Imagine riding on a New York subway and seeing a person reading The New York Times. Which of these two descriptions is a better bet about the stranger? “She has a Ph.D.” “She doesn’t have a college degree.” Since you may associate The New York Times with higher education, you are tempted to bet that she has a Ph.D. However, simple logic dictates that there are many more people riding on that subway who don’t have a degree than those who do. The safer bet is on the person not having a degree.

This is an example from Thinking, Fast and Slow by Daniel Kahneman. He points to an experiment he ran with Amos Tversky. They made up a fictitious character named Linda: “Linda is thirty-one years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in antinuclear demonstrations.” The experimenters then presented the participants with a list of possible scenarios and asked them to pick the most probable one. Two of them were: “Linda is a bank teller.” and “Linda is a bank teller and is active in the feminist movement.”

Pretty much everyone would agree that Linda fits the description of a feminist bank teller better than just a bank teller. However, how likely is it that she is a bank teller active in the feminist movement? The problem comes when trying to judge likelihood. We forget how mathematics works. Not all bank tellers are feminists. Therefore feminist bank tellers are a subset of bank tellers. It is much more likely that Linda is a bank teller than a feminist. It is pure math. Yet, 89% of the study participants indicated that Linda is more likely a feminist bank teller. When introduced to a more sophisticated audience, doctoral students at the Stanford Graduate School of Business, students who had training in probability and statistics, the number of those who believed that it is more likely that Linda is a feminist bank teller than a bank teller was still 85%!

“Intuition misleads us. Our reasoning abilities are then too lazy to correct the mistake.”

When the students were confronted with the results, and the researchers pointed out that they violated a basic logical rule, the reaction of some was telling. “I thought you just asked for my opinion.” As if “it is just my opinion, and it has nothing to do with math or logic.” Even when we are shown that we are wrong, we find a way to justify our opinion. The data, logic, or facts don’t matter.

Kahneman points to a fascinating insight. Consider this statement, “Highly intelligent women tend to marry men who are less intelligent than they are.” Do you think it is true? How do you explain this phenomenon? People will find all sorts of reasons starting with things like intelligent women wanting to avoid competition or intelligent men not wanting to marry intelligent women so they can feel superior. I’m sure you can come up even with more exciting explanations. Or you may even try to deny that this is not true and demand proof. The thing is, it is mathematically given. Since the correlation between spouses’ intelligence is less than perfect, and since you can assume that, on average, men and women are equally intelligent, it is a mathematical inevitability that highly intelligent women will marry less intelligent men. And, of course, vice versa, highly intelligent men will marry less intelligent women. There is nothing magic about it. It is just logic. In its extreme, the most intelligent woman in the world could find only one equally intelligent man, and since that is unlikely to happen, she is going to marry someone less intelligent.

Statistics rule over judgment

Psychologist Paul Meehl argues that statistical rules are superior to intuitive judgments. Kahneman took Meehl’s research and tested it in the military on characteristics relevant to a combat unit’s performance. The goal was to fight the halo effect when interviewing future recruits. He instructed the interviewers to go through the six key traits in a fixed order and rate each on a five-point scale before moving to the next trait. The interviewers shouldn’t consider anything else and try to understand any other candidate’s background than the specific six traits. As Kahneman states, he asked the interviewers “to provide reliable measurements, and leave the predictive validity to him.” The interviewers had a hard time complying. They were used to employing their intuition and experience to decide who was the right candidate and were very uncomfortable just gathering data and not adding their opinion.

Ultimately Kahneman allowed the interviewers to add their rating on whether the recruit would be a good soldier. As it turns out, the sum of the six ratings of the selected traits predicted the soldier’s future performance more accurately than the previous methods. However, the intuitive evaluation the interviewers made after the rigorous interview process was also accurate.

“Intuition works when it is based on a disciplined collection of relevant data.”

Intuition and recognition-primed decision model

Intuition is no magic. It is only a recognition of patterns. This means that intuition only works when you have a big enough set of patterns in your memory to recognize and if the environment is stable enough so the past patterns are still applicable. Intuition is what Daniel Kahneman would call fast thinking. No conscious deliberation and analysis are needed. The solution just pops into your mind. We need to rely on slow, more effortful thinking when there is no intuitive solution.

“Intuition only works when you have a big enough set of patterns in your memory to recognize and if the environment is stable enough.”

Kahneman describes the recognition-primed decision model. It applies to military commanders, firefighters, or even chess players. When faced with a problem in their domain of expertise, they are not trying to come up with several possible courses of action and then evaluate which one is the best. Their associative memory automatically draws on a collection of patterns in their subconscious mind and comes up with the closest one. Then the reasoning mind takes over and analyses how it fits the current situation, mentally simulates the possible outcomes, and tweaks it for a higher chance of success. The decision is made, and the action starts. As Herbert Simon said about intuition, “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.”

Inability to reconstruct past memory

One of the most significant limitations of the human mind is the inability to reconstruct past states of knowledge and beliefs accurately. Once you adopt a new worldview or change your belief, it is virtually impossible to recollect your previous belief correctly. You may be able to remember it in rough strokes, as in “yes, I believed in Santa Claus when I was a kid,” but you can’t remember the details of how it felt and what it meant to you. Based on your current knowledge, you know that Santa Claus is not real and, therefore, can’t recollect how it felt when you believed he was.

Psychologists studied what happens when people change their minds to see how difficult it is to recollect their past beliefs. When you are asked about an opinion on something your mind is not completely decided on and then being exposed to a persuasive counter-argument, you may change your mind. That is only natural. Now you believe the opposite of what you initially argued. However, when being asked to reconstruct your former belief, you will find that very difficult. You will start with your current belief and substitute some parts to be closer to what you might have believed in the past. Or you may claim that you have always believed this and you didn’t change your mind at all.

You are better off relying on processes

This hindsight bias has an unfortunate impact on evaluating past decisions. The decision is not assessed based on whether the process that led to it was sound but rather whether the outcome was good or bad. A good decision with a bad outcome is seen as bad, and the decision-maker should have known better. Kahneman shows it in a case of a surgeon. If the surgeon recommends a minor operation that generally has a high success rate, but an unpredictable accident happens and the patient dies, the chances are high that the jury will indict the surgeon that he should have known the surgery was risky for this particular patient and shouldn’t be performed in the first place. Hindsight is 20/20. Even prudent and low-risk actions could be seen as reckless in retrospect if the outcomes were bad.

This is why adhering to standard operating procedures pays off when you know your decision might get second-guessed in the future. If you are a surgeon, you will do better if you run a standardized set of tests, consult other experts, and apply conventional treatments even when you know they won’t work. You are taking action to protect yourself from lawsuits rather than helping the patient to the best of your abilities. The same patient who would be immensely happy if the unorthodox procedure worked and would praise you for taking the risk would sue you for malpractice and being reckless if it didn’t.

Putting it all together

Intuition only works when you have a big enough set of patterns in your memory and if the environment is stable enough. Otherwise, your subconscious mind is very unreliable. You can’t let it make decisions for you as they will most likely be sub-optimal. You can’t even rely on your memory and can’t reliably evaluate your past decisions and use them as guidance for the future.

So what can you do? You can build effective decision-making processes based on data and then follow these processes rigorously.

What is your take on the topic? Do you rely on intuition? If yes, in what situations? When was the last time intuition failed you? Do you believe you can recollect correctly your past beliefs? How can you use the knowledge from this article to persuade others?

Photo: TheDigitalArtist / Pixabay.com

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Categories: Life, Productivity

Tags: decision-making, intuition, Life