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Why Do Intelligent People Make Dumb Decisions? – Human Psychology and Decision Making

Posted by intellisg on May 17, 2007

dumb1.jpgTHE SKY is falling!

No wait it’s just another dumb mistake. I am of course talking about how intelligent people typically make stupid decisions: I know because I am one of them – the stupid who may even appear intelligent, till of course you engage me to map out your financial retirement plan.

Indeed, from Bhopal to Chernobyl—and in ninety nine out of one hundred accidents in the air, road and sea—human error has accounted for vastly more fatalities than mechanical failure. Yes, we the stupid people of this world are a destructive lot. We make stupid mistakes all the time like drilling our sleeves into walls. Good design takes out some of the edge of course, but if all fails. We the stupid can always blame those intelligent manuals for being too complicated to take stock of our limitations.

Stupid people can’t spell. That probably accounts for why firms like Google have a nifty function which if it thinks we have misspelled a word, suggests the correct spelling. Apart from being good design – they too have to pay homage to us, the stupid people. After all, we pride ourselves on being the statistical significant – there will always be more stupid people than our highly intelligent counterparts.

All of us have either seen or heard about it; seemingly well-educated, balanced and intelligent people, making bad decisions – if you need some prompting just cast your mind back to the dot.com boom during the helium filled days. Or if you missed the white elephant in the living room like I usually do, just switch on the telly – I am sure there is always something intelligently stupid about the war in Iraq.

It simply begs the question why does this happen? How do apparently intelligent people take up positions that defy any reasonable logic? Recently, the special investigative team organized by the brotherhood posed a series of questions to Dr Chandra. An AI researcher who is not only familiar with the science of decision of making, but apparently claims to be have discovered, what he refers too as the “black hole,” in what he describes as the “intelligence deficit.”

Astro Boy: Q: Having spent so many years researching decision science and logic in the AI field. I am sure Dr Chandra, you have catalogued many ways; how smart people not only make lousy decisions but frequently choose to defend them. What do you have to say about this?

Dr Chandra: A: I’m not proud to say this, but despite years of research in the field of logic and computation in the area of artificial intelligence. I really have to say. I am already damaged goods (chuckles and smiles). You will be amazed how many brainless wonders there are holing up in universities these days.

One thing I did come across very early on when applying advanced logic theory in the area of robotics – is the subject of how human psychology typically works against intelligent people most of the time. It still never ceases to surprise me how robust this theory is and you might think that this only applies to humans but the same can be said about smart systems and processes. There are commonalities here. But I understand this article goes out to a predominantly lay audience and since we are still in the dummies series run. So I am going to keep it all to just simple sound bites.

In a nut shell intelligent folk or smart systems such as HAL 9000 computer have a very high degree of proficiency in argument which can all too easily be used to overpower others or subjugate an opposing line of thinking, even if they are dead wrong.

And the reason for this is because smart people like really intelligent systems learn a few tricks of logic which is after all just debating lingo so they are quite adept at refuting what appears to be the obvious even defending the ridiculous. Of course computers do it logically while we humans may appear less rational, but in both cases the dynamics of error output and the way it is justified remains similar.

Let me give you an illustration of how a typical mistake pans out in a real world scenario. Just imagine that you are sitting on the third seat witnessing the first flight of a super duper computerized jet liner. Just as soon as the jet takes off – all the indicators suggest that the plane is doing all the right things it’s supposed to do correctly. Suddenly one of the pilot looks out of the window and realizes instead of going up, the plane is actually descending, there’s a momentary lag, he checks his instruments again and there appears to be a conflict between what he perceives with his physical senses and what his mind actually reads off from the instruments – which one prevails? Unfortunately in an emergency – time is of the essence, by the time the brain figures out what is right and wrong, its usually too late.

That without getting too complicated is how 90% of human error occurs – sure I am simplifying the whole thing into understandable sound bites here, but this sort of “lag” or “disconnect” happens quite often.

All of us for example have been on a train or car, where we don’t move but the carriage or vehicle next to us does. For a moment we feel confused, the whole dynamics isn’t so different from that.

The problem with really intelligent people is that they are usually a victim of their own success. Because they are right most of the time – so they think they are right all the time. Believe it or not they actually believe this.

So it’s not uncommon for them to defend their ideas to even the end rather than admitting they’re wrong. Incidentally, a lot of research has been done in this area – that’s why one of the leading causes of air crashes is the gung-ho “know it and seen it all” captain who typically chews up his younger and less experienced co-pilot.

What that really says is – if they (the intelligent people) got away with it when they were young (with their colleagues and even superiors) they’ve probably built an ego around being right, and will therefore defend their perfect record of invented righteousness to the death. Smart people often fall into the trap of preferring to be right even if it’s based on less than perfect factual grounds – of course they dress it up as “gut feel” and “instinct,” but at the end of the day, its just another lever to get on top of the other guy to steamroll their idea (That’s why if you really take to trouble to look through the eulogies of smart dead people, they are always playing the same record by Frank Sinatra’s “I did it my way.”)

Astro Boy: Q: OK Dr Chandra what you are saying is: there’s not only the information processing dimension, but there is a whole lot of personal psychology that goes into why intelligent people make lousy decisions. Is there a way out of this problem?

Dr Chandra: A: Let me just make it very clear that you don’t have to be the president of the United States or someone important to fall into “the competence trap.” You could even be a reasonably intelligent supervisor working in a factory. Or what I just described could just as well happen to either – me, you or even darkness.

I am the first to admit that I have fallen so many times into the “competence trap,” that I even have a bordello there (smiles and chuckles). As for darkness, he’s probably a permanent resident or something. So let’s be very clear here – the competence trap isn’t necessarily something you would just dismiss with a few words like,

“Well I know people like that, but I am not like that!”

That I think needs to be firmly fixed in mind: anyone can fall into the “competence trap.”

The solution is really quite simple, intelligent people need to have a feedback loop. Or more importantly appreciate its usage in the decision making process. It really doesn’t matter whether it is getting a second opinion about a health or financial issue, but never ever limit yourself to only one or even two sources. In my opinion, you can never ever have too many inputs. Now if people say that’s confusing, then my response is what did you expect? Finding a place to bury your mother-in-law after poisoning her isn’t exactly snake and ladders.

Just to give you a practical example of what a feedback loop should look like: if the decision makers are politicians then it pays to nurture an opposition where there is someone who is tenacious enough to dissect their logic, and resilient enough to endure the thinly veiled intellectual abuse they typically dish out during parliamentary debates. The same equation applies in firms and you could even say in successful marriages and partnerships – in every case having a “yes” man brings absolutely nothing to the table.

Having said that the whole idea of a feedback loop isn’t widely appreciated in politics, business or any where else – you are smart enough to draw your own conclusions why intelligent people usually don’t see the need to have these feed back elements. So I don’t see the need to elaborate.

But if you don’t have it, then I cannot honestly see how it’s possible to continuously examine what is at the core of the decision rationale.

What you need to remember is this golden rule: just because they (intelligent people) cannot be proven wrong, does not make them right! And this highlights the second level of how intelligent people usually make lousy decisions. Usually they fail to recognize the systematic flaw or limitation in logic – that’s to say, logic is based on refuting and throwing out what is not true by strenuously establishing only true justification for a given idea by rejecting falsehoods.

The whole idea with that equation is while it may work very well with a game that last just 2 or 3 minutes where the outcome is known almost immediately. In most cases of decision making – it’s long term and frequently involves countless variables which may have the effect of nullifying even the whole concept of predictability.

The second assumption that we need to appreciate is – if we are to make better decisions and it really doesn’t matter whether it is to buy an aircraft carrier or just to park your money on a few shares: nothing is obvious. If it were obvious then they would be no need to argue in first place. So the first duty or initial protocol requires this assumption to be firmly fixed; nothing is obvious. If you don’t believe me just cast your mind back to the helium filled days of the dot.com era and everything will just come into sharp focus; nothing is obvious – even if it makes perfect financial sense. That needs to be fixed as a matter of strategic priority.

That sort of mental discipline just forces you to question the assumptions continuously? You as the seeker need to go back and ask: how did it happen? Instead of stabbing in the dark and ask who said that? There may be 10 or 20 different valid assumptions that need to be discussed one at a time before any kind of decision can be considered. But if you didn’t go back, you wouldn’t even be considering them and bear in mind each assumption has its own theoretical construct, so if it takes off, it will have a very different trajectory from assumption 1,2,3,4 etc.

After that only then do you go to resolve the problem in the next phases by asking yourself : what’s the nature of the challenge we trying to surmount? What alternatives to solving it are there? What are the tradeoffs in each alternative? By breaking it down further and asking another strata of questions you expose more thinking to light, making it possible for others to ask pick out the issues by posing more questions, and that really is the only way to make it impossible for intelligent people to forward and drive a lousy idea.

Astro Boy: I hear you Dr Chandra. But I may be stupid. I just want you to know I am working at it. What you say sounds right. Only I have a problem visualizing it in a real world setting. Could you give us an illustration how the science of decision making really works by sharing with us one a case study you were personally involved in?

Dr Chandra: Q: Alright let’s take an example we know about, Y2K is a good one.

If you noticed I said, “we know about it,” but we knew almost squat about it before the turn of the century and there were all sorts of conspiracy theories, like it would rain planes and helicopters. Our toasters and microwave ovens will start behaving like Linda Blair in the Exorcist. That’s sort of thing, you get the picture.

Now what surprises not only me but most experts in the field of computing is despite the predictability of the end of the 20th Century. There were a surprisingly large number of intelligent people who were blindsided by Y2K.

Was that stupid? Or let me put it another way Astro Boy, was the event of the turn of the century predictable? Now before you go on and answer that question – consider the Julian calendar was calibrated nearly 500 years ago; long before electricity or the microchip ever existed. And those guys who probably scribed on stone tablets got it right. So what you really need to ask yourself is: how could anyone? Manufacture a computer, write a piece of software, or anything containing a time program without considering that there would certainly be a problem if it couldn’t handle three ‘0’ in a vector of 4 digits?

Contrary to what most people say about Y2K being a no show and all. What most people fail to recognize was it was a criminal waste of resources amounting so nearly USD$40 billion!

Much of it spend on just playing goal keeper because a few geeks in MIT didn’t know how to add, that just goes to show how really smart people make lousy decisions.

I mean Astro Boy, we could just as well talk about the environment, the population explosion, the irresponsible use of fossil energy… those things are really dumb and most of it is typically produced by dumber hierarchic oligarchies managed by really intelligent people. It seems to me at least looking around these days either they aren’t thinking straight or something is wrong with the water supply and they are all delusional. If the Martians were looking at us, this could be extremely funny. But somehow it doesn’t make me laugh.

Astro Boy: Q: Dr Chandra what do you think about the idea that many minds maketh a good decision? Do you agree with that statement? Especially in the context of such a thing commonly referred today as the wisdom of the crowd.

Dr Chandra: A: Just because everyone in the room is intelligent doesn’t mean that collectively they will arrive at the optimum decision. The power of peer pressure is that it works on our psychology, not our intellect – you always need to keep this at the back of your mind.

As social animals we are heavily influenced by how the people around us behave, and the quality of our own internal decision making varies widely depending on the environment we currently are in. I am generally not a big fan of group think – and as far as the wisdom of the crowd goes – it’s just another way of saying the mob knows best, but historically, it doesn’t stand up to even the barest intellectual scrutiny. If it did then no one would be caught up in the Great American Depression. But as you know many lost everything they had when the market bottom out – and the many I am referring too is the so called, “crowd.” I really don’t see where wisdom can possibly reside in a crowd any more than I can look a Petri-dish and tell you how cells are alive and dead. I don’t dispute it’s a catchy way to sell books.

But lets be clear about it – if we were to look a human history in the last 500 hundreds, its being changed not by crowds, but rather through the actions of a few people – the intellectuals – so that to be presents a far more compelling reason to discount this whole idea of the wisdom of the crowd. To be honest with you, I am not a big fan of this crowd business.

Astro Boy: Q: Where do you see the road to better decision making leading too? What I am asking is what roughly do you see as the preferred road map of your perfect world? And what are the limiting factors?

Dr Chnadra: A: Astro Boy what we need to buy into if we are to make better decisions as to what to do with the ageing population or what microwave we should buy is simply this – the primary point that all decision makers need to understand is simply this: no amount of intelligence can help an individual who is diligently working at the wrong level of the problem. Someone with wisdom simply has to tap this guy on the shoulder and say,

“Hey that’s a nice hole you are digging. Are you going to lie in it?”

As for the limits, if there are any – what we really need to appreciate is the history of decision making: from evolutionary theory, it’s clear that we are alive because of our inherited ability to think quickly and respond to change. The survival of species, has been primarily a short term game measured by hours and days. You can out flank your prey, run from the nastier predators. In that kind of context, one doesn’t have the luxury of worrying about tomorrow or the day after and that must be recognized – because it just means man is lousy when it comes to long term planning. We weren’t designed for this – that’s why there are so many old folks collecting aluminum cans and eking out a living on scraps – they just didn’t think ahead – and it’s not really their fault – it’s very much built in us.

It follows then that we tend to be better at worrying about and solving short term issues than long term issues. That’s why long term issues such as fossil fuel depletion and environmental degradation are typically placed at the bottom of the heap. Along with retirement planning or what type of wheel chair we are going to buy when we reach eighty – we’re all too easily distracted away from those deep thoughts by immediate things like what we are going to do today or tomorrow. I strongly believe that is why firms especially are continuous struggling between doing the right thing for the short term against long term – it is a never ending war – a hubris even that never ever goes away. We simply need to balance the two needs in my opinion, if we are to make better decisions.

On your question – how do we make better decisions? Let me just put it this way, how many data points you need to feel comfortable continuing a behavior, strategy or plan is entirely a matter of personal philosophy. The wise and skeptical know that even an infinite number of data points in the past may only have limited bearing on the future. That’s why when some begins a debate with the words, “in my experience…” I just walk away, because it is pointless to waste time with such idiots!

The tricky thing about the future is that it’s different than the past and it doesn’t matter whether it is the stock market or technology trends.

Our data from the past, no matter how big a pile of data it is, may very well be entirely irrelevant. Some find this lack of predictive ability of the future quite frustrating, while others see it as simply a fact of life – intelligent people make these type of trade off’s daily – that’s the only thing they really do – try to see the world as it is – rather than what its really painted to be by politicians, marketers and spin doctors – that’s why they are always ahead of the crowd – they simply don’t trust themselves and that for lack of a better word may actually be the best way for intelligent people to make better decisions.

In short, it pays dividends to believe you are stupid! For one it keeps you humble and away from that funny crowd who often make billion dollar mistakes – the extraordinary and gifted people! (Chuckles and laugh).

(Astro Boy [exclusive interview with Dr Chandra] – Socio / Science –EP 9992784 -2007 – The Brotherhood Press 2007)

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8 Responses to “Why Do Intelligent People Make Dumb Decisions? – Human Psychology and Decision Making”

  1. wbg said

    When has being intelligent got to do with doing the right thing?

    You can say that IS, Mr Wang with his own guessed IQ score, Kitana and Gayle are all intelligent in the sense but hell are they doing smart things.

    They are just being led all around the zoo by the devil himself.

  2. sumiko said

    Wbg,

    Thank you very much. I don’t think we need another round of name calling here. It’s being very confusing lately in the IS and I do agree with Anongal. It will be nice if we had a travelogue to lighten up the mood.

  3. Lassie said

    Hello:)

    I dont think it is very nice to imply obliquely anyone is the devil. Bambi typically gets blamed for even the things he has nothing to do with. I really cannot fathom how both Galye’s and Kitana’s departure had anything to do with him. For one he didnt even know the former existed and regularly confuses her with the singer Crystal Galye and as for Kitana you can go to her blog and read for yourself why she really left, unless you are telling me that Bambi coerced or hypnotize her to say all those things.

    As for Mr Wang, he had it coming and considering what he stupidly did. I think he just escaped with just a very slight mauling. Besides these days whatever he has to say is pitifully very little – really it can more or less fit into a postage stamp. So I really dont see why he bothers.

    As for the brotherhood press, they are currently the only ppl who are “producing,” on a regular basis. So although it is easy for ppl to say they are this or that, I think unless you are capable of producing to their level of proficiency – you really dont have the qualification to talk about something, you hardly know about. In this past few weeks I have heard alot of rubbish about boycotting them, these ppl speak as if there is such a thing called a choice or limitless variety in the Singapore blog scene.

    Do us all a favor and go look again. Go on look very carefully this time.

  4. Lassie said

    No one is doing what they are doing. And if you tell me what they are doing is not important i.e researching, reading and writing all these socio-political observations. You are wrong, they are building up a new cadre of readers, creating awareness and even stimulating many to think. How do I know this, bc I am one of them.

    What I find laughable out there in the internet is there are a few mindless bloggers out there who criticise them, but if you take the trouble to look at how much they have produced. You get a big fat zero.

  5. darkness said

    Let me be very clear abt a few things. Anyone who threatens us will have to go.

    Do I make myself crystal. I do not care whether it some washed up king of blogosphere or whatever it is some super blogger. You will have to go!

    Let this go out to Ah Wang, if he pulls that stunt again we will invade and occupy his site for 30 days solid! -after that like the state of Israel, we will go to the UN and talk shop, but we will do then talk later.

    I do not care whether it is the Singapore govt or the nation of the planet of the apes, you threaten us, you will have to go! it is as simple as that!

    Do I make myself clear. And if you come back, I will personally chase you out – how do you like my freedom of speech?

    I am a very reasonable man, but anyone who threatens me or our fraternity – I say woe ontu you!

    Do you understand, this is where I draw the line!

    I am darkness.

    I want a travelogue out now please!

  6. KOHO said

    19 May 2007 / World Business

    LEE KIN MUN (ALIAS MR BROWN), SINGAPORE

    Singapore has some of the world’s tightest media restrictions. Little genuine public debate is permitted and investigative journalism is largely non-existent. The role of the media is to report government announcements rather than to hold the government to account. And so Singaporeans are fed a bland diet of lifestyle articles, world news often slanted to show Singapore in a good light by way of comparison, and news about government policy. Not surprisingly, Singapore has one of the world’s most active blogging communities. Genuine debate, opinion pieces and news appear on many Singapore-related websites.

    Lee Kin Mun has become one of Singapore’s most widely read and influential bloggers through his social and political commentary website, http://www.mrbrown.com. Lee also produces a satirical podcast called the Mr Brown Show, which averages 20,000 downloads a day. It is sophisticated and hugely funny – and a stark contrast to what is available on local government-controlled television.

    Such is the popularity of Lee’s blog that he was given a column in the government-controlled Today newspaper in a measure designed to demonstrate that the government could tolerate a measure of public debate. However, the experiment ended abruptly after Li wrote a column on rising living costs. A government official complained that Lee had distorted the truth and Singapore’s prime minister claimed that Lee had made wild accusations.

    Lee continues to publish and broadcast his satires and commentaries, providing Singaporeans with a vibrant and diversified media otherwise denied them.

  7. wbg said

    Yeah, MB too.

  8. hellothere said

    Wow, what an article. I was just surfing through stuff and stumbled on this, it’s an act of god. I’ve been debating with my mom and thinking about life and intelligent people — I thought I was very intelligent before I read this (though that’s not to say my confidence is shaken, just now I realize I need to think more carefully) — it’s like this article is the response over everything that I’ve been thinking about it. And I just stumbled on it! You know, this really puts things into perspective and I’ll be much more careful when I’m debating with people. You have to be 100 percent sure you are right.

    Anyway, just one thing I disagree with (no I couldn’t leave it alone). Just a small, less relevant thing. About when you say intelligent people in oligarchies are making dumb decisions and telling us dumb things… first of all, I don’t exactly understand what you mean, but I will take it to mean that the world leaders are not doing anything about our environmental issues and that’s why you say they are delusional. Anyway, all those world leaders are not intelligent; I don’t want to say they have no idea what they’re doing but they’re obviously not doing much. I think the best way to fix these problems, the most efficient and best way, is to have an oligarchy with a few actually INTELLIGENT people at the top making the decisions. Because they are intelligent, they would realize that they need to help everybody with the, and they would be all-caring — otherwise they couldn’t be called intelligent if they weren’t smart enough to realize the stupidity of short-term goals and being selfish. Anyway, I think this would be the most efficient and best way that would work for everyone.

    Just an opinion.

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