Lessons in Real-World Decision-Making

The first few times I had an LED light-bulb start to burn out I assumed it was some sort of electrical issue. I was used to incandescent bulbs which don’t have a “partially working” state, and so when they flickered my mental model of “broken light-bulb” failed me. Fridges on the other hand are notorious for failing more gradually.

Tuesday night I went to my garage fridge to get a fresh package of vegan butter, which I keep in the door. It has been hot in Colorado, with over a week of 90-100 degree days. I opened the package and was met with the realization that the butter was definitely softer than it should be. After dinner I condensed everything that needs to stay cold into my main indoor fridge, and decided to wait to figure out what to do next.

The next morning, the fridge was still cooling. In fact, a few hours after that it seemed to be working perfectly. So, the question became “what should I do about this fridge?” There were so many possible paths, and I wasn’t even sure what I wanted out of my decision. Was I trying to replace my fridge? Meet a functional need to have more cooling space? Is it even a functional need since I was able to cram everything into my main fridge?

So, I gave myself some time. What I most wanted was to not deal with it this week. After that, the chips began to fall into place. The next thing I wanted was not to have the fridge fail with food that could spoil in it. Based on it failing to keep up on a very hot day, I concluded that while the next failure was uncertain, odds are it is relatively soon.

Enter an exogenous factor. If I recycle a working refrigerator with my energy company, they’ll give me a $50 rebate. The intent is to encourage you to shift to a more energy-efficient appliance. So, if I wait until it completely fails, I’ll have to figure out how to get rid of the fridge. If I do it while it still seems to be working, I get 50 dollars! Not bad. Given I expect it to fail completely by next summer at the latest, I make a decision: I want to recycle this fridge, what I do about my cooled-food-storage capacity is a subsequent decision. But for now, I’ll plan on scheduling my pickup next week (see, the first thing I want is not to deal with it this week).

While I have not yet gotten rid of the fridge, I know I am going to. If you go to https://www.energystar.gov/products/refrigerators/flip-your-fridge you can check how much money you would save if you “flipped your fridge” for a new energy efficient option. But, here’s something interesting: Given I already decided to get rid of my current fridge, the analysis is actually misleading. I am no longer choosing between keeping my old fridge and replacing it with a new one. I am deciding between having no fridge in the garage, or having a new one. So, unlike the website indicates (apparently this fridge is from 1989), I would not save $1011 over the next 5 years by replacing the fridge. Because that assumes I am still considering keeping my old one, which I am not.

While I am not deciding between my old fridge and a new one, I am deciding how much fridge-and-freezer capacity I want given the cost of acquiring it. I have my working primary fridge, which I am not considering changing. So the question is, do I prefer to have only that capacity at only my current energy consumption, or do I want to buy a new garage fridge as well as to pay for the ongoing energy consumption.

When first moving into this house, I only used the single main fridge. It was not actually until 2020 and Covid hit that I began relying on the second freezer for extra food storage. A couple years later I started relying on the fridge portion to hold tasty beverages. I have a family of 5 and really cannot imagine keeping all the things I’d like in just one fridge long-term anymore. Especially when the energy-star guides show me that my additional energy costs for a modern fridge should be between $50 and $100 annually. I also like to buy in bulk and have finally figured out some gluten-free and vegan things I can batch cook (Indian curries), if I have space in my freezer.

Given all of the above, I now have a clear picture of what I want. I want to select a new garage fridge (or, as my husband pointed out, we could also choose a new primary fridge and make our current one the garage fridge) based on the features, purchase price, and ongoing energy costs.

So that is my plan and where I am. But what are the lessons I promised for real-world decision making?

1. Trying to make a good decision under a lot of uncertainty is very hard. Depending on these unknown things, you might make different choices.

2. Sometimes, framing your problem differently can help that uncertainty melt away. Is my fridge already broken or not? Well, it doesn’t really matter because I am confident a year from now it will be.

3. You can fool yourself by making the wrong comparison. In hindsight, should I have upgraded this fridge 4 years ago when I started using it most of the time? Yes, I see now that even if the energy cost estimate is off, I would have nearly paid for the new fridge with the energy savings if I had made the switch then. But when I am making my choice today, I am no longer choosing between an estimated $227 annually to keep my old fridge running and a new energy efficient fridge. I am choosing between no fridge and ~$75 annually to keep a new fridge running, plus the initial cost.

4. You can define a specific problem to solve by considering the overall picture. I have not decided which fridge I will buy, nor did I need to in this analysis. I had a general awareness that a new fridge will have the functional capability to hold food and will cost say $500 – $2000 depending on desired features.

5. With all of the complexity ironed out by handling the uncertainty and my key decision (new fridge or not?), I have a much simpler and clearer choice in front of me. Next week.

There you have it. Over 1000 words on a real-world problem triggered by a failing fridge. I hope you only need to use the model and insights, instead of facing your own fridge dilemma any time soon!