Month: February 2021

The Human Need for Certainty - Joe Abittan

The Human Need for Certainty

Posted on by jabittan
Throughout the book Risk Savvy, Gerd Gigerenzer discusses the challenges that people face with thinking statistically, assessing different probable outcomes, and understanding risk. Gigerenzer also discusses how important it is that people become risk literate, and how the future of humanity will require that people better understand risk and uncertainty. What this future requires, he explains, is fighting against aspects of human psychology that are common to all of us and form part of our core nature. One aspect in particular that Gigerenzer highlights as a problem for humans moving forward, is our need for certainty.

 

“Humans appear to have a need for certainty, a motivation to hold onto something rather than to question it,” he writes. Whether it is our religion, our plans for retirement, or the brand of shoes we prefer, we have a need for certainty. We don’t want to question whether our religious, political, or social beliefs are correct. It is more comforting for us to adopt beliefs and be certain that we are correct. We don’t want to continuously re-evaluate our savings plans and open ourselves to the possibility that we are not doing enough to save for retirement. And we like to believe that we purchased the best running shoes, that we bough the most sustainable shoes for the planet, and that our shoe choices are the most popular. In all of these areas, ambiguity makes our decisions harder whereas a feeling of certainty gives us confidence and allows us to move through the world. In many ways, our need for certainty is simply a practicality. There are unlimited possibilities and decisions for us to make every day. Adopting certainty eliminates many possibilities and choices, simplifying our life and allowing us to move through the world without having to question every action of every second of every day.

 

But in the modern world, humans have to be more comfortable living with ambiguity and have to be able to give up certainty in some areas. “For the mature adult,” Gigerenzer writes, “a high need for certainty can be a dangerous thing.”  We live with risk and need to be able to adjust as we face new risks and uncertainties in our lives. We like to hold onto our beliefs and we are not comfortable questioning our decisions, but it can be necessary for us to do so in order to move forward and live in harmony in a changing world with new technologies, different demographics, and new uncertainties. A need for certainty can lead people to become dogmatic, to embrace apologetics when discounting science that demonstrates errors in thinking, and to ignore the realities of a changing world. One way or another, we have to find ways to be flexible and adjust our choices and plans according to risk, otherwise we are likely to make poor choices and be crushed when the world does not align itself with our beliefs and wishes.
Dread Risks - Joe Abittan

Dread Risks

Posted on by jabittan
Over the course of 2020 we watched COVID-19 shift from a dread risk to a less alarming risk. To some extent, COVID-19 became a mundane risk that we adjusted to and learned to live with. Our initial reactions to COVID-19, and our later discontent but general acceptance reveal interesting ways in which the mind works. Sudden and unexplained deaths and risks are terrifying, while continual risk is to some extent ignored, even if we face greater risk from dangers we ignore.

 

In Risk Savvy Gerd Gigerenzer describes dread risks and our psychological reactions by writing, “low-probability events in which many people are suddenly killed trigger an unconscious psychological principle: If many people die at one point in time, react with fear and avoid that situation.” Dread risks are instances like terrorist attacks, sudden bridge collapses, and commercial food contamination events. A risk that we did not consider is thrust into our minds, and we react strongly by avoiding something we previously thought to be safe.

 

An unfortunate reality of dread risks is that they distract us and pull our energy and attention away from ongoing and more mundane risks. This has been a challenge as we try to keep people focused on limiting COVID-19 and not simply accepting deaths from the disease the way we accept deaths from car crashes, gun violence, and second hand smoke exposure. Gigerenzer continues, “But when as many or more die distributed over time, such as in car and motorbike accidents, we are less likely to be afraid.” Dread risks trigger fears and responses that distributed risks don’t.

 

This psychological bias drove the United States into wars in Iraq and Afghanistan in the early 2000s and we are still paying the prices for those wars. The shift of COVID-19 in our collective consciousnesses from a dread risk to a distributed risk lead to mass political rallies, unwise indoor gatherings, and other social and economic events where people contracted the disease and died even though they should have known to be more cautious. Reacting appropriately to a dread risk is difficult, and giving distributed risks the attention and resources they deserve is also difficult. The end result is poor public policy, poor individual decision-making, and potentially the loss of life as we fail to use resources in a way that saves the most lives.
Stats and Messaging

Stats and Messaging

Posted on by jabittan
In the past, I have encouraged attaching probabilities and statistical chances to the things we believe or to events we think may (or may not) occur. For example, say Steph Curry’s three point shooting percentage is about 43%, and I am two Steph Currys confident that my running regiment will help me qualify for the Boston Marathon. One might also be two Steph Currys confident that leaving now will guarantee they are at the theater in time for the movie, or that most COVID-19 restrictions will be rescinded by August 2021 allowing people to go to movies again. However, the specific percentages that I am attaching in these examples may be meaningless, and may not really convey an important message for most people (Myself included!). It turns out, that modern day statistics and the messaging attached to it is not well understood.

 

In his book Risk Savvy, Gerd Gigerenzer discusses the disconnect between stats and messaging, and the mistake most people make. The main problem with using statistics is that people don’t really know what the statistics mean in terms of actual outcomes. This was seen in the 2016 US presidential election when sources like FiveThirtyEight gave trump a 28.6% chance of winning and again in 2020 when the election was closer than many predicted, but was still well within the forecasted range.  In both instances, a Trump win was considered such a low probability event that people dismissed it as a real possibility, only to be shocked when Trump did win in 2016 and performed better than many expected in 2020. People failed to fully appreciate that FiveThirtyEight’s prediction meant that in 28.6% of election simulations, Trump was predicted to win in 2016, and in 2020 many of their models predicted races both closer than and wider than the result we actually observed.

 

Regarding weather forecasting and statistical confusion, Gigerenzer writes, “New forecasting technology has enabled meteorologists to replace mere verbal statements of certainty (it will rain tomorrow) or chance (it is likely) with numerical precision. But greater precision has not led to greater understanding of what the message really is.” Gigerenzer explains that in the context of weather forecasts, people often misunderstand that a 30% chance of rain means that on 30% of days when when the observed weather factors (temperature, humidity, wind speeds, etc…) match the predicted weather for that day, rain occurs. Or that models taking weather factors into account simulated 100 days of weather with those conditions and included rain for 30 of those days.  What is missing, Gigerenzer explains, is the reference class. Telling people there is a 30% chance of rain could lead them to think that it will rain for 30% of the day, that 30% of the city they live in will be rained on, or perhaps they will misunderstand the forecast in a completely unpredictable way.

 

Probabilities are hard for people to understand, especially when they are busy, have other things on their mind, and don’t know the reference class. Providing probabilities that don’t actually connect to a real reference class can be misleading and unhelpful. This is why my suggestion of tying beliefs and possible outcomes to a statistic might not actually be meaningful. If we don’t have a reasonable reference class and a way to understand it, then it doesn’t matter how many Steph Currys likely I think something is. I think we should take statistics into consideration with important decision-making, and I think Gigerenzer would agree, but if we are going to communicate our decisions in terms of statistics, we need to ensure we do so while clearly stating and explaining the reference classes and with the appropriate tools to help people understand the stats and messaging.
Risk Literacy - Joe Abittan

Risk Literacy

Posted on by jabittan
In February of 2020 I finished a book called Risk Savvy by Gerd Gigerenzer. At the time I read the book, I could not predict that thinking about risk would come to dominate the remainder of the year. Throughout 2020 and into the start of 2021, humanity across the globe has demonstrated how poorly we think about and handle risk. The United States has clearly been worse than most countries, as we have failed to understand the risk of COVID-19, failed to grapple with the risk of crowds and appropriate uses of force, and failed to adequately assess the risk of a President living in a state of denial and delusion.  As Gigerenzer writes on page 6 of his book, “Risk Literacy is the basic knowledge required to deal with a modern technological society,” and in many ways, the United States and the rest of humanity have shown that risk literacy is deeply lacking.

 

Gigerenzer believes that we are smart, that we are resourceful, and that with proper aids and education, we can become risk literate. Whether we recognize it or not, we already calculate risk and make decisions based on risk. Understanding risk can lead to us packing an umbrella and wearing a waterproof windbreaker when the weather station forecasts rain. We can make sound investments without understanding every aspect of an investment thanks to savings vehicles that help us better understand and calibrate risk. And we can decide to go to a movie or skip it based on aggregated reviews and ratings scores on Rotten Tomatoes.

 

At the same time, we have had trouble understanding our individual risks related to COVID-19, we have had trouble understanding the risks and benefits of wearing masks, and we have dismissed what seem like impossible possibilities until they happen to us personally, or happen in a dramatic way on tv. We are capable of making good decisions based on perceptions and understandings of risk, but at the same time, we have still shown ourselves to be risk-illiterate.

 

It is clear that moving forward societies will have to do better to become risk literate. We will have to improve our ability to communicate risk, estimate risk, and take appropriate precautions or actions. We cannot live in a world free from risk, and new technologies, ecological pressures, and sociopolitical realities will change the risk calculations that everyone will have to make. Improving our risk literacy might mean that we don’t have over 400,000 people die during future respiratory pandemics. It might mean we have robust economic systems that don’t damage the planet. And it might mean we are able to live together peacefully with global superpowers competing economically. Failure to address risk and failure to improve risk literacy could lead to disaster in any one of those areas.
Asymmetric Paternalism

Asymmetric Paternalism

Posted on by jabittan
While writing about the book Nudge by Richard Thaler and Cass Sunstein, I have primarily focused on an idea that the authors call Libertarian Paternalism. The idea is to structure choices and use nudges (slight incentives and structural approaches) to guide people toward making the best possible decision as judged by themselves. Maintaining free choice and the option to investigate or chose alternatives is an important piece of the concept, as is the belief that we will influence people’s decisions no matter what, so we should use that influence in a responsible way to help foster good decision-making.

 

But the authors also ask if it is reasonable to go a step beyond Libertarian Paternalism. Is it reasonable for choice architects, governments, and employers to go further than gentle nudges in decision situations? Are there situations where decision-making is too important to be left to the people, where paternalistic decision-making is actually best? Sunstein and Thaler present an introduction to Asymmetric Paternalism as one possible step beyond Libertarian Paternalism.

 

“A good approach to thinking about these problems has been proposed by a collection of behavioral economists and lawyers under the rubric of Asymmetric Paternalism. Their guiding principle is that we should design policies that help the least sophisticated people in society while imposing the smallest possible costs on the most sophisticated.”

 

This approach is appealing in many ways, but also walks the line between elitism, the marginalization of entire segments of society, and maximizing good decision-making. I hate having to make lots of decisions regarding appropriate tax filings, I don’t want to have to make decisions on lots of household appliances, and I don’t really want to have to spend too much time figuring out exactly what maintenance schedule is the best for all of my cars. However, I do want to get into the weeds of my healthcare plan, I want to micromanage my exercise routine, and I want to select all the raw ingredients that go into the dinners and lunches that I cook. On some decisions that I make, I want to outsource my decision-making and I would often be happy with having someone else make a decision so that I don’t have to. But in other areas, I feel very sophisticated in my decision-making approach, and I want to have maximum choice and freedom. Asymmetric Paternalism seems like a good system for those of us who care deeply about some issues, are experts in some areas, and want to maintain full decision-making in the areas we care about, while exporting decision-making in other areas to other people.

 

Of course, prejudices, biases, and people’s self-interest can ruin this approach. What would happen if we allowed ourselves to deem entire groups of people as unworthy of making decisions for themselves by default? Could they ever recover and be able to exercise their freedom to chose in important areas like housing, retirement, and investment spaces? Would we be able to operate for long periods of time under a system of Asymmetric Paternalism without the system devolving due to our biases and prejudices? These are real fears, and while we might like to selectively trade off decision-making when it is convenient for us, we also have to fear that someone else will be making decisions for us that are self-serving for someone other than ourselves.

 

The point, according to Sunstein and Thaler, would be to maintain the freedom of decision-making for everyone, but to structure choices in a way where those with less interest and less ability to make the best decisions are guided more strongly toward what is likely the best option for them. However, we can see how this system of asymmetric paternalism would get out of control. How do we decide where the appropriate level is to draw the line between strong guidance and outright choosing for people? Would people voluntarily give up their ability to chose and overtime hand over too many decisions without an ability to get their decision authority back? Transparency in the process may help, but it might not be enough to make sure the system works.
Influence is Unavoidable - Joe Abittan

Influence is Unavoidable

Posted on by jabittan
The last several years has seen the rise of social media influencers across the globe. Regular people have been able to amass large numbers of followers on social media, gaining status, earning contracts with brands and advertisers, and of course, influencing people. Their influence is often times out in the open, like when they endorse a brand or product, but is often hidden, in messages about how life should be, about how one should look, and about the things that people should focus on in life. These hidden and secondary influences may also be intentional, but may also be subconscious, and ultimately, they are unavoidable. To go even deeper, these types of influences are not just limited to bona fide social media influencers, they are unavoidable aspects of all our lives and actions.

 

Whether we want to or not, we influence people’s choices. Some of us are in spaces where we are explicitly asked and expected to influence people’s choices, but many of us are not. Nevertheless, our conversations, decisions, and actions can still influence how people make choices. If we deliberately shape choice environments via a position of authority, we are a choice architect. Human resource managers, club leaders, and parents are all choice architects, with the direct mandate to shape the choices of employees, club members, and children respectively. Nevertheless, fellow employees, adjacent club members, and other kids also influence the decision spaces that choice architects create, regardless as to whether they ever intended to.

 

Cass Sunstein and Richard Thaler consider the implications of unavoidable influence in their book Nudge. The authors believe that choice architects have the responsibility to nudge individuals toward specific decisions and choices that the individuals themselves would deem to be the best outcome. That responsibility, according to Sunstein and Thaler cannot be shirked, because influence cannot be avoided. “It is not possible to avoid choice architecture, and in that sense it is not possible to avoid influencing people.”

Sunstein and Thaler are specifically writing about the impossibility of choice architects to try not to influence people. Most of this post has been about inadvertent influence from people who are not trying to influence others. The two ideas are separate, but important to directly connect and discuss. Choice architects still influence people and their decisions even if they try to pull back completely. Sunstein and Thaler would argue that in doing so they often end up creating decision situations where people make worse choices than if the choice architect had deliberately intervened in an attempt to help people make a better choice. One reason for this is that unintentional influence will play a greater role in the absence of choice architects actively trying to improve people’s decision-making. Imagine that your HR representative had gone through the effort of trying to map out possible health benefits scenarios for employees based on age, family dynamics, and potential health concerns. The way that employees select health insurance plans could be shaped by these mapping scenarios, deliberately trying to help people make better choices. Or, the rep could decide not to try to influence decisions and step back. By doing so, employees might hear from colleagues about a great option that worked for someone else, and select that option even if it doesn’t fit their family and health needs. Other employees may not have been encouraging everyone to select an option, but they still have the ability to indirectly and unintentionally influence the choices of others, potentially for the worse. The choice architect who tried not to influence the decision created a situation where outside uneducated voices were louder – their actions still influenced the decision space.

Choice architects don’t exist in a vacuum. They are part of a larger ecosystem and the context for each choice matters. Choosing not to influence someone doesn’t mean that you don’t still influence them or their choices. Neither does being unaware that you influence others. Influence is unavoidable, and Sunstein and Thaler would argue that it is important that we therefore think about how we intentionally and unintentionally influence others, and for choice architects to be active in helping people understand the best option for themselves in a given choice.
Open Default Nudges

Open Defaults

Posted on by jabittan
Our society has a lot of defaults, and for many of us, we only opt out of the default in a narrow set of circumstances. Whether it is our mode of travel, how we pay for goods, or the type of health insurance plan we are enrolled in, the default option makes a big difference in our lives. Actors within our political and economic systems know this, and the choice of default can matter a lot to individual actors, political groups, and companies. Consequentially, what default is selected, and what story we tell about the default, is a constant point of argument and debate in our country.

 

In their book Nudge, Cass Sunstein and Richard Thaler discuss the importance of nudges and the ways that responsible choice architects should think about them. Choice architects may face pressure to select a default option that in one way or another benefits them personally or benefits the group or ideology they identify with. A state government may favor a default Medicaid option that is confusing and hard for individuals to use, meaning that fewer people will access services, and the state won’t have to pay as much for medical services for low income individuals. A corporate HR representative might feel pressured from a boss to have the default retirement savings rate for employees set at 2%, knowing that the company will spend less through retirement savings matching if the rate is lower.

 

But these types of defaults are not in the best interest of individuals. A health plan that is easy to use and facilitates access to necessary medical care is clearly in the best interest of the individual, but it may cost more for the government agency or corporation sponsoring the plan. A retirement plan that helps save above the rate of inflation is also clearly in the best interest of the individual, but might be more costly to a company’s bottom line.

 

As a guide for setting defaults, following with previous advice of ensuring that deliberate nudges employed by governments or corporations can survive open transparency, Sunstein and Thaler write, “The same conclusion holds for legal default rules. If government alters such rules – to encourage organ donation or reduce discrimination – it should not be secretive about what it is doing.”

 

The defaults we chose, and the reasons we select defaults should be open and transparent. If a choice architect cannot defend a default choice, then they should set an alternative default that can be defended in the open. Defaults that clearly benefit the choice architect or their interests at the expense of the individual making (or failing to make) a choice should be excluded. It is important to note that this means that choice architects have to actively make a decision with the default. Setting the default for a retirement savings plan if an individual never makes a selection to 0 is not in the best interest of the individual. An argument could be made that the choice architect attempted to remove themselves from the choice setting as much as possible by not providing a default, but that is still a choice, and will leave some people worse off than if the choice architect had selected a more defensible choice. Choosing not to set a default can be as indefensible as selecting a self-serving default.