Tag: Ideological bias

Fun with Logical Fallacies

Reading Time: 4 minutes

We came across a cool book recently called Logically Fallacious: The Ultimate Collection of Over 300 Logical Fallacies, by a social psychologist named Bo Bennett. We were a bit skeptical at first — lists like that can be lacking thoughtfulness and synthesis — but then were hooked by a sentence in the introduction that brought the book near and dear to our hearts:

This book is a crash course, meant to catapult you into a world where you start to see things how they really are, not how you think they are.

We could use the same tag line for Farnam Street. (What was that thing about great artists stealing?)

Logically Fallacious a fun little reference guide to bad thinking, but let’s try to highlight a few that seem to arise quite often without enough recognition. (To head off any objections at the pass, most of these are not strict logical fallacies in the technical sense, but more so examples of bad reasoning.)

No True Scotsman

This one is a favorite. It arises when someone makes a broad sweeping claim that a “real” or “true” so and so would only do X or would never do Y.

Example: “No true Scotsman would drink an ale like that!”

“I know dyed-in-the-wool Scotsmen who drink many such ales!”

“Well then he’s not a True Scotsman!”

Problem: The problem should be obvious: It’s a circular definition! A True Scotsman is thus defined as anyone who would not drink such ales, which then makes them a True Scotsman, and so on. It’s non-falsifiable. There’s a Puritanical aspect to this line of reasoning that almost always leads to circularity.

Genetic Fallacy

This doesn’t have to do with genetics per se so much as the genetic origin of an argument. The “genetic fallacy” is when you disclaim someone’s argument based solely on some aspect of their background or the motivation of the claim.

Example: “Of course Joe’s arguing that unions are good for the world, he’s the head of the Local 147 Chapter!”

Problem: Whether or not Joe is the head of his local union chapter has nothing to do with whether unions are good or bad. It certainly may influence his argument, but it doesn’t invalidate his argument. You must approach the merits of the argument rather than the merits of Joe to figure out whether it’s true or not.

Failure to Elucidate

This is when someone tries to “explain” something slippery by redefining it in an equally nebulous way, instead of actually explaining it. Hearing something stated this way is usually a strong indicator that the person doesn’t know what they’re talking about.

Example: “The Secret works because of the vibration of sub-lingual frequencies.”

“What the heck are sub-lingual frequencies?”

“They’re waves of energy that exist below the level of our consciousness.”

“…”

Problem: The claimant thinks they have explained the thing in a satisfactory way, but they haven’t — they’ve simply offered another useless definition that does no work in explaining why the claim makes any sense. Too often the challenger will simply accept the follow up, or worse, repeat it to others, without getting a satisfactory explanation. In a Feynman-like way, you must keep probing, and if the probes reveal more failures to elucidate, it’s likely that you can reject the claim, at least until real evidence is presented.

Causal Reductionism

This reflects closely on Nassim Taleb’s work and the concept of the Narrative Fallacy — an undue simplifying of reality to a simple cause–> effect chain.

Example: “Warren Buffett was successful because his dad was a Congressman. He had a leg up I don’t have!”

Problem: This form of argument is used pretty frequently because the claimant wishes it was true or is otherwise comfortable with the narrative. It resolves reality into a neat little box, when actual reality is complicated. To address this particular example, extreme success on the level of a Buffett clearly would have multiple causes acting in the same direction. His father’s political affiliation is probably way down the list.

This fallacy is common in conspiracy theory-type arguments, where the proponent is convinced that because they have some inarguable facts — Howard Buffett was a congressman; being politically connected offers some advantages — their conclusion must also be correct. They ignore other explanations that are likely to be more correct, or refuse to admit that we don’t quite know the answer. Reductionism leads to a lot of wrong thinking — the antidote is learning to think more broadly and be skeptical of narratives.

“Fallacy of Composition/Fallacy of Division”

These two fallacies are two sides of the same coin: The first problem is thinking that if some part of a greater whole has certain properties, that the whole must share the same properties. The second is the reverse: Thinking that because a whole is judged to have certain properties, that its constituent parts must necessarily share those properties.

Examples: “Your brain is made of molecules, and molecules are not conscious, so your brain must not be the source of consciousness.”

“Wall Street is a dishonest place, and so my neighbor Steve, who works at Goldman Sachs, must be a crook.”

Problem: In the first example, stolen directly from the book, we’re ignoring emergent properties: Qualities that emerge upon the combination of various elements with more mundane innate qualities. (Like a great corporate culture.) In the second example, we make the same mistake in a mirrored way: We forget that greed may be emergent in the system itself, even from a group of otherwise fairly honest people. The other mistake is assuming that each constituent part of the system must necessarily share the traits of the whole system. (i.e., because Wall St. is a dishonest system, your neighbor must be dishonest.)

***

Still Interested? Check out the whole book. It’s fun to pick up regularly and see which fallacies you can start recognizing all around you.

Tagged: Behavioral Psychology, Fallacies, Ideological bias, Logical Fallacy

The Pursuit of Fairness

Reading Time: 4 minutes

As James Surowiecki illustrates in an excellent piece in the New Yorker, the pursuit of perfect fairness causes a lot of terrible problems in system function.

Surowiecki calls this The Fairness Trap:

…Rationally, then, this standoff should end with a compromise—relaxing some austerity measures, and giving Greece a little more aid and time to reform. And we may still end up there. But the catch is that Europe isn’t arguing just about what the most sensible economic policy is. It’s arguing about what is fair. German voters and politicians think it’s unfair to ask Germany to continue to foot the bill for countries that lived beyond their means and piled up huge debts they can’t repay. They think it’s unfair to expect Germany to make an open-ended commitment to support these countries in the absence of meaningful reform. But Greek voters are equally certain that it’s unfair for them to suffer years of slim government budgets and high unemployment in order to repay foreign banks and richer northern neighbors, which have reaped outsized benefits from closer European integration. The grievances aren’t unreasonable, on either side, but the focus on fairness, by making it harder to reach any kind of agreement at all, could prove disastrous.

The basic problem is that we care so much about fairness that we are often willing to sacrifice economic well-being to enforce it. Behavioral economists have shown that a sizable percentage of people are willing to pay real money to punish people who are taking from a common pot but not contributing to it. Just to insure that shirkers get what they deserve, we are prepared to make ourselves poorer. Similarly, a famous experiment known as the ultimatum game—one person offers another a cut of a sum of money and the second person decides whether or not to accept—shows that people will walk away from free money if they feel that an offer is unfair. Thus, even when there’s a solution that would leave everyone better off, a fixation on fairness can make agreement impossible.

You can see this in the way the U.S. has dealt with the foreclosure crisis. Plenty of economists recommended giving mortgage relief to underwater homeowners, but that has not happened on any meaningful scale, in part because so many voters see it as unfair to those who are still obediently paying their mortgages. Mortgage relief would almost certainly have helped all homeowners, not just underwater ones—by limiting the spillover impact of foreclosures on house prices—but, still, the idea that some people would be getting something for nothing irritated voters.

The fairness problem is exacerbated by the fact that our definition of what counts as fair typically reflects what the economists Linda Babcock and George Loewenstein call a “self-serving bias.” You’d think that the Greeks’ resentment of austerity might be attenuated by the recognition of how much money Germany has already paid and how much damage was done by rampant Greek tax dodging. Or Germans might acknowledge that their devotion to low inflation makes it much harder for struggling economies like Greece to start growing again. Instead, the self-serving bias leads us to define fairness in ways that redound to our benefit, and to discount information that might conflict with our perspective. This effect is even more pronounced when bargainers don’t feel that they are part of the same community—a phenomenon that psychologists call “social distance.” The pervasive rhetoric that frames the conflict in terms of national stereotypes—hardworking, frugal Germans versus frivolous, corrupt Greeks, or tightfisted, imperialistic Germans versus freewheeling, independent Greeks—makes it all the more difficult to reach a reasonable compromise.

From the perspective of society as a whole, concern with fairness has all kinds of benefits: it limits exploitation, promotes meritocracy, and motivates workers. But in a negotiation where neither side can have what it really wants, and where the least bad solution is as good as it gets, worrying too much about fairness can be suicidal. To move Europe away from the brink, voters and politicians on all sides need to stop asking themselves what’s fair and start asking themselves what’s possible.

It is more important to have the right system in place than perfect fairness to the individual. The argument here is one of moral hazard and incentives. If you don’t punish Greece, you foster a system where it’s ok to default once in a while. This idea will spread to other countries.

In Steven Sample’s excellent book, The Contrarian’s Guide to Leadership, he talks about the law of a higher good, which he took from Machiavelli’s The Prince.

Let me clarify the most fundamental misunderstanding. Machiavelli was not an immoral or even an amoral man; as mentioned earlier, he had a strong set of moral principles. But he was driven by the notion of a higher good: an orderly state in which citizens can move about at will, conduct business, safeguard their families and possessions, and be free of foreign intervention or domination. Anything which could harm this higher good, Machiavelli argued, must be opposed vigorously and ruthlessly. Failure to do so out of either weakness or kindness was condemned by Machiavelli as being contrary to the interests of the state, just as it would be contrary to the interests of a patient for his surgeon to refuse to perform a needed operation out of fear that doing so would inflict pain on the patient.

Still curious? Add The Contrarian’s Guide to Leadership and The Prince to your reading list.

Tagged: Behavioral Economics, Economics, Ideological bias, Kantian Fairness Tendency, self-deception and denial

Kantian Fairness Tendency: The World Isn’t Fair

Reading Time: 7 minutes

The Kantian Fairness Tendency refers to the pursuit of perfect fairness which causes a lot of terrible problems. Stop expecting the world to be fair and adjust your behavior accordingly.

To learn about this mental model we turn to Charlie Munger, who mentioned it twice.

First in this UCCB talk entitled Academic Economics — Strengths and Weaknesses, after Considering Interdisciplinary Needs where he said:

It is not always recognized that, to function best, morality should sometimes appear unfair, like most worldly outcomes. The craving for perfect fairness causes a lot of terrible problems in system function. Some systems should be made deliberately unfair to individuals because they’ll be fairer on average for all of us. I frequently cite the example of having your career over, in the Navy, if your ship goes aground, even if it wasn’t your fault. I say the lack of justice for the one guy that wasn’t at fault is way more than made up by a greater justice for everybody when every captain of a ship always sweats blood to make sure the ship doesn’t go aground. Tolerating a little unfairness to some to get a greater fairness for all is a model I recommend to all of you. But again, I wouldn’t put it in your assigned college work if you want to be graded well, particularly in a modern law school wherein there is usually an over-love of fairness-seeking process.

The second time was in his essay entitled: The Psychology of Human Misjudgment:

Kant was famous for his “categorical imperative,” a sort of a “golden rule” that required humans to follow those behavior patterns that, if followed by all others, would make the surrounding human system work best for everybody. And it is not too much to say that modern acculturated man displays, and expects from others, a lot of fairness as thus defined by Kant.

In a small community having a one-way bridge or tunnel for autos, it is the norm in the United States to see a lot of reciprocal courtesy, despite the absence of signs or signals. And many freeway drivers, including myself, will often let other drivers come in front of them, in lane changes or the like, because that is the courtesy they desire when roles are reversed. Moreover, there is, in modern human culture, a lot of courteous lining up by strangers so that all are served on a “firstcome-first-served” basis.

Also, strangers often voluntarily share equally in unexpected, unearned good and bad fortune. And, as an obverse consequence of such “fair-sharing” conduct, much reactive hostility occurs when fairsharing is expected yet not provided. It is interesting how the world’s slavery was pretty well abolished during the last three centuries after being tolerated for a great many previous centuries during which it coexisted with the world’s major religions. My guess is that Kantian Fairness Tendency was a major contributor to this result.

* * *

Professor Sanjay Bakshi makes a connection between the Kantian Fairness Tendency and the “law of the higher good” in reference to Machiavelli’s famous book The Prince. Bakshi said this to his students:

Machiavelli’s “The Prince” is a great book and should be made compulsory reading for all MBA students.

To many people, The Prince is an evil book. But Joseph L. Badaracco, who teaches a hugely popular course titled “The Moral Leader” at the Harvard Business School uses this book to teach ethics. And he teaches ethics by telling students to follow Machiavelli’s advice in The Prince.

In an interview, Badaracco has said that four different takes on The Prince usually emerge in classroom discussions of The Prince at HBS:

Version 1 : “This book is a mess. It was written by a guy who hoped to get to the center of things, was there briefly, offended some of the wrong Medicis, was exiled, was tortured, and wanted to get back in.” It’s “a scholar’s dream because you can find anything you want in it and play intellectual games. But just put it aside.”

Version 2 : “Now wait a minute. There’s some good common sense in there. Machiavelli is basically saying that if you want to make an omelet you have to break some eggs… To do some right things, you may have to not do some other right things.”

Version 3 : Other students believe the book is still around because it’s so evil. Why is it evil? “If you look closely at The Prince,” he said, “it’s quite interesting what isn’t in the book. Nothing about religion. Nothing about the Church. Nothing about God. There’s nothing about spirituality. Almost nothing about the law. Almost nothing about traditions. You’re out there on your own doing what works for you in terms of naked ambition.”

Version 4 : “A fourth Prince that other students uncover is the most interesting one, in Badaracco’s mind. Students find that the book reveals a kind of worldview, he says, and it’s not an evil worldview. This version goes: “If you’re going to make progress in the world you’ve got to have a clear sense, a realistic sense, an unsentimental sense, of how things really work: the mixed motives that compel some people and the high motives that compel some others. And the low motives that unfortunately captivate other people.” Students who claim the fourth Prince, Badaracco said, believe that if they’re going to make a difference, it’s got to be in this world, “and not in some ideal world that you would really like to live in.”

One of my favourite mental models comes from The Prince. I call this model, the “law of the higher good“. Before I read The Prince, I read an excellent book called, “The Contrarian Guide to Leadership” by Steven Sample. In this book, which was recommended by Mr. Munger, Sample’s thoughts on the law of the higher good from The Prince resonated very well with what Mr. Munger has been advocating for years.

I reproduce here an excerpt from Sample’s book which deals with the law of the higher good:

“Let me clarify the most fundamental misunderstanding. Machiavelli was not an immoral or even an amoral man; as mentioned earlier, he had a strong set of moral principles. But he was driven by the notion of a higher good: an orderly state in which citizens can move about at will, conduct business, safeguard their families and possessions, and be free of foreign intervention or domination. Anything which could harm this higher good, Machiavelli argued, must be opposed vigorously and ruthlessly. Failure to do so out of either weakness or kindness was condemned by Machiavelli as being contrary to the interests of the state, just as it would be contrary to the interests of a patient for his surgeon to refuse to perform a needed operation out of fear that doing so would inflict pain on the patient.”

The law of the higher good is a terribly useful model for leaders because it forces them to think about things from a totally different perspective.

Here’s a hypothetical situation to ponder about:

You are in charge of running a retail store and one of your cashiers, an elderly woman, is caught committing a minor embezzlement. Fearing that she might be dismissed, she approaches you to plead forgiveness. She tells you that this is the first time she embezzled money from the company and promises that she’ll never do it again. She tells you about her sad situation, namely that her husband is very ill and that she was going to use the money to buy medicines for him. She becomes extremely emotional and your heart is melting. What do you do?

Something similar to the above situation was described by Mr. Munger in a talk given by him. He used two models to produce his answer. The first model was probability. Mr. Munger implores you to reduce the problem to the mathematics of Fermat/Pascal by asking the question: How likely is it that the old woman’s statement, “I’ve never done it before, I’ll never do it again” is true?

Note that this question has nothing whatsoever to do with the circumstances in this particular instance of embezzlement. Rather, Munger is relying on his knowledge of the theory of probability. He asks: “If you found 10 embezzlements in a year, how many of them are likely to be first offences?”

The possible actions are: (1) She is lying and you fire her (good outcome – because it cures the problem and sends the right signals); (2) She is telling the truth and you fire her (bad outcome for her but good outcome for system integrity); (3) She is lying and you pardon her (bad outcome for system integrity); and (4) She is telling the truth and you pardon her (bad outcome for system integrity because it will send the wrong signal that its ok to embezzle once).

Weighed with probabilities, and after considering signalling effects of your actions on other people’s incentives and its effect on system integrity, its clear that the woman should be fired.

Looked this way, this is not a legal problem or an ethical problem. Its an arithmetical problem with a simple solution. This extreme reductionism of practical problems to a fundamental discipline (in this case mathematics), is, of course, the hallmark of the Munger way of thinking and living.

So, from a leader’s perspective, it’s more important to have the right systems with the right incentives in place, rather than trying to be fair to one person – even if that person is the leader or someone close to the leader.

The logic is that leaders must look at such situations from their civilization’s point of view rather than the viewpoint of an individual. If we create systems which encourage embezzlements, or tolerate such systems, we’ll ruin our civilization. If we don’t punish the woman, the idea that its ok to do minor embezzlement once in a while, will spread because of incentive effects, and social proof (everyone’s doing it so its ok). And we cannot let that idea spread because that will ruin our civilization. Its that simple.

Kantian Fairness is part of the Farnam Street latticework of Mental Models.

Tagged: Ideological bias, Immanuel Kant, Kantian Fairness Tendency, law of the higher good, Mental Model, Philosophy, Sanjay Bakshi

Several Uncomfortable Realities

Reading Time: 1 minute

Something to ponder.

A sobering excerpt from Vaclav Smil‘s Global Catastrophes and Trends: The Next Fifty Years:

The first is that even the most assiduous deployment of the best available preventive measures (smart policing, clever informants, globe-spanning, electronic intelligence, willingness to undertake necessary military action) will not be able to thwart all planned attacks.

The second reality is that the most dangerous form of terrorist attacks cannot be deterred because the political and ideological motivations for terrorist attacks that characterized Rapoport’s (2001) first three waves of terror have blended with religious zealotry and become one with the Muslim concept of martyrdom, providing the perpetrators with an irresistible reward: instant access to paradise. Murder by suicide has deep roots in Muslim history …

The third sobering consideration is that neither personal instability nor an individuals hopelessness or overt personal defects, factors that come immediately to mind as the most likely drivers, are dependable predictors of candidates for suicidal martyrdom. Nor are such indicators as poverty, level of eduction, or religious devotion. Institutional manipulation of emotional commitment seems to be a key factor, and one not easily eliminated. Other obvious contributions are rapidly rising youth populations in countries governed by dictatorial regimes with limited economic opportunities, and the disenchantment of second-generation Muslim immigrants with their host societies. But none of these factors can offer any selective guidance to identify the most susceptible individuals and to prevent their murderous suicides.

The forth consideration is that out understandable fixation on suicidal missions may be misplaced. A dirty bomb containing enough radioactive waste to contaminate several downtown blocks of a major city and cause mass panic (as anything invisible and nuclear is bound to do) can be positioned in a place calculated to have a maximum impact and then remotely detonated. And while Hizbullah’s more than 30 days of rocket attacks on Israel in the summer of 2006 were not particularly deadly, they paralyzed a large part of the country and demonstrated how more conventional weapons could be used in the service of terrorism.

Tagged: Ideological bias, Incentives, Vaclav Smil