Who Will Fight Group Think?

At TierneyLab, Nickolas Wade complains about groupthink:

Conformity and group-think are attitudes of particular danger in science, an endeavor that is inherently revolutionary because progress often depends on overturning established wisdom. … If the brightest minds on Wall Street got suckered by group-think into believing house prices would never fall, what other policies founded on consensus wisdom could be waiting to come unraveled? Global warming, you say? You mean it might be harder to model climate change 20 years ahead than house prices 5 years ahead? Surely not – how could so many climatologists be wrong?

Wade cites Shiller on group think at the Fed:

Alan Greenspan, the former Federal Reserve chairman, acknowledged in a Congressional hearing last month that he had made an “error” … Mr. Greenspan’s comments may have left the impression that no one in the world could have predicted the crisis. Yet … lots of people were worried about the housing boom and its potential for creating economic disaster. It’s just that the Fed did not take them very seriously.  …

In his classic 1972 book, “Groupthink,” Irving L. Janis, the Yale psychologist, explained how panels of experts could make colossal mistakes. People on these panels, he said, are forever worrying about their personal relevance and effectiveness, and feel that if they deviate too far from the consensus, they will not be given a serious role. … People compete for stature, and the ideas often just tag along. Presidential campaigns are no different. Candidates cannot try interesting and controversial new ideas during a campaign whose main purpose is to establish that the candidate has the stature to be president. Unless Mr. Greenspan was exceptionally insightful about social psychology, he may not have perceived that experts around him could have been subject to the same traps.

Wade and Shiller both mistakenly assume that what we mainly need is to be aware of group think.  Wade thinks this awareness will make us question global warming consensus, while Shiller thinks it should have made Greenspan see the housing bubble.  But after 37 years, the group think idea is pretty well known.  The problem is that simply knowing that the group might be wrong is very different from knowing where in particular they are wrong.

Most groups have a long queue of contrarian ideas they are neglecting.  What groups need are ways to get them to devote more resources to this entire contrarian set, especially the true parts of the set.  Like, say, prediction markets.  But if instead of proposing some structural, cultural, or institutional reform to achieve this, you just argue “there can be group think, so my contrarian view deserves more attention” you are really just using group think as an excuse to try to jump the queue.  You aren’t really fighting group think at all.

Far more people like to complain about group think when they think their contrarian ideas neglected, than are willing to support prediction markets or other reforms to encourage attention overall to more and better contrarian ideas. Who will really fight group think?

Hat tip to Steven Hsu and J Storrs Hall.

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  • q

    maybe contrarian views are a kind of savings, similar to unpumped oil?

  • Cameron Taylor

    With the context of this complaint by Nickolas Wade:

    Wall Street got suckered by group-think into believing house prices would never fall

    Robin Hanson suggests:

    What groups need are ways to get them to devote more resources to this entire contrarian set, especially the true parts of the set. Like, say, prediction markets.

    I in general advocate prediction markets as an effective solution to groupthink and other problems of the political modes that dominate human thought. But there would seem to be limits to the power of markets, even heavily traded and well funded markets, to overcome groupthink for long term predictions. For example, I have my doubts that lacking a prediction market is the problem on Wall Street.

  • The article: Ben “Systemic Risk” Bernanke proves that Bernanke knowingly maintained a strict monetary policy long after he knew of the sub prime problem as he knew it would cause of the “Depression”.

    It shows that he probably engineered it on purpose!

    If you want to sleep tonight, Don’t Read It!

    “In contradiction to the prevalent view of the time, that money and monetary policy played at most a purely passive role in the Depression, Friedman and Schwartz argued that “the [economic] contraction is in fact a tragic testimonial to the importance of monetary forces” (Friedman and Schwartz, 1963, p. 300).

    The slowdown in economic activity, together with high interest rates, was in all likelihood the most important source of the stock market crash that followed in October.

    In other words, the market crash, rather than being the cause of the Depression, as popular legend has it, was in fact largely the result of an economic slowdown and the inappropriate monetary policies that preceded it.

    Of course, the stock market crash only worsened the economic situation, hurting consumer and business confidence and contributing to a still deeper downturn in 1930.”

    Governor Ben S. Bernanke
    Money, Gold, and the Great Depression.
    At the H. Parker Willis Lecture in Economic Policy, Washington and Lee University,
    Lexington, Virginia.
    March 2nd, 2004

    You can read also: Preparing for the Crash, The Age of Turbulence Update: 22/07/09., which tries to accomplish Greenspan Mission Impossible:

    That is mission impossible. Indeed, the international financial community has made numerous efforts in recent years to establish such oversight, but none prevented or ameliorated the crisis that began last summer. Much as we might wish otherwise, policy makers cannot reliably anticipate financial or economic shocks or the consequences of economic imbalances. Financial crises are characterised by discontinuous breaks in market pricing the timing of which by definition must be unanticipated – if people see them coming, then the markets arbitrage them away.”

    Alan Greenspan
    The Age of Turbulence: Adventures in a New World [Economic Order?].

    Plea for a New World Economic Order. explains the nature and causes of economic depressions and proposes a plausible alternative solution.

  • It’s hilarious that, after identifying the housing bubble as a prime example of groupthink, you then propose prediction markets as the solution. The housing market is a prediction market. That’s how the groupthink occurred. That’s how we got into this mess.

    • Eric Johnson

      I was gonna say, “yeah – what he said.” But….

      What about the argument that government altered the market – via implicit government financial backing of Fanny Mae, by Bush the Lesser’s deregulation of leveraging, via interest rates, by letting banks merge only if they implied with gov’s egalitarianist demands re loan approvals. Even if you stipulate that all these things were good, that doesn’t change the fact that they altered the market.

      In contrast, the prediction market on future housing prices is a pure and free market. It incorporates expert opinion on how the actual housing market is being impacted by not being free and pure.

  • Constant

    It may be possible to distinguish two problems and solve only one without necessarily solving the other.

    1) How can we cause the groups in question to overcome groupthink?

    2) How can individuals or subgroups overcome groupthink?

    It’s not always clear to me whether in discussions about groupthink (of which there are many here) the intent is the more ambitious (1) or the less ambitious (2). A prediction market seems to be aimed at (1), but the many past discussions about overcoming bias (which are now mostly moved over to “less wrong”, making the current blog somewhat misnamed) seem to be aimed at individual self-improvement and thus at (2).

  • Peter Twieg

    But if instead of proposing some structural, cultural, or institutional reform to achieve this, you just argue “there can be group think, so my contrarian view deserves more attention” you are really just using group think as an excuse to try to jump the queue.

    This seems like something of a strawman – I don’t see it being implied that mere susceptibility to groupthink should lead to an idea’s being dismissed, but rather to a marginal skepticism of arguments that draw on expert consensus for support. In fact, I think Wade’s passage is meant to highlight an example of the asymmetrical application of this weighting to consensuses we don’t like, which is exactly what you’re complaining about in this thread.

  • Eric Johnson

    Last night I posted on the NYT blog a structural reform of the NIH budget disbursement. It’s yet to be mod-approved. This is more a brainstorm than something I’m confident in.

    Basically (with some revision from last night’s version) this system hands NIH grant approval over to 200 dictators. It partakes, somewhat, from Mencius Moldbug.

    – The premise is that committees suck. This is just an intuition I have. I have no data.

    – Determine the top 20% of NIH-funded biomed profs. This is by vote of all the profs. Each has one vote. Those you vote for may not fund you at any time in the future.

    – From the thousands of electi, the 200 dictators are selected at random for 15 year terms. The dictators will get half the NIH budget, with the other half controlled the old way. Thus each dictator controls, absolutely, 1/400 of the ~30 billion budget, about 100 million per year. He funds grant proposals at his sole discretion, from any biomed field, consulting anyone or no one, requiring whatever application procedures he wants.

    – So that people will want to be dictators, there should be a way for them to continue their own research programs. Their historic mean level of funding will be doubled, and awarded automatically for the 15 years. Since they will have little time for their research programs, their labs will be mostly run by an appointee, selected at their sole discretion, who can be fired at will.

    – Possibilities for the impeachment of dictators are extremely conservative.

    – Note that even if a number of dictators do poorly, it doesn’t matter that much. The eggs are certainly not in one basket.

    – Viola. A lot like what we have now, only all the power is several/individual rather than joint.

    – Something comparable could be used by academic departments for hiring and tenure decisions.

  • Thus Spake A Woman

    Fighting ‘group think’ often involves a group effort. If one is recruiting for this effort, who is a better candidate – someone who is an established authority whose opinion will be respected, or someone who is younger (professionally) with less invested in the current status quo? Of course ‘better’ can be evaluated in terms of the costs of recruitment, as well as the potential reward for the ’cause’…

    And what about those in the middle of their careers? What is their likelihood of jumping ship and fighting the status quo, and being productive at doing so? How does one evaluate who is likely to be ‘good’ in the cause of fighting group think in a particular area?

  • q

    if you want not to have another bubble like the housing bubble, you have to make sure that there are well-paying high prestige jobs for the contrarians. not going to happen.

  • Robert Wiblin

    Obviously prediction markets are good, but another incentive for accurate contrarianism might be high prestige-prizes for people who have gone out on a limb and were right about something important when most of their colleagues thought they were wrong.

  • Eric Johnson

    A prediction market itself could possibly provide prestige prizes.

    I haven’t read Robin’s tracts. He’s probably addressed the following. But I think you could have an option to pre-register publicly whatever bets you like. Whoever makes $10 million in one field publicly will start to be listened to, you can bet. Not to mention a billion. People with worse-than-average predictions are already incented to depart the prediction market because they lose money – eventually, anyway, though not immediately – and the best are already incented to dominate the market by putting more money in. Yet people will probably look to the opinion of such magnates as well as looking at the position of the prediction market itself, since the latter’s signal is slightly worsened by entries from people who haven’t decided yet whether they are consistently beating the average or not.

    It’s like Warren Buffet. When Buffet says something about finance, business, or the economy, one might suspect what he says of possibly being self-interested. But suspect him as being full of hot air? Not likely to be true – at least not compared to just about anyone else.

  • I agree with all you guys, groupthink is bad.

    • Kenny Evitt


  • Kenny Evitt

    Aren’t prediction markets your neglected contrarian idea? What’s the ‘prediction market’ that will overcome the existing groupthink opposed to prediction markets that will impel people to adopt prediction markets?

  • Hal Finney

    I would distinguish between rational groupthink and emotional groupthink.

    Groupthink can be rational. A group opinion is more likely to be right than my opinion, so it is rational to adopt the group opinion. But if everyone does this, it leads to information cascades, where an idea that gets a head start becomes entrenched even though nobody would believe it on their own.

    Avoiding rational groupthink requires people to distinguish between their informed opinion, what they believe after hearing from the group (which should typically match the group opinion); and their naive opinion, what they would believe if they didn’t know the group opinion. The group consensus should be based on combining naive opinions rather than informed opinions. People need to reveal both and make clear which is which. They would still use their informed opinions to make decisions, but they need to also expose their naive opinions. (Unfortunately I can’t see how to apply this to markets, where only the informed opinion will guide people’s trades, leading to the familiar problem of bubbles.)

    Emotional groupthink is where people try to punish those who depart from the consensus. I confess I don’t understand this part of the problem. But perhaps some fraction of groupthink is rational and could be addressed as I have described.

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  • “Emotional groupthink is where people try to punish those who depart from the consensus. I confess I don’t understand this part of the problem.”

    read my next post (should be up in a day or so and I think it has a good metaphor for this).

  • Great article. 12 step programs based on the 12 steps/traditions of AA are an ideal incubator for contrarian ideas. This article reminded me of the story of evolution pertaining to black/white moths on white oaks during the industrial error. Prior to industry, white moths dominated bc black moths highly contrasted to the white oak trees & were easily spotted by predators. Yet as industry kicked in, the oaks became covered by soot. Suddenly the black moth became dominant. So after centuries of one trait dominance, survival demanded a change. Amazing! In a similar fashion, I’ve found Alcoholics Anonymous to be a community where my ideas of emotional sobriety can be nurtured. Ultimately, if I can help the newcomer find sobriety, then my ideas take dominance, regardless of that my sobriety is less than one year old. In this way, 12 step programs are unions through and through, allowing people to harmonize & essentially thwarting group think. Amazing, amazing stuff. If anyone is curious, feel free to tweet me @vovrv.

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