The Psychology of Human Misjudgement

The Psychology of Human Misjudgment by Charlie Munger (Charlie Munger: 25 Cognitive Biases talk). Resources: Transcript of the speech | http://dbrack.co/1KIgveX Article covering each of the biases | http://dbrack.co/1Q4HCNP Poor Charlie's Almanack | http://dbrack.co/1PDMFGY

The quality of audio here isn't too good. You may have to strain your ears a bit to hear this. But plug your headset on, and this may just be the best one odd hour you'll invest in a very long time. 

Learn a new language

I think it mandatory everybody in the world takes this up in much the same way all of us learn a to a language. You don't just future proof yourself, you learn to think as well. 

Congratulations by the way

Animated adaptation of a commencement speech given by George Saunders at Syracuse University, May 2013.

Down through the ages, a traditional form has evolved for this type of speech, which is: Some old fart, his best years behind him, who, over the course of his life, has made a series of dreadful mistakes (that would be me), gives heartfelt advice to a group of shining, energetic young people, with all of their best years ahead of them (that would be you).

And I intend to respect that tradition.

Now, one useful thing you can do with an old person, in addition to borrowing money from them, or asking them to do one of their old-time “dances,” so you can watch, while laughing, is ask: “Looking back, what do you regret?” And they’ll tell you. Sometimes, as you know, they’ll tell you even if you haven’t asked. Sometimes, even when you’ve specifically requested they not tell you, they’ll tell you.

So: What do I regret? Being poor from time to time? Not really. Working terrible jobs, like “knuckle-puller in a slaughterhouse?” (And don’t even ASK what that entails.) No. I don’t regret that. Skinny-dipping in a river in Sumatra, a little buzzed, and looking up and seeing like 300 monkeys sitting on a pipeline, pooping down into the river, the river in which I was swimming, with my mouth open, naked? And getting deathly ill afterwards, and staying sick for the next seven months? Not so much. Do I regret the occasional humiliation? Like once, playing hockey in front of a big crowd, including this girl I really liked, I somehow managed, while falling and emitting this weird whooping noise, to score on my own goalie, while also sending my stick flying into the crowd, nearly hitting that girl? No. I don’t even regret that.

But here’s something I do regret:

In seventh grade, this new kid joined our class. In the interest of confidentiality, her Convocation Speech name will be “ELLEN.” ELLEN was small, shy. She wore these blue cat’s-eye glasses that, at the time, only old ladies wore. When nervous, which was pretty much always, she had a habit of taking a strand of hair into her mouth and chewing on it.

So she came to our school and our neighborhood, and was mostly ignored, occasionally teased (“Your hair taste good?” — that sort of thing). I could see this hurt her. I still remember the way she’d look after such an insult: eyes cast down, a little gut-kicked, as if, having just been reminded of her place in things, she was trying, as much as possible, to disappear. After awhile she’d drift away, hair-strand still in her mouth. At home, I imagined, after school, her mother would say, you know: “How was your day, sweetie?” and she’d say, “Oh, fine.” And her mother would say, “Making any friends?” and she’d go, “Sure, lots.”

Sometimes I’d see her hanging around alone in her front yard, as if afraid to leave it.

And then — they moved. That was it. No tragedy, no big final hazing.

One day she was there, next day she wasn’t.

End of story.

Now, why do I regret that? Why, forty-two years later, am I still thinking about it? Relative to most of the other kids, I was actually pretty nice to her. I never said an unkind word to her. In fact, I sometimes even (mildly) defended her.

But still. It bothers me.

So here’s something I know to be true, although it’s a little corny, and I don’t quite know what to do with it:

What I regret most in my life are failures of kindness.

Those moments when another human being was there, in front of me, suffering, and I responded . . . sensibly. Reservedly. Mildly.

Or, to look at it from the other end of the telescope: Who, in your life, do you remember most fondly, with the most undeniable feelings of warmth?

Those who were kindest to you, I bet.

It’s a little facile, maybe, and certainly hard to implement, but I’d say, as a goal in life, you could do worse than: Try to be kinder.

Now, the million-dollar question: What’s our problem? Why aren’t we kinder?

Here’s what I think:

Each of us is born with a series of built-in confusions that are probably somehow Darwinian. These are: (1) we’re central to the universe (that is, our personal story is the main and most interesting story, the only story, really); (2) we’re separate from the universe (there’s US and then, out there, all that other junk – dogs and swing-sets, and the State of Nebraska and low-hanging clouds and, you know, other people), and (3) we’re permanent (death is real, o.k., sure – for you, but not for me).

Now, we don’t really believe these things – intellectually we know better – but we believe them viscerally, and live by them, and they cause us to prioritize our own needs over the needs of others, even though what we really want, in our hearts, is to be less selfish, more aware of what’s actually happening in the present moment, more open, and more loving.

So, the second million-dollar question: How might we DO this? How might we become more loving, more open, less selfish, more present, less delusional, etc., etc?

Well, yes, good question.

Unfortunately, I only have three minutes left.

So let me just say this. There are ways. You already know that because, in your life, there have been High Kindness periods and Low Kindness periods, and you know what inclined you toward the former and away from the latter. Education is good; immersing ourselves in a work of art: good; prayer is good; meditation’s good; a frank talk with a dear friend; establishing ourselves in some kind of spiritual tradition — recognizing that there have been countless really smart people before us who have asked these same questions and left behind answers for us.

Because kindness, it turns out, is hard — it starts out all rainbows and puppy dogs, and expands to include . . . well, everything.

One thing in our favor: some of this “becoming kinder” happens naturally, with age. It might be a simple matter of attrition: as we get older, we come to see how useless it is to be selfish — how illogical, really. We come to love other people and are thereby counter-instructed in our own centrality. We get our butts kicked by real life, and people come to our defense, and help us, and we learn that we’re not separate, and don’t want to be. We see people near and dear to us dropping away, and are gradually convinced that maybe we too will drop away (someday, a long time from now). Most people, as they age, become less selfish and more loving. I think this is true. The great Syracuse poet, Hayden Carruth, said, in a poem written near the end of his life, that he was “mostly Love, now.”

And so, a prediction, and my heartfelt wish for you: as you get older, your self will diminish and you will grow in love. YOU will gradually be replaced by LOVE. If you have kids, that will be a huge moment in your process of self-diminishment. You really won’t care what happens to YOU, as long as they benefit. That’s one reason your parents are so proud and happy today. One of their fondest dreams has come true: you have accomplished something difficult and tangible that has enlarged you as a person and will make your life better, from here on in, forever.

Congratulations, by the way.

When young, we’re anxious — understandably — to find out if we’ve got what it takes. Can we succeed? Can we build a viable life for ourselves? But you — in particular you, of this generation — may have noticed a certain cyclical quality to ambition. You do well in high-school, in hopes of getting into a good college, so you can do well in the good college, in the hopes of getting a good job, so you can do well in the good job so you can . . .

And this is actually O.K. If we’re going to become kinder, that process has to include taking ourselves seriously — as doers, as accomplishers, as dreamers. We have to do that, to be our best selves.

Still, accomplishment is unreliable. “Succeeding,” whatever that might mean to you, is hard, and the need to do so constantly renews itself (success is like a mountain that keeps growing ahead of you as you hike it), and there’s the very real danger that “succeeding” will take up your whole life, while the big questions go untended.

So, quick, end-of-speech advice: Since, according to me, your life is going to be a gradual process of becoming kinder and more loving: Hurry up. Speed it along. Start right now. There’s a confusion in each of us, a sickness, really: selfishness. But there’s also a cure. So be a good and proactive and even somewhat desperate patient on your own behalf — seek out the most efficacious anti-selfishness medicines, energetically, for the rest of your life.

Do all the other things, the ambitious things — travel, get rich, get famous, innovate, lead, fall in love, make and lose fortunes, swim naked in wild jungle rivers (after first having it tested for monkey poop) – but as you do, to the extent that you can, err in the direction of kindness. Do those things that incline you toward the big questions, and avoid the things that would reduce you and make you trivial. That luminous part of you that exists beyond personality — your soul, if you will — is as bright and shining as any that has ever been. Bright as Shakespeare’s, bright as Gandhi’s, bright as Mother Teresa’s. Clear away everything that keeps you separate from this secret luminous place. Believe it exists, come to know it better, nurture it, share its fruits tirelessly.

And someday, in 80 years, when you’re 100, and I’m 134, and we’re both so kind and loving we’re nearly unbearable, drop me a line, let me know how your life has been. I hope you will say: It has been so wonderful.

Congratulations, Class of 2013.

I wish you great happiness, all the luck in the world, and a beautiful summer.

Amazon will not last Jeff Bezos

Jeff Bezos comes across to me as a psychologically deranged man. I am willing to punt Amazon will not outlast him. But before I get to that, take a few minutes off and listen to this video. 

Amazon founder and CEO Jeff Bezos gave the Baccalaureate address to Princeton University's Class of 2010. Bezos graduated from Princeton in 1986 with a degree in computer science and electrical engineering. He was introduced by Princeton University President Shirley M. Tilghman. Bezos spoke to the Class of 2010 about the difference between choices and gifts.

Jeff Bezos, the founder of Amazon delivers the graduation speech at Princeton University in 2010

I discovered this very recently after I stumbled across a very compelling post on Medium by Julia Cheiffetz, an Executive Editor at Harper Collins Publishers. It had me stunned for a while. I had a baby and cancer when I worked at Amazon. This is my story, she wrote. 

She concluded: "Jeff: You asked for direct feedback. Women power your retail engine. They buy diapers. They buy books. They buy socks for their husbands on Prime. On behalf of all the people who want to speak up but can’t: Please, make Amazon a more hospitable place for women and parents. Reevaluate your parental leave policies. You can’t claim to be a data-driven company and not release more specific numbers on how many women and people of color apply, get hired and promoted, and stay on as employees. In the absence of meaningful public data — especially retention data — all we have are stories. This is mine."  

Until then, all I had heard were stories of what a great company Amazon is and the genius that is Jeff Bezos. If you listen to his speech above for instance, it is easy to think of him as a super intelligent human with a heart. And why not?

"What I want to talk to you about today is the difference between gifts and choices. Cleverness is a gift, kindness is a choice. Gifts are easy -- they're given after all. Choices can be hard. You can seduce yourself with your gifts if you're not careful, and if you do, it'll probably be to the detriment of your choices," he tells the students.

But between Julia's essay and a pointer that led me to a long investigation by the New York Times on what really happens to people Inside Amazon, particularly white collar workers, I am compelled to once again reassess Jeff Bezos.

The New York Times writes, "Company veterans often say the genius of Amazon is the way it drives them to drive themselves. “If you’re a good Amazonian, you become an Amabot,” said one employee, using a term that means you have become at one with the system.

In Amazon warehouses, employees are monitored by sophisticated electronic systems to ensure they are packing enough boxes every hour. (Amazon came under fire in 2011 when workers in an eastern Pennsylvania warehouse toiled in more than 100-degree heat with ambulances waiting outside, taking away laborers as they fell. After an investigation by the local newspaper, the company installed air-conditioning.)

But in its offices, Amazon uses a self-reinforcing set of management, data and psychological tools to spur its tens of thousands of white-collar employees to do more and more. “The company is running a continual performance improvement algorithm on its staff,” said Amy Michaels, a former Kindle marketer."

And then there is this little bit from the report that stayed in my head: Noelle Barnes, who worked in marketing for Amazon for nine years, repeated a saying around campus: “Amazon is where overachievers go to feel bad about themselves.”

Or for that matter consider this damning part from the New York Times story: 

A woman who had thyroid cancer was given a low performance rating after she returned from treatment. She says her manager explained that while she was out, her peers were accomplishing a great deal. Another employee who miscarried twins left for a business trip the day after she had surgery. “I’m sorry, the work is still going to need to get done,” she said her boss told her. “From where you are in life, trying to start a family, I don’t know if this is the right place for you.”

A woman who had breast cancer was told that she was put on a “performance improvement plan” — Amazon code for “you’re in danger of being fired” — because “difficulties” in her “personal life” had interfered with fulfilling her work goals. Their accounts echoed others from workers who had suffered health crises and felt they had also been judged harshly instead of being given time to recover.

A former human resources executive said she was required to put a woman who had recently returned after undergoing serious surgery, and another who had just had a stillborn child, on performance improvement plans, accounts that were corroborated by a co-worker still at Amazon. “What kind of company do we want to be?” the executive recalled asking her bosses.

The mother of the stillborn child soon left Amazon. “I had just experienced the most devastating event in my life,” the woman recalled via email, only to be told her performance would be monitored “to make sure my focus stayed on my job.”

With this kind of relentless monitoring of its people,  An obsessive man unwilling to let go. There is a dichotomy between his public persona and how he runs the entity.

I'll be damned if I'm wrong. In the 20 odd years I have spent as a journalist, I have witnessed from close quarters Indian entrepreneurs build organizations ground up at the cost of pretty much everything else in the wake of liberalization. I am not at liberty to discuss their names right now. But as things are, and it is time to cede ground to their younger generation, they face resentment and unwillingness to take the baton up. It's their children's way of showing them the middle finger for the years of neglect they suffered. Eventually, these organizations will end up in the hands of Private Equity sharks who will not hesitate to divy it up in any which way that suits their interests. The first signs of fissures in the Indian context are already visible. But like I just said, more on that sometime later when I am at the liberty to talk names and people.

As for now, take it from me. The likes of Amazon will not last forever. My primary concern is what of all the e-books that I have accumulated. The only way I can think up is to save them as .pdf files at multiple places on various cloud platforms. Because the half life of technology and technology companies is getting shorter and shorter. 

Once upon a time whoever would have imagined Enron could go bust?   

The mistrust of science

If this place has done its job and I suspect it has—you’re all scientists now. Sorry, English and history graduates, even you are, too. Science is not a major or a career. It is a commitment to a systematic way of thinking, an allegiance to a way of building knowledge and explaining the universe through testing and factual observation. The thing is, that isn’t a normal way of thinking. It is unnatural and counterintuitive. It has to be learned. Scientific explanation stands in contrast to the wisdom of divinity and experience and common sense. Common sense once told us that the sun moves across the sky and that being out in the cold produced colds. But a scientific mind recognized that these intuitions were only hypotheses. They had to be tested.

When I came to college from my Ohio home town, the most intellectually unnerving thing I discovered was how wrong many of my assumptions were about how the world works—whether the natural or the human-made world. I looked to my professors and fellow-students to supply my replacement ideas. Then I returned home with some of those ideas and told my parents everything they’d got wrong (which they just loved). But, even then, I was just replacing one set of received beliefs for another. It took me a long time to recognize the particular mind-set that scientists have. The great physicist Edwin Hubble, speaking at Caltech’s commencement in 1938, said a scientist has “a healthy skepticism, suspended judgement, and disciplined imagination”—not only about other people’s ideas but also about his or her own. The scientist has an experimental mind, not a litigious one.

As a student, this seemed to me more than a way of thinking. It was a way of being—a weird way of being. You are supposed to have skepticism and imagination, but not too much. You are supposed to suspend judgment, yet exercise it. Ultimately, you hope to observe the world with an open mind, gathering facts and testing your predictions and expectations against them. Then you make up your mind and either affirm or reject the ideas at hand. But you also hope to accept that nothing is ever completely settled, that all knowledge is just probable knowledge. A contradictory piece of evidence can always emerge. Hubble said it best when he said, “The scientist explains the world by successive approximations.”

The scientific orientation has proved immensely powerful. It has allowed us to nearly double our lifespan during the past century, to increase our global abundance, and to deepen our understanding of the nature of the universe. Yet scientific knowledge is not necessarily trusted. Partly, that’s because it is incomplete. But even where the knowledge provided by science is overwhelming, people often resist it—sometimes outright deny it. Many people continue to believe, for instance, despite massive evidence to the contrary, that childhood vaccines cause autism (they do not); that people are safer owning a gun (they are not); that genetically modified crops are harmful (on balance, they have been beneficial); that climate change is not happening (it is).

Vaccine fears, for example, have persisted despite decades of research showing them to be unfounded. Some twenty-five years ago, a statistical analysis suggested a possible association between autism and thimerosal, a preservative used in vaccines to prevent bacterial contamination. The analysis turned out to be flawed, but fears took hold. Scientists then carried out hundreds of studies, and found no link. Still, fears persisted. Countries removed the preservative but experienced no reduction in autism—yet fears grew. A British study claimed a connection between the onset of autism in eight children and the timing of their vaccinations for measles, mumps, and rubella. That paper was retracted due to findings of fraud: the lead author had falsified and misrepresented the data on the children. Repeated efforts to confirm the findings were unsuccessful. Nonetheless, vaccine rates plunged, leading to outbreaks of measles and mumpsthat, last year, sickened tens of thousands of children across the U.S., Canada, and Europe, and resulted in deaths.

People are prone to resist scientific claims when they clash with intuitive beliefs. They don’t see measles or mumps around anymore. They do see children with autism. And they see a mom who says, “My child was perfectly fine until he got a vaccine and became autistic.”

Now, you can tell them that correlation is not causation. You can say that children get a vaccine every two to three months for the first couple years of their life, so the onset of any illness is bound to follow vaccination for many kids. You can say that the science shows no connection. But once an idea has got embedded and become widespread, it becomes very difficult to dig it out of people’s brains—especially when they do not trust scientific authorities. And we are experiencing a significant decline in trust in scientific authorities.

The sociologist Gordon Gauchat studied U.S. survey data from 1974 to 2010 and found some deeply alarming trends. Despite increasing education levels, the public’s trust in the scientific community has been decreasing. This is particularly true among conservatives, even educated conservatives. In 1974, conservatives with college degrees had the highest level of trust in science and the scientific community. Today, they have the lowest.

Today, we have multiple factions putting themselves forward as what Gauchat describes as their own cultural domains, “generating their own knowledge base that is often in conflict with the cultural authority of the scientific community.” Some are religious groups (challenging evolution, for instance). Some are industry groups (as with climate skepticism). Others tilt more to the left (such as those that reject the medical establishment). As varied as these groups are, they are all alike in one way. They all harbor sacred beliefs that they do not consider open to question.

To defend those beliefs, few dismiss the authority of science. They dismiss the authority of the scientific community. People don’t argue back by claiming divine authority anymore. They argue back by claiming to have the truer scientific authority. It can make matters incredibly confusing. You have to be able to recognize the difference between claims of science and those of pseudoscience.

Science’s defenders have identified five hallmark moves of pseudoscientists. They argue that the scientific consensus emerges from a conspiracy to suppress dissenting views. They produce fake experts, who have views contrary to established knowledge but do not actually have a credible scientific track record. They cherry-pick the data and papers that challenge the dominant view as a means of discrediting an entire field. They deploy false analogies and other logical fallacies. And they set impossible expectations of research: when scientists produce one level of certainty, the pseudoscientists insist they achieve another.

It’s not that some of these approaches never provide valid arguments. Sometimes an analogy is useful, or higher levels of certainty are required. But when you see several or all of these tactics deployed, you know that you’re not dealing with a scientific claim anymore. Pseudoscience is the form of science without the substance.

The challenge of what to do about this—how to defend science as a more valid approach to explaining the world—has actually been addressed by science itself. Scientists have done experiments. In 2011, two Australian researchers compiled many of the findings in “The Debunking Handbook.” The results are sobering. The evidence is that rebutting bad science doesn’t work; in fact, it commonly backfires. Describing facts that contradict an unscientific belief actually spreads familiarity with the belief and strengthens the conviction of believers. That’s just the way the brain operates; misinformation sticks, in part because it gets incorporated into a person’s mental model of how the world works. Stripping out the misinformation therefore fails, because it threatens to leave a painful gap in that mental model—or no model at all.

So, then, what is a science believer to do? Is the future just an unending battle of warring claims? Not necessarily. Emerging from the findings was also evidence that suggested how you might build trust in science. Rebutting bad science may not be effective, but asserting the true facts of good science is. And including the narrative that explains them is even better. You don’t focus on what’s wrong with the vaccine myths, for instance. Instead, you point out: giving children vaccines has proved far safer than not. How do we know? Because of a massive body of evidence, including the fact that we’ve tried the alternate experiment before. Between 1989 and 1991, vaccination among poor urban children in the U.S. dropped. And the result was fifty-five thousand cases of measles and a hundred and twenty-three deaths.

The other important thing is to expose the bad science tactics that are being used to mislead people. Bad science has a pattern, and helping people recognize the pattern arms them to come to more scientific beliefs themselves. Having a scientific understanding of the world is fundamentally about how you judge which information to trust. It doesn’t mean poring through the evidence on every question yourself. You can’t. Knowledge has become too vast and complex for any one person, scientist or otherwise, to convincingly master more than corners of it.

Few working scientists can give a ground-up explanation of the phenomenon they study; they rely on information and techniques borrowed from other scientists. Knowledge and the virtues of the scientific orientation live far more in the community than the individual. When we talk of a “scientific community,” we are pointing to something critical: that advanced science is a social enterprise, characterized by an intricate division of cognitive labor. Individual scientists, no less than the quacks, can be famously bull-headed, overly enamored of pet theories, dismissive of new evidence, and heedless of their fallibility. (Hence Max Planck’s observation that science advances one funeral at a time.) But as a community endeavor, it is beautifully self-correcting.

Beautifully organized, however, it is not. Seen up close, the scientific community—with its muddled peer-review process, badly written journal articles, subtly contemptuous letters to the editor, overtly contemptuous subreddit threads, and pompous pronouncements of the academy— looks like a rickety vehicle for getting to truth. Yet the hive mind swarms ever forward. It now advances knowledge in almost every realm of existence—even the humanities, where neuroscience and computerization are shaping understanding of everything from free will to how art and literature have evolved over time.

Today, you become part of the scientific community, arguably the most powerful collective enterprise in human history. In doing so, you also inherit a role in explaining it and helping it reclaim territory of trust at a time when that territory has been shrinking. In my clinic and my work in public health, I regularly encounter people who are deeply skeptical of even the most basic knowledge established by what journalists label “mainstream” science (as if the other thing is anything like science)—whether it’s facts about physiology, nutrition, disease, medicines, you name it. The doubting is usually among my most, not least, educated patients. Education may expose people to science, but it has acountervailing effect as well, leading people to be more individualistic and ideological.

The mistake, then, is to believe that the educational credentials you get today give you any special authority on truth. What you have gained is far more important: an understanding of what real truth-seeking looks like. It is the effort not of a single person but of a group of people—the bigger the better—pursuing ideas with curiosity, inquisitiveness, openness, and discipline. As scientists, in other words.

Even more than what you think, how you think matters. The stakes for understanding this could not be higher than they are today, because we are not just battling for what it means to be scientists. We are battling for what it means to be citizens.