When Nobel-prize winning psychologist Daniel Kahneman outlined the two systems humans use shape our judgment—fast (system 1: unconscious, emotional, instinctive) and slow (system 2: conscious, deliberate, rational) thinking—and how we can use them more effectively in Thinking, Fast and Slow 10 years ago, I was quick to dive in. Using principles of behavioral economics, Kahneman describes the ways in which humans fool themselves and err when thinking, and he walks readers through how to avoid mistakes in situations when the stakes are high. My copy of that book is riddled with highlights, notes, and even a taped list of 40 reasoning errors.When Noise: A Flaw in Human Judgment by Kahneman and two colleagues—Harvard Law professor Cass Sunstein and Olivier Sibony, who teaches at Paris’s renowned École des Hautes Études Commerciales—was released last May, naturally, I opened it eagerly.
As I delved into the pages of Noise, my first realization was that it is radically different from Thinking, Fast and Slow. For example, “noise” is employed as a rather technical term, entirely different from what we think of as background (or foreground) sounds, such as those that might interfere with our listening to a talk or a song. For the authors, “noise” is defined as “random scatter.” Random scatter appears whenever experts, such as doctors and judges (and teachers), differ widely in their evaluation of medical conditions, asylum requests, custody decisions, and assignment grades. The book’s key finding is that such evaluators differ not only from each other but from themselves at different moments, depending on such matters as mood, time of day, or recent cases. (One example describes how baseball umpires and asylum judges tend to avoid making the same decision too many times in a row, creating their own “balance” without regard to objective criteria.)
Noise employs mathematical tools that put much of it out of reach for readers who don’t have a pretty advanced understanding of statistics. But the core of Noise does not require understanding arcana, unless you’re setting up a big data system for corporate hiring, prison sentencing, or marketing. As with Thinking, Fast and Slow, each chapter in Noise ends with concise explanations of its content, often in the form of brief quotations.
The authors contend that noise is as large a problem as bias (which is consistently skewed evaluation based on irrelevant criteria) but has received far less attention, though both undermine the credibility of decisions. Some tools for reducing noise include asking individuals to make choices independent of others, creating a clear scale on which each analyst puts down their opinions before discussion, using ranking instead of seemingly “objective” scoring, and, perhaps most controversial, creating algorithms to replace personal judgment, because even simple algorithms consistently outperform human analysts in predictive value.
Thinking Twice
Two authors, Adam Grant and Annie Duke, whose praises appear on the back of Noise, have themselves published significant books on avoiding errors in judgment. Each taps into a specific line of advice, captured in their titles. Grant’s Think Again: The Power of Knowing What You Don’t Know is an elaboration of the system 2 approach, in which we take care to avoid snap judgments based on intuition or on reasoning fallacies. Thinking again has been shown to improve multiple-choice test scores, because second choices are twice as likely to move from wrong to right as the reverse. But like Noise, Grant concedes that “questioning ourselves makes the world more unpredictable. It requires us to admit that the facts may have changed, that what was once right may now be wrong.” More pointedly, he warns that “we favor the comfort of conviction over the discomfort of doubt, and we let our beliefs get brittle long before our bones.”Although it includes data from studies, Grant’s case also rests on individual human stories, like those of forest firefighters, observing that, “In 1994, on Storm King Mountain in Colorado, high winds caused a fire to explode across a gulch. Running uphill on rocky ground with safety in view just 200 feet away, 14 smokejumpers and wildland firefighters lost their lives. Later, investigators calculated that without their tools and backpacks, the crew could have moved 15% to 20% faster. ‘Most would have lived had they simply dropped their gear and run for safety,’ one expert wrote. But, even more than closely held opinions, these firefighters feel that ‘discarding equipment means admitting failure and shedding part of [their] identity.’ ”
Annie Duke, the author of Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts, is part of a possibly unparalleled independent school dynasty. Née Lederer, she is one of three siblings—graduates of St. Paul’s School in Concord, New Hampshire—who among them have written more than a dozen volumes of poetry, memoir, advice, and how-to works. If the family name seems familiar, it’s because they are the children of Richard Lederer, renowned language and literature maven, himself a quarter-century teacher at St. Paul’s, who in his ninth decade continues to publish prolifically, passing the 50-volume mark in the past couple of years. Each of the siblings has carved out a niche, sometimes several: Katy primarily a poet; Howard, nicknamed “The Professor,” one of the first television and media poker guides; and Annie, after following in Howard’s footsteps, building a second career as a leadership and organizational consultant.
Why does Annie Duke adhere so firmly to the lessons of betting in such arenas as financial markets, strategic planning, human resources, and entrepreneurship? Because, as she states at the outset, “Thinking in bets starts with recognizing that there are exactly two things that determine how our lives turn out: the quality of our decisions and luck.” Approaching situations as bets on the future, becoming clear on what is and is not within your control, and using the concept of bets to question your own strength of commitment to your strategy are all ways to reduce emotion in your decisions and test their strength.
Working in this highly pragmatic arena, Duke provides a range of insights. One, derived from the well-known principle of addiction recovery, is to find a buddy or buddies to create a mutual commitment for helping each other avoid backsliding. Another is what Duke calls “Mental Time Travel.” When considering a decision, ask yourself how “future you” is likely to view the decision you’re about to make (a tool she calls “backcasting” instead of “forecasting”) and conduct a “premortem” (instead of “postmortem”) from the vantage point of months or years down the road.
Of our three books, Thinking in Bets is clearly the liveliest. The time travel chapter alone draws on examples from Super Bowl XLIX, Back to the Future, the Odyssey, Jerry Seinfeld, Nietzsche, Thoreau, and pinball machines. It also has the advantage of a 14-page bibliography for further study. Any of these books will enhance your decision-making; all three would add up to a graduate course in the subject of thinking slow and avoiding both bias and noise.