Psychology – Page 45 – artdiamondblog.com

Experience Can Provide Sound Intuitive Knowledge

(p. 11) . . . , the accurate intuitions of experts are better explained by the effects of prolonged practice than by heuristics. We can now draw a richer and more balanced picture, in which skill and heuristics are alternative sources of intuitive judgments and choices.
The psychologist Gary Klein tells the story of a team of firefighters that entered a house in which the kitchen was on fire. Soon after they started hosing down the kitchen, the commander heard himself shout, “Let’s get out of here!” without realizing why. The floor collapsed almost immediately after the firefighters escaped. Only after the fact did the commander realize that the fire had been unusually quiet and that his ears had been unusually hot. Together these impressions prompted what he called a “sixth sense of danger.” He had no idea what was wrong, but he knew something was wrong. It turned out that the heart of the fire had not been in the kitchen but in the basement beneath where the men had stood.
We have all heard such stories of expert intuition: the chess master who walks past a street game and announces “White mates in three” without stopping, or the physician who makes a complex diagnosis after a single glance at a patient. Expert intuition strikes us as magical, but it is not. Indeed, each of us performs feats of intuitive expertise many times each day. Most of us are pitch-perfect in detecting anger in the first word of a telephone call, recognize as we enter a room that we were the subject of the conversation, and quickly react to subtle signs that the driver of the car in the next lane is dangerous. Our everyday intuitive abilities are no less marvelous than the striking insights of an experienced firefighter or physician–only more common.
The psychology of accurate intuition involves no magic. Perhaps the best short statement of it is by the great Herbert Simon, who studied chess masters and showed that after thousands of hours of practice they come to see the pieces on the board differently from the rest of us. You can feel Simon’s impatience with the mythologizing of expert intuition when he writes: “The situation has provided a cue; this cue has given the expert access to information stored in memory, and the information provides the answer. Intuition is nothing more and nothing less than recognition.”

Source:
Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.
(Note: ellipsis added.)

Behavioral Economics Does Not Undermine Capitalism

Source of book image: http://www.brainpickings.org/wp-content/uploads/2011/10/thinkingfastandslow.jpg

Daniel Kahneman first gained fame in economics through research with Tversky in which they showed that some of economists’ assumptions about human rationality do not always hold true.
Kahneman, whose discipline is psychology, went on to win the Nobel Prize in economics, sharing the prize with Vernon Smith. (Since the Prize is not normally awarded posthumously, Tversky was not a candidate.)
I have always thought that ultimately there should be only one unified science of human behavior—not claims that are “true” in economics and other claims that are “true” in psychology. (I even thought of minoring in psychology in college, before I realized that the price of minoring included taking time-intensive lab courses where you watched rats run through mazes.)
But I don’t think the implications of current work in behavioral economics are as clear as has often been asserted.
Some important results in economics do not depend on strong claims of rationality. For instance, the most important “law” in economics is the law of demand, and that law is due to human constraints more than to human rationality. Gary Becker, early in his career, wrote an interesting paper in which he showed that the law of demand could also be derived from habitual and random behavior. (I remember in conversation, George Stigler saying that he did not like this paper by Becker, because it did not hone closely to the rationality assumption that Stigler and Becker defended in their “De Gustibus” article.)
The latest book by Kahneman is rich and stimulating. It mainly consists of cataloging the names of, and evidence for, a host of biases and errors that humans make in thinking. But that does not mean we cannot choose to be more rational when it matters. Kahneman believes that there is a conscious System 2 that can over-ride the unconscious System 1. In fact, part of his motive for cataloging bias and irrationality is precisely so that we can be aware, and over-ride when it matters.
Sometimes it is claimed, as for instance in a Nova episode on PBS, that bias and irrationality were the main reasons for the financial crisis of 2008. I believe the more important causes were policy mistakes, like Clinton and Congress pressuring Fannie Mae and Freddie Mac to make home loans to those who did not have the resources to repay them; and past government bailouts encouraging finance firms to take greater risks. And the length and depth of the crisis were increased by government stimulus and bailout programs. If instead, long-term cuts had been made in taxes, entrepreneurs would have had more of the resources they need to create start-ups that would have stimulated growth and reduced unemployment.
More broadly, aspects of behavioral economics mentioned, but not emphasized, by Kahneman, can actually strengthen the underpinnings for the case in favor of entrepreneurial capitalism. Entrepreneurs may be more successful when they are allowed to make use of informal knowledge that would not be classified as “rational” in the usual sense. (I discuss this some in my forthcoming paper, “The Epistemology of Entrepreneurship.”)
Still, there are some useful and important examples and discussions in Kahneman’s book. In the next several weeks, I will be quoting some of these.

Book discussed:
Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

The Becker article mentioned above is:
Becker, Gary S. “Irrational Behavior and Economic Theory.” Journal of Political Economy 70, no. 1 (Feb. 1962): 1-13.

The Stigler-Becker article mentioned above is:
Stigler, George J., and Gary S. Becker. “De Gustibus Non Est Disputandum.” American Economic Review 67, no. 2 (March 1977): 76-90.

“Nothing Lasts Forever”

“How will we react when history presents us with uncertainty and risk? A sign on a Stalin bust in Prague in 1989 reads ‘Nothing Lasts Forever.'” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) The psychologist Daniel Kahneman writes that humans naturally “tend to exaggerate our ability to forecast the future, which fosters optimistic overconfidence,” something he terms the “planning fallacy.”
“In terms of its consequences for decisions, the optimistic bias may well be the most significant of the cognitive biases,” he notes. “When forecasting the outcomes of risky projects, executives too easily fall victim to the planning fallacy.”

For the full commentary, see:
JOHN BUSSEY. “THE BUSINESS; The Euro Crisis in Ourselves.” The Wall Street Journal (Fri., June 1, 2012): A13.

Some Tasks Are Done Better in Private Offices

Source of book image: http://timeopinions.files.wordpress.com/2012/01/quiet-final-jacket.jpg

(p. 4) When the R.C. Hedreen Company, a real estate development firm based in Seattle, commissioned a renovation of a 10,800-square-foot floor in an old downtown office building five years ago, it specified a perimeter of private offices. Collaborative spaces are provided for creative teamwork, but the traditional offices remain the executives’ home ports.

”Individually, a lot of our workday is taken up with tasks that are better served by working alone in private offices,” says David Thyer, Hedreen’s president.
Susan Cain, author of ”Quiet: The Power of Introverts in a World That Can’t Stop Talking,” is skeptical of open-office environments — for introverts and extroverts alike, though she says the first group suffers much more amid noise and bustle.
Introverts are naturally more comfortable toiling alone, she says, so they will cope by negotiating time to work at home, or by isolating themselves with noise-canceling headphones — ”which is kind of an insane requirement for an office environment, when you think about it,” she says.
Ms. Cain also says humans have a fundamental need to claim and personalize space. ”It’s the room of one’s own,” she says. ”Your photographs are on the wall. It’s the same reason we have houses. These are emotional safety zones.”

For the full story, see:
LAWRENCE W. CHEEK. “Please, Just Give Me Some Space: In New Office Designs, Room to Roam and to Think.” The New York Times, SundayBusiness Section (Sun., March 18, 2012): 1 & 4.

The book mentioned is:
Cain, Susan. Quiet: The Power of Introverts in a World That Can’t Stop Talking. New York: Crown, 2012.

Workers Want to See Compensation Related to Contribution

This is a great example contra (or at least qualifying) Daniel Pink’s claim that all you need do for knowledge workers is provide them enough money so that they can provide for the basic needs of themselves and their family.

(p. 145) The public offering process brought details of the intended allocation of Pixar stock options into view. A registration statement and other documents with financial data had to be prepared for the Securities and Exchange Commission and a prospectus needed to be made ready for potential investors. These documents had to be reviewed and edited, and it was here that the word apparently leaked: A small number of people were to receive low-cost options on enormous blocks of stock. Catmull, Levy, and Lasseter were to get options on 1.6 million shares apiece; Guggenheim and Reeves were to get 1 million and 840,000, respectively. If the company’s shares sold at the then-planned price of fourteen dollars, the men would be instant multimillionaires.

The revelation was galling. Apart from the money, there was the symbolism: The options seemed to denigrate the years of work everyone else had put into the company. They gave a hollow feel to Pixar’s labor-of-love camaraderie, its spirit that everyone was there to do cool work together. Also, it was hard not to notice that Levy, one of the top recipients, had just walked in the door.
“There was a big scene about all that because some people got (p. 146) huge amounts more than other people who had come at the same time period and who had made pretty significant contributions to the development of Pixar and the ability to make Toy Story,” Kerwin said. “People like Tom Porter and Eben Ostby and Loren Carpenter–guys that had been there since the beginning and were part of the brain trust.”
Garden-variety employees would also get some options, but besides being far fewer, those options would vest over a four-year period. Even employees who had been with the organization since its Lucasfilm days a decade earlier–employees who had lost all their Pixar stock in the 1991 reorganization–would be starting their vesting clock at zero. In contrast, most of the options of Catmull, Lasseter, Guggenheim, and Reeves vested immediately–they could be turned into stock right away.
“I decided, ‘Well, gee, I’ve been at this company eight years, and I’ll have been here twelve years before I’m fully vested,’ ” one former employee remembered. ” ‘It doesn’t sound like these guys are interested in my well-being.’ A lot of this piled up and made me say, ‘What am I doing? I’m sitting around here trying to make Steve Jobs richer in ways he doesn’t even appreciate.’ ”

Source:
Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.
(Note: italics in original.)
(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

For Daniel Pink’s views, see:
Pink, Daniel H. Drive: The Surprising Truth About What Motivates Us. New York: Riverhead Books, 2009.

During Dreams Brain Extracts Meaning from Fragile Memories

(p. C4) In the past, people often had one explanation for sleep and another for dreams. That now seems wrong. One of the chief functions of sleep seems to be achieved during dreaming: the consolidation of memory. Sleep certainly improves memory performance of several different kinds: emotional, spatial, procedural and verbal.

But the new thinking is that, during sleep, the brain reprocesses or transforms fragile new memories into more permanent forms, sets them in mental context and extracts their meaning. And dreaming is a symptom that this is going on.

For the full commentary, see:
MATT RIDLEY. “MIND & MATTER; To Sleep, Perchance to Dream–But Why?” The Wall Street Journal (Sat., December 3, 2011): C4.

Simple Heuristics Can Work Better than Complex Formulas

(p. C4) Most business people and physicians privately admit that many of their decisions are based on intuition rather than on detailed cost-benefit analysis. In public, of course, it’s different. To stand up in court and say you made a decision based on what your thumb or gut told you is to invite damages. So both business people and doctors go to some lengths to suppress or disguise the role that intuition plays in their work.
Prof. Gerd Gigerenzer, the director of the Max Planck Institute for Human Development in Berlin, thinks that instead they should boast about using heuristics. In articles and books over the past five years, Dr. Gigerenzer has developed the startling claim that intuition makes our decisions not just quicker but better.
. . .
The economist Harry Markowitz won the Nobel prize for designing a complex mathematical formula for picking fund managers. Yet when he retired, he himself, like most people, used a simpler heuristic that generally works better: He divided his retirement funds equally among a number of fund managers.
A few years ago, a Michigan hospital saw that doctors, concerned with liability, were sending too many patients with chest pains straight to the coronary-care unit, where they both cost the hospital more and ran higher risks of infection if they were not suffering a heart attack. The hospital introduced a complex logistical model to sift patients more efficiently, but the doctors hated it and went back to defensive decision-making.
As an alternative, Dr. Gigerenzer and his colleagues came up with a “fast-and-frugal” tree that asked the doctors just three sequential yes-no questions about each patient’s electrocardiographs and other data. Compared with both the complex logistical model and the defensive status quo, this heuristic helped the doctors to send more patients to the coronary-care unit who belonged there and fewer who did not.

For the full commentary, see:
By MATT RIDLEY. “MIND & MATTER; All Hail the Hunch–and Damn the Details.” The Wall Street Journal (Sat., December 24, 2011): C4.
(Note: ellipsis added.)

A couple of Gigerenzer’s relevant books are:
Gigerenzer, Gerd. Gut Feelings: The Intelligence of the Unconscious. New York: Penguin Books, 2007.
Gigerenzer, Gerd. Rationality for Mortals: How People Cope with Uncertainty. New York: Oxford University Press, USA, 2008.

Hero Was Oblivious to What Others Thought

Author Eyal Press. Source of photo: online version of the NYT review quoted and cited below.

(p. C26) Maybe the refined intellectual, engaged with ideas, manages to think herself above petty concerns like nationalism? That was what Mr. Press suspected he would find in Aleksander Jevtic, the Serb who pulled many Croatians from a line of men destined to be tortured or killed in 1991.

“Aleksander Jevtic had somehow avoided internalizing this us-versus-them thinking,” Mr. Press writes, “which I assumed had something do with his education and intellect, a rare skepticism and levelheadedness that enabled him to see past the blinding passions and compellingly simple ideas that drove the logic of hate.”
But when Mr. Press at last meets Mr. Jevtic, he finds not a Balkan Isaiah Berlin, nor a soldier-philosopher like Orwell. This lifesaver, this ethical prince among men, turns out to be a slovenly couch potato living off rents he collects from a building he owns: “He also liked sleeping late, hanging out with friends, and watching sports” on his “giant flat-screen television.”
Mr. Press surveys the findings of social scientists and neuroscientists, but none of them have entirely figured out where bravery comes from. Every beautiful soul is different.
Mr. Jevtic’s wife is Croatian, which certainly helped him think of the enemy as human. But Mr. Jevtic is also a misanthrope, and his natural social isolation helped him hear the call of an instinctive decency; he didn’t care what his fellow Serbians, including his commanding officers, might think.
He “wasn’t in the business of making good impressions,” Mr. Press writes. “His obliviousness to what others thought wasn’t necessarily his most becoming feature. But it had served him well in 1991.”

For the full review, see:

MARK OPPENHEIMER. “BOOKS OF THE TIMES; The Loneliness in Doing Right.” The New York Times (Fri., February 24, 2012): C26.
(Note: the online version of the review is dated February 23, 2012.)

The book under review is:
Press, Eyal. Beautiful Souls: Saying No, Breaking Ranks, and Heeding the Voice of Conscience in Dark Times. New York: Farrar, Straus and Giroux, 2012.

Source of book image:
http://jacketupload.macmillanusa.com/jackets/high_res/jpgs/9780374143428.jpg

“Amazed by the Short-Term Psychology in the Market”

(p. A1) Even after European leaders appeared to have averted a chaotic default by Greece with an eleventh-hour deal for aid, worries persist that a debt disaster on the Continent has merely been delayed.

The tortured process that culminated in that latest bailout has exposed the severe limitations of Europe’s approach to the crisis. Many fear that policy makers simply don’t have the right tools to deal with other troubled countries like Italy, Spain, Ireland and Portugal, a situation that could weigh on the markets and the broader economy.
“I don’t want to be a Cassandra, but the idea that it’s over is an illusion,” said Kenneth S. Rogoff, a professor of economics at Harvard and co-author of “This Time Is Different: Eight Centuries of Financial Folly.” “I am amazed by the short-term psychology in the market.”
. . .
(p. B3) “I don’t think we’re anywhere near the endgame,” Professor Rogoff of Harvard said.

For the full commentary, see:
PETER EAVIS. ” NEWS ANALYSIS; For Greece, a Bailout; for Europe, Perhaps Just an Illusion.” The New York Times (Weds., February 22, 2012): A1 & B3 (sic).
(Note: ellipsis added.)
(Note: the online version of the commentary is dated February 21, 2012.)

Rogoff and Reinhart’s thought-provoking and much-praised book is:
Reinhart, Carmen M., and Kenneth Rogoff. This Time Is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press, 2009.

Study Finds Lack of Control at Office Is Deadly for Men

(p. C12) . . . Israeli scientists found that the factor most closely linked to health was the support of co-workers: Less-kind colleagues were associated with a higher risk of dying. While this correlation might not be surprising, the magnitude of the effect is unsettling. According to the data, middle-age workers with little or no “peer social support” in the workplace were 2.4 times more likely to die during the study.
But that wasn’t the only noteworthy finding. The researchers also complicated longstanding ideas about the relationship between the amount of control experienced by employees and their long-term health. Numerous studies have found that the worst kind of workplace stress occurs when people have little say over their day. These employees can’t choose their own projects or even decide which tasks to focus on first. Instead, they must always follow the orders of someone else. They feel like tiny cogs in a vast corporate machine.
Sure enough, this new study found that a lack of control at the office was deadly–but only for men. While male workers consistently fared better when they had some autonomy, female workers actually fared worse. Their risk of mortality was increased when they were put in positions with more control.
While it remains unclear what’s driving this unexpected effect, one possibility is that motherhood transforms control at the office–normally, a stress reducer–into a cause of anxiety. After all, having a modicum of control means that women must constantly navigate the tensions between work and family. Should they stay late at their job? Or go home and help take care of the kids? This choice is so stressful that it appears to increase the risk of death.

For the full summary, see:
JONAH LEHRER. “HEAD CASE; Your Co-Workers Might Be Killing You; Hours don’t affect health much–but unsupportive colleagues do.” The Wall Street Journal (Sat., August 20, 2011): C12.
(Note: ellipsis added.)

The paper referred to in the quote from Lehrer’s summary is:
Shirom, Arie, Sharon Toker, Yasmin Alkaly, Orit Jacobson, and Ran Balicer. “Work-Based Predictors of Mortality: A 20-Year Follow-up of Healthy Employees.” Health Psychology 30, no. 3 (May 2011): 268-75.

Evidence that IQ Is Half Nature and Half Nurture

(p. C4) Hardly any subject in science has been so politically fraught as the heritability of intelligence. For more than a century, since Francis Galton first started speculating about the similarities of twins, nature-nurture was a war with a stalemated front and intelligence was its Verdun–the most hotly contested and costly battle.
So would it not be rather wonderful if a scientific discovery came along that called a truce and calmed all the fury? I think this is about to happen. Call it the Goldilocks theory of intelligence: not too genetic, not too environmental–and proving that intelligence is impossible to meddle with, genetically.
The immediate cause of this optimism is a recent paper in Molecular Psychiatry, which confirms that genes account for about half of the difference in IQ between any two people in a modern society, but that the relevant genes are very numerous and the effect of each is very small.

For the full commentary, see:
MATT RIDLEY. “MIND & MATTER; A Truce in the War Over Smarts and Genes.” The Wall Street Journal (Sat., August 20, 2011): C4.

The paper refereed to in the quote from Ridley’s commentary is:
Davies, G., A. Tenesa, A. Payton, J. Yang, S. E. Harris, D. Liewald, X. Ke, S. Le Hellard, A. Christoforou, M. Luciano, K. McGhee, L. Lopez, A. J. Gow, J. Corley, P. Redmond, H. C. Fox, P. Haggarty, L. J. Whalley, G. McNeill, M. E. Goddard, T. Espeseth, A. J. Lundervold, I. Reinvang, A. Pickles, V. M. Steen, W. Ollier, D. J. Porteous, M. Horan, J. M. Starr, N. Pendleton, P. M. Visscher, and I. J. Deary. “Genome-Wide Association Studies Establish That Human Intelligence Is Highly Heritable and Polygenic.” Molecular Psychiatry 16, no. 10 (October 2011): 996-1005.