Tag: decision making

Narrow Framers

Narrow Framers

Posted on by jabittan
I like to write about the irrational nature of human thinking because it reminds me that I don’t have all the answers figured out, and it reminds me that I often make decisions that feel like the best decision in the moment, but likely isn’t the best decision if I were to step back to be more considerate. Daniel Kahneman writes about instances where we fail to be rational actors in his book Thinking Fast and Slow, and his examples have helped me better understand my own thinking process and the context in which I make decisions that feel logically consistent, but likely fall short of being truly rational.

 

In one example, Kahneman describes humans as narrow framers, failing to take multiple outcomes into consideration and focusing instead on a limited set of salient possibilities. He writes, “Imagine a longer list of 5 simple (binary) decisions to be considered simultaneously. The broad (comprehensive) frame consists of a single choice with 32 options. Narrow framing will yield a sequence of 5 simple choices. The sequence of 5 choices will be one of the 32 options of the broad frame. Will it be the best? Perhaps, but not very likely. A rational agent will of course engage in broad framing, but Humans are by nature narrow framers.”

 

In the book Kahneman writes that we think sequentially and address problems only as they arise. We don’t have the mental capacity to hold numerous outcomes (even simple binary outcomes) in our mind simultaneously and make predictions on how the world will respond to each outcome. If we map out decisions and create tables, charts, and diagrams then we have a chance of making rational decisions with complex information, but if we don’t outsource the information to a computer or to pen and paper, then we are going to make narrow short-term choices. We will consider a simple set of outcomes and discount other combinations of outcomes that we don’t expect. In general, we will progress one outcome at a time, reacting to the world and making choices individually as the situation changes, rather than making long-term decisions before a problem has arisen.

 

Deep thinking about complex systems is hard and our brains default toward lower energy and lower effort decision-making. We only engage our logical and calculating System 2 part of the brain when it is needed, and even then, we only engage it for one problem at a time with a limited set of information that we can easily observe about the world. This means that our thinking tends to focus on the present, without full consideration of the future consequences of our actions and decisions. It also means that our thinking is limited and doesn’t contain the full set of our data that might be necessary for making accurate and rational choices or predictions. When necessary, we build processes, systems, and structures to help our minds be more rational, but that requires getting information out of our heads, and outsourcing the effort to technologies beyond the brain, otherwise our System 2 will be bogged down and overwhelmed by the complexity of the information in the world around us.
Decision Weights

Decision Weights

Posted on by jabittan
On the heels of the 2020 election, I cannot decide if this post is timely, or untimely. On the one hand, this post is about how we should think about unlikely events, and I will argue, based on a quote from Daniel Kahneman’s book Thinking Fast and Slow, that we overweight unlikely outcomes and should better alight our expectations with realistic probabilities. On the other hand, however, the 2020 election was closer than many people expected, we almost saw some very unlikely outcomes materialize, and one can argue that a few unlikely outcomes really did come to pass. Ultimately, this post falls in a difficult space, arguing that we should discount unlikely outcomes more than we actually do, while acknowledging that sometimes very unlikely outcomes really do happen.

 

In Thinking Fast and Slow Kahneman writes, “The decision weights that people assign to outcomes are not identical to the probabilities of these outcomes, contrary to the expectation principle.”  This quote is referencing studies which showed that people are not good at conceptualizing chance outcomes at the far tails of a distribution. When the chance of something occurring gets below 10%, and especially when it pushes into the sub 5% range, we have trouble connecting that with real world expectations. Our behaviors seem to change when things move from 50-50 to 75-25 or even to 80-20, but we have trouble adjusting any further once the probabilities really stretch beyond that point.

 

Kahneman continues, “Improbable outcomes are overweighed – this is the possibility effect. Outcomes that are almost certain are underweighted relative to actual certainty. The expectation principle, by which values are weighted by their probability, is poor psychology.”

 

When something has only 5% or lower chance of happening, we actually behave as though chance or probability for that occurrence is closer to say 25%. We know the likelihood is very low, but we behave as if the likelihood is actually a bit higher than a single digit percentage. Meanwhile, the very certain and almost completely sure outcome of 95%+ is discounted beyond what it really should be. Certainly very rare outcomes do sometimes happen, but in our minds we have trouble conceptualizing these incredibly rare outcomes, and rather than keeping a perspective based on the actual probabilities, by utilizing rational decision weights, we overweight the improbably and underweight the certain.

 

Our challenges with thinking about and correctly weighting extremely certain or extremely unlikely events may have an evolutionary history. For our early ancestors, being completely sure of anything may have resulted in a few very unlikely deaths. Those who were a tad more cautious may have been less likely to run across the log that actually gave way into the whitewater rapids below. And our ancestors who reacted to the improbably as though it were a little more certain may have also been better at avoiding the lion the one time the twig snapping outside the campground really was a lion. Our ancestor who sat by the fire and said, “twigs snap every night, the chances that it actually is a lion this time have gotta be under 5%,” may not have lived long enough to pass enough genes into the future generations. The reality is that in most situations for our early ancestors, being a little more cautious was probably advantageous for society. Today being overly cautious and struggling with improbable or nearly certain decision weights can be costly for us in terms of over-purchasing insurance, spending huge amounts to avoid the rare chance that we could lose a huge amount, and over trusting democratic institutions in the face of a coup attempt.
Hindsight Bias and Accountability - Joe Abittan

Hindsight Bias and Accountability

Posted on by jabittan
“Increased accountability is a mixed blessing,” writes Daniel Kahneman in his book Thinking Fast and Slow. This is an idea I came across in the past from books like Political Realism by Jonathan Rauch and The New Localism by Bruce Katz and  Jeremy Nowak. Our go-to answer to any challenges and problems tends to be increased transparency and greater oversight. However, in some complex fields simply opening processes and decision-making procedures to more scrutiny and review can create new problems that might be even worse. This is a particular challenge when we consider the way hindsight bias influences the thoughts and opinions of those reviewing bodies.

 

Kahneman continues, “because adherence to standard operating procedures is difficult to second-guess, decision makers who expect to have their decisions scrutinized with hindsight are driven to bureaucratic solutions and – to an extreme – reluctance to take risks.”

 

Excess scrutiny and oversight can lead to rigid and mechanical decision-making processes. This might not be a problem when we are engineering a bridge and need to make technical decisions based on known mathematical calculations (I’ve never engineered a bridge so I may be wrong here), but it can be a problem for doctors and policy makers. Doctors have to rely on their experience, their knowledge, and their intuitions to determine the best possible medical treatment. Checklists are fantastic ideas, but when things go wrong in an operating room, doctors and nurses have to make quick decisions balancing risk and uncertainty. If the oversight they will face is high, then there is a chance that doctors stick to a rigid set of steps, that might not really fit the current emergency. In his book, Kahneman writes about how this leads doctors to order unnecessary tests and procedures, more to cover themselves from liability than to truly help the patient, wasting time and money within the healthcare system.

 

For public decision-making, hindsight bias can be a disaster for public growth and development. The federal government makes loans and backs many projects. Like any venture capitalist firm or large bank making multiple investments, some projects will fail. It is impossible to know at the outset which of ten solar energy projects will be a massive success, and which company is going to go bust. But thanks to hindsight bias and the intense oversight that public agencies and legislatures are subject to, an investment in a solar project that goes bust is likely to haunt the agency head or legislators who backed the project, even if 9 of the other 10 projects were huge successes.

 

Oversight is important, but when oversight is subject to hindsight bias, the accountability shifts into high gear, blaming decision-makers for failing to have the superhuman ability to predict the future. This creates risk averse institutions that stagnate, waste resources, and are slow to act, potentially creating new problems and new vulnerabilities to hindsight bias in the future. Rauch, Katz, and Nowak in the posts I linked to above, all favor reducing transparency in the public setting for this reason, but Kahneman might not agree with them, arguing that closing the deliberations to transparency won’t hide the outcomes from the public, and won’t stop hindsight bias from being an issue.
The Environment of the Moment

The Environment of the Moment

Posted on by jabittan
“The main moral of priming research is that our thoughts and our behavior are influenced, much more than we know or want, by the environment of the moment. Many people find the priming results unbelievable, because they do not correspond to subjective experience. Many others find the results upsetting, because they threaten the subjective sense of agency and autonomy.”

 

Daniel Kahneman includes the above quote in his book Thinking Fast and Slow when recapping his chapter about anchoring effects. The quote highlights the surprising and conflicting reality of research on priming and anchoring effects. The research shows that our minds are not always honest with us, or at least are not capable of consciously recognizing everything taking place within them. Seemingly meaningless cues in our environment can influence a great deal of what takes place within our brains. We can become more defensive, likely to donate more to charity, and more prone to think certain thoughts by symbols, ideas, and concepts present in our environment.

 

We all accept that when we are hungry, when our allergies are overwhelming, and when we are frustrated from being cut-off on the freeway that our behaviors will be changed. We know these situations will make us less patient, more likely to glare at someone who didn’t mean to offend us, and more likely to grab a donut for breakfast because we are not in the mood for flavor-lacking oatmeal. But somehow, even though we know external events are influencing our internal thinking and decision-making, this still seems to be in our conscious control in one way or another. A hearty breakfast, a few allergy pills, and a few deep breaths to calm us down are all we need to get back to normal and be in control of our minds and behavior.

 

It is harder to accept that our minds, moods, generosity, behavior towards others, and stated beliefs could be impacted just as easily by factors that we don’t even notice. We see some type of split between being short with someone because we are hungry, and being short with someone because an advertisement on our way to work primed us to be more selfish. We don’t believe that we will donate more to charity when the charity asks for a $500 dollar donation rather than a $50 dollar donation. In each of these situations our conscious and rational brain produces an explanation for our behavior that is based on observations the conscious mind can make. We are not aware of the primes and anchors impacting our behavior, so consciously we don’t believe they have any impact on us at all.

 

Nevertheless, research shows that our minds are not as independent and controllable as we subjectively believe. Kahneman’s quote shows that traditional understandings of free-will fall down when faced by research on priming and anchoring effects. We don’t like to admit that random and seemingly innocuous cues in the environment of the moment shape us because doing so threatens the narratives and stories we want to believe about who we are, why we do the things we do, and how our society is built. It is scary, possibly upsetting, and violates basic understandings of who we are, but it is accurate and important to accept if we want to behave and perform better in our lives.
Affect Heuristics

Affect Heuristics

Posted on by jabittan
I studied public policy at the University of Nevada, Reno, and one of the things I had to accept early on in my studies was that humans are not as rational as we like to believe. We tell ourselves that we are making objective and unbiased judgments about the world to reach the conclusions we find. We tell ourselves that we are listening to smart people who truly understand the issues, policies, and technicalities of policies and science, but studies of voting, of policy preference, and of individual knowledge show that this is not the case.

 

We are nearing November and in the United States we will be voting for president and other elected officials. Few of us will spend much time investigating the candidates on the ballot in a thorough and rigorous way. Few of us will seek out in-depth and nuanced information about the policies our political leaders support or about referendum questions on the ballot.  But many of us, perhaps the vast majority of us, will have strong views on policies ranging from tech company monopolies, to tariffs, and to public health measures. We will reach unshakable conclusions and find a few snippets of facts to support our views. But this doesn’t mean that we will truly understand any of the issues in a deep and complex manner.

 

Daniel Kahneman, in his book Thinking Fast and Slow helps us understand what is happening with our voting, and reveals what I didn’t want to believe, but what I was confronted with over and over through academic studies. He writes, “The dominance of conclusions over arguments is most pronounced where emotions are involved. The psychologist Paul Slovic has proposed an affect heuristic in which people let their likes and dislikes determine their beliefs about the world.”

 

Very few of us have a deep understating of economics, international relations, or public health, but we are good at recognizing what is in our immediate self-interest and who represents the identities that are core to who we are. We know that having someone who reflects our identities and praises those identities will help improve the social standing of our group, and ultimately improve our own social status. By recognizing who our leader is and what is in our individual self-interest to support, we can learn which policy beliefs we should adopt. We look to our leaders, learn what they believe and support, and follow their lead. We memorize a few basic facts, and use that as justification for the beliefs we hold, rather than admit that our beliefs simply follow our emotional desire to align with a leader that we believe will boost our social standing.

 

It is this affect heuristic that drives much of our political decision making. It helps explain how we can support some policies which don’t seem to immediately benefit us, by looking at the larger group we want to be a part of and trying to increase the social standing of that group, even at a personal cost. The affect heuristic shows that we want a conclusion to be true, because we would benefit from it, and we use motivated reasoning to adopt beliefs that conveniently support our self-interest. There doesn’t need to be any truth to the beliefs, they just need to satisfy our emotional valance and give us a shortcut to making decisions on complex topics.

Racial Bias Manifests When We Are Tired

Posted on by jabittan
Whether we want to admit it or not, we all make cognitive errors that result in biases, incorrect assessments, and bad decisions. Daniel Pink examines the timing of our errors and biases in his book When: The Scientific Secrets to Perfect Timing. It is one thing to simply say that biases exist, and another to try to understand what leads to biases and when such biases are most likely to manifest. It turns out that the time of day has a big impact on when we are likely to see biases in our thinking and actions.

 

Regarding a research study where participants were asked to judge a criminal defendant, Pink writes, “All of the jurors read the same set of facts. But for half of them, the defendants’s name was Robert Garner, and for the other half, it was Roberto Garcia. When people made their decisions in the morning, there was no difference in guilty verdicts between the two defendants. However, when they rendered their verdicts later in the day, they were much more likely to believe that Garcia was guilty and Garner was innocent.”

 

Pink argues that when we are tired, when we have had to make many decisions throughout the day, and when we have become exhausted from high cognitive loads, we slow down with our decision-making process and are less able to think rationally. We use short-cuts in our decisions which can lead to cognitive errors. The case above shows how racial biases or prejudices may slip in when our brains are depleted.

 

None of us like to think of ourselves as impulsive or biased. And perhaps in the morning, after our first cup of coffee and before the stress of the day has gotten to us, we really are the aspirational versions of ourselves who we see as fair, honest, and patient. But the afternoon version of ourselves, the one who yells at other drivers in 5 p.m. traffic, is much less patient, more biased, and less capable of rational thought.

 

The idea of implicit biases, or prejudices that we don’t recognize that we hold, is controversial. None of us want to believe that we could make such terrible mistakes in thinking and treat two people so differently simply because a name sounds foreign. The study Pink mentions is a good way to approach this topic and show that we are at the whim of our tired brains, and to demonstrate that we can, in a sense, have two selves. Our rational and patient post-coffee self is able to make better decisions than our afternoon I-just-want-to-get-home-from-work selves. We are not the evil that manifests through our biases, but rather our biases are a manifestation that results from poor decision-making situations and mental fatigue. This is a lighter way to demonstrate the power and hidden dangers of our cognitive biases, and the importance of having people make crucial decisions at appropriate times. It is important to be honest about these biases so that we can look at the structures, systems, and institutions that shape our lives so that we can create a society that works better for all of us, regardless of what time of day it is.

Cities Building from Strengths

Posted on by jabittan
I really like the ideas presented in The New Localism by Bruce Katz and Jeremy Nowak because they provide a road-map for getting stuff done in a local context where our hyper polarized tendencies can be put aside. The ideas presented in the book focus on engaging local community members and groups to take real action against our most pressing challenges. It doesn’t simply present a best case scenario of local policy-making, but demonstrates real examples of local place-making alongside realistic decision-making.

 

Cities have the power to lead on many issues that we face today because of their abilities to create networks to pull people together. It is the strengths of cities that propels them to be the solution engines that they can be in our world today. The authors write, “Cities unveil and tap hidden strengths by aggregating public, corporate, philanthropic, and university stakeholders into networks that work together to tackle hard challenges and leverage distinctive opportunities.”  It is the people, the companies, the groups, and the local environment that allow cities to be diverse, dynamic, and successful in developing real responses to social, economic, and security threats. By understanding and connecting these resources, cities can build coalitions with the power and energy to transform cities in the face of obstacles.

 

Katz and Nowak continue (emphasis in original), “The best networks have a smart recipe:  Build from strength to address needs rather than build from needs to address strength. This enables cities to realize the full value of latent assets, whether they are sector based … or geographic …”

 

Cities cannot identify who they want to be, and then try to engineer the strengths that would help them bring about the transformations they want to see. Cities have to be able to honestly look at themselves and see what they can be. There is plenty or room for imagination and visionary leadership in this model, even if it feels limiting. Cities cannot invent strengths out of no where, but they can identify, coordinate, and combine the resources that produce existing strengths to further develop new industries and sectors, or to capitalize on existing advantages. Building from strengths takes the existing pieces and encourages them to grow, expand, and recombine in novel ways. It requires organic communication and networking along with new institutions to help streamline the decision-making process to implement the programs and policies to help propel cities forward.

Problem Solving to Fit the World

Posted on by jabittan
In The New Localism Bruce Katz and Jeremy Nowak argue that political decision-making, solutions to complex problems, and innovations in progress and economic development occur more at the local level than at the national level in the world today. Their argument is that national politics is complex and cumbersome, with too many large and disconnected voices and opinions to tailor policy solutions to problems in ways that actually make sense. More local structures, on the other hand, are better suited to find and implement real solutions to the specific problems taking place in a given region.

 

“Cities and other localities,” the authors write, “can craft and deliver better solutions to hard challenges since they match problem solving to the way the world works – integrated, holistic, and entrepreneurial rather than compartmentalized and bureaucratic.”

 

Sometimes we think about our challenges and problems as being distinct from each other. We tend to think  the opioid crisis is a healthcare failure, that unaffordable rent in San Francisco is a housing policy failure, that a factory closing is an economic failure. We try to find individual solutions to each of these problems such as, introducing databases to monitor opioid prescriptions, or capping the price of rent in a city, or by trying to attract a new business to fill the old factory with tax breaks. In reality, however, all of these policy areas are interconnected. Economic development can influence the price of housing, and stable housing (or the lack thereof) can influence community dynamics which make people more or less likely to misuse drugs. Trying to tackle any individual problem from a broad national level, without considering the specific details that contribute to the problem in a given place would be unlikely to succeed.

 

Local problem solving, as Katz and Nowak suggest, is able to look at problems in a more comprehensive way since it tailors solutions to the local environment. Solutions can be integrated instead of compartmentalized and localities can bring entrepreneurs into the fold to mix business interests and development with social responsibility and support. The policy that is likely to succeed in reducing opioid misuse San Francisco is unlikely to be the same solution that would succeed in Dayton, Ohio, but both communities could share what they learn and take advantage of local resources to build coalitions to address the problems in a manner consistent with the local experiences. National level policy cannot introduce such individualized solutions and cannot be as responsive to the local variations on a given problem.

What Does “The People” Mean?

Posted on by jabittan
“We the people” is a powerful phrase in the United States. It conjures images of democracy, freedom, revolution, and the power to push back against illiberal governments and disinterested elites. The phrase has been a rallying cry in movies for civic motivation, has been a symbol in politics for grassroots movements, and occupies and idyllic vision of governance to many Americans.

 

The challenge, however, is that “the people” is not a very clear idea or concept. It is ambiguous, without real direction, and is not always used in all encompassing ways. The idea of a government governed by “We the people” is great in theory, but at the end of the day decisions need to be made and a final direction must be chosen. “We the people” is not actually a great approach to decision making when you get to the end of the line. Building a government based on “We the people” may seem natural to us today, but looking deeper reveals the challenges of setting up a government based on the public will that our founding fathers encountered after the revolutionary war. Joseph Ellis captures these challenges in his book The Quartet when he wrote about James Madison’s perceptions of the new direction he wanted the nation to go:

 

“Experience during and after the war had demonstrated beyond any doubt that romantic descriptions of “the people” were delusional fabrications, just as far-fetched as the divine right of kings.”

 

Ellis also quotes Jefferson and his doubts about the feasibility of a government built on popular will and fully democratic values, “a choice by the people themselves is not generally distinguished for its wisdom, that the first secretion from them is usually crude and heterogeneous.”

 

“We the people” is absolutely the spirit of government that we should embrace in the United States, but I think it is important to also be nuanced in how we think about the actual decisions that government must make. Popular will can be hard to gauge and impossible to decipher. When popular will does align, we must also be fearful of a tyrannical majority. Ultimately, “We the people” must translate into active participation in government that works to better understand, connect, and unify the American people. If “We the people” does not live up to this standard, it risks devolution into demagoguery and minority out-casting.

Realists

Posted on by jabittan
In 2015, Jonathan Rauch from the Brookings Institute wrote a book about how politics should to operate in order to actually get anything done. His book, Political Realism: How Hacks, Machines, Big Money, and Back-Room Deals Can Strengthen American Democracy, cuts against our traditional thoughts about the ways in which we can improve our society and country. Rauch looks at movements that have great moral purposes, but that seem to make general duties within government more difficult and challenging. Particularly in legislative bodies today, government seems to be operating poorly and in a way that stokes the flames of partisan anger and opposition. Very few people have a positive view of any governmental agency, and if there is one thing all American’s seem to have in common today, it is a distrust of political parties and a sense of disgust toward national political bodies.

However, our government did not always have such a negative public view and did not always struggle to act on even basic legislation. Rauch begins his book by discussing some of the tools that government has used to clear a path for basic legislation and functioning. Of generations past in the United States he writes, “not being fools or crooks, they understood that much of what politicians do to bring order from chaos, like buying support with post offices and bridges, looks unappealing in isolation and up close, but they saw that the alternatives were worse. In other words, they were realists.” Previous generations understood the negative perception of the shady things that seemed to take place in government. They recognized the danger of fraud and corruption, and they acknowledged the need to hide under the table business. Nevertheless, these were tools that helped the country move forward. Rauch argues that today, operating with a government that cannot move anything forward, what we need is a little more of this old-school politics, and a little less of today’s sunshine disinfectant.

Where this all stems from is the most basic flaw of human societies. We can only be rational about  the ways in which we get to our ends, we cannot be rational about the ends themselves. This is to say that the goals and the desired outcomes we want to see in society are inevitably and unavoidably political. How we choose what society wants, what society should do, who we should help, who gets to be part of our group, and what will be excluded from society is not a scientific question but rather a question of identity and self-interest. These questions are simply political with no possible answer satisfying everyone.

Human rationality can only be applied once an end has been selected. Once we have agreed on an outcome, or once a majority voice has selected the desired end state, we can rationally work out the best way to get there. It is like a group of 10 couples who all must decide when and where they want to take a vacation as a big group. There is no perfect destination to satisfy everyone’s desires of seeing family, visiting big tourist items, and finding off the grid treasures. But once a decision has been made, the group can identify the most efficient route to take that maximizes the time spent viewing what most everyone wants. If the group primarily wants to spend time at a beach in southern Spain, then the most efficient travel option is a flight directly to Southern Spain, and the travel rout that flies into Bilbao in northern Spain then uses public transportation southward across the country is not considered. However, if visiting art museums and seeing a wide swath of Spanish culture is the main goal of the trip, flying to and staying in coastal southern towns is not a rational option to meet the goals, but flying into Bilbao and traveling across the country by bus is an ideal plan. The end goals must be selected before a rational decision can be made to meet that decision, but seeing art and culture is not inherently better than relaxing on a Mediterranean beach.

Government will always be hampered by this question, no matter how rational or how similar we become and no matter how good our artificial intelligence one day becomes. Government therefore, needs a way to move things forward that deescalates the tension of identity and self-interest. This is the argument that Rauch puts forward. He does not argue for the backrooms filled with cigar smoke and fat cats driving the show. After all, generations before did give us painfully slow desegregation and a political period rife with presidential assassinations and violent racial protests. What we can plausibly see however, is a system where discussions and deliberations can be secret, because what may be good for the nation could be toxic for an individual based on their constituency’s identity and self-interest.

What ultimately needs to be remembered is that government cannot rationally chose and advance a goal. Government can do its best to reach its desired end state, but selecting an end that hurts some and leaves representatives vulnerable creates a system where some members must oppose all action by that government as a signal to their compassion, concern, and identification with their constituents. A government with hidden deliberations and gear greasing allows for compromise and realistic legislation. Some discussions must be allowed to take place in ways that shield legislative members from direct criticism so that they cannot later be attacked and vilified for decisions that hurt some but move the majority in the right direction. Government needs a way to be a little bit wasteful and a way to put up with a little bit of abuse in order to move society forward. Constantly patrolling for abuse and waste is expensive and ultimately makes people less likely to take action and try to make things better.