What is 'Counterfactual Thinking'?
“And what counterfactual thinking does is establish a contrast between a person’s actual experience and an imagined alternative.”
Mental models are frameworks you can use to improve your thinking and decision making.
They do this by forcing you to look at things from a different perspective as opposed to just going with your ‘gut’ reaction.
We’ve looked at a number of them in two previous posts, 10 Mental Models Worth Knowing and 10 More Mental Models Worth Knowing.
This post looks at another one, ‘counterfactual thinking’, which helps us understand the power of creating alternative narratives for past events.
What is counterfactual thinking?
The Man in the High Castle is a novel by Philip K. Dick describing a world in which the Allies have lost World War II, and the spoils have been divided up between the victorious German and Japanese forces.
The story takes place in 1962 and revolves around the political tension between imperial Japan and Nazi Germany as they rule over a divided United States of America.
If you’re an Amazon Prime member, you can watch the excellent TV adaptation of it.
It’s a tale that makes you stop and reflect on what could have been had the war not turned out the way it did.
It’s also an example of ‘counterfactual thinking’, which is the human tendency to create alternative stories for events that have already happened.
The term comes from psychology, and the word ‘counterfactual’ literally means ‘counter to the facts’.
It’s why you play the game of ‘what if’ or ‘if only’ when looking back on past life events.
Your brain can’t help itself pressing rewind on what’s happened and wondering what might have occurred had you made a different choice.
There are two types of counterfactual thinking: one that looks ‘upward’ and one that looks ‘downward’.
Looking ‘upward’ simply means you imagine a scenario where you made a better decision than the one you did, which led to a more favourable outcome.
For example, you might say to yourself, ‘If only I had taken that other job, I would be better paid by now’.
Looking ‘downwards’ is the opposite.
In other words, imagine a scenario where you could’ve made an even worse decision.
For example, you might say to yourself, ‘It was so good I decided to leave ‘Psycho Mark’; otherwise, I would’ve been a lot less happy than I am now’.
Why is counterfactual thinking helpful?
Apart from being the basis of exciting stories, counterfactual thinking can be a helpful tool for easing mental burdens.
If you’ve experienced an unfortunate event, it can help to imagine a worse scenario, I.e. by practising ‘downward’ counterfactual thinking.
Most bad things that happen are transitory and survivable, but it doesn’t always feel like that at the time.
Imagining things could’ve been even worse helps give you perspective.
In certain situations, this can help you from making an impulsive decision that you later regret, such as getting back together with ‘Psycho Mark’.
The reverse is also true.
Practising ‘upward’ counterfactual thinking can make your psychological situation worse and has been associated with depression.
It’s also a great strategic thinking tool for two reasons.
Firstly, it allows you to learn from past experiences by reflecting on alternative outcomes. Hopefully, this helps you avoid repeating further mistakes in the future when a similar situation presents itself.
Secondly, you can use this model to scenario plan when faced with an important decision by asking yourself, ‘Why might my decision not turn out how I want it to?’
Where can you read more about counterfactual thinking?
The Paradox of Choice: Why More is Less by Barry Schwarz is an excellent book we’ve recommended before that touches on this topic.
For a faster read, you might enjoy this explainer article from Big Think.
If you enjoyed this post on mental models, you would probably enjoy our popular courses on a range of topics featuring other mental models you can apply to improve your thinking, problem solving and decision-making.
