Science shows why business is stupid

Another excellent talk from TED.com about behavioural economics (to add to those already covered on this blog). Dan Pink, a former speech writer for Al Gore, explains how a lot of business practice still relies on extrinsic motivation which is known scientifically to be counter-productive (explained previously on this blog). He echoes Phil Rozenweig’s charge that the business world is lacking in scientific critical thinking, and offers Wikipedia versus Encarta as an example of how intrinsic motivation wins out. It’s not only an engaging talk, but another nail in the coffin of the concept of incentives which is core to rational-choice economics.

The friendship paradox

Reading today about illusory superiority to improve the Wikipedia article, I came across something tangential but intellectually delightful.

Most people have fewer friends than their friends (on average) have.

When I first read it, it sounded impossible, but it’s a practically inevitable fact.

It’s not specifically about friendship, but a mathematical fact about any relation which is symmetrical and which varies across a population.

The biased search for confirmation bias

Confirmation bias is the bias to seek for, interpret and remember information in ways that confirm our existing beliefs rather than genuinely test them. In general, it’s an irrational preference for information that matches our expectations. This is one of the first biases I learned about, but recently I’ve been reading up on it in a more systematic way. I’m putting my notes direct into Wikipedia rather than improve my own site.

In what I’ve learned, there’s a massive irony that I’m surprised isn’t commented on. The term “confirmation bias” comes from the original pair of  experiments from the 1970s by Peter C. Wason. Since and because of them, it has become widely accepted that subjects seek to confirm their working hypotheses rather than subject them to falsification.

However, those experiments didn’t prove the existence of a confirmation bias. There were logical errors in the interpretation of the results, pointed out especially in a 1987 Psychological Review paper by Joshua Klayman and Young-Won Ha which is one of my all-time favourite academic papers (see the Wikipedia article for refs). Subsequent research has found genuine confirmation biases, but they’ve turned out to be specific to particular situations, rather than ubiquitous. When testing a hypothesis, people often seem to prefer a genuinely diagnostic strategy.

Despite this critique, there is still a lot of psychological writing that takes the Wason experiments as proving the reality of confirmation bias. Even Sutherland does so in “Irrationality”, his outstanding paperback round-up of bias research.

So why were these experiments accepted so easily as proof when, for a long time, the evidence was inadequate? Because it fit with expectations built up from informal observation: in other words, a clear case of confirmation bias.

World Health Organisation condemns homeopathy

Joyful news today on the BBC about a successful campaign for the charity Sense About Science. They asked the World Health Organisation to comment on the use of homeopathic treatment for diseases like HIV, malaria, TB and infant diarrhoea, and various WHO authorities have responded, stating in very clear terms that these conditions need to be treated with actual medicine and actual evidence. SAS have passed on these WHO statements in an open letter to the world’s health ministers (PDF link). Using “remedies” without any active ingredient to “treat” these horrible diseases, when effective alternatives are available, is an obscenity.

It’ll be interesting to see how much popular attention this gets (it was second-most-read on the BBC News site this morning): is the tide finally turning against alternative medicine?

A massive intellectual wiki-boner

This is a navel-gazing post about an exercise in vanity searching, mainly set down as a not to myself. There: you were warned.

I did some testing using the Wikipedia stats tool to investigate how many people read my contributions.

I assume that people rarely read entire WP articles, but usually skim them. So I can’t include every article I’ve contributed. I’ve looked up daily hits for articles I’ve created:

What makes humans happy?

Last week I gave a talk about happiness research. Here are some notes for posterity. I haven’t deliberately sought out happiness research, but bias research (my area of interest) overlaps with it a great deal.

First, a disclaimer. When we talk about one group being happier than another, we’re talking about the average of a large number of subjects. All the different life stories that arise from, say, having children, are boiled down to a single figure. I would prefer to see longitudinal studies of happiness displayed as a “heat map” rather than a line on a graph.

Second, a correction. Last week I hadn’t read Bella DePaulo’s Singled Out, which takes a close look at research on the effects of marriage. So when I said that marriage makes people happier by a wide margin, I was unaware of how much this apaprently “common-sense” finding was based on bad research which has been influenced by the “family values” lobby. Some of DePaulo’s findings:

Book Review: Mistakes were Made (but not by Me)

Review of Carol Tavris and Elliot Aronson (2007) Mistakes Were Made (but Not by Me): Why We Justify Foolish Beliefs, Bad Decisions and Hurtful Acts. ISBN 978-0151010981 (Hardback), 978-1905177219 (Paperback)

For clear, engaging explanations of psychological research, this is one of the best books you can get. Cognitive biases are like optical illusions, distorting our decisions, memories and judgement. This book focuses in particular on self-directed biases: the distortions of memory and explanation that make sure that each of us is the hero, not the villain, or our own life story.

When corrupt police frame innocent people, how do they justify to themselves what they are doing? When a couple divorce, how can two former lovers come to hate each other with such passion? When political or military mistakes lead to thousands of deaths, how do the decision-makers live with themselves? The authors take academic research (on cognitive dissonance, stereotypes, obedience and more) and apply it to a wide spectrum of issues from the White House to Mel Gibson’s racism.

It is eye-opening to read how malleable and unreliable memory is, and how easy it is to create feedback loops of increasing certainty from just a glimmer of evidence. An appalling example is the recovered memory craze of the 80s and 90s, which is discussed at length. The book isn’t entirely downbeat, even though it explains how prosecutions, marriages or therapy sessions can go terribly wrong. It shows how easy it is for good people to hurt others, but that we can avoid these traps with humility and self-questioning. They call science “a form of arrogance control”.

A theme running through the work of these two psychologists is how science can address real problems of human conflict. That warm, humane spirit pervades this book and I think anybody curious about the science or the solutions would benefit from reading it.

Attribute substitution- a quick guide

Noticing that there wasn’t an article about this concept on Wikipedia, I’ve written the following and donated it to start off an article. The GNU Free Documentation license applies. (Updated 2 June. 20 hours after its creation, the article is the number four hit for its title on Google UK!)

Attribute Substitution is a psychological process thought to underlie a number of cognitive biases and perceptual illusions. It occurs when an individual has to make a judgment (of a target attribute) that is computationally complex, and instead substitutes a more easily calculated heuristic attribute. This substitution is thought of as taking place in the automatic intuitive judgment system, rather than the more self-aware reflective system. This explains why biases are unconscious and persist even when the subject is made aware of them. It also explains why human judgments often fail to show regression toward the mean. Hence, when someone answers a difficult question, they may be answering a related but different question, without realising that a substitution has taken place.

Behavioural Economics Videos

Behavioural economists have been quick on the uptake in using video lectures to convey their message. Here is a short round-up focusing on quality rather than comprehensiveness.

Book Review: Free Market Madness

Review of Peter A. Ubel (2009) Free Market Madness: Why human nature is at odds with economics  – and why it matters. Harvard Business Press, ISBN:9781422126097

Despite the title, this book sings the praises of the free market. However, it soundly debunks a libertarian free-market fundamentalism that draws its legitimacy from the rational-choice assumptions of economics.

The author is a medical doctor and decision scientist, not to mention an accessible writer. The book is based on many important scientific studies, including the author’s own research, so there’s a high fact-to-opinion ratio. In his medical work, Ubel sees first-hand the obesity crisis, the stressful conditions in which we make medical decisions and the inefficiency of a market medical system. This in turn shows the danger of believing that people always make decisions in their own best interest.