Author Archives: Patri Friedman

Tribal Biases and the Inauguration

Regardless of your feelings about the election, inauguration, or national politics in general, they do make for great settings in which to explore the classic themes.  No, not Hope and Change and Unity and Freedom, those are themes for Presidents, not Overcoming Bias.  I mean the ways in which our monkey brains lead us into messes, and how sober reflection can lead us out.

First, IOZ nicely captures why Obama's economic program is counterproductive:

The central conceit of Obama's inauguration and the crisis-wracked program he began to lay out is that given our troubled times, we must put aside difference in favor of "unity" and seek common purpose in collective action. Subsumed beneath an overwrought paean to national character and responsibility is the notion that only through centralization can crises of such magnitude be met and bested. This is precisely the wrong lesson to draw. Each of our current crises, whether imperial overreach or economic calamities, are at root problems of scale. If you really wanted more a more flexible, resilient, and self-sustaining economy, you would seek means to increase regional and local enterprise at the expense of State-subsidized national and transnational corporations; you would notice, for instance, that most small banks are doing just fine, and you'd let Citigroup go belly-up.

It would be foolish to lay this at Obama's door – I think Hillary would do worse, and quite possibly McCain as well. The erroneous focus on scale and centralization and "pulling together in times of crisis" is a general human irrationality which politicians specialize in catering to.

Like many (?most?) irrationalities, it is likely a relic of our tribal past.  In the ancestral environment, pulling together to help the tribe in a time of crisis was the best way for an individual to survive.  In our modern environment, however, we are often led to identify with an entire nation as our "tribe", and it turns out that this is an inefficiently large group for most types of collective action.  We evaluate the prospect of unity with ancient mental modules optimized for Dunbarian tribes, and that sphexishness leads us into disastrous collective ventures.

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Positive vs. Optimal

I’ve been thinking a little lately about the difference between doing something useful, and doing the most useful thing. The latter is a lot harder, yet a lot more productive. I wonder if this is a basic area of human irrationality. I think you can classify a lot of the bad arguments that get made for things like the bailout of banks, or of car companies, as people saying “Here is why this money would help these companies”, and missing out on “But it would help the rest of the world (like, companies that are profitable) even more”.

Normally I rail against zero-sum thinking, the belief that we’re just dividing up a fixed pie. But in the short-term, the inputs to producing happiness are constrained. I only have 24 hours in the day. The GDP of the US is only so much. We’re investing those resources to produce even more resources – but the inputs at this stage are fixed. We can’t invest in every positive-sum project. When you are figuring out what to do with these constrained inputs, you need to balance your use against *every other possible use* (or more specifically, the best alternative use). (This is nerve-wracking and tortuous, but you don’t actually have to do it that well – if you just do a decent job, you’ll be doing way better than someone who just does whatever positive projects happen to catch their attention.)

I think this connects to important topics at the micro and the macro level. Personal productivity techniques like Eat That Frog or Big Rocks are based on fighting our inclination to do what seems urgent, and instead doing what is optimal. I know I have a lot of trouble getting distracted by small urgent things, rather than doing the core, important work, and it seems to be a general problem. Our intuition is a terrible task prioritizer. And much of the erroneous analysis about the benefits of regulation has to do with ignoring the invisible (the best alternative use of the resources), as Henry Hazlitt so eloquently writes. Our intuition seizes on the visible consequences, and has trouble seeing the subtle, distributed, unrealized, un-proposed alternatives.

Which suggests a technique for overcoming this, at both the personal and professional levels. Try to always present alternatives. Reify the other options – or your mind will focus on whether your proposal does net good, rather than the most good with its limited resources.

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The Robot’s Rebellion

I’m on my second read, and I think that this is quite an underappreciated book.  While it doesn’t have a lot of practical advice about methods to overcome bias, its general philosophy is (IMNSHO) both deeply true and quite rare.  It takes the logic of Dawkin’s Selfish Gene and unflinchingly explores the logical implications of the genes’-eye view of the world in which humans are lumbering robots constructed by coalitions of immortal genes for the sole purpose of copying those genes.  The idea that humans, the conscious, apparently self-directed actors in our world, are robots – in the sense of having been constructed by something very different for its own ends – is for me profound, unintuitive, and deeply unsettling.

The book uses a metaphor (originally by Daniel Dennett): suppose that you are trying to preserve your body for 400 years.  One option would be to cryopreserve it in a bunker (the "plant" strategy).  But suppose you are worried that no location is safe, or that your capsule may need more resources along the way.  You might build a robot to protect your cryocapsule, scavenging the landscape for energy and materials when necessary.  You’d want the robot to be intelligent enough to react to any survival situation it encounters with creative solutions, not just pre-programmed ones, which requires a certain degree of intellectual freedom (long-leash control).  You also want it to make the preservation of your capsule its highest priority (short-leash control).

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Prediction Markets and Insider Trading

The NYT reports:

With Internet gambling predicted to surpass $20 billion in 2008, and with illegal wagering accounting for $150 billion in the United States, by some estimates, the temptation for those seeking to influence the outcome of games has never been greater. Now, a raft of gambling scandals in sports, from cricket to soccer and most recently tennis, has raised an uncomfortable question: Are the games we watch fixed?

Part of the reason why sports is more vulnerable to manipulation is that, as I have long argued, they don’t matter:

Who wins these sporting contests is irrelevant. It does not matter, except inasmuch as people choose to make it matter. It does not make the world a better or worse place…Much of the lure of sports lies in the illusion that they are important. It is pretty clear, when you think about it, that they aren’t, but the illusion is strong. After all, an awful lot of people care about them. Our newspapers in the morning and news shows at night have a business segment, a political segment, and a sports segment, implying that these sectors are of equal value. There are magazines devoted to sports…It is no wonder that so many are fooled into taking them with far more seriousness than they deserve.

A CEO who manipulates his firms profits is manipulating something deeply attached to the real world: a measurement of how much value his firm is producing.  Since this value is hard to measure, there are ways to jigger the accounting, but they are inherently temporary.  Accumulated profits should appear in physical form, like cash or securities, or valuable property.  Eventually, Ponzi schemes and companies like Enron get caught, because their accumulated physical assets don’t match their claimed profits.

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Transcend Or Die

Follow up to Robin’s Biting Evolution Bullets:

Robin quotes Cirkovic as saying:

Biological imperatives, like the survival until the reproduction age, … will become marginal, if not entirely extinct as valid motivations for individual and group actions.  Let us, for the sake of elaborated example, consider the society of uploaded minds

I believe that this line of reasoning is deeply wrong, and for important reasons.  Robin touches on them briefly…

But there can be genes without DNA, and selection pressure without violence or great expense.  And the fact that Egan did not talk about selection effects does not even remotely suggest they are absent in the situation he describes.

…but I think that this is an important enough point that it bears repeating more loudly and directly[1].

The flaw in the view that we may become "post-biological" is that evolution works even if you don’t believe in it (to borrow Eliezer’s phrase).  Sure, some members of some cultures in some species may become post-biological.  Much like those who commit suicide, such individuals eliminate themselves from the biological rat race without having the slightest effect on the viability of the race[2] as a whole.  All they’ve done is to select against themselves.

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Be biased to be happy

Robin writes "Optimism bias is clearly not an unnoticed accident – people want to be so biased."

In poker, there is a joke which goes "Have you ever noticed that when you win, it’s all skill, and when you lose, it was bad luck?"  It’s funny because this method of protecting one’s own ego is universal enough to strike a deep chord, yet any good player knows how wrong it is.  In the short-term, poker is mostly luck, and it takes a great deal of experience to even partially disentangle the effects of one’s own strategy from the vicissitudes of fortune.  (Hint: a crucial first step is to always think in terms of opponent hand distributions, not specific hands.)

While in poker, this way of thinking will hold a player back from accurately evaluating and improving their game, the evidence from positive psychology is that it helps you be a winner in life.  From Half Full, a blog about the science of raising happy kids:

According to Seligman and other researchers, how optimistic or pessimistic we are amounts to how we explain life’s events, be they good or bad. There are three basic dimensions to an explanation: permanence, pervasiveness, and personalization.   The OPTIMISTIC way of understanding why something GOOD happened would explain:

The cause of what just happened as Permanent (so it will reoccur);
And Pervasive (it will affect many other circumstances, too);
And Personal (I made it happen).

On the other hand, the PESSIMISTIC way of explaining why something GOOD just happened would illustrate that:

The cause of what just happened is Temporary (something short-lived caused it – probably won’t happen again);
And Specific (affecting only this situation);
And Impersonal (I didn’t have anything to do with what happened, other people or the circumstances did).

The reverse is also true when something bad happens. A kid trips on the sidewalk and skins her knee, dirtying her new dress. The pessimist thinks: “I’m so clumsy – I’m always tripping everywhere, and now I look stupid.” The cause of her fall is (1) permanent—she sees it as a personality trait, and therefore it is both (2) pervasive and (3) personal. On the other hand, the optimist thinks: “Dang!  Someone oughtta fix that crack in the sidewalk!” She’s thinking that a flaw in the sidewalk, not her own inherent clumsiness, caused her to trip. That crack is (1) temporary; (2) specific to that moment; and (3) impersonal—she had nothing to do with it.

There is plenty of evidence that those with the optimistic mindset are happier, healthier, and more successful, but of course we have to be careful because the causality runs both ways.  (If life has been good to you, you will tend to expect more of the same).  But (while I don’t have cites on hand), I’ve seen some research on interventions to improve optimism, and on predicting later success based on earlier optimism (controlling for other obvious factors of success), which suggest that at least some of the causality runs from optimism to happiness.

It seems a bit sad to me that our egos need such nurturing, and as a rationalist I worry that optimistic bias (like any false view of the world) will sometimes lead us to make worse decisions which will increase suffering.  But to the degree that we’re stuck with the biased minds we have, the evidence seems to be that it’s better to be optimistic than pessimistic.

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Framing problems as separate from people

We are not only affected by our own biases, but those of the people we interact with.  So the sorts of psychological hacks I write about also apply to our interactions with other people.  Here is a classic, from Stu via Parent Hacks:

When I have a problem that concerns one of my kids (meaning: When I want them to do something that they refuse to do), I see that I have a choice. I could visualize my child standing on the other side of a line, next to "The Problem", with me yelling across the line, "Hey, you better solve "The Problem." Instead, I get myself to stand next to my child, with "The Problem" alone on the other side of the line, with me putting an arm around my child, saying "Hey, you and me, we’re gonna defeat "The Problem" together." I find that this attitude seems to make my kids feel better about themselves. It minimizes/eliminates shame.

This cognitive reframing doesn’t just apply to parent:child relationships, but many other places such as husband:wife, manager:report, and worker:coworker.  Basically, anywhere that you need to bring up a problem that someone else is causing or contributing to, where there is enough shared interest that the "same team" model is reasonable.

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With blame comes hope

After the smoke clears, we begin to apportion blame.  We have a natural tendency to try to shift the blame onto others, avoiding guilt and responsibility for errors.  But there are some obvious problems with this strategy.

Errors are valuable training instances, and our bias against accepting blame reduces the number available.  If we could externally shift blame while internally maintaining a rational apportionment, we would not be reducing our training data, but people don’t work like that.  To be believable, our efforts to shift blame must be sincere, and so our brain engages in self-deception rather than partitioning.  The result will then be to tend to underestimate the dangers of our action (and inaction) and underestimate the degree to which we can prevent bad outcomes by acting differently.

It is this latter point which gives the connection between blame and hope.  For to avoid blame is to avoid responsibility, and to avoid responsibility is to disempower oneself.  To say "I was not to blame for what happened" is to say "I could not have prevented it", which is to say "In future situations like that, I will be helpless".

So let us instead be honest about how we could have acted differently, even when things turn out craptacularly.  We can trick our minds into doing this by focusing on the positive, forward-looking nature of responsibility: thinking about how we might do better in the future, rather than the negative-sum fight to divide the anti-spoils of the past.  And reminding ourselves that some bitter blame is a small price to pay to hold onto hope.

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Relative vs. Absolute Rationality

I’m reading Tim Harford’s "The Logic of Life" – it’s the first book I bought on my Kindle.  He uses a definition of rationality which I hadn’t seen before, which is simply that people respond to incentives.  I think this model of people as relatively rational has much more support than the idea that they are absolutely rational – that they choose optimal strategies to reach their goals, that they behave in an unbiased fashion.

And I think this is a good way of squaring the ideas that there is lots of evidence for human rationality and lots of evidence for human irrationality.  Before, I’d been thinking of the resolution as just that sometimes people are rational and sometimes they are irrational, depending on how complex the decisions and which heuristic modules are invoked.  But it feels much more correct to say that people rarely get the answer exactly right, but that they generally respond in the right direction when things change.

This definition rescues the implications of rationality-assuming economic analysis from the "But people aren’t rational!" attack.  Sure, people aren’t (absolutely) rational, but since they are (relatively) rational, policy makers[1] can influence behavior by assuming that people will respond in the correct direction to changes in incentives.  And they had better be wary of creating incentives without considering the consequences on behavior.

[1] Or anyone else engaged in mechanism design for humans.

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Experiencing The Endowment Effect

I recently decided that it was finally time for a new car, so after a lot of shopping around, I picked one out and ordered one.  There was definitely some significant psychic pain involved in spending that much money, but I spent many hours thinking over and discussing the decision, and am happy with the purchase.

The release of the Kindle has made me realize just how much clutter books add to my life – including books I may never get to, and others I’ve read but will never read again.  To have those books on an SD card instead of piled in my room and shelves sounds wonderful.  So as a first step in decluttering, I’m getting rid of all the books I expect to never open again.  Perhaps then I’ll get ebook versions of the books I actually read and get rid of the physical copies.

I’m planning to just give my books to friends or Goodwill, since the effort it would take to sell them (list, package, and ship) would not be worth my time.  Yet in contemplating this, I’m experiencing psychic pain far, far greater than that of buying my new car, even though the total cost of these books is only a few thousand dollars.  Thanks to the damn endowment effect, it is so much easier to convince myself that a high income justifies buying expensive things than throwing away cheap ones.

And it’s just so clearly irrational.  If I considered the total income from selling the books, and the time it would take, and I encountered it in the context of "Would you pay this much in order to save that much of your time?", I’m sure I would.  Yet framed as "Would you rather throw these things away, or put in this much time to eke that much value from them", it feels like a terribly wasteful decision.

Ah well.  I’ve had enough practice at overcoming bias that when I can clearly and consciously identify what’s going on, I can usually do the right thing.  I just wish the psychic pain was more amenable to being argued out of existence.

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