Tuesday, October 03, 2017

Chance Disguised as Skill



I just finished the book Thinking Fast and Slow by Daniel Kahneman.  Being in the general cultural bubble (of tech culture, skeptical, philosophical, ethical podcasts, blogs, etc.) that reference the material in this book constantly, I figured I better go back and read it even though I feel like I've absorbed most of the ideas by osmosis already.  Kinda like the way I made myself watch Blade Runner for the first time a couple years ago; and yeah, it's impact on me was almost negligible because its ideas have be retread, expanded upon, and improved over the years.  I was afraid that would be the case with this book, and most of it was indeed kind of a slog over the various cognitive biases I've heard about a hundred times now.  (Kahneman and his research partner were the ones who discovered and named many of them.)  Also, I should note, this is an extra hard book to read when you’re aware of the replication crisis that is apparently extra bad in the social sciences, and how heavily Kahneman leans on the results of experiments that have specifically been called out as potentially highly flawed.  But as far as I can tell, the stuff I want to talk about does not rely on that.

The standout to me was chapter 20, and YIKES is it a doozie!  I'm kind of shocked that no one in my bubble is talking about this... but then, I’m not shocked because I have a pretty good idea why.  This chapter is about how hindsight bias leads us to construct false causal narratives that we then instantiate in tradition, institution, business practice, etc.  Kahneman says the stats back up something I've always secretly thought:  Analysts provide the same amount of predictive power as chimps throwing darts at a target.  That is: exactly zero.  It's totally random.  The people on Wall Street who get paid millions for their "skill" in reading and playing the market are simply random guessers in a large scale self-deception-powered industry of post-hoc rationalization.  Same goes for political pundits and anyone else getting paid to make predictions about complex things.  So we’ve got massive pillars of our economy and politics predicated on something that’s been proven false with math.  (If someone has a rebuttal to the statistical analysis referred to in chapter 20 I’d love to see it.)  

Kahneman talks about how the financial-something-or-other company who hired him and provided the data he analysed took the news that their entire industry was based on faulty assumptions.  They politely listened, and promptly swept it aside.  I mean, what CAN you do with a claim that says everything you put value on in your career is a mistake?  That the REASON your company and industry exists is a sham. Shut down the company?  Of course not.  And so it is with the broader application of this hindsight bias/post hoc causal narrative problem that humans have.  The implications are too vast for an individual -let alone a society- to digest.  Our institutions require the illusion, and our egos are too fragile to recognize the massive role that chance (rather than skill or virtue) plays in our lives. This is not to say that skill and virtue can’t play ANY role in success.  Only that it is disproportionately misattributed in a massive scale.  

The Problem of Low Numbers when it comes to our perceptions of ‘hot streaks’ leads to misapplying attributes other than luck to people who have had successful careers.  Think about it.  If you gave every human on earth a coin and had them flip it over and over, there would be SOME people who get heads a ridiculous-seeming number of times in a row.  It’s a statistical necessity, having nothing to do with talent or virtue.  If you abstract that to any group of people doing any particular activity you’ll understand that some will excel to a very high degree, but we don’t look at those people as lucky.  We assume they must have some amazing talent or strategy and then everyone buys their book.  

I’m guessing the reason this concept resonates with me so powerfully is because it seems like evidence for my ‘broken epistemology’.  I don’t actually think my epistemology IS broken.  It’s only broken in relation to the organization and conceptual frameworks of most humans.  In the same way Kahneman’s hot take on financial projections simply don’t fit anywhere in the paradigms of that sector.  It’s not that his information is broken.  It’s that there’s no way to incorporate that information into the system.  The only appropriate way to deal with that information is to dismantle the system and rebuild it on different premises.  But the SYSTEM is a reflection of human psychology.  We couldn’t rebuild a different financial/business/government systems without first addressing the human cognitive biases that drive our impulse to misattribute phenomena like hot streaks and personality to skill and virtue.  

I don’t know what to do with this.  I’m convinced that human brains are terrible at interpreting reality.  And this is not limited to individuals.  I think those cognitive illusions are magnified and reinforced by our traditions and institutions.  And I don’t know how to challenge the individual problems without advocating for a wholesale destruction of every current paradigm.  Even if I thought that such a process was feasible, desirable, or morally justifiable, who the hell am I to tell the world how it should change?  I’m trapped in the same maze of cognitive illusions as everyone else.  

I guess that’s why I keep going back to my life goal, which is to make the world more loving.  I’m not sure how to do that.  But I know that inspiring human brains with stories of Fierce Love is the strategy that resonates the most with me.  

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