The fine print

An Econ [totally rational human being] will read and understand the fine print of a contract before signing it, but Humans usually do not. An unscrupulous firm that designs contracts that customers will routinely sign without reading has considerable legal leeway in hiding important information in plain sight. A pernicious implication of the rational-agent model in its extreme form is that customers are assumed to need no protection beyond ensuring that the relevant information is disclosed. The size of the print and the complexity of the language in the disclosure are not considered relevant—an Econ knows how to deal with small print when it matters. In contrast, the recommendations of [the book] Nudge require firms to offer contracts that are sufficiently simple to be read and understood by Human customers. It is a good sign that some of these recommendations have encountered significant opposition from firms whose profits might suffer if their customers were better informed. A world in which firms compete by offering better products is preferable to one in which the winner is the firm that is best at obfuscation.— Thinking, Fast and Slow, page 413

<idle musing>
That's the final snippet from this book—a very relevant book that you should take the time to read. I was only able to skim off the top in these excerpts. The book itself fills in the details.
</idle musing>

We're seeing it now

In a nation of Econs [people who only are rational], government should keep out of the way, allowing the Econs to act as they choose, so long as they do not harm others. If a motorcycle rider chooses to ride without a helmet, a libertarian will support his right to do so. Citizens know what they are doing, even when they choose not to save for their old age, or when they expose themselves to addictive substances. There is a hard edge to this position: elderly people who did not save enough for retirement get little more sympathy than someone who complains about the bill after consuming a large meal at a restaurant. Much is therefore at stake in the debate between the Chicago school and the behavioral economists, who reject the extreme form of the rational-agent model. Freedom is not a contested value; all the participants in the debate are in favor of it. But life is more complex for behavioral economists than for true believers in human rationality. No behavioral economist favors a state that will force its citizens to eat a balanced diet and to watch only television programs that are good for the soul. For behavioral economists, however, freedom has a cost, which is borne by individuals who make bad choices, and by a society that feels obligated to help them. The decision of whether or not to protect individuals against their mistakes therefore presents a dilemma for behavioral economists. The economists of the Chicago school do not face that problem, because rational agents do not make mistakes. For adherents of this school, freedom is free of charge.— Thinking, Fast and Slow, page 412

<idle musing>
And we're seeing the results of this mindset now. Problem is that it's about as far from the Sermon on the Mount as you can get, to say nothing of the moral code in the Old Testament. It's individualism allowed to run rampant at the cost of society. Nietzsche's superman will win and the rest of us will be toast.

If that's the world you want, you are in serious danger of getting it. Just remember, you might not be the superman you think you are. what then? To whom will you turn?
</idle musing>

Rational? Not so much

The assumption that agents are rational provides the intellectual foundation for the libertarian approach to public policy: do not interfere with the individual’s right to choose, unless the choices harm others. Libertarian policies are further bolstered by admiration for the efficiency of markets in allocating goods to the people who are willing to pay the most for them. A famous example of the Chicago approach is titled A Theory of Rational Addiction; it explains how a rational agent with a strong preference for intense and immediate gratification may make the rational decision to accept future addiction as a consequence. I once heard Gary Becker, one of the authors of that article, who is also a Nobel laureate of the Chicago school, argue in a lighter vein, but not entirely as a joke, that we should consider the possibility of explaining the so-called obesity epidemic by people’s belief that a cure for diabetes will soon become available. He was making a valuable point: when we observe people acting in ways that seem odd, we should first examine the possibility that they have a good reason to do what they do. Psychological interpretations should only be invoked when the reasons become implausible—which Becker’s explanation of obesity probably is.— Thinking, Fast and Slow, page 411–12

<idle musing>
With all due respect to libertarians, this is why it is a doomed philosophy. People are not rational beings. They are easily manipulated and swayed—as this book makes eminently clear. The wolves will always try to feast on the sheep. Unfortunately, far too often the wolves are the ones in authority. And that is the reason the prophets of the Old Testament/Hebrew Bible spoke out against the authorities so strongly.

It might also be the reason Jesus didn't get along so well with the authorities, either. When was the last time a person in authority took the Sermon on the Mount as their modus operandi? Right.
</idle musing

Mountain? Molehill? Which?

Any aspect of life to which attention is directed will loom large in a global evaluation. This is the essence of the focusing illusion, which can be described in a single sentence

Nothing in life is as important as you think it is when you are thinking about it— Thinking, Fast and Slow, page 402

<idle musing>
Which is why we tend to make mountains out of mole hills. Why we obsess of things that are not important. Why we need to take a step back and take the time to get a little perspective on things. But we rarely do...
</idle musing>

Real value

Beyond the satiation level of income [his 2011 research showed that to be $75,000], you can buy more pleasurable experiences, but you will lose some of your ability to enjoy the less expensive ones.— Thinking, Fast and Slow, page 397

<idle musing>
And the less expensive ones are the ones that usually matter more. What kind of value can you put on watching a sunset (or sunrise) over the lake? It's free, yet I'll wager that if you are busy climbing the corporate ladder, you rarely see one. Jesus was right in the Sermon on the Mount—Solomon's clothing is nothing next to the clothing of nature.
</idle musing>

False hope

Many unfortunate human situations unfold in the top right cell. This is where people who face very bad options take desperate gambles, accepting a high probability of making things worse in exchange for a small hope of avoiding a large loss. Risk taking of this kind often turns manageable failures into disasters. The thought of accepting the large sure loss is too painful, and the hope of complete relief too enticing, to make the sensible decision that it is time to cut one’s losses. This is where businesses that are losing ground to a superior technology waste their remaining assets in futile attempts to catch up. Because defeat is so difficult to accept, the losing side in wars often fights long past the point at which the victory of the other side is certain, and only a matter of time.— Thinking, Fast and Slow, page 318–19

Semper reformandum? Not so much

Animals, including people, fight harder to prevent losses than to achieve gains. In the world of territorial animals, this principle explains the success of defenders. A biologist observed that “when a territory holder is challenged by a rival, the owner almost always wins the contest—usually within a matter of seconds.” In human affairs, the same simple rule explains much of what happens when institutions attempt to reform themselves, in “reorganizations” and “restructuring” of companies, and in efforts to rationalize a bureaucracy, simplify the tax code, or reduce medical costs. As initially conceived, plans for reform almost always produce many winners and some losers while achieving an overall improvement. If the affected parties have any political influence, however, potential losers will be more active and determines than potential winners; the outcome will be biased in their favor and inevitably more expensive and less effective than initially planned. Reforms commonly include grandfather clauses that protect current stakeholders—for example, when the existing workforce is reduced by attrition rather than by dismissals, or when cuts in salaries and benefits apply only to future workers. Loss aversion is a powerful conservative force that favors minimal changes from the status quo in the lives of both institutions and individuals.— Thinking, Fast and Slow, page 305

Beware!

Most of us view the world as more benign than it really is, our own attributes as more favorable than they truly are, and the goals we adopt as more achievable than they are likely to be. We also tend to exaggerate our ability to forecast the future, which fosters optimistic overconfidence. In terms of its consequences for decisions, the optimistic bias may well be the most significant of the cognitive biases. Because optimistic bias can be both a blessing and a risk, you should be both happy and wary if you are temperamentally optimistic.— Thinking, Fast and Slow, page 255

The best laid plans...

When forecasting the outcomes of risky projects, executives too easily fall victim to the planning fallacy. In its grip, they make decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities. They overestimate benefits and underestimate costs. They spin scenarios of success while overlooking the potential for mistakes and miscalculations. As a result, they pursue initiatives that are unlikely to come in on budget or on time or to deliver the expected returns—or even to be completed.— Thinking, Fast and Slow, page 252

<idle musing>
Been there, done that. Many times : (
</idle musing>

But of course I'm right!

Professional controversies bring out the worst in academics. Scientific journals occasionally publish exchanges, often beginning with someone’s critique of another’s research, followed by a reply and a rejoinder. I have always thought that these exchanges are a waste of time. Especially when the original critique is sharply worded, the reply and the rejoinder are often exercises in what I have called sarcasm for beginners and advanced sarcasm. The replies rarely concede anything to a biting critique, and it is almost unheard of for a rejoinder to admit that the original critique was misguided or erroneous in any way.— Thinking, Fast and Slow, page 234

<idle musing>
Indeed! I've read far too many of them. . .
</idle musing>

Reject it!

You surely understand in principle that worthless information should not be treated differently from a complete lack of information, but WYSIATI [what you see is all there is] makes it very difficult to apply that principle. Unless you decide immediately to reject evidence (for example, by determining that you received it from a liar), your System 1 [subconscious mind] will automatically process the information available as if it were true. There is one thing you can do when you have doubts about the quality of the evidence: let your judgments of probability stay close to the base rate. Don’t expect this exercise of discipline to be easy—it requires a significant effort of self-monitoring and self-control.— Thinking, Fast and Slow, page 153

<idle musing>
How relevant! This is how marketing/advertising—and propaganda!—work. And it's also why they are so effective. We are naturally lazy thinkers, so our minds go the way of least resistance. : (
</idle musing>

The big splash

In today’s world, terrorists are the most significant practitioners of the art of inducing availability cascades. With a few horrible exceptions such as 9/11, the number of casualties from terror attacks is very small relative to other causes of death. Even in countries that have been targets of intensive terror campaigns, such as Israel, the weekly number of casualties almost never came close to the number of traffic deaths. The difference is in the availability of the two risks, the ease and the frequency with which they come to mind. Gruesome images, endlessly repeated in the media, cause everyone to be on edge.— Thinking, Fast and Slow, page 144

<idle musing>
Good to keep in mind, isn't it? But we tend to forget that we have a higher risk of getting hit by a random driver while in the crosswalk than of being killed by a terrorist. And an even smaller risk that the terrorist is not already a U.S. citizen with a rifle...
</idle musing>

Perceptions and the reality

• Strokes cause almost twice as many deaths as all accidents combined, but 80% of respondents judged accidental death to be more likely. • Tornadoes were seen as more frequent killers than asthma, although the latter cause 20 times more deaths. • Death by lightning was judged less likely than death from botulism even though it is 52 times more frequent. • Death by disease is 18 times as likely as accidental death, but the two were judged about equally likely. • Death by accidents was judged to be more than 300 times more likely than death by diabetes, but the true ratio is 1:4 The lesson is clear: estimates of causes of death are warped by media coverage. The coverage is itself biased toward novelty and poignancy. The media do not just shape what the public is interested in, but also are shaped by it. Editors cannot ignore the public’s demands that certain topics and viewpoints receive extensive coverage. Unusual events (such as botulism) attract disproportionate attention and are consequently perceived as less unusual than they really are. The world in our heads is not a precise replica of reality; our expectation about the frequency of events are distorted by the prevalence and emotional intensity of the messages to which we are exposed.— Thinking, Fast and Slow, page 138

<idle musing>
Especially in today's political climate it is important to be aware of these facts. Both sides are guilty of emphasizing things, making them appear bigger than they are. The difficulty is checking the facts to see which ones are being goosed and which ones are real.&thinsp. .

Unfortunately, there is no easy way to do that aside from researching the statements. : (
</idle musing>

From the playbook

A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth. Authoritarian institutions and marketers have always known this fact. But it was psychologists who discovered that you do not have to repeat the entire statement of a fact or idea to make it appear true. People who were repeatedly exposed to the phrase “the body temperature of a chicken” were more likely to accept as true the statement that “the body temperature of a chicken is 144º” (or any other arbitrary number). The familiarity of one phrase in the statement sufficed to make the whole statement feel familiar, and therefore true. If you cannot remember the source of a statement, and have no way to relate it to other things you know, you have no option but to go with the sense of cognitive ease.— Thinking, Fast and Slow, page 62

<idle musing>
An important thing to remember in these days of "alternative facts"! By the way, the body temperature of an adult chicken is 105–107ºF according to the University of Kentucky Dept. of Agriculture. . .
</idle musing>

It requires effort

The nervous system consumes more glucose than most other parts of the body, and effortful mental activity appears to be especially expensive in the currency of glucose. When you are actively involved in difficult cognitive reasoning or engaged in a task that requires self-control, your blood glucose level drops. The effect is analogous to a runner who draws down glucose stored in her muscles during a sprint.— Thinking, Fast and Slow, page 43

<idle musing>
Maybe that's why some people avoid thinking as much as they avoid physical exercise?!
</idle musing>

Don't overreach!

The often-used phrase “pay attention” is apt: you dispose of a limited budget of attention that you can allocate to activities, and if you try to go beyond that budget, you will fail. It is the mark of effortful activities that they interfere with each other, which is why it is difficult or impossible to conduct several at once. You could not compute the product of 17 x 24 while making a left turn into dense traffic, and you certainly should not try. You can do several things at once, but only if they are easy and undemanding. You are probably safe carrying on a conversation with a passenger while driving on an empty highway, and many parents have discovered, perhaps with some guilt, that they can read a story to a child while thinking of something else.— Thinking, Fast and Slow, page 23

Are you sure of that?

We are prone to overestimate how much we understand about the world and to underestimate the role of chance in events. Overconfidence is fed by the illusory certainty of hindsight.— Thinking, Fast and Slow, page 14

What about intuition?

Valid intuitions develop when experts have learned to recognize familiar elements in a new situation and to act in a manner that is appropriate to it. Good intuitive judgments come to mind with the same immediacy as “doggie!”— Thinking, Fast and Slow, page 12

&t;idle musing>
Indeed! Intuition is that subconscious flash of memory because you've prepared yourself by study and practice. Unfortunately, there is no shortcut—no matter what the person marketing the latest gimmick might tell you!
</idle musing>

What are you thinking about?

People tend to assess the relative importance of issues by the ease with which they are retrieved from memory—and this is largely determined by the extent of coverage in the media. Frequently mentioned topics populate the mind even as others slip away from awareness. In turn, what the media choose to report corresponds to their view of what is currently on the public’s mind. It is no accident that authoritarian regimes exert substantial pressure on independent media. Because public interest is most easily aroused by dramatic events and by celebrities, media feeding frenzies are common.— Thinking, Fast and Slow, pages 8–9

<idle musing>
We're starting a new book today, Thinking, Fast and Slow. It's quite timely, as you can see, even though it has been out for a while. I hope you enjoy the ride and find it enlightening. I certainly have as I read it.
</idle musing>