This could be the next Google. Maybe you’ll be lucky. But what is the reality? The most likely scenario is that they company will not even make it off the starting line. The second most likely outcome is that it will go bankrupt within 3 years. Of the companies that survive these first 3 years, most never grow to more than 10 employees. So, should you never put your hard-earned money at risk? Not necessarily. But you should recognize that the survivor bias is at work, distorting the probability of success like cut glass.
Take the Dow Jones Industrial Average Index. It consists of out-and-out survivors. Failed and small businesses do not enter the stock market, and yet these represent the majority of business ventures. A stock index is not indicative of a country’s economy. Similarly, the press does not report proportionately on all musicians. The vast number of books and coaches dealing with success should also make you skeptical: the unsuccessful don’t write books or give lectures on their failures.
Survivorship bias can become especially pernicious when you become a member of the “winning” team. Even if your success stems from pure coincidence, you’ll discover similarities with other winners and be tempted to mark these as “success factors.” However, if you ever visit the graveyard of failed individuals and companies, you will realize that its tenants possessed many of the same traits that characterize your success.
Professional swimmers don’t have perfect bodies because they train extensively. Rather, they are good swimmers because of their physicques. Similarly, female models advertise cosmetics and thus, many female consumers believe that these products make you beautiful.
It is as if these individuals do not realize that they were born happy, and now tend to see the positive in everything. They do not realize that cheerfulness is largely a personality trait that remains constant throughout life. “Trying to be happier is as futile as trying to be taller.”
What would you have done? Would you have stayed put, scratching your head, and weighing up whether what you were looking at was a lion or something that just looked like a lion? No, you would have sprinted after your friends. Later on, when you were safe, you could have reflected on what the “lion” had actually been.
If you find yourself hungry in a foreign city and don’t know a good restaurant, it makes sense to pick the one that’s full of locals. In other words, you copy the locals’ behavior.
We have spent $30 regardless of whether we stay or leave, so this factor should not play a role in our decision.
You decide to share the deer with the group, which ensures that you will benefit from others’ spoils when your haul is less impressive. The bellies of your buddies serve as your refrigerator.
Reciprocity is a very useful survival strategy, a form of risk management. Without it, humanity — and countless species of animal — would be long extinct. It is at the core of cooperation between people who are not related to each other and a necessary ingredient for economic growth and wealth creation. There would be no global economy without it — there would be no economy at all. That’s the good side of reciprocity.
But there is also an ugly side of reciprocity: retaliation. Revenge breeds counter-revenge and you soon find yourself in a full-scale war. Jesus preached that we should break this cycle by turning the other cheek, which proves very difficult to do.
We couldn’t think of a good excuse to refuse, so we accepted. Things played out exactly as we had imagined: the dinner party was beyond tedious. Nevertheless, we felt obliged to invite them to our home a few months later. The constraint of reciprocity had now presented us with 2 wearisome evenings.
The confirmation bias is the mother of all misconceptions. It is the tendency to interpret new information so that it becomes compatible with our existing theories, beliefs and convictions. In other words, we filter out any new information that contradicts our existing views. This is a dangerous practice. “Facts do not cease to exist because they are ignored,” said Aldous Huxley. “What the human being is best at doing, is interpreting all new information so that their prior conclusions remain intact,” said Warren Buffett.
It pays to listen to Charles Darwin: from his youth, he set out systematically to fight the confirmation bias. Whenever observations contradicted his theory, he took them very seriously and noted them down immediately. He knew that the brain actively “forgets” disconfirming evidence after a while. The more correct he judged his theory to be, the more actively he looked for contradictions.
Whether you go through life believing that “people are inherently good” or “people are inherently bad,” you will find daily proof to support your case. Both parties, the philanthropists and the misanthropes, simply filter disconfirming evidence and focus instead on the do-gooders and dictators who support their worldviews.
Religious and philosophical beliefs represent an excellent breeding ground of the confirmation bias. Here, in soft, spongy terrain, it grows wild and free.
No professionals suffer more from the confirmation bias than business journalists. Often, they formulate an easy theory, pad it out with two or three pieces of “evidence” and call it a day. For example, “Google is so successful because the company nurtures a culture of creativity.” Rarely does the writer week out disconfirming evidence, which in this instance would be struggling businesses that live and breath creativity or, conversely, flourishing firms that are utterly uncreative. Both groups have plenty of members, but the journalist simply ignores them. If he or she were to mention just one, the storyline would be ruined.
Self-help and get-rich-quick books are further examples of blinkered storytelling. Their shrewd authors collect piles of proof to pump up the most banal of theories, such as “meditation is the key to happiness.”
Authorities pose two main problems to clear thinking: first, their track records are often sobering.
Especially at risk are firms with domineering CEOs, where employees are less likely to keep their “lesser” opinions to themselves — much to the detriment of the business.
Authorities crave recognition and constantly find ways to reinforce their status. Doctors and researchers sport white coats. Bank directors don suits and ties. Kings wear crowns. Members of the military wield rank badges. Today, even more symbols and props are used to signal expertise: from appearances on talk shows and on the covers of magazines, to book tours and their own Wikipedia entries. Authorities changes much like fashion does, and society follows it just as much.
More than twice as many English words have K in 3rd position than start with a K. Why do most people believe the opposite is true? Because we can think of words beginning with a K more quickly. They are more available to our memory.
The availability bias says this: we create a picture of the world using the examples that most easily come to mind. This is absurd, of course, because in reality things don’t happen more frequently just because we can conceive of them more easily.
The availability bias has an established seat at the corporate board’s table, too. Board members discuss what management has submitted — usually quarterly figures — instead of more important things, such as a clever move by the competition, a slump in employee motivation or an unexpected change in customer behavior.
For $5K a day, this man analyzes the company and come back with his findings: “Your sales department has no vision, and your brand isn’t positioned clearly. It’s a tricky situation. I can fix it for you — but not overnight. The measures will require sensitivity, and most likely, sales will fall further before things improve.”
A mere smokescreen, the “It’ll get worse before it gets better fallacy” is a variant of the so-called confirmation bias. If the problem continues to worsen, the prediction is confirmed. If the situation improves unexpectedly, the customer is happy and the expert can attribute it to his prowess. Either way he wins.
Suppose you are president of a country, and have no idea how to run it. What to do? You predict “difficult years” a head, ask your citizens to “tighten their belts.”
The best evidence of this strategy’s success is Christianity: its literal followers believe that before we can experience heaven on earth, the world must be destroyed. Disasters, floods, fires, death — they are all part of the larger plan and must take place. Believers will view any deterioration of the situation as confirmation of the prophecy, and any improvement as a gift from God.
We want our lives to form a pattern that can be easily followed. Many call this guiding principle “meaning.” If our story advances evenly over the years, we refer to it as “identity.” We try on stories as we try on clothes.
We do the same with world history, shaping the details into a consistent story. Suddenly we “understand” certain things; for example, why the Treaty of Versailles led to WW2, or why Alan Greenspan’s loose monetary policy created the collapse of Lehman Brothers. We comprehend why the Iron Curtain had to fall or why Harry Potter became a best-seller.
Story A is a factual report, but story B has “meaning.” According to information theory, we should be able to hold on to A better: it is shorter. But our brains don’t work that way.
Advertisers have learned to capitalize on this too. Instead of focusing on an item’s benefits, they create a story around it. Objectively speaking, narratives are irrelevant, but still we find them irresistible.
From our own life stories to global events, we shape everything into meaningful stories. Doing so distorts reality and affects the quality of our decisions, but there is a remedy: pick these apart. Ask yourself: what are they trying to hide? Visit the library and spend half a day reading old newspapers. You will see that today look connected weren’t so at the time. To experience the effect once more, try to view your life story out of context. Dig into your old journals and notes, and you’ll see that your life has not followed a straight arrow leading to today, but has been a series of unplanned, unconnected events and experiences.
The omitted elements might not be of relevance. But then again, they might be even more relevant than the elements featured in the story, such as when “explaining” a financial crisis or the “cause” of war. The real issue with stories: they give us a false sense of understanding, which inevitably leads us to take bigger risks and urges us to take a stroll on thin ice.
Overcoming the hindsight bias is not easy. Studies have shown that people who are aware of it fall for it just as much as everyone else. So, I’m very sorry, but you’ve just wasted your time reading this chapter.
Don’t forget to read history too — not the retrospective, compacted theories compiled in textbooks, but the diaries, oral histories and historical documents from the period. If you can’t live without news, read newspapers from 5, 10 or 20 years ago. This will give you a much better sense of just how unpredictable the world is. Hindsight may provide temporary comfort to those overwhelmed by complexity, but as for providing deeper revelations about how the world works, you’ll benefit by looking elsewhere.
84% of Frenchmen estimate thay they are above average lovers. 93% of US students estimated themselves to be above average drivers.
Most restaurants close their doors after 3 years. The ROI in the restaurant business lies chronically below zero.
Bach composed 1127 works that survived to this day.
Unfortunately, it is increasingly difficult to separate true knowledge from chauffeur knowledge. With news anchors, however, it is still easy. These are actors. Period. Everyone knows it. And yet it continues to astound me how much respect these perfectly-coiffed script readers enjoy, not to mention how much they earn moderating panels about topics they barely fathom.
What lies inside this circle of competence you understand intuitively; what lies outside, you may only partially comprehend.
True experts recognize the limits of what they know and what they do not know. If they find themselves outside their circle of competence, they keep quiet or simply say, “I don’t know.” This they utter unapologetically, even with a certain pride. From chauffeurs, we hear every line except this.
In casinos, most people throw the dice as hard as they can if they need a high number, and as gingerly as possible if they are hoping for a low number — which is as nonsensical as football fans thinking they can swing a game by gesticulating in front of the TV.
The two rooms, A and B, were identical, save one thing: room B had a red panic button on the wall. The button was purely for show, but it gave participants the feeling that they were in control of the situation, leading them to withstand significantly more noise.
The idea that people can influence their destiny even by a fraction encouraged these prisoners not to give up hope.
To control a rat infestation, French colonial rulers in Hanoi in the 19th century passed a law: for every dead rat handed in to the authorities, the catcher would receive a reward. Yes, many rats were destroyed, but many were also bred specifically for this purpose.
Never judge a decision by its outcome.
Joe Girard is considered the most successful car salesman in the world. His tip for success: “There’s nothing more effective in selling anything than getting the customer to believe, really believe, that you like him and care about him.” His secret weapon is sending a card to his customers each month. Just one sentence salutes them: “I like you.”
The more we like someone, the more inclined we are to buy from or help that person. Still, the question remains: what does “likeable” even mean? According to research, we see people as pleasant if A) they are outwardly attractive, B) they are similar to us in terms of origin, personality or interests, and C) they like us.
Consequently, advertising is full of attractive people. Ugly people seem unfriendly and don’t even make it into the background.
Aid agencies employ the liking bias to great effect. Their campaigns use beaming children or women almost exclusively. Never will you see a stone-faced, wounded guerrilla fighter staring at you from billboards — even though he also needs your support.
In real estate, the endowment effect is palpable. Sellers become emotionally attached to their houses and thus systematically overestimate their value. They balk at the market price, expecting buyers to pay more — which is completely absurd since this excess is little more than sentimental value.
We can safely say that we are better at collecting things than at casting them off. Not only does this explain why we fill our homes with junk, but also why lovers of stamps, watches and pieces of art part with them so seldomly.
There’s a similar effect in the job market. If you are applying for a job and don’t get a call back, you have every reason to be disappointed. However, if you make it to the final stages of the selection process and then receive the rejection, the disappointment can be much bigger — irrationally. Either you get the job or you don’t; nothing else should matter.
The first possibility is what actually took place: “choir delayed and church exploded.” But there are 3 other options: “choir delayed and church did not explode,” “choir on time and church exploded” and “choir on time and church did not exploded.” Every day, millions of choirs gather for scheduled rehearsals and their churches don’t blow up. Suddenly, the story has lost its unimaginable quality.
Members of a close-knit group cultivate team spirit by (unconsciously) building illusions. One of these fantasies is a belief in invincibility: “If both our leader and the group are confident that the plan will work, then luck will be on our side.” Next comes the illusion of unanimity: if the others are of the same opinion, any dissenting view must be wrong.
When we are deprived of an option, we suddenly deem it more attractive. It is a kind of act of defiance. It is also known as the Romeo and Juliet effect: because the love is forbidden, it knows no bounds. In the US teenagers drunk just because it’s illegal to drink below the age of 21.
The typical response to scarcity is a lapse in clear thinking. Assess products and services solely on the basis of their price and benefits. It should be of no importance if an item is disappearing fast, nor if any doctors from London take an interest.
The way I see it, my role is to give students a base-rate crash course: “With a degree from this school, the chance of you landing a spot on the board of a Fortune 500 company is less than 0.1%. No matter how smart and ambitious you are, the most likely scenario is that you will end up in middle management.”
He had participants spin it, and afterward, they were asked how many member states the UN has. Their guesses confirmed the anchor effect: the highest estimates came from people who had spun high numbers on the wheel.
Anchors abound, and we all clutch at them. The “recommended retail price” printed on many products is nothing more than an anchor. Sales professionals know they must establish a price at an early state — long before they have an offer. Also, it has been proven that if teachers know students’ past grades, it influences how they will mark new work. The most recent grades act as a starting point.
This continues for a few more weeks until, eventually, the goose’s scepticism gives way. After a few months, the goose is sure that “The farmer has my best interest at heart.” Each additional day’s feeling confirms this. The Christmas goose fell victim to inductive thinking, the inclination to draw universal certainties from individual observations.
To assume that our existence to date is an indication of our future survival is a serious flaw in reasoning. Probably the most serious of all.
The long list of possibilities makes us realize just how many obstacles to happiness exist; in short, there are more bad things than good — and they are far more consequential.
In our evolutionary past, this was even more the case. One stupid mistake and you were dead. Everything could lead to your rapid departure from the game of life — carelessness on the hunt, an inflamed tendon, exclusion from the group and so on. People who were reckless or gung-ho died before they could pass their genes on to the next generation. Those who remained, the cautious, survived. We are their descendants.
So no wonder we fear loss more than we value gain.
Management gurus push employees in large companies to be bolder and more entrepreneurial. The reality is: employees tend to be risk-averse. From their perspective, this aversion makes perfect sense: why risk something that brings them, at best, a nice bonus, and at worst, a pink slip? The downside is larger than the upside. In almost all companies and situations, safeguarding your career trumps any potential reward.
On average, if 2 people were pulling together, each invested just 93% of their individual strength, when 3 pulled together, it was 85%, and with 8 people, just 49%.
Science calls this the social loafing effect. It occurs when individual performance is not directly visible; it blends in to the group effort. It occurs among rowers, but not in relay races, because here, individual contributions are evident.
What worked very well in Japan could not be replicated with the Americans and Europeans — perhaps because social loafing rarely happens there. In the West, teams function better if and only if they are small and consist of diverse, specialized people.
In conclusion: people behave differently in groups than when alone. The disadvantages of groups can be mitigated by making individual performances as visible as possible.
A sheet of copy paper is 0.004 inches thick, its thickness after 50 fold is 70M miles. This equals the distance between the earth and the sun.
In history books, you learn that the success of the French army in the early 1800s is a testament to Napoleon’s superb leadership and strategy. “Every story has a face,” it seems. Indeed this is and ironclad rule in every newsroom. Always on the lookout for the “people angle,” journalists take this principle one step further, and thus fall prey to the fundamental attribution error.
All eyes shift to the CEO’s office, even if we know the truth: economic success depends far more on the overall economic climate and the industry’s attractiveness than on brilliant leadership. It is interesting how frequently firms in ailing industries replace their CEOs — and how seldom that happens in booming sectors.
Cisco, the Silicon Valley firm, was once a darling of the new economy. Business journalists gushed about its success in every discipline: its wonderful customer service, perfect strategy, skillful acquisitions, unique corporate culture and charismatic CEO. In March 2000, it was the most valuable company in the world.
When Cisco’s stock plummeted 80% the following year, the journalists changed their tune. Suddenly the company’s competitive advantages were reframed as destructive short-comings: poor customer service, a woolly strategy, clumsy acquisitions, a lame corporate culture and an insipid CEO.
There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.
Option A kills 400 people. Option B offers a 33% chance that no one will die, and a 66% chance that all 600 will die.
Next came the choice between “98% fat free” and “1% fat.” Again, most respondents chose the first option — despite its higher fat content.
Although we now value contemplation more highly, outright inaction remains a cardinal sin. You get no honor, no medal, no statue with your name on it if you make exactly the right decision by waiting — for the good of the company, the state, even humanity. On the other hand, if you demonstrate decisiveness and quick judgment, and the situation improves, it’s quite possible your boss, or even the mayor, will shake your hand. Society at large still prefers rash action to a sensible wait-and-see strategy.
In new or shaky circumstances, we feel compelled to do something, anything. Afterward we feel better, even if we have made things worse by acting too quickly or too often.
His dream materialized into a villa with 10 rooms, a swimming pool and an enviable view of the lake and mountains. For the first few weeks, he beamed with delight. But soon the cheerfulness disappeared, and 6 months later he was unhappier than ever. What happened? As we now know, the happiness effect evaporates after a few months. The villa was no longer his dream. “I come home from work, open the door and… nothing. I feel as indifferent about the villa as I did about my one-room student apartment.” To make things worse, the poor guy now faced a one-hour commute twice a day. This may sound tolerable, but studies show that commuting by car represents a major source of discontent and stress, and people hardly ever get used to it.
The same goes for people who buy the latest Porsche. Science calls this effect the hedonic treadmill: we work hard, advance and are able to afford more and nicer things, and yet this doesn’t make us any happier.
- Avoid negative things that you cannot grow accustomed to, such as commuting, noise or chronic stress.
- Expect only short-term happiness from material things, such as cars, houses, lottery winnings, bonuses and prizes.
- Aim for as much free time and autonomy as possible, since long-lasting positive effects generally come from what you actively do. Follow your passions even if you must forfeit a portion of your income for them. Invest in friendships. For most people, professional status achieves long-lasting happiness, as long as they don’t change peer groups at the same time. In other words, if you ascend to a CEO role and fraternize only with other executives, the effect fizzles out.
The reason: because I can only crawl forward when in a traffic jam, I spend a disproportionate amount of time in this state. In addition, if the traffic is zooming along, the prospect never crosses my mind. But the moment it arises and I am stuck, I notice it.
Our brain is a connection machine. This is quite practical: if we eat an unknown fruit and feel sick afterward, we avoid it in future, labelling the plant poisonous or at least unpalatable. This is how knowledge comes to be.
In fact, history has no shortage of beginner’s luck: I doubt whether Napoleon or Hitler would have dared launch a campaign against the Russians without the previous victories in smaller battles to bolster them.
Hyperbolic discounting, the fact that immediacy magnetizes us, is a remnant of our animal past. Animals will never turn down an instant reward in order to attain more in the future. You can train rats as much as you like; they’re never going to give up a piece of cheese today to get two pieces tomorrow.
Mischel found that the capacity for delayed gratification is a reliable indicator of future career success. Patience is indeed a virtue.
Making decisions is exhausting. Anyone who has ever configured a laptop online or researched a long trip — flight, hotels, activities, restaurants, weather — know this well: after all the comparing, considering and choosing, you are exhausted. Science calls this decision fatigue.
Decision fatigue is perilous: as a consumer, you become more susceptible to advertising messages and impulse buys. As a decision-maker, you are more prone to erotic seduction. Willpower is like a battery. After a while it runs out and needs to be recharged. How do you do this? By taking a break, relaxing and eating something.
The judges granted requests 1 and 2 because their blood sugar was still high (from breakfast or lunch). However, they struck out applications 3 and 4 because they could not summon enough energy to risk the consequences of an early release. They took the easy option (the status quo) and the men remained in jail.
The worse-off a company is, the greater the talk of the CEO. The extra chatter extends to not just a lot of talking, but to hyperactivity, also designed to mask the hardship. A laudable exception is Jack Welch. He once said: “You would not believe how difficult it is to be simple and clear. People are afraid that they may be seen as a simpleton. In reality, just the opposite is true.”
Verbal expression is the mirror of the mind. Clear thoughts become clear statements, whereas ambiguous ideas transform into vacant ramblings. The trouble is that, in many cases, we lack very lucid thoughts. The world is complicated, and it takes a great deal of mental effort to understand even one facet of the whole. Until you experience such an epiphany, it’s better to heed Mark Twain: “If you have nothing to say, say nothing.” Simplicity is the zenith of a long, arduous journey, not the starting point.
Forget trying to amass all the data. Do your best to get by with the bare facts. It will help you make better decisions. Superfluous knowledge is worthless, whether you know it or not. The greatest obstacle to discovery is not ignorance — it is the illusion of knowledge.
Groups use effort justification to bind members to them — for example, through initiation rites. Gangs and fraternities initiate new members by forcing them to withstand nauseating or vicious tests. Research proves that the harder the “entrance exam” is to pass, the greater the subsequent pride and the value they attach to their membership. MBA schools play with effort justification in this way: they work their students day and night without respite, often to the point of exhaustion. Regardless of how useful or idiotic the coursework, once the students have the MBAs in the bag, they’ll deem the qualification essential to their careers simply because it demanded so much of them.
Expectations are intangible, but their effect is quite real. They have the power to change reality. Can we deprogramme them? Is it possible to live a life free from expectations? Unfortunately not. But you can deal with them more cautiously. Raise expectations for yourself and for the people you love. This increases motivation. At the same time, lower expectations for things you cannot control. As paradoxical as it sounds, the best way to shield yourself from nasty surprises is to anticipate them.
Dear reader, it may surprise you, but I know you personally. This is how I would sum you up: “You have a great need for other people to like and admire you. You have a tendency to be critical of yourself. You have a great deal of unused capacity, which you have not turned to your advantage. While you have some personality weaknesses, you are generally able to compensate for them. Your sexual adjustment has presented problems for you. Disciplined and self-controlled outside, you tend to be worrisome and insecure inside. At times you have serious doubts as to whether you have made the right decision or done the right thing. You prefer a certain amount of change and variety and become dissatisfied when hammed in by restrictions and limitations. You pride yourself as an independent thinker and do not accept others’ statements without satisfactory proof. You have found it unwise to be too frank in revealing yourself to others. At times you are extroverted, affable and sociable while at other times you are introverted, wary and reserved. Some of your aspirations tend to be pretty unrealistic. Security is one of your major goals in life.”
The father of all fallacies, the confirmation bias: we accept whatever corresponds to our self-image and unconsciously filter everything else out. What remains is a coherent portrait.
Truth be told, no one uses this method to make decisions. First of all, we lack enough imagination to list all the possible pros and cons. We are limited by what springs to mind; we can only conjure up what we have seen in our modest experience. It is hard to imagine a storm of the century if you’re only 30 years old. Second, calculating small probabilities is impossible because we do not have enough data on rare events. Third, our brain is not built for such calculations. They require time and effort — not our preferred state.
Whether we like it or not, we are puppets of our emotions. We make complex decisions by consulting our feelings, not our thoughts.
Xiang Yu and Cortes are exceptions. We mere mortals do everything we can to keep open the maximum number of options.
There is no such thing as a free option, but in most other realms, options seem to be free. This is an illusion, however. They also come at a price, but the price tag is often hidden and intangible: each decision costs mental energy and eats up precious time for thinking and living. CEOs who examine every possible expansion option often choose none in the end.
Amazingly, just the opposite is true for propaganda. If it strikes a chord with someone, this influence will only increase over time. This is called the sleeper effect. The source of the argument fades faster than the argument. In other words, your brain quickly forgets where the information came from (e.g. from the department of propaganda). Therefore, any knowledge that stems from an untrustworthy source gains credibility over time.
I’ve written plenty of testimonials for other books, but they were never for rival titles. I hesitated: wouldn’t writing a blurb be cutting off my nose to spite my face? Why should I help someone who might soon vie with me for the top slot? As I pondered the question, I realized social comparison bias had kicked in — that is, the tendency to withhold assistance to people who might outdo you, even if you look like a fool in the long run.
In conclusion: do you foster individuals more talented than you? Admittedly, in the short term the preponderance of stars can endanger your status, but in the long run, you can only profit from their contributions. Others will overtake you at some stage anyway. Until then, you should get in the up-and-comers’ good books — and learn from them.
Alan is smart, hard-working, impulsive, critical, stubborn and jealous. Ben, however, is jealous, stubborn, critical, impulsive, hard-working and smart. Who would you prefer? Most would choose Alan, even though the descriptions are exactly the same. Your brain pays more attention to the first adjectives. This is called the primacy effect.
NIH syndrome causes you to fall in love with your own ideas. This is valid for all kinds of solutions, business ideas and inventions. Companies tend to rate home-grown ideas as far more important than those from outsiders, even if, objectively, this is not the case.
What you master in one area is difficult to transfer to another. Especially daunting is the transfer from academia to real life — from the theoretically sound to the practically possible. Of course, this also counts for this book. It will be difficult to transfer the knowledge from these pages to your daily life. Even for me as the writer that transition proves to be a tough one. Book smarts doesn’t transfer to street smarts easily.
Why should I identify with the Swiss skiers? Was I related to any of them? I didn’t think so. I didn’t even know what they thought or read, and if I lived a few feet over the Swiss border, I would probably (have to) cheer for another team altogether.
This brings us to the question: does identifying with a group — a sports team, an ethnicity, a company, a state — represent flawed thinking?
Have you ever noticed that, in science-fiction movies, only the humans have different cultures and the aliens do not?
Your amygdala plays a crucial role. This is evident not least in your political orientation: the more averse you are to uncertainty, the more conservatively you will vote. Your political views have a partial biological underpinning.
The salient effect ensures that outstanding features receive much more attention than they deserve. Since marijuana is the salient feature in this accident, Kurt believes that it is responsible for the crash.
However, it never crossed my mind to spend this hard-earned money on something so unnecessary. The most I treated myself was a trip to the movies every now and then. It was only upon reflection that I realized how irrational my behavior had been. Money is money after all. But we don’t see it that way. Depending on how we get it, we treat it differently. Money is not naked; it is wrapped in an emotional shroud.
Marketing strategists recognize the usefulness of the house-money effect. Online gambling sites “reward” you with $100 credit when you sign up. Credit card companies offer the same when you fill in the application form. Airlines present you with a few thousand miles when you join their frequent flyer clubs.
Procrastination is the tendency to delay unpleasant but important acts. Procrastination is idiotic because no project completes itself. We know that these tasks are beneficial, so why do we keep pushing them on to the back burner? Because of the time lapse between sowing and reaping. To bridge it requires a high degree of mental energy.
Of all the emotions, envy is the most idiotic. Why? Because it is relatively easy to switch off. This is in contrast to anger, sadness, or fear. Envy is the most stupid of vices, for there is no single advantage to be gained from it. In short, envy is the most sincere type of flattery; other than that, it’s a waste of time.
Why was this ban created in the first place? To conceal the true costs of war. We can easily find out the number of casualties, but statistics leave us cold. People, on the other hand, especially dead people, spark an emotional reaction.
The media have long known that factual reports and bar charts do not entice readers. Hence the guideline: give the story a face.
In conclusion: be careful when you encounter human stories. Ask for the facts and the statistical distribution behind them. You can still be moved by the story, but this way, you can put it into the right context. If, however, you seek to move and motivate people for your own ends, make sure your tale is seasoned with names and faces.
Why are cost and schedule overruns so frequent? Because it is not the best offer overall that wins; it is whichever one looks best on paper. This is “reverse Darwinism”: whoever produces the most hot air will be rewarded with the project. However, is strategic misrepresentation simply brazen deceit? Yes and no. Are women who wear make-up frauds? Are men who lease Porsches to signal financial prowess liars? Yes and no. Objectively they are, but the deceit is socially acceptable, so we don’t get worked up about it.
Essentially, if you think too much, you cut off your mind from the wisdom of your feelings. This may sound a little esoteric — and a bit surprising coming from someone like me who strives to rid my thinking of irrationality — but it is not. Emotions from in the brain, just as crystal-clear, rational thoughts do. They are merely a different form of information processing — more primordial, but not necessarily an inferior variant. In fact, sometimes they provide the wiser counsel.
What do you make of this story? As a business analyst, you want to understand why the business idea did not work: was he a bad leader? Was the strategy wrong, the market too small or the competition too large? As a marketer, you imagine the campaigns were poorly organized, or that he failed to reach his target audience. If you are a financial expert, you ask whether the loan was the right financial instrument. As a local journalist, you realize the potential of the story: how lucky that he killed himself! As a writer, you think about how the incident could develop into a kind of Greek tragedy. As a banker, you believe an error took place in the loan department. As a socialist, you blame the failure of capitalism. As a religious conservative, you see in this a punishment from God. As a psychiastrist, you recognize low serotonin levels. Which is the “correct” viewpoint?
He has one goal: to have a head as clear as water. For this, you don’t need to have your whole life sorted into tidy compartments. But it does mean that you need a detailed plan for dealing with the messier areas. This plan must be divided into step-by-step tasks and preferably written down. Only when this is done can your mind rest. The adjective “detailed” is important. “Organize my wife’s birthday party” or “find a new job” are worthless. Allen forces his client to split such projects into 20 to 50 individual tasks.
It’s worth noting that Allen’s recommendation seems to fly in the face of the planning fallacy: the more detailed our planning, the more we tend to overlook factors from the periphery that will derail our projects. But here is the rub: if you want peace of mind, go for Allen’s approach. If you want the most accurate estimate on cost, benefit, and duration of a project, forget your detailed plan and look up similar projects. If you want both, do both.
Last week, while on a walk, it occurred to me that nothing hurt. It was an unexpected thought. I rarely experience pain anyway, but when I do, it is very present. But the absence of pain I rarely recognize. It was such a simple, obvious fact, it amazed me. For a moment, I was elated — until this little revelation slipped from my mind again.
Would be less happy without the work? Probably not. Had the symphony never been composed, no one would miss it.
In conclusion: we have problems perceiving non-events. We are blind to what does not exist. We realize if there is a war, but we do not appreciate the absence of war during peacetime. If we are healthy, we rarely think about being sick. Or, if we get off the plane in Cancun, we do not stop to notice that we did not crash. If we thought more frequently about absence, we might well be happier. But it is tough mental work.
As long as we believe in singular reasons, we will always be able to trace triumphs or disaster back to individuals and stamp them “responsible.” The idiotic hunt for a scapegoat goes hand-in-hand with the exercise of power — a game that people have been playing for thousands of years.
Second, news is irrelevant. In the past 12 months, you have probably consumed about 10K news snippets. Be very honest: name one of them, just one, that helped you make a better decision — for your life, your career or your business — compared with not having this piece of news. No one I have asked has been able to name more than 2 useful news stories — out of 10K. A miserable result. News organizations assert that their information gives you a competitive advantage. In reality, news consumption represents a competitive disadvantage.
Here is Plato’s analogy: a rider steers wildly galloping horses; the rider signifies reasons and the galloping horses embody emotions. Reason tames feelings. If this fails, irrationality runs free.
If you spend 15 minutes in a shopping mall, you will pass more people than our ancestors saw during their entire lifetimes.
In our hunter-gatherer past, activity paid off more often than reflection did.
Our brains are designed to reproduce rather than search for the truth. In other words, we use our thoughts primarily to persuade. Whoever convinces others secures power and thus access to resources. Such assets represent a major advantage for mating and for rearing offspring. That truth is, at best, a secondary focus is reflected in the book market: novels sell much better than non-fiction titles, in spite of the latter’s superior candor.