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Source of book image: http://www.harpercollins.com/harperimages/isbn/large/9/9780061834769.jpg

(p. 23) Abraham Maslow, humanistic psychology's founding father, rejected the atomistic approaches of psychoanalysis and behaviorism that dominated the first half of the 20th century. He strove to develop a psychology that provided "a fuller, though still scientific, treatment of the individual" and understood the potential for growth as innate. His ideas got their most welcome reception from industrial management, to which Maslow retreated when academia failed to roll out the red carpet. But Grogan eloquently insists that humanistic psychology subtly revolutionized Americans' conception of the self and the role of therapy, and asserts that current trends in the field, like positive psychology, owe the theory a debt they have been reluctant to pay.

For the full review, see:

MEGAN BUSKEY. "Nonfiction Chronicle." The New York Times Book Review (Sun., March 31, 2013): 23.

(Note: the online version of the review has the date March 29, 2013.)

The book under review:

Grogan, Jessica. Encountering America: Humanistic Psychology, Sixties Culture, and the Shaping of the Modern Self. New York: Harper Perennial, 2012.

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Source of book image: online version of the WSJ review quoted and cited below.

(p. A11) The history of American business is full of immigrant success stories--of men and women who flee poverty and oppression in their home countries, arrive on our shores with only pennies in their pockets, and go on to build companies that generate wealth, create jobs, and provide innovative products and services.

Count among them Ping Fu, the Chinese-born chief executive of the high-tech company Geomagic, which provides 3D-imaging for such modern-day miracles as customized prosthetic limbs. If your child wears orthodontic braces, chances are that they were designed for his teeth with the help of Geomagic technology. Ms. Fu founded the company in 1997, 13 years after arriving in San Francisco with $80 in her purse and three English phrases in her vocabulary: "hello," "thank you" and "help."

. . .

In the U.S., Ms. Fu worked as a maid, a waitress and a baby sitter while learning English and studying computer science. She eventually landed at Bell Labs in Illinois before striking out on her own. "I was a reluctant and unlikely entrepreneur," she writes. In China, "I had been hardwired to think that money was evil, and traumatized as a child because of my family's success." Encouraged by her Shanghai Papa to follow in the family's entrepreneurial tradition, she and her then-husband launched Geomagic. In her book, she traces the challenges she faced in building a company--obtaining funding, winning customers, managing a growing staff of professionals.

Ms. Fu's life story raises a core question about the development of the human psyche: Why is it that, confronted with the kind of horrors that Ms. Fu experienced as a child, some survivors succeed in later life while others fail, overcome by the trials they endured?

Ms. Fu credits the tranquil, happy childhood she experienced for the first eight years of her life. She also points to the Taoist teachings of her Shanghai Papa, who taught her to admire the flexible nature of the bamboo trees that grew in the family garden. Bamboo, he told her, "suggests resilience, meaning that we have the ability to bounce back from even the most difficult times."

For the full review, see:

MELANIE KIRKPATRICK. "BOOKSHELF; The Art Of Resilience; Ping Fu endured gang-rape and political prison in China before arriving on our shores and founding her own high-tech firm." The Wall Street Journal (Weds., January 9, 2013): D7.

(Note: ellipsis added.)

(Note: the online version of the review has the date January 8, 2013.)

The book under review is:

Fu, Ping. Bend, Not Break: A Life in Two Worlds. New York: Portfolio, 2012.

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The following passage is Steve Jobs speaking, as quoted by Walter Isaacson.

(p. 567) My passion has been to build an enduring company where people were motivated to make great products. Everything else was secondary. Sure, it was great to make a profit, because that was what allowed you to make great products. But the products, not the profits, were the motivation. Sculley flipped these priorities to where the goal was to make money. It's a subtle difference, but it ends up meaning everything: the people you hire, who gets promoted, what you discuss in meetings.

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

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(p. 565) . . . I think . . . [Jobs] actually could have controlled himself, if he had wanted. When he hurt people, it was not because he was lacking in emotional awareness. Quite the contrary: He could size people up, understand their inner thoughts, and know how to relate to them, cajole them, or hurt them at will.

The nasty edge to his personality was not necessary. It hindered him more than it helped him. But it did, at times, serve a purpose. Polite and velvety leaders, who take care to avoid bruising others, are generally not as effective at forcing change. Dozens of the colleagues whom Jobs most abused ended their litany of horror stories by saying that he got them to do things they never dreamed possible. And he created a corporation crammed with A players.

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: ellipses and bracketed "Jobs" added.)

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(p. D1) Late last year Matthew Barzun, an official with the Obama campaign, called Craig Fox, a psychologist in Los Angeles, and invited him to a political planning meeting in Chicago, according to two people who attended the session.

"He said, 'Bring the whole group; let's hear what you have to say,' " recalled Dr. Fox, a behavioral economist at the University of California, Los Angeles.

So began an effort by a team of social scientists to help their favored candidate in the 2012 presidential election. Some members of the team had consulted with the Obama campaign in the 2008 cycle, but the meeting in January signaled a different direction.

"The culture of the campaign had changed," Dr. Fox said. "Before then I felt like we had to sell ourselves; this time there was a real hunger for our ideas."

. . .

(p. D6) When asked about the outside psychologists, the Obama campaign would neither confirm nor deny a relationship with them.

. . .

For their part, consortium members said they did nothing more than pass on research-based ideas, in e-mails and conference calls. They said they could talk only in general terms about the research, because they had signed nondisclosure agreements with the campaign.

In addition to Dr. Fox, the consortium included Susan T. Fiske of Princeton University; Samuel L. Popkin of the University of California, San Diego; Robert Cialdini, a professor emeritus at Arizona State University; Richard H. Thaler, a professor of behavioral science and economics at the University of Chicago's business school; and Michael Morris, a psychologist at Columbia.

"A kind of dream team, in my opinion," Dr. Fox said.

For the full story, see:

BENEDICT CAREY. "Academic 'Dream Team' Helped Obama's Effort." The New York Times (Tues., November 13, 2012): D1 & D6.

(Note: ellipses added.)

(Note: the online version of the story has the date November 12, 2012.)

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(p. 528) When they got to Istanbul, . . . [Jobs] hired a history professor to give his family a tour. At the end they went to a Turkish bath, where the professor's lecture gave Jobs an insight about the globalization of youth:

I had a real revelation. We were all in robes, and they made some Turkish coffee for us. The professor explained how the coffee was made very different from anywhere else, and I realized, "So fucking what?" Which kids even in Turkey give a shit about Turkish coffee? All day I had looked at young people in Istanbul. They were all drinking what every other kid in the world drinks, and they were wearing clothes that look like they were bought at the Gap, and they are all using cell phones. They were like kids everywhere else. It hit me that, for young people, this whole world is the same now. When we're making products, there is no such thing as a Turkish phone, or a music player that young people in Turkey would want that's different from one young people elsewhere would want. We're just one world now.

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: ellipsis and bracketed "Jobs" added; indented Jobs block quote was indented in the original.)

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Source of book image: http://si.wsj.net/public/resources/images/OB-VL312_bkrvta_DV_20121122124330.jpg

(p. C12) Nassim Nicholas Taleb's "Antifragile" argues that some people, organizations and systems are resilient in the face of stress because they are able to alter themselves by adapting and learning. The converse is fragility, embodied in entities that are immovable even when faced with shocks or adversity. To my mind, an obvious example is how numerous governments and international agencies have clung to foreign aid as a tool to combat poverty even though aid has failed to deliver sustainable growth and meaningfully reduce indigence. And nation-states, which rest on one unifying vision of the nation, tend to be fragile, while city-states that adjust, adapt and constantly evolve tend to be antifragile. Mr. Taleb's lesson: Embrace, rather than try to avoid, the shocks.

For the full review essay, see:

Dambisa Moyo (author of passage quoted above, one of 50 contributors to whole article). "Twelve Months of Reading; We asked 50 of our friends to tell us what books they enjoyed in 2012--from Judd Apatow's big plans to Bruce Wagner's addictions. See pages C10 and C11 for the Journal's own Top Ten lists." The Wall Street Journal (Sat., December 15, 2012): passim (Moyo's contribution is on p. C12).

(Note: the online version of the review essay has the date December 14, 2012.)

The book under review, is:

Taleb, Nassim Nicholas. Antifragile: Things That Gain from Disorder. New York: Random House, 2012.

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"ARTIFACTS; The excavations have uncovered caches of advanced stone hunting tools, including spear tips and other small blades, or microliths, which suggest that modern Homo sapiens in Africa had a grasp of complex technologies. The research team's report challenges a Eurocentric theory of modern human development." [This photo shows spear tips; another photo included with the article showed three small blades (aka microliths).] Source of quoted part of caption and of photo: online version of the NYT article quoted and cited below.

(p. D3) At a rock shelter on a coastal cliff in South Africa, scientists have found an abundance of advanced stone hunting tools with a tale to tell of the evolving mind of early modern humans at least 71,000 years ago.

. . .

"Ninety percent of scientists are comfortable that fully modern humans and human cognition developed in Africa," Dr. Marean said. "Now they have moved on. The questions are, how much earlier than 71,000 years did these behaviors emerge? Was it an accretionary process, or was it an abrupt event? Did these people have language by this time?"

Like many other archaeologists, Dr. Marean and his team have concentrated their investigations in the caves and rock shelters overlooking the Indian Ocean. In a global ice age beginning 72,000 years ago, many Africans fled the continent's arid interior, heading for the more benign southern shore. Access to seafood and more plentiful plant and animal resources may have increased populations and encouraged technological advances, Dr. Marean said.

The well-preserved artifacts at Pinnacle Point, collected over a recent 18-month period, led the researchers to conclude that the advanced technologies in Africa "were early and enduring." Other archaeologists who reached different conclusions may have been misled by the "small sample of excavated sites," they said.

Richard G. Klein, a paleoanthropologist at Stanford University who has favored a more sudden and recent origin of modern behavior, about 50,000 years ago, questioned the reliability of the dating method for the tools, noting that "there is another team that has already argued for a much longer" time period for the toolmaking culture.

. . .

The hypothesis of earlier African origins of modern human behavior and cognition has been gaining strength over the last decade or two. Two archaeologists, Alison S. Brooks of George Washington University and Sally McBrearty of the University of Connecticut, led the charge with publications of their analysis of increasing evidence of African art and ornamentations expressing a modern cognitive capacity and symbolic thinking.

In a commentary accompanying the Nature report, Dr. McBrearty, who was not involved in the research, wrote that she believed that "modern cognitive capacity emerged at the same time as modern anatomy, and that various aspects of human culture arose gradually" over the course of subsequent millenniums.

For the full story, see:

JOHN NOBLE WILFORD. "Stone Tools Point to Creative Work by Early Humans in Africa." The New York Times (Tues., November 13, 2012): D3.

(Note: ellipses added.)

(Note: the online version of the story has the date November 12, 2012.)

The research discussed in the passages quoted above, appeared in Nature:

Brown, Kyle S., Curtis W. Marean, Zenobia Jacobs, Benjamin J. Schoville, Simen Oestmo, Erich C. Fisher, Jocelyn Bernatchez, Panagiotis Karkanas, and Thalassa Matthews. "An Early and Enduring Advanced Technology Originating 71,000 Years Ago in South Africa." Nature 491, no. 7425 (22 November 2012): 590-93.

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(p. 415) The investment of attention improves, performance in numerous activities--think of the risks of driving through a narrow space while your mind is wandering-and is essential to some tasks, including comparison, choice, and ordered reasoning. However, System 2 is not a paragon of rationality. Its abilities are limited and so is the knowledge to which it has access. We do not always think straight when we reason, and the errors are not always due to intrusive and incorrect intuitions. Often we make mistakes because we (our System 2) do not know any better.

I have spent more time describing System 1, and have devoted many (p. 416) pages to errors of intuitive judgment and choice that I attribute to it. However, the relative number of pages is a poor indicator of the balance between the marvels and the flaws of intuitive thinking. System 1 is indeed the origin of much that we do wrong, but it is also the origin of most of what we do right--which is most of what we do. Our thoughts and actions are routinely guided by System 1 and generally are on the mark. One of the marvels is the rich and detailed model of our world that is maintained in associative memory: it distinguishes surprising from normal events in a fraction of a second, immediately generates an idea of what was expected instead of a surprise, and automatically searches for some causal interpretation of surprises and of events as they take place.

Source:

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

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(p. 351) The intense aversion to trading increased risk for some other advantage plays out on a grand scale in the laws and regulations governing risk. This trend is especially strong in Europe where the precautionary principle, which prohibits any action that might cause harm, is a widely accepted doctrine. In the regulatory context, the precautionary principle imposes the entire burden of proving safety on anyone who undertakes actions that might harm people or the environment. Multiple international bodies have specified that the absence of scientific evidence of potential damage is not sufficient justification for taking risks. As the jurist Cass Sunstein points out, the precautionary principle is costly, and when interpreted strictly it can be paralyzing. He mentions an impressive list of innovations that would not have passed the test, including "airplanes, air conditioning, antibiotics, automobiles, chlorine, the measles vaccine, open-heart surgery, radio, refrigeration, smallpox vaccine, and X-rays." The strong version of the precautionary principle is obviously untenable. But enhanced loss aversion is embedded in a strong and widely shared moral intuition; it originates in System 1. The dilemma between intensely loss-averse moral attitudes and efficient risk management does not have a simple and compelling solution.

Source:

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

(Note: italics in original.)

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(p. 346) The sunk-cost fallacy keeps people for too long in poor jobs, unhappy marriages, and unpromising research projects. I have often observed young scientists struggling to salvage a doomed project when they would be better advised to drop it and start a new one. Fortunately, research suggests that at least in some contexts the fallacy can be overcome. The sunk-cost fallacy is identified and taught as a mistake in both economics and business courses, apparently to good effect: there is evidence that graduate students in these fields are more willing than others to walk away from a failing project.

Source:

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

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(p. 338) . . . I have a sermon ready for Sam if he rejects the offer of a single highly favorable gamble played once, and for you if you share his unreason-able aversion to losses:

I sympathize with your aversion to losing any gamble, but it is costing you a lot of money. Please consider this question: Are you on your deathbed? Is this the last offer of a small favorable gamble that you will ever consider? Of course, you are unlikely to be offered exactly this gamble again, but you will have many opportunities to consider attractive gambles with stakes that are very small relative to your wealth. You will do yourself a large financial favor if you are able to see each of these gambles as part of a bundle of small gambles and rehearse the mantra that will get you significantly closer to economic rationality: you win a few, you lose a few. The main purpose of the mantra is to control your emotional response when you do lose. If you can trust it to be effective, you should remind yourself of it when deciding whether or not to accept a small risk with positive expected value. Remember these qualifications when using the mantra:

• It works when the gambles are genuinely independent of each other; it does not apply to multiple investments in the same industry, which would all go bad together.

(p. 339)

• It works only when the possible loss does not cause you to worry about your total wealth. If you would take the loss as significant bad news about your economic future, watch it!

• It should not be applied to long shots, where the probability of winning is very small for each bet.

If you have the emotional discipline that this rule requires, you will never consider a small gamble in isolation or be loss averse for a small gamble until you are actually on your deathbed and not even then.

This advice is not impossible to follow. Experienced traders in financial markets live by it every day, shielding themselves from the pain of losses by broad framing. As was mentioned earlier, we now know that experimental subjects could be almost cured of their loss aversion (in a particular context) by inducing them to "think like a trader," just as experienced baseball card traders are not as susceptible to the endowment effect as novices are. Students made risky decisions (to accept or reject gambles in which they could lose) under different instructions. In the narrow-framing condition, they were told to "make each decision as if it were the only one" and to accept their emotions. The instructions for broad framing of a decision included the phrases "imagine yourself as a trader," "you do this all the time," and "treat it as one of many monetary decisions, which will sum together to produce a 'portfolio'." The experimenters assessed the subjects' emotional response to gains and losses by physiological measures, including changes in the electrical conductance of the skin that are used in lie detection. As expected, broad framing blunted the emotional reaction to losses and increased the willingness to take risks.

Source:

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

(Note: ellipsis added; italics in original.)

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(p. 290) The omission of the reference point from the indifference map is a surprising case of theory-induced blindness, because we so often encounter cases in which the reference point obviously matters. In labor negotiations, it is well understood by both sides that the reference point is the existing contract and that the negotiations will focus on mutual demands for concessions relative to that reference point. The role of loss aversion in bargaining is also well understood: making concessions hurts. You have much (p. 291) personal experience of the role of reference point. If you changed jobs or locations, or even considered such a change, you surely remember that the features of the new place were coded as pluses or minuses relative to where you were. You may also have noticed that disadvantages loomed larger than advantages in this evaluation--loss aversion was at work. It is difficult to accept changes for the worse. For example, the minimal wage that unemployed workers would accept for new employment averages 90% of their previous wage, and it drops by less than 10% over a period of one year.

Source:

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

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(p. 286) Most graduate students in economics have heard about prospect theory and loss aversion, but you are unlikely to find these terms in the index of an introductory text in economics. I am sometimes pained by this omission, but in fact it is quite reasonable, because of the central role of rationality in basic economic theory. The standard concepts and results that undergraduates are taught are most easily explained by assuming that Econs do not make foolish mistakes. This assumption is truly necessary, and it would be undermined by introducing the Humans of prospect theory, whose evaluations of outcomes are unreasonably short-sighted.

There are good reasons for keeping prospect theory out of introductory texts. The basic concepts of economics are essential intellectual tools, which are not easy to grasp even with simplified and unrealistic assumptions about the nature of the economic agents who interact in markets. Raising questions about these assumptions even as they are introduced would be confusing, and perhaps demoralizing. It is reasonable to put priority on helping students acquire the basic tools of the discipline. Furthermore, the failure of rationality that is built into prospect theory is often irrelevant to the predictions of economic theory, which work out with great precision in some situations and provide good approximations in many others. In some contexts, however, the difference becomes significant: the Humans described by prospect theory are (p. 287) guided by the immediate emotional impact of gains and losses, not by long-term prospects of wealth and global utility.

I emphasized theory-induced blindness in my discussion of flaws in Bernoulli's model that remained unquestioned for more than two centuries. But of course theory-induced blindness is not restricted to expected utility theory. Prospect theory has flaws of its own, and theory-induced blindness to these flaws has contributed to its acceptance as the main alternative to utility theory.

Source:

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

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(p. 286) Perhaps carried away by their enthusiasm, [Rabin and Thaler] . . . concluded their article by recalling the famous Monty Python sketch in which a frustrated customer attempts to return a dead parrot to a pet store. The customer uses a long series of phrases to describe the state of the bird, culminating in "this is an ex-parrot." Rabin and Thaler went on to say that "it is time for economists to recognize that expected utility is an ex-hypothesis." Many economists saw this flippant statement as little short of blasphemy. However, the theory-induced blindness of accepting the utility of wealth as an explanation of attitudes to small losses is a legitimate target for humorous comment.

Source:

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

(Note: bracketed names and ellipsis added.)

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Source of book image: http://images.amazon.com/images/G/01/richmedia/images/cover.gif

(p. 19) Growing up in the erratic care of a feckless single mother, "Kewauna seemed able to ignore the day-to-day indignities of life in poverty on the South Side and instead stay focused on her vision of a more successful future." Kewauna tells Tough, "I always wanted to be one of those business ladies walking downtown with my briefcase, everybody saying, 'Hi, Miss Lerma!' "

Here, as throughout the book, Tough nimbly combines his own reporting with the findings of scientists. He describes, for example, the famous "marshmallow experiment" of the psychologist Walter Mischel, whose studies, starting in the late 1960s, found that children who mustered the self-control to resist eating a marshmallow right away in return for two marshmallows later on did better in school and were more successful as adults.

"What was most remarkable to me about Kewauna was that she was able to marshal her prodigious noncognitive capacity -- call it grit, conscientiousness, resilience or the ability to delay gratification -- all for a distant prize that was, for her, almost entirely theoretical," Tough observes of his young subject, who gets into college and works hard once she's there. "She didn't actually know any business ladies with briefcases downtown; she didn't even know any college graduates except her teachers. It was as if Kewauna were taking part in an extended, high-stakes version of Walter Mischel's marshmallow experiment, except in this case, the choice on offer was that she could have one marshmallow now or she could work really hard for four years, constantly scrimping and saving, staying up all night, struggling, sacrificing -- and then get, not two marshmallows, but some kind of elegant French pastry she'd only vaguely heard of, like a napoleon. And Kewauna, miraculously, opted for the napoleon, even though she'd never tasted one before and didn't know anyone who had. She just had faith that it was going to be delicious."

For the full review, see:

ANNIE MURPHY PAUL. "School of Hard Knocks." The New York Times Book Review (Sun., August 26, 2012): 19.

(Note: the online version of the article is dated August 23, 2012.)

The full reference for the book under review, is:

Tough, Paul. How Children Succeed: Grit, Curiosity, and the Hidden Power of Character. Boston, MA: Houghton Mifflin Harcourt, 2012.

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(p. 276) The mystery is how a conception of the utility of outcomes that is vulnerable to . . . obvious counterexamples survived for so long. I can explain (p. 277) it only by a weakness of the scholarly mind that I have often observed in myself. I call it theory-induced blindness: once you have accepted a theory and used it as a tool in your thinking, it is extraordinarily difficult to notice its flaws. If you come upon an observation that does not seem to fit the model, you assume that there must be a perfectly good explanation that you are somehow missing. You give the theory the benefit of the doubt, trusting the community of experts who have accepted it. . . . As the psychologist Daniel Gilbert observed, disbelieving is hard work, and System 2 is easily tired.

Source:

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

(Note: ellipses added.)

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(p. 265) As a team converges on a decision--and especially when the leader tips her hand--public doubts about the wisdom of the planned move are gradually suppressed and eventually come to be treated as evidence of flawed loyalty to the team and its leaders. The suppression of doubt contributes to overconfidence in a group where only supporters of the decision have a voice. The main virtue of the premortem is that it legitimizes doubts. Furthermore, it encourages even supporters of the decision to search for possible threats that they had not considered earlier. The premortem is not a panacea and does not provide complete protection against nasty surprises, but it goes some way toward reducing the damage of plans that are subject to the biases of WYSIATI and uncritical optimism.

Source:

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

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(p. 262) As Nassim Taleb has argued, inadequate appreciation of the uncertainty of the environment inevitably leads economic agents to take risks they should avoid. However, optimism is highly valued, socially and in the market; people and firms reward the providers of dangerously misleading information more than they reward truth tellers. One of the lessons of the financial crisis that led to the Great Recession is that there are periods in which competition, among experts and among organizations, creates powerful forces that favor a collective blindness to risk and uncertainty.

The social and economic pressures that favor overconfidence are not (p. 263) restricted to financial forecasting. Other professionals must deal with the fact that an expert worthy of the name is expected to display high confidence. Philip Tetlock observed that the most overconfident experts were the most likely to be invited to strut their stuff in news shows. Overconfidence also appears to be endemic in medicine. A study of patients who died in the ICU compared autopsy results with the diagnosis that physicians had provided while the patients were still alive. Physicians also reported their confidence. The result: "clinicians who were 'completely certain' of the diagnosis antemortem were wrong 40% of the time." Here again, expert overconfidence is encouraged by their clients: "Generally, it is considered a weakness and a sign of vulnerability for clinicians to appear unsure. Confidence is valued over uncertainty and there is a prevailing censure against disclosing uncertainty to patients." Experts who acknowledge the full extent of their ignorance may expect to be replaced by more confident competitors, who are better able to gain the trust of clients. An unbiased appreciation of uncertainty is a cornerstone of rationality--but it is not what people and organizations want. Extreme uncertainty is paralyzing under dangerous circumstances, and the admission that one is merely guessing is especially unacceptable when the stakes are high. Acting on pretended knowledge is often the preferred solution.

Source:

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

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(p. 261) For a number of years, professors at Duke University conducted a survey in which the chief financial officers of large corporations estimated the returns of the Standard & Poor's index over the following year. The Duke scholars collected 11,600 such forecasts and examined their accuracy. The conclusion was straightforward: financial officers of large corporations had no clue about the short-term future of the stock market; the correlation between their estimates and the true value was slightly less than zero! When they said the market would go down, it was slightly more likely than not that it would go up. These findings are not surprising. The truly bad news is that the CFOs did not appear to know that their forecasts were worthless.

Source:

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

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(p. 260) Colin Camerer and Dan Lovallo, who coined the concept of competition neglect, illustrated it with a quote from the then chairman of Disney Studios. Asked why so many expensive big-budget movies are released on the same days (such as Memorial Day and Independence Day), he replied: Hubris. Hubris. If you only think about your own business, you think, "I've got a good story department, I've got a good marketing department, we're (p. 261) going to go out and do this." And you don't think that everybody else is thinking the same way. In a given weekend in a year you'll have five movies open, and there's certainly not enough people to go around.

The candid answer refers to hubris, but it displays no arrogance, no conceit of superiority to competing studios. The competition is simply not part of the decision, in which a difficult question has again been replaced by an easier one. The question that needs an answer is this: Considering what others will do, how many people will see our film? The question the studio executives considered is simpler and refers to knowledge that is most easily available to them: Do we have a good film and a good organization to market it? The familiar System 1 processes of WYSIATI and substitution produce both competition neglect and the above-average effect. The consequence of competition neglect is excess entry: more competitors enter the market than the market can profitably sustain, so their average outcome is a loss. The outcome is disappointing for the typical entrant in the market, but the effect on the economy as a whole could well be positive. In fact, Giovanni Dosi and Dan Lovallo call entrepreneurial firms that fail but signal new markets to more qualified competitors "optimistic martyrs"-- good for the economy but bad for their investors.

Source:

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

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People have a right to be overly-optimistic when they invest their own money in entrepreneurial projects. But governments should be prudent caretakers of the money they have taken from taxpayers. The overly-optimistic bias of subsidy-seeking entrepreneurs weakens the case for government support of entrepreneurial projects.

(p. 259) The optimistic risk taking of entrepreneurs surely contributes to the economic dynamism of a capitalistic society, even if most risk takers end up disappointed. However, Marta Coelho of the London School of Economics has pointed out the difficult policy issues that arise when founders of small businesses ask the government to support them in decisions that are most likely to end badly. Should the government provide loans to would-be entrepreneurs who probably will bankrupt themselves in a few years? Many behavioral economists are comfortable with the "libertarian paternalistic" procedures that help people increase their savings rate beyond what they would do on their own. The question of whether and how government should support small business does not have an equally satisfying answer.

Source:

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

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(p. 257) One of the benefits of an optimistic temperament is that it encourages persistence in the face of obstacles. But persistence can be costly. An impressive series of studies by Thomas Åstebro sheds light on what happens when optimists receive bad news. He drew his data from a Canadian organization--the Inventors Assistance Program--which collects a small fee to provide inventors with an objective assessment of the commercial prospects of their idea. The evaluations rely on careful ratings of each invention on 37 criteria, including need for the product, cost of production, and estimated trend of demand. The analysts summarize their ratings by a letter grade, where D and E predict failure--a prediction made for over 70% of the inventions they review. The forecasts of failure are remarkably accurate: only 5 of 411 projects that were given the lowest grade reached commercialization, and none was successful.

Discouraging news led about half of the inventors to quit after receiving a grade that unequivocally predicted failure. However, 47% of them continued development efforts even after being told that their project was hopeless, and on average these persistent (or obstinate) individuals doubled their initial losses before giving up. Significantly, persistence after discouraging advice was relatively common among inventors who had a high score on a personality measure of optimism--on which inventors generally scored higher than the general population. Overall, the return on private invention was small, "lower than the return on private equity and on high-risk securities." More generally, the financial benefits of self-employment are mediocre: given the same qualifications, people achieve higher average returns by selling their skills to employers than by setting out on their own. The evidence suggests that optimism is widespread, stubborn, and costly.

Source:

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

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(p. 256) The chances that a small business will survive for five years in the United States are about 35%. But the individuals who open such businesses do not believe that the statistics apply to them. A survey found that American entrepreneurs tend to believe they are in a promising line of business: their (p. 257) average estimate of the chances of success for "any business like yours" was 60%--almost double the true value. The bias was more glaring when people assessed the odds of their own venture. Fully 81% of the entrepreneurs put their personal odds of success at 7 out of 10 or higher, and 33% said their chance of failing was zero.

Source:

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

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(p. 250) This should not come as a surprise: overly optimistic forecasts of the outcome of projects are found everywhere. Amos and I coined the term planning fallacy to describe plans and forecasts that

• are unrealistically close to best-case scenarios
• could be improved by consulting the statistics of similar cases

. . .

The optimism of planners and decision makers is not the only cause of overruns. Contractors of kitchen renovations and of weapon systems readily admit (though not to their clients) that they routinely make most of their profit on additions to the original plan. The failures of forecasting in these cases reflect the customers' inability to imagine how much their wishes will escalate over time. They end up paying much more than they would if they had made a realistic plan and stuck to it.

Errors in the initial budget are not always innocent. The authors of unrealistic plans are often driven by the desire to get the plan approved--(p. 251)whether by their superiors or by a client--supported by the knowledge that projects are rarely abandoned unfinished merely because of overruns in costs or completion times. In such cases, the greatest responsibility for avoiding the planning fallacy lies with the decision makers who approve the plan. If they do not recognize the need for an outside view, they commit a planning fallacy.

Source:

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

(Note: ellipsis added; italics in original.)

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Kahneman's frequently-used acronym "WYSIATI," used in the passage quoted below, means "What You See Is All There Is."

(p. 247) On that long-ago Friday, our curriculum expert made two judgments about the same problem and arrived at very different answers. The inside view is the one that all of us, including Seymour, spontaneously adopted to assess the future of our project. We focused on our specific circumstances and searched for evidence in our own experiences. We had a sketchy plan: we knew how many chapters we were going to write, and we had an idea of how long it had taken us to write the two that we had already done. The more cautious among us probably added a few months to their estimate as a margin of error.

Extrapolating was a mistake. We were forecasting based on the informa-(p. 248)tion in front of us--WYSIATI--but the chapters we wrote first were probably easier than others, and our commitment to the project was probably then at its peak. But the main problem was that we failed to allow for what Donald Rumsfeld famously called the "unknown unknowns:' There was no way for us to foresee, that day, the succession of events that would cause the project to drag out for so long. The divorces, the illnesses, the crises of coordination with bureaucracies that delayed the work could not be anticipated. Such events not only cause the writing of chapters to slow down, they also produce long periods during which little or no progress is made at all. The same must have been true, of course, for the other teams that Seymour knew about. The members of those teams were also unable to imagine the events that would cause them to spend seven years to finish, or ultimately fail to finish, a project that they evidently had thought was very feasible. Like us, they did not know the odds they were facing. There are many ways for any plan to fail, and although most of them are too improbable to be anticipated, the likelihood that something will go wrong in a big project is high.

Source:

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

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(p. 241) Some regularities in the environment are easier to discover and apply than others. Think of how you developed your style of using the brakes on your car. As you were mastering the skill of taking curves, you gradually learned when to let go of the accelerator and when and how hard to use the brakes. Curves differ, and the variability you experienced while learning ensures that you are now ready to brake at the right time and strength for any curve you encounter. The conditions for learning this skill arc ideal, because you receive immediate and unambiguous feedback every time you go around a bend: the mild reward of a comfortable turn or the mild punishment of some difficulty in handling the car if you brake either too hard or not quite hard enough. The situations that face a harbor pilot maneuvering large ships are no less regular, but skill is much more difficult to acquire by sheer experience because of the long delay between actions and their noticeable outcomes. Whether professionals have a chance to develop intuitive expertise depends essentially on the quality and speed of feedback, as well as on sufficient opportunity to practice.

Source:

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

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(p. 240) If subjective confidence is not to be trusted, how can we evaluate the probable validity of an intuitive judgment? When do judgments reflect true expertise? When do they display an illusion of validity? The answer comes from the two basic conditions for acquiring a skill:

• an environment that is sufficiently regular to be predictable

• an opportunity to learn these regularities through prolonged practice

When both these conditions are satisfied, intuitions are likely to be skilled. Chess is an extreme example of a regular environment, but bridge and poker also provide robust statistical regularities that can support skill. Physicians, nurses, athletes, and firefighters also face complex but fundamentally orderly situations. The accurate intuitions that Gary Klein has described are due to highly valid cues that the expert's System 1 has learned to use, even if System 2 has not learned to name them. In contrast, stock pickers and political scientists who make long-term forecasts operate in a zero-validity environment. Their failures reflect the basic unpredictability of the events that they try to forecast.

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

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(p. 222) I never met Meehl, but he was one of my heroes from the time I read his Clinical vs. Statistical Prediction: A Theoretical Analysis and a Review of the Evidence.

In the slim volume that he later called "my disturbing little book," Meehl reviewed the results of 20 studies that had analyzed whether clinical predictions based on the subjective impressions of trained professionals were more accurate than statistical predictions made by combining a few scores or ratings according to a rule. In a typical study, trained counselors predicted the grades of freshmen at the end of the school year. The counselors interviewed each student for forty-five minutes. They also had access to high school grades, several aptitude tests, and a four-page personal statement. The statistical algorithm used only a fraction of this information: high school grades and one aptitude test. Nevertheless, the formula was more accurate than 11 of the 14 counselors. Meehl reported generally sim-(p. 223)ilar results across a variety of other forecast outcomes, including violations of parole, success in pilot training, and criminal recidivism.

Not surprisingly, Meehl's book provoked shock and disbelief among clinical psychologists, and the controversy it started has engendered a stream of research that is still flowing today, more than fifty years after its publication. The number of studies reporting comparisons of clinical and statistical predictions has increased to roughly two hundred, but the score in the contest between algorithms and humans has not changed. About 60% of the studies have shown significantly better accuracy for the algorithms. The other comparisons scored a draw in accuracy, but a tie is tantamount to a win for the statistical rules, which are normally much less expensive to use than expert judgment. No exception has been convincingly documented.

Source:

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

(Note: italics in original.)

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(p. 215) Some years ago I had an unusual opportunity to examine the illusion of financial skill up close. I had been invited to speak to a group of investment advisers in a firm that provided financial advice and other services to very wealthy clients. I asked for some data to prepare my presentation and was granted a small treasure: a spreadsheet summarizing the investment outcomes of some twenty-five anonymous wealth advisers, for each of eight consecutive years. Each adviser's score for each year was his (most of them were men) main determinant of his year-end bonus. It was a simple matter to rank the advisers by their performance in each year and to determine whether there were persistent differences in skill among them and whether the same advisers consistently achieved better returns for their clients year after year.

To answer the question, I computed correlation coefficients between the rankings in each pair of years: year 1 with year 2, year 1 with year 3, and so on up through year 7 with year 8. That yielded 28 correlation coefficients, one for each pair of years. I knew the theory and was prepared to find weak evidence of persistence of skill. Still, I was surprised to find that the average of the 28 correlations was .01. In other words, zero. The consistent correlations that would indicate differences in skill were not to be found. The results resembled what you would expect from a dice-rolling contest, not a game of skill.

Source:

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

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(p. 169) The social norm against stereotyping, including the opposition to profiling, has been highly beneficial in creating a more civilized and more equal society. It is useful to remember, however, that neglecting valid stereotypes inevitably results in suboptimal judgments. Resistance to stereotyping is a laudable moral position, but the simplistic idea that the resistance is costless is wrong. The costs are worth paying to achieve a better society, but denying that the costs exist, while satisfying to the soul and politically correct, is not scientifically defensible.

Source:

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

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(p. 164) The laziness of System 2 is part of the story. If their next vacation had depended on it, and if they had been given indefinite time and told to follow logic and not to answer until they were sure of their answer, I believe that most of our subjects would have avoided the conjunction fallacy. However, their vacation did not depend on a correct answer; they spent very little time on it, and were content to answer as if they had only been "asked for their opinion." The laziness of System 2 is an important fact of life, and the observation that representativeness can block the application of an obvious logical rule is also of some interest.

Source:

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

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(p. 142) An availability cascade is a self-sustaining chain of events, which may start from media reports of a relatively minor event and lead up to public panic and large-scale government action. On some occasions, a media story about a risk catches the attention of a segment of the public, which becomes aroused and worried. This emotional reaction becomes a story in itself, prompting additional coverage in the media, which in turn produces greater concern and involvement. The cycle is sometimes sped along deliberately by "availability entrepreneurs," individuals or organizations who work to ensure a continuous flow of worrying news. The danger is increasingly exaggerated as the media compete for attention-grabbing headlines. Scientists and others who try to dampen the increasing fear and revulsion attract little attention, most of it hostile: anyone who claims that the danger is overstated is suspected of association with a "heinous cover-up." The issue becomes politically important because it is on everyone's mind, and the response of the political system is guided by the intensity of public sentiment. The availability cascade has now reset priorities. Other risks, and other ways that resources could he applied for the public good, all have faded into the background.

Kuran and Sunstein focused on two examples that are still controversial: the Love Canal affair and the so-called Alar scare. In Love Canal, buried toxic waste was exposed during a rainy season in 1979, causing contamination of the water well beyond standard limits, as well as a foul smell. The residents of the community were angry and frightened, and one of them, (p. 143) Lois Gibbs, was particularly active in an attempt to sustain interest in the problem. The availability cascade unfolded according to the standard script. At its peak there were daily stories about Love Canal, scientists attempting to claim that the dangers were overstated were ignored or shouted down, ABC News aired a program titled The Killing Ground, and empty baby-size coffins were paraded in front of the legislature. A large number of residents were relocated at government expense, and the control of toxic waste became the major environmental issue of the 1980s. The legislation that mandated the cleanup of toxic sites, called CERCLA, established a Superfund and is considered a significant achievement of environmental legislation. It was also expensive, and some have claimed that the same amount of money could have saved many more lives if it had been directed to other priorities. Opinions about what actually happened at Love Canal are still sharply divided, and claims of actual damage to health appear not to have been substantiated. Kuran and Sunstein wrote up the Love Canal story almost as a pseudo-event, while on the other side of the debate, environmentalists still speak of the "Love Canal disaster."

Source:

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

(Note: italics in original.)

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(p. 5) Gadi Geiger and Jerome Lettvin, cognitive scientists at the Massachusetts Institute of Technology, used a mechanical shutter, called a tachistoscope, to briefly flash a row of letters extending from the center of a subject's field of vision out to its perimeter. Typical readers identified the letters in the middle of the row with greater accuracy. Those with dyslexia triumphed, however, when asked to identify letters located in the row's outer reaches.

. . .

Dr. Catya von Károlyi, an associate professor of psychology at the University of Wisconsin, Eau Claire, found that people with dyslexia identified simplified Escher-like pictures as impossible or possible in an average of 2.26 seconds; typical viewers tend to take a third longer. "The compelling implication of this finding," wrote Dr. Von Károlyi and her co-authors in the journal Brain and Language, "is that dyslexia should not be characterized only by deficit, but also by talent."

. . .

Five years ago, the Yale Center for Dyslexia and Creativity was founded to investigate and illuminate the strengths of those with dyslexia, while the seven-year-old Laboratory for Visual Learning, located within the Harvard-Smithsonian Center for Astrophysics, is exploring the advantages conferred by dyslexia in visually intensive branches of science. The director of the laboratory, the astrophysicist Matthew Schneps, notes that scientists in his line of work must make sense of enormous quantities of visual data and accurately detect patterns that signal the presence of entities like black holes.

A pair of experiments conducted by Mr. Schneps and his colleagues, published in the Bulletin of the American Astronomical Society in 2011, suggests that dyslexia may enhance the ability to carry out such tasks. In the first study, Mr. Schneps reported that when shown radio signatures -- graphs of radio-wave emissions from outer space -- astrophysicists with dyslexia at times outperformed their nondyslexic colleagues in identifying the distinctive characteristics of black holes.

In the second study, Mr. Schneps deliberately blurred a set of photographs, reducing high-frequency detail in a manner that made them resemble astronomical images. He then presented these pictures to groups of dyslexic and nondyslexic undergraduates. The students with dyslexia were able to learn and make use of the information in the images, while the typical readers failed to catch on.

. . .

Mr. Schneps's study is not the only one of its kind. In 2006, James Howard Jr., a professor of psychology at the Catholic University of America, described in the journal Neuropsychologia an experiment in which participants were asked to pick out the letter T from a sea of L's floating on a computer screen. Those with dyslexia learned to identify the letter more quickly.

Whatever special abilities dyslexia may bestow, difficulty with reading still imposes a handicap.

For the full commentary, see:

ANNIE MURPHY PAUL. "The Upside of Dyslexia." The New York Times, SundayReview Section (Sun., February 5, 2012): 5.

(Note: ellipsis added.)

(Note: online version of the commentary is dated February 4, 2012.)

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(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.)

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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.

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"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.

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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.

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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.

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(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.

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(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.

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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

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(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.

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(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.

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(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.

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(p. C4) Much of the research on decision-making focuses on the "choice paralysis" commonly thought to result from having too many options. But new research suggests that instead of being a debilitating factor, having many options actually sharpens our focus on quality.

For the full summary, see:

DAVID DISALVO. "Commerce; Choosing the Very Best." The Wall Street Journal (Sat., August 20, 2011): C4.

The paper summarized is:

Bertini, Marco, Luc Wathieu, and Sheena S. Sethi-Iyengar. "The Discriminating Consumer: Product Proliferation and Willingness to Pay for Quality." SSRN eLibrary (2010).

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(p. C4) Chief executives with a penchant for personal risk-taking are also corporate risk-takers who take on more debt, aggressively pursue mergers and acquisitions, and make bold equity plays. But, in general, they are also more effective leaders who create more value in their organizations than their less risk-loving counterparts. And they do so, the researchers add, without additional incentives; they imprint their risk-loving natures on their companies because it's simply who they are.

For the full summary, see:

DAVID DISALVO. "Management; For Effective CEOs, Look Up." The Wall Street Journal (Sat., August 20, 2011): C4.

The article summarized is:

Cain, Matthew D., and Stephen B. McKeon. "Cleared for Takeoff? CEO Personal Risk-Taking and Corporate Policies." SSRN eLibrary (2011).

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But since we choose what we eat, we have the power to control how food affects our feelings and choices?

(p. C12) As the neuroscientist Antonio Damasio writes, "The mind is embodied, not just embrained."

The latest evidence comes from a new study of probiotic bacteria, the microorganisms typically found in yogurt and dairy products. While most investigations of probiotics have focused on their gastrointestinal benefits--the bacteria reduce the symptoms of diarrhea and irritable bowel syndrome--this new research explored the effect of probiotics on the brain.

The experiment, led by Javier Bravo at University College Cork in Ireland, was straightforward. First, he fed normal lab mice a diet full of probiotics. Then, Mr. Bravo's team tested for behavioral changes, which were significant: When probiotic-fed animals were put in stressful conditions, such as being dropped into a pool of water, they were less anxious and released less stress hormone.

How did the food induce these changes? The answer involves GABA, a neurotransmitter that reduces the activity of neurons. When Mr. Bravo looked at the brains of the mice, he found that those fed probiotics had more GABA receptors in areas associated with memory and the regulation of emotions. (This change mimics the effects of popular antianxiety medications in humans.)

For the full summary/commentary, see:

JONAH LEHRER. "HEAD CASE; The Yogurt Made Me Do It; There's nothing metaphorical about 'gut feelings'--bacteria influence our minds." The Wall Street Journal (Sat., SEPTEMBER 17, 2011): C12.

The paper summarized is:

Bravo, Javier A., Paul Forsythe, Marianne V. Chew, Emily Escaravage, Hélène M. Savignac, Timothy G. Dinan, John Bienenstock, and John F. Cryan. "Ingestion of Lactobacillus Strain Regulates Emotional Behavior and Central GABA Receptor Expression in a Mouse Via the Vagus Nerve." Proceedings of the National Academy of Sciences (2011).

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(p. 27) Getting richer is not the only or even the best way of getting happier. Social and political liberation is far more effective, says the political scientist Ronald Ingleheart: the big gains in happiness come from living in a society that frees you to make choices about your lifestyle - about where to live, who to marry, how to express your sexuality and so on. It is the increase in free (p. 28) choice since 1981 that has been responsible for the increase in happiness recorded since then in forty-five out of fifty-two countries. Ruut Veenhoven finds that 'the more individualized the nation, the more citizens enjoy their life.'

Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

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(p. B1) Can you spot a bubble?

Ever since 1841, when a Scottish journalist named Charles Mackay published the book known today as "Extraordinary Popular Delusions and the Madness of Crowds," the answer has seemed clear. If you watch carefully for signs of euphoria, you can sidestep the damage when markets go mad.

But bubble spotting isn't as simple as Mackay made it sound--even, it turns out, for Mackay himself. Investors should always guard against the glib assertions of pundits who claim they can detect bubbles before they burst.

. . .

But new research tells the untold tale of Mackay's own behavior in the face of a bubble--and it is a shocker. A mathematician and former cryptographer at Bell Labs named Andrew Odlyzko has spent much of the past decade researching a forgotten stock mania. One of its biggest boosters was none other than Charles Mackay.

A bubble in British railroad stocks began in 1844, only three years after Mackay published his book, and it didn't start to collapse until late 1845. Even with the history of market folly fresh in his mind, Mackay urged British investors to pile into railway stocks, whose extravagant prices were based on absurdly unrealistic projections of future growth.

The most famous critic of bubbles who ever lived fell like a chump for a craze that was unfolding before his very eyes. On Oct. 2, 1845, Mackay wrote that "those who sound the alarm of an approaching railway crisis have somewhat exaggerated the danger."

He went on to ridicule anyone who argued that "the Railway mania of the present day" was similar to the devastating bubbles he had described in his own book. "There is no reason whatever to fear" a crash, he concluded.

He couldn't have been more wrong. From 1845 to the bottom in 1850, railway stocks fell by two-thirds--the equivalent of roughly $1 trillion of losses in today's money. Mackay never fessed up to his own extraordinary delusion.

For the full commentary, see:

JASON ZWEIG. "THE INTELLIGENT INVESTOR; The Extraordinary Popular Delusion of Bubble Spotting." The Wall Street Journal (Sat., NOVEMBER 5, 2011): B1.

(Note: ellipsis added.)

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(p. C4) Fantasizing about achieving goals can make people less likely to achieve them, by sapping the energy required to do the necessary work, a study finds.

. . .

The researchers concluded: "Positive fantasies will sap job-seekers of the energy to pound the pavement, and drain the lovelorn of the energy to approach the one they like."

For the full story, see:

Christopher Shea. "Week in Ideas; Psychology; Lost in Fantasy." The Wall Street Journal (Sat., JUNE 4, 2011): C4.

(Note: ellipsis added.)

The article summarized is:

Kappes, Heather Barry, and Gabriele Oettingen. "Positive Fantasies About Idealized Futures Sap Energy." Journal of Experimental Social Psychology 47 (2011): 719-29.

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Source of book image: http://www.barbaraoakley.com/_font_face__book_antiqua___font_size__3___i__b_pathological_altruism__i___b__106998.htm

(p. D1) On entering the patient's room with spinal tap tray portentously agleam, Dr. Burton encountered the patient's family members. They begged him not to proceed. The frail, bedridden patient begged him not to proceed. Dr. Burton conveyed their pleas to the oncologist, but the oncologist continued to lobby for a spinal tap, and the exhausted family finally gave in.

. . .

(p. D2) . . . , Dr. Burton is a contributor to a scholarly yet surprisingly sprightly volume called "Pathological Altruism," to be published this fall by Oxford University Press. . . .

As the new book makes clear, pathological altruism is not limited to showcase acts of self-sacrifice, like donating a kidney or a part of one's liver to a total stranger. The book is the first comprehensive treatment of the idea that when ostensibly generous "how can I help you?" behavior is taken to extremes, misapplied or stridently rhapsodized, it can become unhelpful, unproductive and even destructive.

. . .

David Brin, a physicist and science fiction writer, argues in one chapter that sanctimony can be as physically addictive as any recreational drug, and as destabilizing. "A relentless addiction to indignation may be one of the chief drivers of obstinate dogmatism," he writes. . . .

Barbara Oakley, an associate professor of engineering at Oakland University in Michigan and an editor of the new volume, said in an interview that when she first began talking about its theme at medical or social science conferences, "people looked at me as though I'd just grown goat horns. They said, 'But altruism by definition can never be pathological.' "

To Dr. Oakley, the resistance was telling. "It epitomized the idea 'I know how to do the right thing, and when I decide to do the right thing it can never be called pathological,' " she said.

. . .

Yet given her professional background, Dr. Oakley couldn't help doubting altruism's exalted reputation. "I'm not looking at altruism as a sacred thing from on high," she said. "I'm looking at it as an engineer."

For the full story, see:

NATALIE ANGIER. "BASICS; The Pathological Altruist Gives Till Someone Hurts." The New York Times (Tues.,October 4, 2011): D1 & D2.

(Note: ellipses added.)

(Note: the online version of the article is dated October 3, 2011.)

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(p. 12) In a classic psychology experiment, people for and against the death penalty were asked to evaluate the different research designs of two studies of its deterrent effect on crime. One study showed that the death penalty was an effective deterrent; the other showed that it was not. Which of the two research designs the participants deemed the most scientifically valid depended mostly on whether the study supported their views on the death penalty.

In the laboratory, this is labeled confirmation bias; observed in the real world, it's known as pigheadedness.

Scientists are not immune. In another experiment, psychologists were asked to review a paper submitted for journal publication in their field. They rated the paper's methodology, data presentation and scientific contribution significantly more favorably when the paper happened to offer results consistent with their own theoretical stance. Identical research methods prompted a very different response in those whose scientific opinion was challenged.

For the full commentary, see:

CORDELIA FINE. "GRAY MATTER; Biased but Brilliant." The New York Times, SundayReview Section (Sun., July 31, 2011): 12.

(Note: the online version of the article is dated July 30, 2011.)

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The Max Planck view expressed in the quote below, has been called "Planck's Principle" and has been empirically tested in three papers cited at the end of the entry.

(p. 12) How's this for a cynical view of science? "A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it."

Scientific truth, according to this view, is established less by the noble use of reason than by the stubborn exertion of will. One hopes that the Nobel Prize-winning physicist Max Planck, the author of the quotation above, was writing in an unusually dark moment.

And yet a large body of psychological data supports Planck's view: we humans quickly develop an irrational loyalty to our beliefs, and work hard to find evidence that supports those opinions and to discredit, discount or avoid information that does not.

For the full commentary, see:

CORDELIA FINE. "GRAY MATTER; Biased but Brilliant." The New York Times, SundayReview Section (Sun., July 31, 2011): 12.

(Note: ellipses added.)

(Note: the online version of the article is dated July 30, 2011.)

Three of my papers that present evidence on Planck's Principle, are:

"Age and the Acceptance of Cliometrics." The Journal of Economic History 40, no. 4 (December 1980): 838-841.

"Planck's Principle: Do Younger Scientists Accept New Scientific Ideas with Greater Alacrity than Older Scientists?" Science 202 (November 17, 1978): 717-723 (with David L. Hull and Peter D. Tessner).

"The Polywater Episode and the Appraisal of Theories." In A. Donovan, L. Laudan and R. Laudan, eds., Scrutinizing Science: Empirical Studies of Scientific Change. Dordrecht, Holland: Kluwer Academic Publishers, 1988, 181-198.

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Source of book image: http://www.kurzweilai.net/images/The-Compass-of-Pleasure-Linden-David-J-9780670022588.jpg

David J. Linden is the author of The Compass of Pleasure and a Johns Hopkins University School of Medicine Professor of Neuroscience.

(p. 4) . . . , the psychological profile of a compelling leader -- think of tech pioneers like Jeff Bezos, Larry Ellison and Steven P. Jobs -- is also that of the compulsive risk-taker, someone with a high degree of novelty-seeking behavior. In short, what we seek in leaders is often the same kind of personality type that is found in addicts, whether they are dependent on gambling, alcohol, sex or drugs.

How can this be? We typically see addicts as weak-willed losers, and chief executives and entrepreneurs are people with discipline and fortitude. To understand this apparent contradiction we need to look under the hood of the brain, and in particular at the functions that relate to pleasure and reward.

. . .

Crucially, genetic variants that suppress dopamine signaling in the pleasure circuit substantially increase pleasure- and novelty-seeking behaviors -- their bearers must seek high levels of stimulation to reach the same level of pleasure that others can achieve with more moderate indulgence. Those blunted dopamine receptor variants are associated with substantially increased risk of addiction to a range of substances and behaviors.

. . .

The risk-taking, novelty-seeking and obsessive personality traits often found in addicts can be harnessed to make them very effective in the workplace. For many leaders, it's not the case that they succeed in spite of their addiction; rather, the same brain wiring and chemistry that make them addicts also confer on them behavioral traits that serve them well.

So, when searching for your organization's next leader, look for someone with an attenuated dopamine function: someone who is never satisfied with the status quo, someone who wants the feeling of success more than others -- but likes it less.

For the full commentary, see:

DAVID J. LINDEN. "Addictive Personality? You Might be a Leader." The New York Times, SundayReview Section (Sun., July 24, 2011): 4.

(Note: ellipses added.)

(Note: the online version of the commentary is dated July 23, 2011.)

The book mentioned above is:

Linden, David J. The Compass of Pleasure: How Our Brains Make Fatty Foods, Orgasm, Exercise, Marijuana, Generosity, Vodka, Learning, and Gambling Feel So Good. New York: Viking Adult, 2011.

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Source of book image: online version of the WSJ review quoted and cited below.

We learn the most when our priors are contradicted. But the dissonance between evidence and beliefs is painful. So we often do not see, or soon forget, evidence that does not fit with our beliefs.

The innovative entrepreneur is often a person who sees and forces herself to remember, the dissonant fact, storing it away to make sense of, or make use of, later. At the start, she may be alone in what she sees and what she remembers. So if we are to benefit from her ability and willingness to bear the pain of dissonance, she must have the freedom to differ, and she must have the financial wherewith-all to support herself until her vision is more widely shared, better understood, and more fruitfully applied.

(p. A13) Beliefs come first; reasons second. That's the insightful message of "The Believing Brain," by Michael Shermer, the founder of Skeptic magazine. In the book, he brilliantly lays out what modern cognitive research has to tell us about his subject--namely, that our brains are "belief engines" that naturally "look for and find patterns" and then infuse them with meaning. These meaningful patterns form beliefs that shape our understanding of reality. Our brains tend to seek out information that confirms our beliefs, ignoring information that contradicts them. Mr. Shermer calls this "belief-dependent reality." The well-worn phrase "seeing is believing" has it backward: Our believing dictates what we're seeing.

. . .

One of the book's most enjoyable discussions concerns the politics of belief. Mr. Shermer takes an entertaining look at academic research claiming to prove that conservative beliefs largely result from psychopathologies. He drolly cites survey results showing that 80% of professors in the humanities and social sciences describe themselves as liberals. Could these findings about psychopathological conservative political beliefs possibly be the result of the researchers' confirmation bias?

As for his own political bias, Mr. Shermer says that he's "a fiscally conservative civil libertarian." He is a fan of old-style liberalism, as in liberality of outlook, and cites "The Science of Liberty" author Timothy Ferris's splendid formulation: "Liberalism and science are methods, not ideologies." The "scientific solution to the political problem of oppressive governments," Mr. Shermer says, "is the tried-and-true method of spreading liberal democracy and market capitalism through the open exchange of information, products, and services across porous economic borders."

But it is science itself that Mr. Shermer most heartily embraces. "The Believing Brain" ends with an engaging history of astronomy that illustrates how the scientific method developed as the only reliable way for us to discover true patterns and true agents at work. Seeing through a telescope, it seems, is believing of the best kind.

For the full review, see:

RONALD BAILEY. "A Trick Of the Mind; Looking for patterns in life and then infusing them with meaning, from alien intervention to federal conspiracy." The Wall Street Journal (Weds., July 27, 2011): A13.

(Note: ellipsis added.)

Book reviewed:

Shermer, Michael. The Believing Brain: From Ghosts and Gods to Politics and Conspiracies---How We Construct Beliefs and Reinforce Them as Truths. New York: Times Books, 2011.

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""I had to train myself not to get too interested in their problems, and not to get sidetracked trying to be a semi-therapist." Dr. Donald Levin, a psychiatrist whose practice no longer includes talk therapy." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) DOYLESTOWN, Pa. -- Alone with his psychiatrist, the patient confided that his newborn had serious health problems, his distraught wife was screaming at him and he had started drinking again. With his life and second marriage falling apart, the man said he needed help.

But the psychiatrist, Dr. Donald Levin, stopped him and said: "Hold it. I'm not your therapist. I could adjust your medications, but I don't think that's appropriate."

Like many of the nation's 48,000 psychiatrists, Dr. Levin, in large part because of changes in how much insurance will pay, no longer provides talk therapy, the form of psychiatry popularized by Sigmund Freud that dominated the profession for decades. Instead, he prescribes medication, usually after a brief consultation with each patient. So Dr. Levin sent the man away with a referral to a less costly therapist and a personal crisis unexplored and unresolved.

For the full story, see:

GARDINER HARRIS. "Talk Doesn't Pay, So Psychiatry Turns Instead to Drug Therapy." The New York Times, First Section (Sun., March 6, 2011): A1 & A21.

(Note: the online version of the story is dated March 5, 2011.)

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(p. D6) In a recent study published in the journal Cognition, psychologists at Princeton and Indiana University had 28 men and women read about three species of aliens, each of which had seven characteristics, like "has blue eyes," and "eats flower petals and pollen." Half the participants studied the text in 16-point Arial font, and the other half in 12-point Comic Sans MS or 12-point Bodoni MT, both of which are relatively unfamiliar and harder for the brain to process.

After a short break, the participants took an exam, and those who had studied in the harder-to-read fonts outperformed the others on the test, 85.5 percent to 72.8 percent, on average.

To test the approach in the classroom, the researchers conducted a large experiment involving 222 students at a public school in Chesterland, Ohio. One group had all its supplementary study materials, in English, history and science courses, reset in an unusual font, like Monotype Corsiva. The others studied as before. After the lessons were completed, the researchers evaluated the classes' relevant tests and found that those students who'd been squinting at the stranger typefaces did significantly better than the others in all the classes -- particularly in physics.

"The reason that the unusual fonts are effective is that it causes us to think more deeply about the material," a co-author of the study, Daniel M. Oppenheimer, a psychologist at Princeton, wrote in an e-mail. "But we are capable of thinking deeply without being subjected to unusual fonts. Think of it this way, you can't skim material in a hard to read font, so putting text in a hard-to-read font will force you to read more carefully."

Then again, so will raw effort, he and other researchers said. Concentrating harder. Making outlines from scratch. Working through problem sets without glancing at the answers. And studying with classmates who test one another.

For the full story, see:

BENEDICT CAREY. "MIND; Come On, I Thought I Knew That!" The New York Times (Tues., April 19, 2011): D5-D6.

(Note: the online version of the article is dated April 18, 2011.)

The forthcoming article that is discussed in the quotes above, is:

Diemand-Yauman, Connor, Daniel M. Oppenheimer, and Erikka B. Vaughan. "Fortune Favors the Bold (and the Italicized): Effects of Disfluency on Educational Outcomes." Cognition (2010).

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(p. 26) He was a lonely ghost uttering a truth that nobody would ever hear. But so long as he uttered it, in some obscure way the continuity was not broken. It was not by making yourself heard but by staying sane that you carried on the human heritage.

Source:
.
Orwell, George. Nineteen Eighty-Four. New York: The New American Library, 1961 [1949].

By Canadian law, 1984 is no longer under copyright. The text has been posted on the following Canadian web site: http://wikilivres.info/wiki/Nineteen_Eighty-Four

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The image is of the Canadian edition, which has a different subtitle than the American edition cited below. Source of book image: http://3.bp.blogspot.com/_qGSiMLu6NXM/TTWIQkcllmI/AAAAAAAADEI/qD2yo1rxnL0/s1600/Future%2BBabble.jpg

(p. C6) How bad are expert predictions? Almost predictably bad. In 2005, Philip Tetlock, a professor of psychology at the University of Pennsylvania, published the results of a magisterial 20-year analysis of 27,450 judgments about the future from 284 experts. He discovered that the experts, in aggregate, did little better, and sometimes considerably worse, than "a dart-throwing chimpanzee."

While Mr. Tetlock guaranteed anonymity to get his experts to reveal how useless they were, Mr. Gardner names names. In the late 1960s, he notes, the political scientist Andrew Hacker predicted that race relations in America would soon get so bad that they would lead to the "dynamiting of bridges and water mains" and the "assassinating of public officials and private luminaries." In the early 1970s, Richard Falk, at Princeton, imagined that by the 1990s we would be living in a world dominated by "the politics of catastrophe." In the mid-1970s, Daniel Bell and other analysts assumed that high levels of inflation were, as Mr. Gardner puts it, "here to stay." (In fact, inflation cooled off in the early 1980s and has stayed low for decades.) In the early 1990s, Lester Thurow, the MIT economist, was one of the experts who predicted that Japan would dominate the 21st century, though he noted that Europe had a chance, too.

The high priest of erroneous prediction is, of course, Paul Ehrlich, who, though a respected entomologist, turned into an end-of-the-worlder with "The Population Bomb" (1968) and "The End of Affluence" (1974). In the latter book he wrote: "If I were a gambler, I would take even money that England will not exist in the year 2000." Now 77, Mr. Ehrlich is "a gregarious and delightful man, a natural performer," Mr. Gardner reports, thereby tapping into the sources of his success in the face of repeated failure: Never admit mistakes, never sound doubtful. As Mr. Gardner shows in his survey of expert prediction-making, the more you sound like you know what you are talking about, the more people will believe you.

For the full review, see:

TREVOR BUTTERWORTH. "Prophets of Error." Wall Street Journal (Sat., APRIL 30, 2011): C6.

(Note: the online version of the article is dated APRIL 30, 2011.)

The book being reviewed, is:

Gardner, Dan. Future Babble: Why Expert Predictions Are Next to Worthless, and You Can Do Better. New York: Dutton Adult, 2011.

The important Tetlock book mentioned, is:

Tetlock, Philip E. Expert Political Judgment: How Good Is It? How Can We Know? Princeton, NJ: Princeton University Press, 2005.

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(p. 145) . . . , it is standard to denounce materialism in others while lusting for it ourselves. At the end of the 1990s, Hillary Rodham Clinton decried "a consumer-driven culture that promotes values that undermine democracy" and blasted "materialism that undermines our spiritual centers." Shortly thereafter, she bought a $1.7 million home and signed an $8 million book contract. As the novelist Daniel Akst has noted, Rodham Clinton thus joined the long line of commentators "bent on saving the rest of us from the horrors of consumption" while taking care to make themselves rich and comfy.

Source:

Easterbrook, Gregg. The Progress Paradox: How Life Gets Better While People Feel Worse. Paperback ed. New York: Random House, 2004.

(Note: ellipsis added.)

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Source of book image: http://www.turingfilm.com/wp-content/uploads/2011/03/11-3-18-The-Most-Human-Human.jpg

To be an innovative entrepreneur is to "get out of book" in the language well-expressed below.

(p. A17) In chess, computers are strongest in the parts of the game in which human players rely most on memory: the opening and closing sequences. (Serious players learn strategies by rote, and the early stages of even grandmaster games contain few surprises for the cognoscenti.) Knowledge of these tried and tested moves is called "the book." By the middle section of a game, however, the number of permutations of moves is too vast for memorization to help. Here players need to get "out of book" and act unexpectedly, which is why computers--even Deep Blue--can struggle.

Mr. Christian elaborates on this distinction and applies it to human intelligence in general. For isn't it precisely when people refuse to get "out of book"--just following orders or playing their role--that we find them least human? Likewise, when we get "out of book," we are at our most human. Think of the difference between the waiter who runs through the usual routine and the one who responds to your order with a witticism. Remaining alive to what is mechanical or original in our own behavior can preserve a sense of human difference.

For the full review, see:

JULIAN BAGGINI. "BOOKSHELF; More Than Machine; No computer has yet to pass the Turing Test, fooling judges into believing its responses come from a person." Wall Street Journal (Tues., MARCH 8, 2011): A17.

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(p. D1) SAN ANTONIO -- Some of the world's pre-eminent experts on bias discovered an unexpected form of it at their annual meeting.

Discrimination is always high on the agenda at the Society for Personality and Social Psychology's conference, where psychologists discuss their research on racial prejudice, homophobia, sexism, stereotype threat and unconscious bias against minorities. But the most talked-about speech at this year's meeting, which ended Jan. 30, involved a new "outgroup."

It was identified by Jonathan Haidt, a social psychologist at the University of Virginia who studies the intuitive foundations of morality and ideology. He polled his audience at the San Antonio Convention Center, starting by asking how many considered themselves politically liberal. A sea of hands appeared, and Dr. Haidt estimated that liberals made up 80 percent of the 1,000 psychologists in the ballroom. When he asked for centrists and libertarians, he spotted fewer than three dozen hands. And then, when he asked for conservatives, he counted a grand total of three.

"This is a statistically impossible lack of diversity," Dr. Haidt concluded, noting polls showing that 40 percent of Americans are conservative and 20 percent are liberal. In his speech and in an interview, Dr. Haidt argued that social psychologists are a "tribal-moral community" united by "sacred values" that hinder research and damage their credibility -- and blind them to the hostile climate they've created for non-liberals.

. . .

(p. D3) The politics of the professoriate has been studied by the economists Christopher Cardiff and Daniel Klein and the sociologists Neil Gross and Solon Simmons. They've independently found that Democrats typically outnumber Republicans at elite universities by at least six to one among the general faculty, and by higher ratios in the humanities and social sciences. In a 2007 study of both elite and non-elite universities, Dr. Gross and Dr. Simmons reported that nearly 80 percent of psychology professors are Democrats, outnumbering Republicans by nearly 12 to 1.

For the full commentary, see:

JOHN TIERNEY. "Findings; Social Scientist Sees Bias Within." The New York Times (Tues., February 8, 2011): D1 & D3.

(Note: ellipsis added.)

(Note: the online version of the article is dated February 7, 2011.)

To listen to Prof. Haidt's speech and view his PowerPoints, follow this link:

Haidt, Jonathan. "The Bright Future of Post-Partisan Social Psychology." Presented at the annual meeting of the Society for Personality and Social Psychology in San Antonio, TX on Jan. 27, 2011.

The Cardiff and Klein research mentioned in the commentary:

Cardiff, Christopher F., and Daniel B. Klein. "Faculty Partisan Affiliations in All Disciplines: A Voter Registration Study." Critical Review 17, no. 3-4 (Dec. 2005): 237-55.

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William Rosen gives us a thought-provoking anecdote about Edmund Cartwright, the inventor of the first power loom:

(p. 238) He was also, apparently, convinced of the practicality of such a machine by the success of the "Mechanical Turk," a supposed chess-playing robot that had mystified all of Europe and which had not yet been revealed as one of the era's great hoaxes: a hollow figurine concealing a human operator. Inventors are sometimes beneficiaries of their own ignorance.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

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(p. 123) [A] . . . study . . . conducted in 1962, compared the results of psychometric tests given to inventors and noninventors (the former defined by behaviors such as application for or receipt of a patent) in similar professions, such as engineers, chemists, architects, psychologists, and science teachers. Some of the results (p. 124) were about what one might expect: inventors are significantly more thing-oriented than people-oriented, more detail-oriented than holistic. They are also likely to come from poorer families than noninventors in the same professions. . . .

. . . , the 1962 study also revealed that independent inventors scored far lower on general intelligence tests than did research scientists, architects, or even graduate students. There's less to this than meets the eye: The intelligence test that was given to the subjects subtracted wrong answers from right answers, and though the inventors consistently got as many answers correct as did the research scientists, they answered far more questions, thereby incurring a ton of deductions. While the study was too small a sample to prove that inventors fear wrong answers less than noninventors, it suggested just that. In the words of the study's authors, "The more inventive an independent inventor is, the more disposed he will be--and this indeed to a marked degree--to try anything that might work."

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: word in brackets and ellipses added.)

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(p. B1) Being in a position of power . . . may make people feel that they can do no wrong. In recent experiments, Dana Carney, a psychologist at Columbia University's business school, has found that acquiring power makes people more comfortable committing acts they might otherwise be reluctant to commit, like lying or cheating. As people rise to a position of power, she has shown, their bodies generate more testosterone, a hormone associated with aggression and risk-taking, and less cortisol, a chemical that the body generates in response to stress.

"Having power changes you physiologically, reducing your body's internal feedback that tells you which actions are good or bad," says Prof. Carney. "Power temporarily intoxicates you."

For the full commentary, see:

JASON ZWEIG. "THE INTELLIGENT INVESTOR; What Conflict of Interest? How Power Blinds Us to Our Flaws." The Wall Street Journal (Sat., OCTOBER 16, 2010): B1.

(Note: ellipsis added.)

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(p. 36) For centuries, certainly ever since Immanuel Kant called the hand the window on the mind," philosophers have been pondering the very complex way in which the human hand is related to the human mind. Modern neuroscience and evolutionary biology have confirmed the existence of what the Scottish physician and theologian Charles Bell called the intelligent hand. Stephen Pinker of Harvard even argues that early humans' intelligence increased partly because they were equipped with levers of influence on the world. namely the grippers found at the end of their two arms. We now know that the literally incredible amount of sensitivity and articulation of the human hand, which has increased at roughly the same pace as has the complexity of the human brain, is not merely a product of the pressures of natural selection, butt an initiator of it: The hand has led the brain to evolve just as much as the brain has led the hand. The hands of a pianist, or a painter, or a sushi chef, or even, as with Thomas New-(p. 37)comen, hands that could use a hammer to shape soft iron, are truly, in any functional sense, "intelligent."

This sort of tactile intelligence was not emphasized in A. P. Usher's theory of invention, the components of which he filtered through the early twentieth-century school of psychology known as Gestalt theory, which was preeminently a theory of visual behavior. The most important precepts of Gestalt theory (to Usher, anyway, who was utterly taken with their explanatory power) are that the patterns we perceive visually appear all at once, rather than by examining components one at a time, and that a principle of parsimony organizes visual perceptions into their simplest form. Or forms; one of the most famous Gestalt images is the one that can look like either a goblet or two facing profiles. Usher's enthusiasm for Gestalt psychology explains why, despite his unshakable belief in the inventive talents of ordinary individuals, he devotes an entire chapter of his magnum opus to perhaps the most extraordinary individual in the history of invention: Leonardo da Vinci.

Certainly, Leonardo would deserve a large place in any book on the history of mechanical invention, not only because of his fanciful helicopters and submarines. hut for his very real screw cutting engine, needle making machine, centrifugal pumps, and hundreds more. And Usher found Leonardo an extraordinarily useful symbol in marking the transition in mechanics from pure intuition to the application of science and mathematics.

But the real fascination for Usher was Leonardo's straddling of two worlds of creativity, the artistic and the inventive. No one, before or since, more clearly demonstrated the importance to invention of what we might call "spatial intelligence"; Leonardo was not an abstract thinker of any great achievement, nor were his mathematical skills, which he taught himself late in life, remarkable. (p. 38) His perceptual skills, on the other hand, developed primarily for his painting, were extraordinary, but they were so extraordinary that Usher could write, "It is only with Leonardo that the process of invention is lifted decisively into the field of the imagination. . . . "

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

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(p. W14) Are certain kinds of modern art too complex for anybody to understand? Fred Lerdahl thinks so, at least as far as his chosen art form is concerned. In 1988 Mr. Lerdahl, who teaches musical composition at Columbia University, published a paper called "Cognitive Constraints on Compositional Systems," in which he argued that the hypercomplex music of atonal composers like Messrs. Boulez and Carter betrays "a huge gap between compositional system and cognized result." He distinguishes between pieces of modern music that are "complex" but intelligible and others that are excessively "complicated"--containing too many "non-redundant events per unit [of] time" for the brain to process. "Much contemporary music," he says, "pursues complicatedness as compensation for a lack of complexity." (To read his paper online, go to: http://www.bussigel.com/lerdahl/pdf/Cognitive%20Constraints%20on%20Compositional%20Systems.pdf)

. . .

Mr. Lerdahl is on to something, and it is applicable to the other arts, too. Can there be any doubt that "Finnegans Wake" is "complicated" in precisely the same way that Mr. Lerdahl has in mind when he says that a piece of hypercomplex music like Mr. Boulez's "Le marteau sans maître" suffers from a "lack of redundancy" that "overwhelms the listener's processing capacities"?

. . .

"You have turned your back on common men, on their elementary needs and their restricted time and intelligence," H.G. Wells complained to Joyce after reading "Finnegans Wake." That didn't faze him. "The demand that I make of my reader," Joyce said, "is that he should devote his whole life to reading my works." To which the obvious retort is: Life's too short.

For the full commentary, see:

TERRY TEACHOUT. "Too Complicated for Words; Are our brains big enough to untangle modern art?." The Wall Street Journal (Sat., June 26, 2010): W14.

(Note: ellipses added.)

The research discussed above is:

Lerdahl, Fred. "Cognitive Constraints on Compositional Systems." Contemporary Music Review 6, no. 2 (1992): 97-121.

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I believe that resilience is a key characteristic of successful entrepreneurs. Amanda Ripley has some plausible and useful comments on resilience in the passages quoted below.

(p. 91) Resilience is a precious skill. People who have it tend to also have three underlying advantages: a belief that they can influence life events; a tendency to find meaningful purpose in life's turmoil; and a conviction that they can learn from both positive and negative experiences. These beliefs act as a sort of buffer, cushioning the blow of any given disaster. Dangers seem more manageable to these people, and they perform better as a result.    . . .

. . .    A healthy, proactive worldview should logically lead to resilience. But it's the kind of unsatisfying answer that begs another question. If this worldview leads to resilience, well what leads to the worldview?

(p. 92) The answer is not what we might expect. Resilient people aren't necessarily yoga-practicing Buddhists. One thing that they have in abundance is confidence. As we saw in the chapter on fear, confidence---that comes from realistic rehearsal or even laughter---soothes the more disruptive effects of extreme fear. A few recent studies have found that people who are unrealistically confident tend to fare spectacularly well in disasters. Psychologists call these people "self-enhancers," but you and I would probably call them arrogant. These are people who think more highly of themselves than other people think of them. They tend to come off as annoying and self-absorbed. In a way, they might be better adapted to crises than they are to real life.

Source:

Ripley, Amanda. The Unthinkable: Who Survives When Disaster Strikes - and Why. New York: Crown Publishers, 2008.

(Note: ellipses added.)

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The toughest part of inventing isn't solving problems. It's figuring out which problems are worth the effort.

"A few years ago, an inventor patented a device that caused an electric motor to rock a chair," wrote Raymond F. Yates in 1942. "Now imagine, if you will, the sad spectacle of anybody too lazy to rock his own chair! No wonder he could not make money. If he had expended the same effort on something that was actually needed, he might be wealthy today instead of being sadder but wiser."

Mr. Yates, a self-taught engineer, inventor and technical writer, tried to nudge other inventors in the right direction with his book, "2100 Needed Inventions." Published by Wilfred Funk Inc., Mr. Yates's book was a list of ways people could alleviate certain nuisances and defects of life and get rich for their trouble.

. . .

"Invention is really a systematic form of criticism," Mr. Yates wrote, and people tend to criticize the things that annoy them in their daily lives. Mr. Yates, for example, seems to have found most commonplace devices excessively noisy.

For the full story, see: 

CYNTHIA CROSSEN.  "DEJA VU; An Inventor in 1940s Gave Tips on Going From Smart to Rich."  The Wall Street Journal  (Mon., May 21, 2007):  B1.  

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