to assume that finance officers are more comfortable with numbers than most of the decision-makers the finance officer supports. These decision-makers are likely more comfortable with narratives. Numbers are often part of the conversation, but psychological research shows that people often grossly misunderstand and/or misuse numbers in favor of their preferred narrative. Of course, finance officers are people too, and they can fall prey to the same pitfalls as less numerate people. A better understanding of the relationship between narratives and numbers can help us structure decisions more wisely. In this article, we will explore narratives and numbers in four parts:
- What we see is all there is
- We string that into a casual story
- We continually confirm that story
- We translate our inferences imperfectly.