Yesterday was day one of the Marketing Science Ideas Xchange (MSiX). As I mentioned in a previous post, it has been an interesting opportunity to see behavioural science outside of the academic and economics environments I am used to. There were a lot of interesting presentations, and a lot of good books were mentioned along the way.
First, a couple of blasts from the past: Claude Hopkins’s Scientific Advertising (if the one dollar Amazon price is prohibitive, it doesn’t take much searching to find some free pdf versions) and Vance Packard’s The Hidden Persuaders. The idea of injecting more science into advertising is not new.
The usual behavioural science texts got plenty of mentions, particularly Daniel Kahneman’s Thinking, Fast and Slow. System 1 and System 2 thinking were regular frames for the speakers (and in today’s workshops). Richard Thaler and Cass Sunstein’s Nudge and Dan Ariely’s Predictably Irrational also got the expected mentions.
The first three speakers had an evolutionary thread in parts of their talks (nice to see), so naturally a few books I have plugged before came up. Rory Sutherland put up his reading list from Verge, which includes Paul Seabright’s The Company of Strangers, Jonathan Haidt’s The Righteous Mind, Robert Kurzban’s Why Everyone (Else) Is a Hypocrite: Evolution and the Modular Mind and Robert Frank’s The Darwin Economy. All highly recommended, as is the rest of Sutherland’s reading pile, although I haven’t read Stuart Sutherland’s Irrationality: the enemy within, which I suppose will get added to my list.
Another book I had not come across before was Iain McGilchrist’s The Master and His Emissary: The Divided Brain and the Making of the Western World, which looks interesting.
Uri Gneezy and John List got a solid mention from the last presenter, Liam Smith from Monash University’s BehaviourWorks Australia. Gneezy and List’s new book The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life is also sitting on my reading pile.
Outside of the presentations, a few other interesting books came up in conversation. They included Jim Manzi’s Uncontrolled: The Surprising Payoff of Trial-and-Error for Business, Politics, and Society, which should be on your reading list. One of my favourite books, Christopher Buckley’s Thank You for Smoking was also mentioned, which was unsurprising considering the potential sin industry clients of many of the conference attendees – and if you do read it, rip out the last couple of pages. While Barry Schwartz’s book The Paradox of Choice was not specifically mentioned, the phrase was regularly used.
Finally, Adam Ferrier, the conference curator, has a book out – The Advertising Effect: How to Change Behaviour. After organising a conference myself earlier in the year, I feel for him – many rewards but so much effort.
Since I first came across it, I have been a fan of Gerd Gigerenzer’s work. But I have always been slightly perplexed by the effort he expends framing his work in opposition to behavioural science and “nudges”. Most behavioural science aficionados who are aware of Gigerenzer’s work are fans of it, and you can appreciate behavioural science and Gigerenzer without suffering from two conflicting ideas in your mind.
In a recent LSE lecture about his new book Risk Savvy: How to Make Good Decisions (which sits unread in my reading pile), Gigerenzer again has a few swipes at Daniel Kahneman and friends. The blurb for the podcast gives a taste. A set of coercive government interventions are listed, none of which are nudges, and it is suggested that we need risk savvy citizens who won’t be scared into surrendering their freedom. Slotted between these is the suggestion that some people see a need for “nudging”.
Gigerenzer does provide a different angle to the behavioural science agenda. His work has provided strong evidence for the accuracy of heuristics and shown that many of our so-called irrational decisions make sense from the perspective of the environment where they were designed (evolved). But his work doesn’t undermine the fact that many decisions are made outside of the environment where they originated – those fast, frugal and well-shaped heuristics have not stopped us getting fat, spending huge amounts on unused gym memberships and failing to save for retirement. Gigerenzer’s work provides depth to the behavioural analysis, rather than undermining it, and points to a richer set of potential solutions.
When Gigerenzer starts throwing around solutions, the difference between his approach and nudging becomes even hazier. In the LSE lecture he suggests that doctors be trained to present risks to patients in a certain way. That doesn’t seem much different from a typical nudge, although here it is the previously statistically-illiterate doctors presenting the information that nudges the patient behaviour.
One other interesting point in the lecture is when Gigerenzer speaks about the failure of breast cancer screening to cut deaths, and the presentation of results in deceptive ways designed to increase screening rates. He proposes presenting information by showing natural frequencies, which would likely reduce the rate of screening. But what of screening that doesn’t have deleterious side-effects for false positives of the same scale as breast cancer? Should they presented as Gigerenzer proposes, or in alternative ways more likely to induce screening? There has been no shortage of work in behavioural science designed to increase screening rates, particularly given the other biases and barriers that need to be overcome. I prefer Gigerenzer’s approach, but can see the arguments that would be mounted for the other side.
Otherwise, Gigerenzer’s speech channels Nassim Taleb on financial markets, before hinting at some of the very interesting work he is doing with the Bank of England. It’s generally worth a listen.
I am reading John Coates’s thus far excellent The Hour Between Dog and Wolf: How Risk Taking Transforms Us, Body and Mind. There are many highlights and interesting pieces, the below being one of them.
First, we do not see in real-time:
When light hits out retina, the photons must be translated into a chemical signal, and then into an electrical signal that can be carried along nerve fibers. The electrical signal must then travel to the very back of the brain, to an area called the visual cortex, and then project forward again, along two separate pathways, one processing the identity of the objects we see, the “what” stream, as some researchers call it, and the other processing the location and motion of the objects, the “where” stream. These streams must then combine to form a unified image, and only then does this stream emerge into conscious awareness. The whole process is a surprisingly slow one, taking … up to one tenth of a second. Such a delay, though brief, leaves us constantly one step behind events.
So how does our body deal with this problem? How could you catch a ball or dodge a projectile if your vision is behind time?
[T]he brains visual circuits have devised an ingenious way of helping us. The brain anticipates the actual location of the object, and moves the visual image we end up seeing to this hypothetical new location. In other words, your visual system fast forwards what you see.
Very cool concept, but how would you show this?
Neuroscientists … have recorded the visual fast-forwarding by means of an experiment investigating what is called the “flash-lag effect.” In this experiment a person is shown an object, say a blue circle, with another circle inside it, a yellow one. The small yellow circle flashes on and off, so what you see is a blue circle with a yellow circle blinking inside it. Then the blue circle with the yellow one inside starts moving around your computer screen. What you should see is a moving blue circle with a blinking yellow one inside it. But you do not. Instead you see a blue circle moving around the screen with a blinking yellow circle trailing about a quarter of an inch behind it. What is going on is this: while the blue circle is moving, your brain advances the image to its anticipated actual location, given the one-tenth-of-a-second time lag between viewing it and being aware of it. But the yellow circle, blinking on and off, cannot be anticipated, so it is not advanced. It thus appears to be left behind by the fast-forwarded blue circle.
A quick scan of the Wikipedia page on the flash-lag effect suggests there are a few competing explanations, but it’s an interesting idea all the same. It would explain that feeling of disbelief when a batter swings at and misses a ball that moves unexpectedly in the air. They would have seen it in precisely the place they swung.
The below video provides a visual illustration.
MIT Technology reports new research on the “wisdom of the confident”:
It turns out that if a crowd offers a wide range of independent estimates, then it is more likely to be wise. But if members of the crowd are influenced in the same way, for example by each other or by some external factor, then they tend to converge on a biased estimate. In this case, the crowd is likely to be stupid.
Today, Gabriel Madirolas and Gonzalo De Polavieja at the Cajal Institute in Madrid, Spain, say they found a way to analyze the answers from a crowd which allows them to remove this kind of bias and so settle on a wiser answer.
… Their idea is that some people are more strongly influenced by additional information than others who are confident in their own opinion. So identifying these more strongly influenced people and separating them from the independent thinkers creates two different groups. The group of independent thinkers is then more likely to give a wise estimate. Or put another way, ignore the wisdom of the crowd in favor of the wisdom of the confident.
To test this result, they eliminated those who updated their estimates based on that of the crowd:
Madirolas and De Polavieja began by studying the data from an earlier set of experiments in which groups of people were given tasks such as to estimate the length of the border between Switzerland and Italy, the correct answer being 734 kilometers.
After one task, some groups were shown the combined estimates of other groups before beginning their second task. These experiments clearly showed how this information biased the answers from these groups in their second tasks. …
That allows them to divide the groups into independent thinkers and biased thinkers. Taking the collective opinion of the independent thinkers then gives a much more accurate estimate of the length of the border.
The funny thing about this research is that anyone who believes in the wisdom of crowds and updates their belief based on that collective wisdom is then excluded from the collective estimate. The wisdom of crowds needs someone who trusts their own opinion more than that of the crowd. It is similar to the efficient markets hypothesis relying on those who don’t believe in it – if everyone believed markets were efficient, no one would invest effort in finding and acting on information that might affect market prices. That effort is what allows prices to reflect this information.
So who are the confident people who form this more accurate estimate? The Dunning-Kruger effect tells us that the unskilled will be overconfident as they don’t have the cognitive skills to recognise their ineptitude. But despite this effect, the more skilled do tend to be more confident than the unskilled – just not by as much as the skill gap warrants. As a result, eliminating the less confident can still cut the least skilled.