Incentives for Overestimating Risk

Incentives for Overestimating Risk

In the United States, and really across the globe, things are becoming more expensive. The price of food, gasoline, cars, and other goods have gone up quite a bit in the last year as the global economy adjusts to the new realities of the post-COVID world, as economies continue to respond to economic stimulus events, and as uncertainty around whether the pandemic truly is in our rear-view mirror continue to hang over our global consciousnesses. During this time of high inflation, many tv pundits, politicians, and experts are forecasting doom and gloom for national and global economies. Forecasting bad news seems to be the norm right now.
 
 
Steven Pinker explored the incentives for overestimating risk and forecasting bad news in his 2011 book The Better Angels of Our Nature. Pinker specifically looked at violence and war in his book and found that there are incentives for people to predict something negative, but not necessarily incentives for people to predict something positive. Pinker writes:
 
 
“Like television weather forecasters, the pundits, politicians, and terrorism specialists have every incentive to emphasize the worst-case scenario. It is undoubtedly wise to scare governments into taking extra measures to lock down weapons and fissile material and to monitor and infiltrate groups that might be tempted to acquire them. Overestimating the risk, then, is safer than underestimating it – though only up to a point. (emphasis mine)
 
 
We might be safer if everyone predicts a worst case scenario. If the people with the largest platforms focus on the dangerous potential for a terrorist attack, the public will demand action to reduce the risk. If there is a great focus on the need for improved safety equipment in hospitals responding to a new strain of COVID, then public officials are more likely to act. If there is overwhelming concern about inflation and economic collapse, the government will hopefully take better actions to balance the economy. Predicting that everything will work out and hum along on its own could be more dangerous than predicting the worst outcomes. Predicting doom and gloom not only gets attention, it can drive early and decisive decision making.
 
 
But as Pinker notes, it is safer to overestimate risk only to a point. Pinker cites the costs of the war in Iraq in search of weapons of mass destruction that did not exist as an example of dangerous worst case forecasting. Overreacting to COVID in China through excessive lockdowns and insufficient vaccination efforts may be contributing to higher global prices for goods at the moment. And predicting an economic collapse could spook markets and scare consumers, leading to worse economic outcomes than might otherwise occur. There are incentives to predicting the worst, but also costs if our predictions go too far.
 
 
I think our jobs as individuals is to be aware of the worst case scenarios, but not to become too trapped by such predictions. We need to remember that making worst case scenario predictions will provide feedback into what is already a noisy system. It is likely that forecasting the worst and spurring action by individuals will avert the worst. This doesn’t mean we can sit back and let others handle everything, but it should encourage us to think deeply about worse cases, our actions, and how panicked we should be.
Animal Happiness

Animal Happiness

Do you ever think about the happiness of animals? If you have a pet, then you probably think about their happiness all the time. My wife and I have a dog and we go out of our way to ensure she gets walks, has some entertaining things to play with when we are working, and gets to socialize with other dogs. She may not be human, but we still care about her happiness.
 
 
But I almost never think about the happiness of other animals. There is a commercial that says that good milk comes from happy cows, and that happy cows come from California. But I don’t ever actually think about whether dairy cows are happy. I almost never think about whether factory farmed chickens are happy, or if any other animal raised for slaughter and human consumption is happy. But some people, like Peter Singer and Yuval Noah Harari think I should.
 
 
In his book Sapiens, Harari writes, “when evaluating global happiness, it is wrong to count the happiness of only the upper classes, of Europeans, or of men. Perhaps it is also wrong to consider only the happiness of humans.” Perhaps we should be thinking about whether other animals on the planet are happy, and whether our actions make them less happy. Perhaps there is nothing inherently special about humans that makes us more deserving of life and happiness than any other sentient animal and creature, and perhaps we should think about that when we think about factory farming and animal suffering.
 
 
We clearly care about our pets and see them as members of our families, complete with many emotions that we experience ourselves. We see a consciousness and an ability to experience the world in the minds of our pets, but we still think of them and other animals as less than ourselves. This is how we have ended up with a factory farming system that creates short, brutal lives for animals that the animals themselves may not find to be worth living. We have created systems with huge amounts of suffering, and if we think about global happiness, the unhappiness of factory farmed animals, Singer and Harari would argue, should be part of the equation. I don’t personally think about animal happiness too often, but I do think Harari is correct. I do think we should think about life and work to make it better – or at least not cause life to deliberately suffer – whether it is human or not.
Bias Versus Discrimination - Joe Abittan

Bias Versus Discrimination

In The Book of Why Judea Pearl writes about a distinction between bias and discrimination from Peter Bickel, a statistician  from UC Berkeley. Regarding sex bias and discrimination in the workplace, Bickel carefully distinguished between bias and discrimination in a way that I find interesting. Describing his distinction Pearl writes the following:
“He [Bickel] carefully distinguishes between two terms, that in common English, are often taken as synonyms: bias and discrimination. He defines bias as a pattern of association between a particular decision and a particular sex of applicant. Note the words pattern and association. They tell us that bias is a phenomenon on rung one of the Ladder of Causation.”
Bias, Pearl explains using Bickel’s quote, is simply an observation. There is no causal mechanism at play when dealing with bias and that is why he states that it is on rung one of the Ladder of Causation. It is simply recognizing that there is a disparity, a trend, or some sort of pattern or association between two things.
Pearl continues, “on the other hand, he defines discrimination as the exercise of decision influenced by the sex of the applicant when that is immaterial to the qualification for entry. Words like exercise of decision, or influence and immaterial are redolent of causation, even if Bickel could not bring himself to utter that word in 1975. Discrimination, unlike bias, belongs on rung two or three of the Ladder of Causation.”
Discrimination is an intentional act. There is a clear causal pathway that we can posit between the outcome we observe and the actions or behaviors of individuals. In the case that Bickel used, sex disparities in work can be directly attributed to discrimination if it can be proven that immaterial considerations were the basis for not hiring women (or maybe men) for specific work. Discrimination does not happen all on its own, it happens because of something else. Bias can exist on its own. It can be caused by discrimination, but it could be caused by larger structural factors that themselves are not actively making decisions to create a situation. Biases are results, patterns, and associations we can observe. Discrimination is deliberate behavior that generates, sustains, and reinforces biases.
Stimulus Response Compatibility

Stimulus Response Compatibility

Have you ever had someone give you a list of words written in different colored ink and asked you to ignore the word as written and instead say the color of the ink that the word is written in? It isn’t too difficult when you see random words, but it becomes much different when you see the names of colors written in different colors, such as green written in red ink or the other way around. The difficulty with reading the color and not the word in those situations stems from poor stimulus response compatibility. The brain receives a signal in the writing of the word, and has to overcome that signal to say a different color.

 

Richard Thaler and Cass Sunstein use this as an example in their book Nudge. They also demonstrate stimulus response compatibility using an example of a door with round wooden handles in a classroom that Thaler once taught in. The handles sent a signal to student and anyone else exiting the room that indicated they were intended to be pulled in order for the door to be opened. However, the doors needed to be pushed open. Describing the confusing doors and the poor stimulus response compatibility, the authors write, “you want the signal you receive (the stimulus) to be consistent with the desired action. When there are inconsistencies, performance suffers and people blunder.”

 

Stimulus response compatibility is crucial in terms of website design, road construction, slide presentations, video games, and any other setting where cues are used to indicate a desired behavior. People need to understand where to click to add an item to a shopping cart, how to scroll through a website, and how to close out of any pop-ups. Drivers need explicit cues for when it is safe to drive through an intersection, and inexplicit cues can help drivers understand when they need to slow down. Visual, audio, and other stimuli can drive predictable responses in people, and they can be used as nudges to help encourage or discourage certain behaviors. Understanding the stimulus you are providing and whether it is compatible with the behaviors you want people to exhibit is crucial.

 

Most of us probably want to develop good stimulus response compatibility, but we should also note that it can be used to frustrate people and prevent certain behaviors or goal attainment. If you have ever tried to unsubscribe from an annoying email list or newsletter, you may have experienced the challenges of intentionally poor stimulus response compatibility. Instead of having a clear link at the end of the email to unsubscribe, the link might be a dull gray color. The link might take you to a page with unclear directions on what buttons you needed to select to unsubscribe from all future emails. You may have seen a green button prominently placed that re-subscribed you instead of unsubscribed you from the emails, thwarting your plan to declutter your inbox.

 

It isn’t quite the case that these nudges are methods of mind control, but they do influence our behavior and can shape how we behave, what we learn, and real outcomes in our lives. If we are choice architects, we should recognize what behaviors we are trying to encourage, and think about the subtle cues and stimuli we can present to encourage people to make decisions that are in the best interest of the individual making the choice – as measured and determined by them, not us. Nudges are powerful, especially when a good stimulus response compatibility is in place. Importantly, nudges are not the kinds of roadblocks and obstacles that I discussed in the example of trying to unsubscribe from an email list.
Facilitating Behaviors Through Nudges

Facilitating Behaviors

Plans held within our own head don’t seem to mean that much. I have had tons of plans to get things done around the house, to stop snacking on baked goods, and to read more, but I often find the time ticking by while I waste time reading news stories that don’t mean much to me or checking twitter. Having plans just in my head, that I convince myself I will accomplish, isn’t an effective strategy to making the changes I want. However, there are strategies that can be used for facilitating behaviors that we actually desire.

 

My last post was about the mere measurement effect. Just by measuring what people plan to do, simply by asking them if they plan to vote, plan to buy a new car this year, or intend to lose weight, people become more likely to actually follow-through on a stated behavior. But, there is a way to nudge the mere measurement effect even further, by asking people how they are going to enact their plans. When you ask people how they plan to vote, where they plan to buy a new car, and what steps they plan to take to lose weight, people become even more likely to follow-through on their intentions.

 

Asking people the how and when of a behavior they plan to adopt or an action they plan to do is a powerful and simple nudge. It is also something we can harness for ourselves. If we really want to make a change, we can’t just tell ourselves that tomorrow we will behave differently. Doing so will likely lead to letdown when the cookie temptations kick in around 2:30 in the afternoon, or when we fail to get up at our early alarm, or when we are tired in the afternoon and put on a tv show. But, if we have asked how we plan to make a change, then we can look ahead to the obstacles in our way, and plan for a healthy snack when cravings kick in, set thing up to make it easier to get out of bed, and hide the remote so we don’t turn on the TV without thinking.

 

Nudges don’t have to be external, they can be internal. We can use them to set a default course of action for ourselves or to push ourselves out of a default that we want to change. The quote that inspired this post is from Cass Sunstein and Richard Thaler’s book Nudge, where the authors write:

 

“The nudge provided by asking people what they intend to do can be accentuated by asking them when and how they plan to do it. This insight falls into the category of what the great psychologist Kurt Lewin called channel factors, a term he used for small influences that could either facilitate or inhibit certain behaviors.”
Living Under Constraints

Living Under Constraints

In Letters From a Stoic, Seneca quotes Epicurus in writing, “It is wrong to live under constraint; but no man is constrained to live under constraint.”

 

Quite frankly, Seneca and Epicurus are wrong. The stoic thinkers make two arguments in the short quote, and both fail to live up to the reality of humankind’s existence. The sentiment shared is noble, and certainly rings true in my American ears, but on closer reflection, proves to be a fiction.

 

The first argument, that it is wrong to live under constraint assumes that human beings can somehow exist separate from society with all needs and desires fulfilled. Stoic thought focuses on our mind and what is within our direct control. Stoicism hinges on the idea that our thoughts and reactions are the only thing we can possibly have true ownership and control over. It encourages us to move beyond our ego, which drives us to acquire possessions, build a reputation, and always bolster our social status with things beyond our control. Stoic philosophy encourages self-awareness and a sense of self-contentedness that comes from controlling one’s mind and being satisfied by simply experiencing life, whatever life is presented to us.

 

However, having constraints in our lives is important, and might actually be better for us than unlimited choice and possibility. A famous study on jam selection and satisfaction from 2000 suggests that people who had a limited selection of jams were more satisfied with their selection than people who picked a jam from a more broad and expansive selection of jams. With unlimited choice, options, and opportunities, we are unhappy. We can’t make a selection when we are not living under constraints, and we are constantly unsure if we truly made the best choice when our choices are unlimited. Constraints play a powerful role in helping us understand who we are, where we fit in society, and by creating bounds for our decisions, actions, and lives. Without constraints, we do not always flourish, sometimes we flounder.

 

What we see is that our lives are guided by and defined by constraints. Therefore, the second argument of the two stoics, that no man is constrained to live under constraints, is clearly wrong. We might not be actively constrained by another human being, but we are constrained by our governments, our home owners associations, or our bosses or customers. We are also constrained by nature and our physiology. There is a limit to how fast we can run, what forces our bodies can endure, and much we can eat. Our brains are incredible machines, but they too are limited in how long they can operate without sleep, how difficult of tasks they can work through, and how much they can remember. There is simply no way to escape constraints, and living in a complete freedom, as Seneca seems to be suggesting with the rest of his letter after the quote above, will not lead to unbridled happiness. It is constraint, and how we learn to live within constraints, which brings forth our creativity, our imagination, and makes life actually possible.
Thoughts on Personal Responsibility

Complex and Conflicting Thoughts on Personal Responsibility

I’m really hesitant to criticize others for not taking sufficient personal responsibility for the ways they live and the outcomes of their lives. A lot of factors influence whether you are economically successful or whether you are fit and healthy. Some things we seem to have a lot of control over, but many things are matters of chance and circumstance. Placing too much blame on the individual doesn’t seem fair, yet at the same time, there is clearly an element of personal responsibility involved. I’m not sure where I land on how we should think about this division.

 

What is clear, however, is that there can be negative consequences when we take away people’s agency in their decision-making and life outcomes, and when we erode the authority of those who are reasonably critical of negative lifestyles and ways of thinking and being, we can put ourselves and societies in vulnerable positions.

 

Sam Quinones writes about these tensions in his book Dreamland and he highlights how patient responsibility and physician authority devolved between the 1980’s and twenty-teens as a quick fix, there’s-a-drug-for-that mindset took hold of the American healthcare system. He writes, “…patients were getting used to demanding drugs for treatment. They did not, however, have to accept the idea that they might, say, eat better and exercise more, and that this might help them lose weight and feel better. Doctors, of course, couldn’t insist. As the defenestration of the physician’s authority and clinical experience was under way, patients didn’t have to take accountability for their own behavior.”

 

I’m usually hesitant to say that the problem is people’s lack of accountability, because how often do we really control how much exercise we can get when many of us live in places where walking is difficult because our streets are not safe, or are not well designed for pedestrian use, or because half the year it is dark early and we get lots of snowfall? How often do we not know what kinds of exercises we should do, and how often do we have people who are only critical of our current state rather than supportive and encouraging? How often have we had a bad break and poor advice on how to get back, only leading to a further defeat, deflating our sense of self worth? In addition to all this, how often have we seen people use the personal responsibility argument in bad faith? To justify not helping others or to rationalize their greed or excessive self-aggrandizement?

 

But at the same time, as Quinones shows, responsibility is important. We need to think about what we can and should be doing to help improve our own lives, without hoping for an easy fix in the form of a miracle pill. We can’t just throw out the opinions of experts and devalue their authority because they are willing to say things that are discomforting for us, but are likely correct in terms of how we can make our lives better. Somehow we need to work together to build a society that recognizes the barriers and challenges that we face toward becoming the successful and healthy people that we want to be, but encourages us to still work hard and overcome obstacles by taking responsibility for our actions and (at least some percentage of) our outcomes. I don’t know what this looks like exactly, and I’m not sure where the line falls between personal responsibility and outside factors, but I am willing to have an honest discussion about it and about what it all means for how we relate to each other.

The Price of Friendship

The Elephant in the Brain by Kevin Simler and Robin Hanson suggests that our self-interest drives a lot more of our behavior than we would like to admit. No matter what we are doing or what we are up to, part of our brain is active in looking at how we can maximize the world in our own interest. It isn’t always pretty, but it is constantly happening and if we are not aware of it or choose not to believe that we are driven by self-interest, we will continually be frustrated by the world and confused by our actions and the actions of others.

 

Friendship is one of the areas where Hanson and Simler find our self-interest acting in a way we would rather not think about. When we learn new things, build up skills, and gain new social connections, we make ourselves a better potential friend for other people. The more friends and allies we have, the more likely we will gain some sort of social assistance that will eventually help us in a self-interested way. This part of us likely originated when we lived in small political tribes with only a handful of potential mates. In order for our ancestors to be selected, they had to show they had something valuable to offer the tribe, and they had to be in high enough regard socially to be an acceptable mate. Simler and Hanson ask what happens if we look at friendships through a zero-sum lens, as our minds tend to do, where we rank everyone we interact with and apply some type of value to each person’s time and friendship. They write,

 

“Everyone, with an eye toward raising their price [Blog Author’s Note: meaning the value of their friendship], strives to make themselves more attractive as a friend or associate–by learning new skills, acquiring more and better tools, and polishing their charms.
Now, our competitions for prestige often produce positive side effects such as art, science, and technological innovation. But the prestige-seeking itself is more nearly a zero-sum game, which helps explain why we sometimes feel pangs of envy at even a close friend’s success.”

 

The author’s suggest that friendship is as much a selfish phenomenon as it can be an altruistic and genuine kind social phenomenon. We constantly try to raise our own status, so that we can count as (at least) allies and equals among people who are well connected, have resources, and can help us find additional allies or potential mates. We always want to be one step ahead in the social hierarchy, and as a result, when someone else’s status rises relative to us, even if we stay at the same level, we feel that our status is less impressive relative to them and we feel a bit jealous. All of this paints a complex picture of our interactions and shows that we can never turn off our own self-interest, even when we are participating in ways that can seem as if they are about more than just ourselves. All the things we do to improve ourselves and world are ultimately a bit self-serving in helping us have some type of future advantage or some type of advantage that helps us pass our genes along.

Recognition is Empty

At some point in human history, we were living in small tribes of maybe 50 to 250 people and we were evolving ever more complex brains because our small political groups put pressure on our ancestors to be socially skilled in order to pass on their genes. In a small social tribe, actions and motivations mattered. There was a pressure to do good and impressive things and to appear to be doing those things for noble rather than vain reasons, but it was also not enough to just do good, you had to be noticed by your tribe. You had to make sure your status improved, that people saw you doing positive and noteworthy things so that you could progress up the social hierarchy of the tribe and be permitted to pass your genes along. The traits that flowed from these evolutionary social group pressures are still with us, but the need to seen doing physically and socially impressive things in order to pass our genes to the next generation (and potentially even just to survive on a daily basis with the help of some friends/allies) is mostly gone. This leaves us in an awkward place where our brains still want to impress people and climb up a social ladder (remember that our ancestors social ladder was only about 50 to 250 people tall) in a world where we can connect with millions of people and where competition for security, shelter, food, and a partner just isn’t as life threateningly dramatic as it was one hundred thousands years ago.

 

Pushing back against some of these natural feeling and evolutionary favored behaviors can actually lead to a more fulfilling and meaningful life. This is at the center of the idea in Ryan Holiday’s book, The Ego is the Enemy. Holiday encourages us to avoid acting in the interest of our ego, which is to say he encourages us not to act out of our own self-interest with the intent to be seen and with the intent to deliberately rise up the social hierarchy. We can certainly do that and we will have lots of opportunities in our live to chose that path, but Holiday argues that to live a more fulfilling and complete life today, we should look to do great work as opposed to simply being impressive to other people. Regarding a fulfilling life Holiday writes, “It’s about the doing, not the recognition.”

 

This quote has stayed with me and helped me think about why I do some of the things I do and how I chose to do those things. I could go work out in the gym and make sure I take up as much space as possible and exercise as extravagantly as possible so that everyone sees how physically impressive I am. Or, I could find a spot that doesn’t interfere with other people and doesn’t necessarily put me in the center of attention and I could focus on making sure I really do the exercises that matter to keep me fit, healthy, and injury free. I might get stronger with both strategies, but the first strategy is really about my ego and about being seen, where the second approach is actually about health and physical development. I believe much of life is like this.

 

We can make excuses for doing the flashy things that help us rise through the social ladder and we can lie to ourselves and others about our motives for doing those things (our brains literally evolved in small groups to do this). However, with several billion people on the planet, we hit a point where this strategy is counter productive if we actually want to be fulfilled and content with our lives and actions. We no longer live in the small tribes we evolved for, and we have more options to make an impact for the people in our lives and societies in which we live. We no longer need to set out to make sure we are seen and recognized for doing great work to build allies for survival. We will likely receive all the recognition we need from the people who matter most in our lives if we set out to do good without setting out to build a reputation. Part of us may still want that recognition and be happy when we receive it obliquely (maybe even more happy to receive it this way) which is fine. The point is that we can be more content and fulfilled when we take this oblique path to success and recognition and build habits and work that are about doing and not about being applauded.

Self-Reflection and Seeing Your Place in the World

When we think of ourselves and who we are as people, we can easily fall into a trap where the best parts of who we are standout and shine, while the worst parts of ourselves are hidden in the shadows where we are not able to recognize them. We are rational beings, and we are so good at being rational that we can explain away almost anything. Our bad behaviors are never just our own bad behaviors but they are a result of someone else’s bad behaviors in the first place, and our bad habits really are not habits and they really are not that bad, and our lack of initiative on that thing we tell everyone we are working on is due to how hard we work on everything else and how busy we are. In the end, we paint a picture of ourselves in our mind that makes us really awesome. Our decisions are motivated by all the right reasons and we are on the correct side of any given political debate, parental decision, and freeway driving style.

 

Ta-Nehisi Coats grew up constantly questioning and challenging this instinctual way of thinking. In my last post I described his mother’s method of punishment when he got in trouble as a school child. His mother would make him sit down and write about his poor behavior and answer questions about why he was disrespectful, why his behavior was frowned upon by his teachers and by society, and why he thought it was ok for him to do the things that got him in trouble. He explains that all this writing did little to change his actual behavior as a child, but it gave him a unique skillset, the ability to look at the world, ask why it was the way it was and why people acted the way they did, and to then turn inward and ask if he himself acted the way that others did, and why he acted as he did. His mother built a sense of self-awareness in him that shaped his life and the way he understood the world.

 

What Coats found when he became more reflective of himself was a world that was not as innocent as many have believed growing up. Each time he got in trouble he was forced to recognize that he was not the perfect person that he wanted to see in the mirror. He was forced to acknowledge his shortcomings and negative instincts, and he began to make connections from himself and his behaviors to other people. About his reflective writing Coats writes, “Here was the lesson: I was not an innocent. My impulses were not filled with unfailing virtue. And feeling that I was as human as anyone, this must be true for other humans. If I was not innocent, then they were not innocent. Could this mix of motivation also affect the stories they tell? The cities they built? The country they claimed as given to them by God?”

 

We all act in ways that best serve ourselves, or ways that we think will best serve ourselves and our tribe. We shape the stories we tell about the nature of the universe to align with the lifestyle, the privileges, and the opportunities we have. This is part of our human nature, evolved over hundreds of thousands of years. When left unchecked, this part of us does not always lead to perfect outcomes for everyone. Our impulses may lead to tribal decisions that reflect discriminatory biases and our habits may disempower other people. If we cannot build a practice of self-reflection in our own lives, then we end up searching out and defending our decisions with information that is comforting to us, but not connected with the reality of our actions and the reality of the world that other people live within. Coats began to question the world around him because he understood his impulses and his own thoughts and behaviors. He understood why he got in trouble, and began to see that other people were not just the perfect individuals they presented as, but dealt with the same impulses and the same dark side that he dealt with. From this perspective, Coats could ask new questions of himself, his society, and how everyone built a shared understanding of who they were and where they came from.