Occam's Razor

How do we use it in our everyday life for decision-making

Pro tip: It has literally got nothing to do with shaving

Occam's Razor or The Principle of Simplicity in Problem Solving and Scientific Inquiry.

Well, that sounds intimidating.

Scientific inquiry is critical for our progress as a society no doubt, but let’s be honest - most of us in our daily lives are having a hard time, just trying to pay our bills and getting by!

I don't know about you, but for me, even deciding the menu in a restaurant becomes a super stressful task at times! Choices galore and no idea of what most of anything tastes like. Add to it, peer pressure, waiter patience (or lack thereof) and most of the time it's "Why don't you recommend something nice" 😊

Can Occam's Razor help people like me in everyday decision-making to make life easier?

Admittedly, scientific enquiry is not something most of us need to undertake, but what we do face in our everyday lives is the act of making decisions and choices. Sometimes the problems that come our way have easy answers. Sometimes they don't. Often these problems have multiple answers representing a fork in the road where our choice defines the path we need to take.

The problem is that most times we are not sure of which path to take because we don’t know what it will bring!

Occam’s Razor can help simplify this decision-making process for us. But to unpack this a little more let's take a short detour into history and context.

Also known as the law of parsimony, the origins of Occam's Razor are in theology. It was named after the medieval philosopher and theologian William of Ockham, who simplified its inference into a basic concept stating that when faced with competing explanations for a phenomenon, the simplest one is more likely to be correct.

This principle when applied across disciplines can be an invaluable tool for individuals, businesses, and organisations to make better-informed decisions that lead to efficient outcomes.

But how do mere mortals like us use it in everyday life to make things a bit less complicated?

Let’s find out.

Identifying the decision context

Context matters. The why and what of things we want to achieve. Before applying Occam's Razor, we need to define this context clearly. First, we need to recognise the problem or question at hand and its components. Then we need to be aware of the various explanations or solutions that can potentially solve for it.

When we map the problem to its possible solution, the choice of the solution can then guide us on the decision we need to make and how much complexity we are willing to undertake.

Is the effort worth the cost (time/ emotion/ stress)?

Understanding this specific decision-making scenario enables us to focus on the relevant information and avoid unnecessary complex scenarios that can create more frustration and stress.

Identify potential explanations or solutions

When faced with a problem, the one key area where we need to spend time is gathering and assessing the different explanations or solutions available. This is because a problem can be solved in different ways, but each way has its own cost. This cost can be mental, emotional or financial.

What cost are we willing to pay based on our needs? Is the need personal or community?

Listing the possible alternatives and considering their underlying assumptions and implications can help us narrow down choices and get clearer perspectives. More often than not, the simpler answer can be easier to implement with a lesser cost

Evaluate plausibility and supporting evidence

Gathering answers to solve a problem can be overwhelming. It depends a lot on the subject and the situation. Is the problem personal or organisational? Does it impact people, health, financial returns or risk? Verifying each explanation can be painful because we operate without always having all the evidence in our hands and without knowing how our decisions will affect our future.

This makes it massively overwhelming.

So, what we need to focus on, is, if the solution will require additional assumptions, complexities, or entities beyond what is necessary to address the situation effectively. We need to focus on the evidence we have in hand and whether we feel it’s plausible. We need to calculate what would be the emotional, financial and time costs to invest in solving deeper complexities.

And whether that cost is worth the effort, time and stress.

More often than not it will be the simpler solution which will be more valid and straightforward. It will simply have more supporting evidence to choose from and thereby be more plausible to act upon.

Prioritise simplicity

Simplicity is the simplest thing to yearn for and the hardest thing to execute. However, in practical decision-making, simplicity is extremely crucial, because complexity only adds more layers of human and financial debt. It also causes stressful unhealthy environments where the collective suffers.

Most people, by nature, gravitate towards answers which are simpler because they can be easily communicated and understood at the same time. Complex solutions often cause misunderstandings and the cost of misunderstanding at scale is so intense that decision makers need to be extremely careful before making such choices. That is why in practical decision-making, prioritising simplicity is an absolute key factor in evaluation.

The simpler the approach is, the more straightforward the implementation is. The less is the human cost of error and the sunk cost of time.

Manage risk

Occam's Razor can be particularly useful in risk management. Why so? Cos risk inherently comes with problems which have multiple answers, none of which we can be sure of.

That’s why it’s called risk.

Consider the stock market and the average retail investor. We don’t know if the stock we are investing in will give returns. It’s primarily a gamble. A gamble on a life’s worth of savings at times. So how do we go about it?

When evaluating potential stocks, analyse data like company returns in the past few years, their forward projection plans, their S1 filings, their reputation in the market and their product viability in the current economic scenario. Remove speculative buys as much as possible. The more empirical data you have, the more balanced your decision to invest. It can still fail, but the chances are minimised.

Similarly in any form of risk management, choosing explanations that involve fewer speculative assumptions and more empirical evidence will help us reach answers that are simpler and more predictable thereby avoiding complex scenarios which may be more difficult to predict or mitigate.

Conduct cost-benefit analysis

Everything in life has a cost. This cost varies. Sometimes emotional, sometimes financial, sometimes ethical. Each comes with its own time commitment. Therefore, whichever cost we aim to pay, it inherently has a deep impact on us at a personal level.

Now, the cost we pay depends on the answer we choose for the various problems we face in our everyday lives. Deciding this cost thereby is key to our happiness and success. This means that considering the cost-benefit implication of each decision is extremely critical to what we do and how we adapt. A simpler approach may require fewer resources, less time and manageable effort to implement and maintain. It can thereby deliver significant cost savings; both mental and financial. A complex answer, on the other hand, can multiply our risk exposure, stretch our time and drain our happiness.

Avoid overfitting

Overfitting is a common challenge in data analysis. It happens when a complex model fits the training data extremely well but fails to perform when presented with new data.

But why does that happen?

For starters, there is the size of the database. Smaller datasets are more prone to overfitting, as there is less information available for the model to arrive at correct conclusions. Another factor is the complexity of the model itself. We generally gravitate towards gathering the data and then retrofitting the model to accommodate. In this scenario, the model works on the training data, but when the parameters change, the model often cannot adjust or is not flexible enough to compensate for the variances. This leads to wrong projections.

As a rule of thumb, in any modelling, the lesser the number of key parameters, the simpler is the model, which has a better utility across multiple use cases.

In life, we often complicate our decision-making by focusing on micro instances and situations. When our decisions are based on these instance-specific situations, they often do not consider the larger and simpler repeatable patterns thereby missing the forest for the trees.

Occam's Razor serves as a safeguard against this overfitting. Choosing simpler models that capture the essential patterns and relationships in data, reduces complexity, helps unlock the bigger picture and can help drive more productivity and value.

Collaboration and consensus

One of the key drivers of growth is collaboration and consensus. If people don't believe in an idea or a product, they are reticent to embrace it. Belief, however, is a human factor and in any given situation, the simpler the explanation, the easier it is for people to believe and rally behind it. It's also easier to recruit others to collaborate on it.

In many decision-making scenarios, multiple stakeholders need to be bought along the journey for an idea to be supported and executed. Occam's Razor can help facilitate this collaboration and consensus-building among decision-makers. Simpler explanations which are more intuitive, are easier for multiple stakeholders to agree upon.

The key lies in reaching common ground based on the most straightforward and plausible explanations.

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I write 'cos words can be fun. More about me here. Follow @hackrlife on X