> costs and benefits MUST be converted to a single comparable value.
Yes. And now, what should the decision process look like? For monetary decisions, this is easy—money is fungible, so one can use addition/subtraction. But for costs and benefits which are not fungible, can we come up with a decision process, and make sense of our reaction to that decision?
There are two elements to this. The first is purely one of framing—the resulting decision is the same. The second arises from the framing—where the outcome necessitates more decisions. To demonstrate:
CityValue:80 SuburbValue:100 Since SuburbValue>CityValue, choose Suburb.
Till here everything is fine. Now, the traditional approach:
NetBenefit=100−80=20 So, there is a 20 point increase in satisfaction
Compare this to recognizing that the costs are not fungible with the benefits:
SuburbOutcome={100,−80} There will be more moments of satisfcation than dissatisfaction.
My claim is that the traditional approach is superficially conclusive. Your satisfaction has increased by 20 points, grumbling feels irrational. It’s not providing any further signals. The non-fungible approach, simply through framing, drives you to look at that −80. To understand the moments of dissatisfaction. And most importantly—drives you to action in order to reduce it.
> costs and benefits MUST be converted to a single comparable value.
Yes. And now, what should the decision process look like? For monetary decisions, this is easy—money is fungible, so one can use addition/subtraction. But for costs and benefits which are not fungible, can we come up with a decision process, and make sense of our reaction to that decision?
There are two elements to this. The first is purely one of framing—the resulting decision is the same. The second arises from the framing—where the outcome necessitates more decisions. To demonstrate:
CityValue:80
SuburbValue:100
Since SuburbValue>CityValue, choose Suburb.
Till here everything is fine. Now, the traditional approach:
NetBenefit=100−80=20
So, there is a 20 point increase in satisfaction
Compare this to recognizing that the costs are not fungible with the benefits:
SuburbOutcome={100,−80}
There will be more moments of satisfcation than dissatisfaction.
My claim is that the traditional approach is superficially conclusive. Your satisfaction has increased by 20 points, grumbling feels irrational. It’s not providing any further signals. The non-fungible approach, simply through framing, drives you to look at that −80. To understand the moments of dissatisfaction. And most importantly—drives you to action in order to reduce it.