Ideological Through-and-Through

Homo economicus is a myth. This alleged “rational man” is as non-existent as the Loch Ness Monster, Bigfoot and (perhaps) moderate Republicans. Yet the idea that we’re essentially rational creatures is a very seductive myth, especially as and when we relate the concept to ourselves (few lose money preying on another’s ego). In fact, we tend to think that we’re almost superhuman in our ability to invoke reason to our advantage.

Think of Hamlet (Act II, scene 2), for example (with Sir Kenneth Branagh as the melancholy Dane in the clip below).

“What a piece of work is a man! How noble in reason! how infinite in faculty! in form, in moving, how express and admirable! in action how like an angel! in apprehension how like a god! the beauty of the world! the paragon of animals!”

Of course, there are some very good reasons to stand awestruck at what human reason can accomplish, particularly in the areas of science, technology and engineering. But you might also recall what became of Hamlet. We are much less rational than we assume. Continue reading

What you’re vacillatin’ between

Francis Paschal

Francis Paschal

When I was a first-year law student at Duke many years ago, my Civil Procedure professor was the delightfully named J. Francis Paschal. Professor Paschal seemed to like to portray himself as a bit of a good ol’ boy, with a protruding gut, truly dreadful sports jackets, hair slicked and parted just off-center, and a drawl as thick as molasses on a cold day (if not nearly so sweet). That image could not mask a keen mind and a sharp wit. Nor did it hide his erudition — in addition to his credentials in the law, Professor Paschal had a Princeton Ph.D. too.

The good professor led his classes using the Socratic conventions of the day. A student was called upon to answer a series of penetrating and perplexing questions supposedly designed to ferret out the nuances of some legal principle or another but which, in reality, served to demonstrate to a class full of bright and full-of-themselves college graduates that they were out of the minors and into the intellectual big leagues. If we were going to compete at that level, we needed to up our collective game considerably.

One day fairly early in the first semester Professor Paschal called on a woman in the row ahead of me (who I shall kindly refer to — using a pseudonym since she is now a Deputy Attorney General — as “Frieda Clancy”) and asked a typically impossible question. SInce Frieda was a friend, I happened to know that her extremely difficult predicament was actually utterly impossible because she was not prepared for class.  In fact, it wasn’t just that she wasn’t fully prepared (meaning that she had read the required case, all the cases cited therein, the case comments, casebook notes and citations, relevent hornbook and law review materials and anything else we could think of that might be relevant). She wasn’t prepared at all. She hadn’t even read the case at issue.

This was not likely to turn out well. Continue reading

Myopinion

with-stupidNoah Smith (@Noahpinion on Twitter) made an interesting assertion yesterday about the purpose of argument. Smith began by noting Boston University economist Laurence Kotlikoff’s op-ed in Forbes in which he acts as a concern troll toward New York Times columnist (and noted economist himself) Paul Krugman because Krugman allegedly called Congressman Paul Ryan stupid. To be clear, Krugman’s primary point was not that Ryan is stupid, but that he is crooked, especially as it pertains to his budget proposals. Smith uses this context for looking at arguments in general, and he makes an excellent point.

[A]s a society, we use arguments the wrong way. We tend to treat arguments like debate competitions — two people argue in front of a crowd, and whoever wins gets the love and adoration of the crowd, and whoever loses goes home defeated and shamed. I guess that’s better than seeing arguments as threats of physical violence, but I still prefer the idea of arguing as a way to learn, to bounce ideas off of other people. Proving you’re smart is a pointless endeavor (unless you’re looking for a job), and is an example of what Stanford University psychologist Carol Dweck calls a “fixed mindset.” As the band Sparks once sang, “Everybody’s stupid — that’s for sure” [even though nobody wants to be called stupid]. What matters is going in the right direction — becoming less stupid, little by little.

But I think Smith’s ideal isn’t all that practical. To begin with, as Megan McArdle emphasizes, by calling one who disagrees with you stupid (even implicitly) “you have guaranteed that no one who disagrees with you will hear a word that you are saying.” Thus “calling people stupid is simply a performance for the fellow travelers in your audience” as well as a means of asserting superiority.

My sense is that the key element to this discussion is that most partisans see “their side” as not just true, but obviously true. It’s a by-product of bias blindness, or selective perception.  We tend to see bias in others but not in ourselves. Therefore, our strongly held positions aren’t really debatable — they’re objectively and obviously true. After all, if we didn’t think our positions were true, we wouldn’t hold them. And (our thinking goes) since they are objectively true, anyone who makes the effort to try should be able to ascertain that truth. Our opponents are thus without excuse.  Continue reading

A Commitment to Truth

InvestmentBeliefssm2 (2)It seems to me, after a good deal of thought, reflection and research, that we have so much difficulty dealing with behavioral and cognitive bias in large measure because we build our belief structures precisely backwards. There’s nothing revelatory in that conclusion, obviously, because it is exactly what confirmation bias is all about. We like to think that we make (at least relatively) objective decisions based upon the best available evidence. But the truth is that we are ideological through-and-through and thus tend to make our “decisions” first — based upon our pre-conceived notions — and then backfill to add some supportive reasoning (which need not be very good to be seen as convincing).

I have been working on an infographic to try to illustrate the issue* and have come up with the following.

Commitment Hierarchy

The goal should be to build from the ground up — beginning with facts, working to conclusions and so on. Beliefs are interpretations of one’s conclusions about the facts. If more fervently held, they rise to the level of conviction and perhaps to the highest pyramid level, whereby one makes a major commitment to a particular cause, approach or ideology. These commitments are the things by which we tend to be defined.  Continue reading

Laugh or Cry?

Our biases make it really hard to see things clearly.

Our biases make it really hard to see things clearly.

Ezra Klein (formerly of The Washington Post) has a new venture (Vox) dedicated to what he calls “explanatory journalism” and which offers consistently progressive “explanations” for various policies by a talented but ideologically pure staff. Klein’s big introductory think piece cites research (already familiar to regular readers here) showing that people understand the world in ways that suit their preexisting beliefs and ideological commitments. Thus in controlled experiments both conservatives and liberals systematically misread the facts in a way that confirms their biases.

Interestingly, if unsurprisingly, while Klein concedes the universality of the problem in theory, all of his examples point out the biased stupidity of his political opponents. Paul Krugman – a terrific economist but an often insufferable progressive shill – sees Klein’s bid and ups the ante, exhibiting classic bias blindness: “the lived experience is that this effect is not, in fact, symmetric between liberals and conservatives.” In other words, his “lived experience” trumps the research evidence (science at work!). In Krugman’s view, conservatives are simply much stupider than liberals because reality skews liberal. He even goes so far as to deny that there are examples where liberals engage in the “overwhelming rejection of something that shouldn’t even be in dispute.” If what is being expressed is perceived to be the unvarnished truth, bias can’t be part of the equation.

Yale’s Dan Kahan, who was Klein’s primary interviewee in the referenced piece and an author of much of the relevant research, found Krugman’s view “amazingly funny,” in part because the research is so clear. Biased reasoning is in fact ideologically symmetrical. Continue reading

What’s Your Baseline?

I spoke at an excellent conference recently and was on a panel there with two big-time economists.  While I was sitting on the dias listening to my “colleagues,” I couldn’t help thinking about this old gem from Sesame Street.

And I was the “thing” that didn’t belong. 

That said, I was a bit surprised that we had so many areas of substantial agreement because our starting points were pretty different.  Economists look at the investment world somewhat differently from the rest of us.  They come at things from a different place.  Plus, neither of them was American, making our outlooks even less inherently consistent.

Continue reading

“It Has a Place”

ControversyIt was a situation every kid who plays baseball has dreamed about.  With his team trailing last night, 4-3, with two outs in the ninth inning, Adam Rosales of the Oakland A’s launched what appeared to be a game-tying home run off Cleveland Indians closer Chris Perez that bounced off the railing just beyond the high left field wall.  Tie game.  Glory time.

Not so fast.

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Connecting the Dots

Connect the DotsIt’s a consuming question for all Americans:  Should the FBI, the CIA, Homeland Security and related entities have “connected the dots” about the Tsarnaev brothers and thus been able to prevent the Boston Marathon bombings?  Continue reading

Motivated Reasoning

InvestmentABCs1There is a wide body of research on what has come to be known as “motivated reasoning” and – more recognizably for those of us in the investment world – its “flip-side,” confirmation bias.  While confirmation bias is our tendency to notice and accept that which fits within our preconceived notions and beliefs, motivated reasoning is the complementary tendency to scrutinize ideas more critically when we disagree with them than when we agree.  We are also much more likely to recall supporting rather than opposing evidence.  The Simmelweis Reflex is a reflection of this phenomenon. Upton Sinclair offered perhaps its most popular expression:  “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

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