Hindsight Bias
By Kevin
I've been reading Daniel Kahneman's Thinking Fast and Slow and was especially intrigued by Chapter 19 - The Illusion of Understanding. He talks about the hindsight bias and our tendency to overrate our prior expectation of the outcome that unfolded.
He talks about the implications on decision makers where people who took huge ridiculous risks and won the gamble were celebrated as genius (for seeing what was to come) whereas those who were prudent to avoid pitfalls and evaluated their options appropriately might be punished when they missed opportunities but are not rewarded when they managed to steer clear of a catastrophe.
Worst of all, when we imagine that we had always 'knew' this was coming or that history is narrated with an air of inevitability. Fact is that luck counts and convergence of incidents, accidents often bring about the outcomes we attribute to intention and manipulation.
Being aware of the bias doesn't help us feel any differently but we may be able to think about things more positively. When bad things happen, we need to downplay our tendency to think that it could necessarily have had been prevented (a common hindsight bias). We need to acknowledge the element of luck when giving credit - it may not necessarily be announcing it to everyone but when assessing performance we must think about that and ensure we're drawing conclusions from a big sample of observations.
Here's a video of his little sharing at my school a couple of months ago:
Personality vs Character
By Kevin
To put Susan Cain's ideas in a rather more coherent way; an introvert is someone who gets energy from low levels of social stimulation while the extroverts are people who are energized by high levels of social stimulation. It's great to see a book like Quiet published. And I was pretty moved by Susan's talk in part because I really appreciated the position she was describing, and in part because she presented herself as a really genuine, quiet cheerleader of the introverts.
The more interesting idea that I picked up from the talk was this idea about the transition from a culture of character to a culture of personality. Indeed, because of the ultra connected world and our obsession with efficiency and speed, we no longer have time to try and truly get to know people - we can't be bothered to. Therefore, we prefer bite-size pitches, 'superficial' demonstration of abilities, outright self-confidence, the easily-identified bright spot. Personality supersedes character; even though I suspect that in long term, it really is the people with good character whom you should hang on to.
We need to re-discover character-building; we need to discover people's character to know them and not just by their personalities. Only when we take the time to discover them, people would start realising the importance of building that up. The decline of character-building is also why people are more easily irritated by failure, intolerant of difficulties and drudgery, quick to anger and slow to forgive.
Virtuous Haste?
I came across this image a couple of days back and was amused by it. But I've also discovered how mutated our culture has become; indeed, 'hurrying' has already become a virtue, just by the sheer number of people upholding it. So what's with the haste? Why not sit back and think about where has persistence, endurance, patience gone? What's with the obsession with quick fixes and speed? The way we see 'time' has indeed altered our judgments of the merits of the man of actions and the man of contemplation. While those men of action should sit back and contemplate, those men of contemplation need to summon the courage - in Susan Cain's words - 'to speak softly'.
Materialistic Rewards
By Kevin
Having failed to secure a seat in Alain de Botton's public lecture in the LSE led me to check out his talks on TED.com which turned out to be wonderful. His insights into life and philosophy is extremely powerful and can indeed be applied to living well.
Motivational Psychology
By Kevin
Set it, and reach it
I never knew there was such thing as 'motivational psychologist' until I stumbled upon Heidi's article on HBR. She wrote a book about reaching our goals through better understanding of our own psychology. In this article, she detailed 9 traits that successful people appears to share. It is important that these are not character or personality and have got to do more with habits and conditioning. They do not necessarily require skills though intelligence and street-smartness helps.
Her list included the following:
- Get Specific
- Seize the moment to act on your goals
- Know exactly how far you have left to go
- Be a realistic optimist
- Focus on getting better, rather than being good
- Have grit
- Build your willpower muscle
- Don't tempt fate
- Focus on what you will do, not what you won't do
You realised that they are actions, things that you and I can constantly practice and perform in our lives. That's pleasing to know because many demotivated people find themselves helpless - they think that they are subjected to circumstances and conditions beyond their control. Being a realist, understanding what you can control and what you can't and then being hopeful by working hard on those areas where you can make a difference can be an extremely powerful thing to do. Take charge and play an active role in your life and some day, you'll be able to change it the way you want.
Think Questions
By Kevin
Think, then Ask
Writers often draw or attract the attention of reader by posing interesting questions which they then seek to explain in their writing content. But then how about the readers? Could they also pose questions for themselves or other readers so that they make the reading experience a little more active?
So when you're reading, you might like come up with interesting questions that will lead readers to those articles. Here are some attempts of mine:
Article 1: Does drinking water make you slimmer? Even when you maintain food intake?
Article 2: Is spying on your spouse going to keep him/her faithful?
Article 3: Are corporate giants necessarily clumsy innovators?
This activity helps you identify key interesting elements of an article that you think is worth highlighting and then forces you to come up with a means to attract people's attention to it. In this case, you can only use a question out of your toolkit (which might include graphics, data charts, a different font colour or font size). A question draws attention through it's interaction with mental processes and thinking rather than through visual content and so is much more difficult at times.
The question trains you to draw your attention towards interesting areas of a topic you might not exactly be particularly interested in and then, you may see it in a different light.
Behavioural Economists
By Kevin
Get Reading...
Someone recently asked me about books to read on Behavioural Economics and I told him he's lucky because if it was a couple of years back, the subject hasn't exactly attracted that much attention so there's not much books and they're probably pretty hard to find. I thought I'd share with readers of ERPZ who might be keen to explore this blooming area in the field of Economics & Psychology.
Recommending books is a tricky affair because people have a variety of tastes for books; non-fiction books are not as much a social affair as fiction so it isn't always that enjoyable to follow the crowd. Nonetheless, I'm attempting this tricky activity here:
Nudge by Richard Thaler
Stumbling on Happiness by Daniel Gilbert
Predictably Irrational & The Upside of Irrationality by Dan Ariely
Create Your Own Economy by Tyler Cowen
Now, the fact is that I haven't actually finish all of the books above, but here are my reasons for the recommendations:
Richard Thaler have got his research on behavioural economics cited by lots of different writers of popular economics books and you can be sure that he's an expert on the subject; I've looked through the first chapters of 'Nudge' and while it doesn't exemplify brilliant, engaging writing, the ideas are interesting and implications enormous (which means people should know about them and try to steer them correctly).
I've read Dan Gilbert and watched him speak. He's brilliant.
Dan Ariely's Predictably Irrational basically has some fan club and I've watched him speak at TED.
I've read Tyler Cowen's 'Discover Your Inner Economist' and while he keeps distracting readers in his writings, he eventually does bring his points across. And on the way, you would have picked up much other tidbits. So I'm pretty sure his new book would also be an enjoyable read.
The Special Case
By Kevin
Gotta Come Down
For those students of A Levels Economics who still have no idea how asset bubbles form and why the classical theory of economics suggests that bubbles are unlikely might like to read the recent Buttonwood. A Special Case highlights why the properties of goods that are classified as assets are fundamentally different from the rest of the goods in the economy. This is not only about financial assets but those other goods that are treated as assets. During the tulip mania, the tulips were treated as assets briefly before the entire frenzy collapsed.
When price information feeds back into the demand of a good, the Law of Demand no longer applies and the demand curve of the goods starts sloping upwards. We never seen this sort of analysis done mathematically because it is an imprecise analysis and the equilibrium found is not meaningful (think about 2 positive gradient curves intersecting). George A. Akerlof and Robert J. Shiller brings in various other explanations for the emergence of depressions from disciplines like psychology in their Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism I just manage to borrow it from the library and hopefully I'll be able to finish and review it soon.
Random Issues
By Kevin
The father of Humbug...
In this holiday season, The Economist discusses Joel Waldfogel's Scroogenomics with a little humour. Of course, the signalling effect of gifts is once again ignored.
Emily Yoffe writes about sibling's "rivalry" on Slate.com. The article explores the love-hate cycles that siblings undergo through the lifetime and considers the influence of parents. In general, the article's inclinations is that having siblings is generally better than not having any; children benefits from unintended 'guidance' from older siblings especially through even the mildest verbal bullying. It helps to have someone close to your age beside you most of the time when you're young because it prepares you for social interaction and also helps you understand the mind of another. Perhaps most importantly, having a sibling makes an ego that blooms out of a single child less possible.
The small number of psychologists who study sibling relationships say that their intensity in childhood helps prepare us for the adult social world we will someday need to navigate. After, all every day siblings teach the necessary, if painful, early lesson that you are not the world's most important person.
Pop-Science seem to be poking fun at Avatar; suggesting that the film is made possible by technologies and science that would be impossible in a world that is implicitly advocated in the film. It is interesting to note that several of the film's actors have signed on for potential sequels and as my sister rightly points out: these actors, like Sam Worthington and Zoë Saldaña are not exactly going to appear in the future films since they're all Na'vi anyways and merely helping to generate the computer graphics if not offering their dubbing services as well.
The Value of Pessimism
By Wei Seng
To smile or frown?
I felt a bit vindicated to read in the Lexington column in The Economist's Christmas edition that two writers have decided to tackle 'the American tendency towards mindless optimism'. Being a habitual pessimist it does feel good occasionally to read about people who are pessimists and stand up for their views instead of let themselves be bashed by optimists.
The two writers mock the optimists for being too positive and too dependant on positive thinking to help them in their lives, from defeating cancer to not gaining weight. I like that the example of the banking crisis was used to justify when one should listen to 'the killjoys' and stop letting the bubble inflate. Optimism apparently blinds sometimes, and this is where pessimism comes in. I like how one of the writers allude pessimism to 'foul weather' like thunderstorms: it might be dampening and depressing, but to some it refreshes and energises them. It can wake people up from their daydreams and their eternal sunshine (even though many people love thunderstorms because they can sleep comfortably through the cool weather).
But of course, there needs to be some optimism. Ultimately, Lexington argues that pessimism should be taken like a pinch of salt, just a pinch / ounce and not too much. For instance, one of the writers (a conservative) argues that mass immigration will not benefit America, but ultimately 'America was built on the mass immigration of optimists'. I guess there needs to be a balanced dose of both sides.
On a side-note, reading The Economist makes me feel more and more pessimistic about the world... is it because of the coverage, or are world affairs really that gloomy and glum?
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