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FALLACIES AND FOLLY


40 Books in 2018 / #1

Stuart Sutherland

IRRATIONALITY – THE ENEMY WITHIN

336pp Pinter and Martin

Let’s start with a question: “Are there more words ending in ‘ing’ than ending in ‘-n-‘?” Quickly; give me an answer.

Those two sentences represent the beginning and end of Stuart Sutherland’s cult book. Spine-broken, cover-torn copies used to resell for £100 before being reprinted in 2013, the 21st anniversary of its first edition.

The central premise is straightforward: to expose the failings of human reasoning, judgment and intuition. Sutherland explores the inconsistencies of human behaviour, and sets out to discover why even experts find it so hard to make rational and unbiases decisions.

(Almost 250 references are provided for the sources of the experimental results mentioned in the book.)

AVAILABLE, FIRST HALO

My first sentence starts the exploration. Most people think that “ing” endings are more common, but in fact “-n-“ must be more frequent since all “ing” endings have ‘n’ as the penultimate letter.

It’s easier to bring words ending “-ing” to mind than those ending “-n-”. Which is fine. Under time pressure people don’t go through the argument outlined above.

Judging by the first thing that comes to mind is called the ‘availability error’, the first of the Big Three mental trip-ups that permeates all reasoning. The organizers of lotteries give maximum visibility to winners, and none to the great majority who don’t. Crashes, riots and war news coverage is dramatic, leading people to believe they are twice as likely to die from an accident as from a stroke.

In fact, in 2010 (most recent comparable UK statistics I found), 1,970 died in transport accidents, 49,366 died from a stroke.

It doesn’t have to be anything dramatic to lead to irrationality. Consider this study: one group is asked to evaluate a person based on these adjectives, (1) ‘intelligent, industrious, impulsive, critical, stubborn and envious’. The other group were given (2) ‘envious, stubborn, critical, impulsive, industrious and intelligent’.

All participants were asked to evaluate the person on a rating sheet. Same adjectives, reverse order. Readers of list (1) evaluated the person considerably more highly. Hence the second of the Big Three is the ‘primacy error’.

Beliefs are formed by first impressions; later evidence is interpreted in the light of these beliefs.

(As Sutherland recommends: ‘If you are writing a book, make sure that the beginning is really good.’ I assume that’s true for blog posts too.)

The third of Big Three is the ‘halo effect’. If a person has one salient good trait, his/her other characteristics are likely to be judged by others as better than they really are. Good looking people tend to be rated highly on intelligence, athletic prowess, sense of humour and so on.

The inverse also happens. There are examples of people serving on juries saying, “I don’t like the look of him/her. We should find them guilty.” (See earlier blog post about ’12 Angry Men’.)

The Big Three appear as contributing factors throughout ‘Irrationality’, to a catalogue of in-groups and out-groups (including stereotypes), obedience, conformity, illusory correlation, the boomerang effect, sunk cost error, and the misuse of rewards.

All in all, a catalogue of more 100 specific irrational errors. I’ve chosen three examples which Sutherland blames on ‘our inability to think straight’.

DISTORTING THE EVIDENCE

Field Marshal Bernard Montgomery, 1st Viscount Montgomery of Alamein, KG, GCB, DSO, PC, DL, was one of the most decorated and successful leaders of the Allied Forces during WW2. His command included the Second Battle of El Alamein, and Operation Overlord up to and after the Battle of Normandy.

And he was responsible for one of the Allies’ greatest failures: Operation Market Garden.

Simply put, Montgomery conceived a plan to parachute 35,000 men into southern Holland in 1944, take the bridge at Arnhem and “end the war by Christmas”.

There are plenty of books and websites if you’d like more detail; I’m not a military strategist. What’s important in the ‘irrational context’ is the ability of senior people to distort evidence.

Based on facts and real people, here’s an early scene from Richard Attenborough’s epic ‘A Bridge Too Far’, which also shows the ability of senior staff to support folly.

CHARACTERS

Lt. Gen. Roy BROWNING – Commander of the Airborne Corp (pic: Dirk Bogarde)

Maj. FULLER – intelligence officer, with evidence from a low-level reconnaissance of the area

FULLER SHOWS AREA PHOTOS TO BROWNING

FULLER - I've had this one enlarged.

BROWNING - I shouldn't worry about them.

FULLER - But, sir, you see that they are tanks.

BROWNING - I doubt if they're fully serviceable.

FULLER - They still have guns.

BROWNING- So have we.

FULLER - But, sir, if they weren't serviceable, why would they try to conceal them?

BROWNING - Normal routine, Fuller.

FULLER - But, sir, we keep getting reports from the Dutch Underground.

BROWNING - I've read them! And so has Field Marshal Montgomery. Now look here. There have been thousands of photographs from this sortie and from the others. How many of them have shown tanks?

FULLER - Just these, sir.

BROWNING - And you seriously consider asking us to cancel the biggest operation mounted since D-Day... because of three photographs?

FULLER - No, sir.

BROWNING - Sixteen consecutive drops have been cancelled in the last few months for one reason or another. But this time the party's on...and no one is going to call it off. Is that fully understood?

FULLER - Yes, sir.

History shows that Montgomery and his staff tenaciously stuck with the ‘Operation Market Garden’ decision. They rejected and/or distorted messages that conflicted with it, and had subordinates who either bolstered their leader or confirmed to the majority view.

OVERCONFIDENCE

Sutherland has a thing about Engineers. For all their expertise and training, the profession does have a track record of failing to foresee the reactions of operators and of the public. Their myopia is further shortened by senior managers.

Herald of Free Enterprise: a roll-on/roll-off ferry with 8-decks which capsized just moments after leaving the Belgian port of Zeebrugge, killing 193 passengers and crew.

In Sutherland’s view, it was a disaster caused by irrationality at all levels.

The immediate cause was water entering the car decks because the ship sailed with the bow doors open. The following factors contributed:

  • The captain had asked for an automatic signal on the bridge showing the state of the doors. None was supplied;

  • The assistant bosun should have closed the doors. Instead, he was fast asleep;

  • The officer who should have checked that they were closed had been called away. There was a shortage of crew;

  • The ferry had been designed to ply between Dover and Calais; the ramp at Zeebrugge was lower than at Calais. The ship had to take on ballast water to lower it to load cars;

  • The captain had been ordered to save 20 minutes on the crossing. There was no time to pump out the ballast before leaving;

  • And because of time pressure, the captain left at full speed. That created a bow wave which swept into the car decks.

Had any one of these factors been absent, the ferry might not have sunk. And as a report by W. A. Wagenaar stressed, the main responsibility must lie with the managers. They insisted on a fast crossing, refused the earlier request for automatic signal reporting, and failed to provide sufficient crew.

Overconfidence leading to greed or sloth.

ORGANIZATIONAL FOLLY

“We can’t do that: it will set a precedent.”

That’s the opening to Sutherland’s chapter on companies, committees and, especially, the Civil Service, assuming rational organisations will adopt the best way available to pursue its ends. In practice this rarely happens because its members may put their own ends such as self-advancement before those of the organisation to which they belong.

Much of the chapter draws on ‘Your Disobedient Servant’, a 1978 memoire by Leslie Chapman who succeeded in cutting wasted spend in one regional public department by one third. He then tried to repeat this success. As he points out, ‘wasteful practices in public bodies have no limits’:

  • Islington Council paid a firm £730 to weed 2 square metres of shrubbery;

  • Liverpool Council paid two gas-light lighters and a mate over £250,000 over eight years – while there were no gas lamps in Liverpool;

  • Leicestershire Council deprived 200 physically handicapped children of their holiday by cutting their subsidy; they made up for this by increasing their Chairman’s allowances by four times the amount.

The chapter is entertaining and irritating in equal measure. It is full of examples to make voters’ and citizens’ jaws drop. But Sutherland only skims the surface with somewhat small-scale stories. It’s the Afterword (by James Ball) that resets the parameters of institutional irrationality, with an example as big as it’s possible to be:

The 2008 global financial crisis.

It was triggered by a housing boom born of irresponsible lending. Households with low incomes, poor credit histories or even (in the US) no incomes at all, were offered mortgages to buy houses which they could not afford.

Loans to these individuals were more expensive than the regular mortgages, which would mean higher monthly payments for people with less money.

The enticement was a low “introductory” rate for two or three years, perhaps 5 points lower than the ballooning rate that would follow. Very affordable to start with, and very attractive on the banks’ books: everyone was keeping up-to-date.

The people taking the loan were irrational; they were relying on remortgaging the loans indefinitely, postponing defaulting on the mortgage (and losing their home).

The bankers, though, were acting rationally. Banks had worked out how to package and resell loans, with a seal of approval from credit rating agencies. From the banks point of view, the long-term viability of the loan was unimportant; it needed to be safe long enough to sell on.

(All this is told with great clarity in the Michael Lewis book – and later film – ‘The Big Short’.)

The salespeople offering mortgages were incentivised to make as many deals as possible. The incentives for the bank executives relied on short term sales and share prices. The ratings agencies were, in turn, paid by the banks whose products they were endorsing.

When the housing bubble popped, it was too big to stop. Too many loans were defaulting, now repackaged and spread too widely across the system.

CURING THE COSTS

As I mentioned at the start of this essay, irrationality is everywhere, at every level. Individuals and organizations, students and company executives, government officials and army generals; all falling foul of effects errors, and fallacies:

  • when gamblers roll dice, they throw ‘hard’ when they want a big number and ‘softly’ when they need low;

  • if hiring organisations want to understand a candidates’ personality, graphology is still used in some quarters;

  • in psychometric tests, Rorschach ink-blots are still in psychologists’ kit bags;

  • and 95% of drivers think they (we?) are better than average.

All these are amusing, and rather saddening at the same time. Even more so is the refusal of correct thinking when the mistake is pointed out. Taking decisions in a hurry or while under stress is a unwise, since one’s thinking is too inflexible. Where the evidence does not point conclusively in one direction, we should suspend judgment.

“It is a strength not weakness to change one’s mind.”

At the simplest level, remember Benjamin Franklin’s advice: write down the pros and cons before taking an important decision.

A much harder – but much more accurate – thinking process is to use the ideas that form the centre of Sutherland’s book: elementary probability and elementary statistics. As he points out, the mathematics needed to solve every numerical problem in ‘Irrationality’ is much easier to acquire than elementary geometry or calculus.

So, I’ll leave you with a clarion call by ‘mathemagician’ Arthur Benjamin, in one of the shortest, most rational presentations in the TED catalogue.

(1,977 words. Thanks for reading.)

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