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

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?

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.

Continue reading