Who’s the Easiest Person to Fool?

RES_1213_AnnuityAnalytics_MI600-resize-600x338My December Research magazine column is now available online. Here’s a taste.

Innovation in financial planning typically starts with an idea. If enough people (or the right people) think it might be a good idea, it then moves to evidence-gathering for confirmation. But the entire endeavor—designed to try to confirm if the idea makes sense—is inherently prone to confirmation bias. We should be systematically and consistently looking to disprove the idea. Without a devil’s advocate with the specific mission to try to show why the idea is a bad one, without recrimination or criticism for doing so, many bad ideas will seem to be confirmed.

I hope you will read the whole thing.

Who’s the Easiest Person to Fool?

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The Semmelweis Reflex

SemmelweisThe “Semmelweis Reflex” is a metaphor for our reflex-like tendency to reject new evidence or new knowledge because it contradicts our established norms, beliefs or paradigms.  It is named for Ignaz Semmelweis, a Hungarian obstetrician who found lasting scientific fame, but only posthumously.

Semmelweis discovered that the often-fatal puerperal fever (“childbed fever”), common among new mothers in hospitals, could essentially be eliminated if doctors simply washed their hands before assisting with childbirth. After observing that a particular obstetrical ward suffered unusually high instances of the disease and that doctors there often worked in the morgue right before aiding in childbirth but had not washed their hands in between, Semmelweis speculated that “cadaverous material” could be passed from doctors’ hands to patients, causing the disease.  He thereupon initiated a strict regimen at his hospital whereby all who would assist in a birthing must first wash their hands with a chlorinated solution. As a consequence, death rates plummeted.

Semmelweis expected a revolution in hospital hygiene as a consequence of his findings. But it didn’t come.

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