"If we could learn to recognize and evade the biggest errors in thinking – in our private lives, at work, or in government – we might experience a leap in prosperity. We need no extra cunning, no new ideas, no unnecessary gadgets, no frantic hyperactivity – all we need is less irrationality."
Rolf Dobelli admits that he is not a social scientist; he has no fancy lab with a team that conducts experiments all day long. Instead what he does is translate complicated results from “cognitive biases” experiments and interprets and synthesizes them into short, easy to understand summaries. Cognitive biases are the simple errors that we make in our day-to-day thinking. In his book The Art of Thinking Clearly, he has done so with 99 such experiments.
Chapter one kicks off with Survivorship Bias – Why you should visit cemeteries. In everyday life, triumph is made more visible than failure so we systematically overestimate our chances of succeeding. Whether we are an aspiring rock star, hockey player, author, or entrepreneur we fall victim to only thinking of the success while a vast majority never make it. Even if we do make it big by coincidence, we’ll find some similarities with other winners and deem them “success factors” even though it was pure luck.
Dobelli recommends visiting the graveyard of failed individuals and companies and you will find that they also share the same characteristics that you deemed were the “success factors”. The moral of the story – Survivorship Bias means that people systematically overestimate their chances of success. Guard against it by visiting the graves of once promising projects, investments, and careers. It’s a sad walk Dobelli tells us, but one that should clear your mind.
The Big Idea
Base Rate Neglect
"When you hear hoof beats, don’t expect a Zebra."
Mark is a thin man from Germany with glasses who likes to listen to Mozart. Which is more likely? a) Mark is a truck driver or b) he is a professor of literature in Frankfurt. Which did you pick? I picked option b, as I’m sure that most of you did incorrectly as well.
Every day we overlook the statistical reality – this is called Base Rate Neglect. Germany has ten thousand times the number of truck drivers than Frankfurt has lit profs, so it is much more likely that Mark is a truck driver instead.
Dobelli points out that only the medical field provides any training on purging base rate neglect from their minds. Migraines can be caused from a viral infection or a brain tumor. The chance that it is a viral infection is much greater so doctors start with that. This ties into the survivorship bias that he covered in chapter one.
The key to overcoming the base rate neglect is to look at things rationally and statistically. Sure that business plan calls for revenues of hundreds of millions. The graduate fresh out of university thinks they will have the corner office in a Fortune 100 company one day. But realistically, the company will hover in the middle of the pack and the graduate will end up in middle management. When you hear hoof beats behind you, don’t expect a Zebra.
Insight #1
The It'll-Get-Worse-Before-It-Gets-Better Fallacy
"Why ‘No Pain, No Gain’ should set alarm bells ringing."
So let’s say that you are the CEO of a company. Sales are tanking and your sales people don’t seem to care. In your desperation, you hire a consultant for $5,000 a day to help get things back on track by analysing your company and reporting his findings. “Your sales department has no vision, and your brand isn’t positioned clearly. It’s a tricky situation. I can fix it for you – but not overnight. Most likely sales will fall before things get better.” Some time goes by and sales do fall. More time, more falling sales. “I told you this would happen,” the consultant says.
The It’ll-Get-Worse-Before-It-Gets-Better Fallacy is a smoke screen. If the problem continues to worsen, the prediction is confirmed. If sales happen to get better, the consultant is a genius. Either way he wins.
If someone says “Things are going to get worse before they get better,” you should hear alarm bells. But Dobelli warns that some situations do exist where things first dip and then get better. One example is a career change that requires a loss of income. The reorganization of a company takes some time, too. However, in all of these cases we can see relatively quickly if the measures are working by creating clear and verifiable milestones.
Insight #2
Twaddle Tendency
"If you have nothing to say, say nothing."
To see a great example of the Twaddle Tendency you have to watch this video. Miss Teen South Carolina was asked why a fifth of American’s can’t find the US on a map during a competition. Here is her 45 second answer.
It’s like watching a car accident. I felt embarrassed and anxious while watching that clip. Dobelli lays it out in his book, but watching it is much more powerful.
The Twaddle Tendency is using reams of words to disguise intellectual laziness, stupidity, or underdeveloped ideas. Sometimes it works, sometimes it doesn’t. I know that I am guilty of this and now that I am aware of it, I stop myself from speaking when I really shouldn’t. I’m also more aware when others do it because I’m on the lookout now.
Professional athletes are the worst. Just tune into Sports Centre and watch. “We played hard tonight. You know, we practiced all week, we had some good plays, but we didn’t execute like we should have. They are a good team, you know, we’ve got to give them credit.” Yes, you play hard every night. Yes, you also practice if you are not playing – you are a professional athlete, that’s what you do. And, yes, the other team is good, they are professionals also. Really what the athlete should say is “We lost the game”, but they have to fill air time.
Dobelli tells us that verbal expression is the mirror of the mind. The world is complicated and it takes a great deal of mental effort to understand even one facet of the whole. Clear thoughts become clear statements, where ambiguous ideas transform into vacant ramblings. I would guess that Miss Teen South Carolina’s mind was cloudy with how she would answer the starving-kids-in-Africa question when she was asked the map question. Poor girl. Best to heed Mark Twain’s advice, “If you have nothing to say, say nothing.”
In the introduction to Dobelli’s book he tells us that it’s impossible to overcome the way that our mind thinks and to think clearly all of the time. But what I found really useful was being made aware of the way that I think and the traps that I fall into time and time again.
Have you ever been guilty of Base Rate Neglect?
