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More on the bailout and 'thinking about thinking'

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8 October 2008 14:09

Guest blogger: Paul Monk is Managing Director of Austhink Consulting, specialists in using visual techniques for decision analysis. He is also a prolific writer on politics.

Jonah Lehrer's forthcoming book, How We Decide, ought to make interesting reading. His central observation in the Boston Globe piece Sam refers to is drawn from the work of Philip Tetlock, and it warrants some comment, especially as applied to strategic decisions in politics and business.

Tetlock's findings, in his marvellous book, Expert Political Judgment, were that in complex matters, expertise conferred almost no value in predicting the future. We should not, therefore, place any great confidence in what market analysts or political pundits tell us and, the more confident or dogmatic they are, the more sceptical we should be. But of course, none of us is well equipped to make better predictive judgments than the experts, so we should be suitably modest about our own judgments too. 
 
So far so good, except that all but universal human proclivities, compounded by the relentless pressures placed upon experts to make predictions and then defend them, make Tetlock's findings much more alarming than the raw data alone suggest. As Lehrer correctly points out, Tetlock's proposed 'solution' is that we all, but especially experts or high level decision makers, assiduously practice the 'art of self-overhearing' when we are making decisions, especially those entailing predictions.

Tetlock borrows this idea from the literary critic Harold Bloom, who identified it in the mental life of a fictitious character — Hamlet. Lehrer doesn't stop to note, any more than Tetlock did, that Hamlet was, notoriously, driven to despair by his quicksilver capacity for thought and self-overhearing and that, at the end of Shakespeare's play, almost all the main characters, including Hamlet himself, lie dead. 
 
Tetlock and Lehrer both would have done better to leave Hamlet (and the highly flamboyant Bloom) aside and recommend the kind of 'self-overhearing' and thoughtful debate that classically characterised President Kennedy and his circle at the time of the Cuban Missile Crisis. In that case, though it was a notoriously close run thing, the participants did not all end up dead; indeed, none of them did and neither did the rest of us.

The key to this was the willingness and ability of JFK and his close advisers (most notably his civilian advisers, be it noted) to do what cognitive scientists call scenario testing and at least informal analysis of competing hypotheses. The first means asking under what circumstances could fact X be true without inference Y being warranted. For example, a U-2 has been shot down by Soviet SAM batteries, but was that necessarily a definitive, intentional escalation by Moscow, or some kind of stuff-up? 

These kinds of exercises could have made a significant difference in the lead-up to the invasion of Iraq in 2003. The best evidence shows that George Bush and his circle, especially Donald Rumsfeld and Dick Cheney, failed to do anything like really thoughtful scenario testing or analysis of competing hypotheses. Their Army, their country and their political reputations have all paid a very high price for that.

The biggest worry about the Paulson bailout is the apparent lack of such thinking in this case, also. The bailout has been pushed through on the basis of a false dilemma: it's this package or a global financial catastrophe. A better plan and better received policy might have been presented in terms of a number of options, setting out their advantages and disadvantages, and showing the case for the preferred option.

More generally, rather than  just asking for decision-makers to engage in 'self-overhearing' (since this runs a high risk of them believing what they hear), we might call for the grounds of major decisions to be coherently and explicitly articulated, using the best tools available, and for decision makers to be held to account if they do not do this. The greatest advantage would be that of learning from errors, which will inevitably be made. Destructive, personalised or politicised blame games can be minimized in the process.

Photo by Flickr user kevinthoule, used under a Creative Commons license.

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