People Aren’t Dumb, the World Is Hard

http://freakonomics.com/podcast/richard-thaler/

by dctoedt • 8 years ago

868 417 8 years ago

We’re dumb in comparison to the systems we’ve created. Increasingly, the disparity between what our technology is capable of and our own limitations as animals will become a pressing issue.

One thing that always bothers me is how we have this myth of personal responsibility that supposes an individual is equipped to defend their own interests against a multinational corporation on their own.

“Well I just don’t get why the baby didn’t defend itself from the bear.”

alexmat2• 8 years ago

Hear hear, the agricultural revolution has trapped us in a Faustian bargain!

"The currency of evolution is neither hunger nor pain, but rather copies of DNA helixes. Just as the economic success of a company is measured only by the number of dollars in its bank account, not by the happiness of its employees, so the evolutionary success of a species is measured by the number of copies of its DNA. If no more DNA copies remain, the species is extinct, just as a company without money is bankrupt. If a species boasts many DNA copies, it is a success, and the species flourishes. From such a perspective, 1,000 copies are always better than a hundred copies. This is the essence of the Agricultural Revolution: the ability to keep more people alive under worse conditions."[1]

[1] https://erenow.com/common/sapiensbriefhistory/20.html

danharaj2• 8 years ago

# of copies of DNA is just a proxy for probability of propagation.

cafard• 8 years ago

There is something curious about posters on a techie site lauding the superiority of the hunter-gatherer life.

cubano• 8 years ago

Yet people have done and are doing it on a daily basis.

TeMPOraL2• 8 years ago

Do they now? Or are they just successful in areas where the corporation does not care, or even notice?

To paraphrase Eliezer's famous quote about AI - the Corporation does not hate you, nor does it love you; you're just a potential revenue source, and as long as it believes you'll net it something, it'll let you have your way.

nkrisc• 8 years ago

I like to remind people that it's not "you versus AT&T" it's "you versus a quarter million experts in their respective domains."

I would expect any average individual to lose against AT&T in whatever their issue is unless AT&T willingly concedes to them.

Picking on AT&T for no particular reason.

athenot• 8 years ago

That's an intersting point. Perhaps things would be more level if a conflict between an individual would be settled by selecting one RANDOM employee from that company (not the super ninja expert in the narrow field at hand), and have them battle it out in a lower court / arbitration.

pjmorris• 8 years ago

I once spent nine months in what seemed like a losing battle with AT&T for them to correctly account for two checks I wrote that they credited to my old phone number rather than my new phone number. I had to write a letter to my state's Public Service Commission before I could get the attention of AT&T's executive office and get their collections department off of my back.

52-6F-62• 8 years ago

With you 100% on this one.

Your last illustration there reminds me a little of this:

https://www.npr.org/2018/07/08/627082032/1-year-old-shows-up...

>>

His name is Johan.

He drank a bottle of milk and played with a purple ball as he waited for the immigration judge, The Associated Press reported.

John W. Richardson, the judge at the Phoenix courthouse, said he was "embarrassed to ask" if the defendant understood the proceedings. "I don't know who you would explain it to, unless you think that a 1-year-old could learn immigration law," he told Johan's attorney.

Spooky23• 8 years ago

That’s isn’t a matter of smart vs dumb. That is a farcical process subverting the judiciary to abuse someone’s rights.

If the judge had integrity he would resign or be disbarred.

s-shellfish3• 8 years ago

I think lots of people have been aware for a long time that there's a big gap between the individual understanding of what we can perceive machines (and institutions, philosophies based on their mechanical functioning) can do, versus what they do do.

It's just when you are caught up in it, you can't afford to think about it. You have to both be a part of it and not allow the responsibility of knowing you influence the system - therefore don't have the capacity to reason about the consequences of every single action - crush you.

It's more like you are the bear and you are trying to take care of a baby. There's the idea that you are just this tiny, little singular organism in comparison to the whole, but you aren't. Everything we do has consequences, everything we do directs systems. If you think some things you do just don't matter, you are missing some perspective.

olef_• 8 years ago

Execs of MNCs can be "nudged" too to do the right thing. That finding is one of reasons Thaler deserves his Nobel. Read his book.

dredmorbius• 8 years ago

MNCs?

api• 8 years ago

It's not just technology per se. We are dumb when it comes to understanding the behavior of any complex system with lots of emergent properties and feedback loops. I doubt the Roman Empire was understandable by its leaders either.

We are also fairly dumb when it comes to understanding things like ecosystems, genetic regulatory networks, the climate, the brain, etc. Those are all systems that have similar properties.

barrkel• 8 years ago

And many of our problems are collective action problems: where it makes sense for individuals to defect on their own, and they can only raise the standard for the group if they act together.

At different scales this means unionization and professional organizations, government regulation, and international regulation, to prevent whole countries from defecting - this is in large part what the EU is about, and a significant source of UK ill will towards it; and also generally what makes nationalists upset at globalists.

Collective action problems require collective action solutions. Large actors, however, tend to dislike collective action because it reduces their scale advantage.

Collective action has its own problem: power structures encourage corruption and misuse of the pooled power. Overall, I suspect government and international systems are more likely to be less corrupt because they can afford to build more checks and balances into their institutions, but the distance from the people decreases their perceived legitimacy.

Not an easy circle to square.

sandworm1012• 8 years ago

It also means laws/regulations to just plain ban harmful behaviors. Collectivization to alter market forces cannot fix everything. Some things need to just stop. Selling CFCs needs to stop. That won't happen by naming and shaming involved companies. It won't happen by people gathering on facebook to organize a boycott. It happens by people in uniforms enforcing the law, with violence when necessary. Sometimes that is the only way to stop individuals bent on illegally benefiting themselves at the expense of others.

gascan• 8 years ago

As I see it, the corruption challenge of collective action is because it is so often not carefully, purposefully structured. Government is constructed with the express purpose of checking power.

I read a bit I liked a while back about early feminism, in which members rejected wholesale the idea of power structures & authority, and established no authority. The author relates, however, that the power vacuum was naturally still filled- but because everyone wanted to pretend there was no power structure, the one that developed was unusually cruel & unaccountable.

I liked the bit because to me it seems like the strongest argument for official government- if the power vacuum must always be filled, let us be deliberate in how we fill it.

jeffdavis• 8 years ago

"Collective action has its own problem: power structures encourage corruption and misuse of the pooled power."

Exactly. I tend to be wary of concentrating power. The larger the group the more likely that there are conflicts of interest within the group.

Perhaps more importantly, large groups just don't make sense in a lot of cases. If I make a union of milk drinkers, we can buy in huge bulk and get a discount. But then we have 1000000 bottles of milk in one place that will go bad in a couple weeks. We need to invent a distribution network, and a way to figure out who actually needs milk and when, and a way to track who is drinking the most milk so they can pay higher dues. In other words, the union hasn't accomplished anything and basically everything will be the same.

amorphid• 8 years ago

We’re dumb in comparison to the systems we’ve created.

I prefer not to think like that. I'd say we're doing our best to navigate hard problems, and it's not yet clear how to do things more effectively. Worst case scenario we're acting dumb, and I'd argue that is kind of a useless statement. We're acting, and we can do better, so put some time into working on doing better.

walterstucco• 8 years ago

Are you sure that is the disparity between what our technology is capable of and our own limitations as animals and not our perception of it?

My grandparents lived most of their life under the menace of a nuclear holocaust, but when they were born the electric power system was still in infancy and they had no electricity whatsoever in their house.

Going back centuries, the Ishtar Gate was built so that people arriving to Babilonia would be scared

I think that we are more scared by what we don't know that by what we can't manage

The world IS hard, but we're also very dumb

We know smoking gives cancer, but we still smoke anyway.

We know cars pollute the environment, but we ride them anyway.

etc. etc. etc.

noonespecial• 8 years ago

Its worse. The baby doesn't even know that its supposed to be afraid of the bear.

peacetreefrog2• 8 years ago

"One thing that always bothers me is how we have this myth of personal responsibility that supposes an individual is equipped to defend their own interests against a multinational corporation on their own."

1. Our wiring isn't perfect, but who is better equipped to defend a person's interests than the individual themself? Serious question.

2. I don't think the "power" and coerciveness of multinational corporations is anywhere near that of government, which people bashing corporations usually want to make larger and more powerful. As Diedre McCloskey says, what happens if you are morally opposed to some new fighter jet or corporate subsidy, and unilaterally decide to pay fewer taxes because of it? The answer is you go jail. What happens if you choose Samsung or an Iphone? Nothing.

3. It's not like there is just one monolithic corporation. There are many, and they have various interests, capabilities and incentives. Usually they're competing with each other. Further, in time, many corporations correctly view these irrationalities as market opportunities and actively work on helping consumers combat them. E.g. see Acorns, Wealthfront, or hundreds of apps that help people use their phones less.

enraged_camel2• 8 years ago

>Our hardware isn't perfect, but who is better equipped to defend your own interests than the individual?

Organizations who have similar levels of resources and expertise as those who are infringing upon the individual’s interests, obviously. Otherwise it ends up being a David vs Goliath situation.

s73v3r_4• 8 years ago

"1. Our wiring isn't perfect, but who is better equipped to defend a person's interests than the individual themself? Serious question."

Someone who actually knows something about the topic in question? It is highly in the interests of any person to have both a plentiful and safe food supply, and safe, breathable air and safe, drinkable water. Pesticides constantly straddle this line; how much pollution is acceptable for food production, but still leaving the air and water safe? Do you honestly expect any random person to be able to make the correct choice in that situation? No. That's why we have experts in that field which study the effects of these chemicals, and the impact they have on the environment, and come to the conclusion of what's safe or not.

Another similar issue: One's actions do not exist in a vacuum. There's a recent story of some farmers spraying a certain herbicide to protect their crops from pigweed. However, not every farmer in the area is using it, or the herbicide resistant crops. The thing about spraying is that it goes in the air, and tends not to recognize property lines. The herbicide kills the crops on the neighboring farms. So while the original farmer who sprayed acted in their individual interest, they most definitely did not act in the interest of society in general, and clearly not in the interest of their neighbors.

"I don't think the "power" and coerciveness of multinational corporations is anywhere near that of government, which people bashing corporations usually want to make larger and more powerful."

No, we just want government to actually act in people's interests.

"As Diedre McCloskey says, what happens if you are morally opposed to some new fighter jet or corporate subsidy, and unilaterally decide to pay fewer taxes because of it? The answer is you go jail."

Yes, you broke the law, and so you must face the consequences. And unless you're Al Capone, you're not going to jail. Please stop parroting this ridiculous argument.

"What happens if you choose Samsung or an Iphone? "

What happens if you stop paying the balance on your Samsung phone because you switched?

"Further, in time, many corporations correctly view these irrationalities as market opportunities and actively work on helping consumers combat them."

I have huge doubts that many of them do this, and I have huge doubts that they are effective in this.

notabee3• 8 years ago

No one has the time, energy, or capacity to become expert in all domains within a complex civilization that could materially affect them. You are confusing "better equipped" with "having the most substantial interest". A person has the most substantial interest in their own safety and benefit, but that in no way implies that they will be the best equipped to attain that in all cases, or even understand how to. By all means, that person should seek out such knowledge, but it will never be as comprehensive as the accumulated wisdom of experts, or even compete with a motivated group of non-experts. You can advocate for personal agency and also still realize that a person standing alone is likely to get screwed over.

andrei_says_• 8 years ago

Placing refugee children as young as one in front of immigration courts, in seriousness, speaks volumes to this.

stephengillie2• 8 years ago

Life is hard, it's harder if you're stupid. - John Wayne

amelius• 8 years ago

Yeah, except if you're too stupid to even notice how hard life really is.

qaq• 8 years ago

I actually often see the opposite less intelligent people are often carefree and more happy.

blueprint• 8 years ago

Being intelligent is not exactly the same as being smart, and no matter how intelligent you may be, if you cannot control the activities of the effects that stick to your consciousness after the fact of what has happened to you in the past, you can't preserve your own true self for a long time, especially in this modern age.

ManlyBread• 8 years ago

This is only true up until a point where they have to deal with something they don't understand.

paidleaf• 8 years ago

Ignorance is bliss.

Quotes are like bible passages. There is one for every occasion and every perspective. Given one quote, you can find an equally poignant and contradictory quote.

Time and tide wait for no man!

Slow and steady wins the race!

This is why I cringe when I see people leading their lives based on quotes.

ionised• 8 years ago

Intelligence is apparently correlated with depression and anxiety, as the more intelligent one is the more likely they are to question themselves and their world.

francisofascii• 8 years ago

There was an interesting NPR Planet Money episode about Richard Thaler back in November. https://www.npr.org/sections/money/2017/11/01/561421807/epis...

howeyc• 8 years ago

This looks to be a bunch of discussion around receiving the Nobel prize.

Any pointers to where to find the information/studies that won him the prize. What people should/shouldn't be doing when making financial decisions. For instance, there was a reference to the fact that people "should ignore sunk costs" but don't. What are some other things to watch out for, and the reasons to do so?

ghaff• 8 years ago

Thaler has written a couple of books. Nudge (with Cass Sunstein) focuses on how the "right" decisions can be "nudged" by setting up appropriate decision frameworks.

Misbehaving is more of a personal history of how he got to behavioral decision theory. I particularly enjoyed that because I had a couple classes with him when he was working on these ideas early on.

frgtpsswrdlame• 8 years ago

Here's the lecture he's gave for the Nobel: https://www.nobelprize.org/nobel_prizes/economic-sciences/la...

If you're looking for information on nudges, check this: http://economicspsychologypolicy.blogspot.com/2013/08/nudge-...

It looks like they've stopped updating it but it has all sorts of economic research on nudges in it. Beware that some of this research is debated though.

wgyn• 8 years ago

There's another section of the Nobel site that provides background on the work, both a popular version and an advanced version. The advanced version amounts to a fairly substantive literature review. In general, you can find both documents for all Nobel Prizes, and the writing is very good.

Advanced: https://www.nobelprize.org/nobel_prizes/economic-sciences/la...

known• 8 years ago

It's hard due to https://en.wikipedia.org/wiki/Complex_interdependence

tw1010• 8 years ago

The negation of the former is true but the latter is also true.

ppeetteerr6• 8 years ago

This is probably the greatest argument for big government. If we were to eliminate the supervision of the establishment over the safety and security of everyday life, it would be very time consuming to handle every single aspect of it.

There is always the issue of an overreaching government, and that's where the left/right party split comes in. Each party either creates more regulation and protection or take some away. As voters, we have to recognize this duality of our system and embrace it. It's our only way to control the people we elect.

digi_owl• 8 years ago

I seem to recall running into a claim that the original idea of the republicans was that the government would be a check against coercion, be it physical, emotional, economic, or otherwise.

yosito• 8 years ago

Seems the current Republican establishment is the exact opposite of that ideal.

gbacon2• 8 years ago

Politicians and civil servants are subject to behavioral concerns too. Who will watch the watchmen?

WilliamEdward• 8 years ago

it doesn't have to be an endless hierarchy of people looking over one another. For example, we could watch the people that watch us.

mcguire5• 8 years ago

Ideally, the electorate.

In a small government scenario, who watches those providing services?

a_136_chiffa• 8 years ago

That's why free/leisure time to figure WTF is going on politically/economically socially and an education not to get lost on the way of getting there have been considered as pre-requisites for a functioning democracy.

throwaway375852• 8 years ago

What makes you think government is immune to these concerns? If anything, they can be more susceptible to certain kinds of adverse effects.

acjohnson55• 8 years ago

I agree with both you and the original poster. It's really important to have a culture of government accountability and iterative improvement. This has proven difficult in practice, as a sense of continuity and tradition is a hallmark of stable governments. But I think it's important to keep working toward that goal.

bigpicture• 8 years ago

I don't think economists agree with the concept of Big Government. Here's an entertaining back and forth between Thaler and Gene Fama about the efficient market theory [1]:

Q: So policy makers should use bubbles as a way to step in?
Thaler: Yes, but very gently. It’s not like I think policy makers know what’s going to happen, but if they see what looks disturbing, they can lean against the wind a little bit. That’s as far as I would go. We both agree that markets, good or bad, are the best thing we’ve got going. Nobody has devised a way of allocating resources that’s better.
Fama: We disagree about whether policy makers are likely to get it right, though. On balance, I think they are likely to cause more harm than good.

[1] http://review.chicagobooth.edu/economics/2016/video/are-mark...

ppeetteerr6• 8 years ago

Economists rarely have a good solution to societal problems. They have good solutions for facilitating trade but offer nothing with respect to social norms, nationalistic sentiment, etc.

We all agree that economists are good at maximizing resource allocation. Sysops are good at maximizing hardware allocation but we should let them dictate national policy :)

Politics is about taking all of the science and all of the human components of administrating a country and merge them into an ideal outcome. Economics is just one part of a bigger picture.

rvern• 8 years ago

No, this is one of the greatest arguments for small government or no government. People are more rational when the cost to them of being irrational is larger. Voting for good policies is a public good. When a voter is one among three hundred millions of citizens, only 1/300,000,000 (on average) of the benefits of the vote befall the individual voter. This gigantic externality means that the democratic market will severely underproduce votes for good policies. Simultaneously, social desirability bias means that voters have a strong incentive to believe in policies that are harmful to them but that make them look good to other people. Since the cost to them of being wrong about politics is so small and the benefit large, voters have gravely irrational beliefs. This conclusion is consistent with the results from social science that show that voters are ignorant about politics and with the widespread agreement with protectionist tariffs, price controls, restrictions on immigration, and many other policies that cause great economic harm.

jknz• 8 years ago

Voting for good policies is a public good. When a voter is one among three hundred millions of citizens, only 1/300,000,000 (on average) of the benefits of the vote befall the individual voter.

Typically, voting results are highly skewed towards 50/50, say in most elections in democratic regimes with fair elections. This was the case for Brexit or the popular vote in the US 2016 election for instance.

For an election whose expected result is close to 50/50, each voter is highly influential; intuitively, if all but one voter are decided and produce a 50/50 draw, the last undecided voter has complete power. Since a lot of fair elections are approximately 50/50, undecided voters have far better influence than 1/300,000,000 for a population of 300,000,000.

In an approximately 50/50 election with few undecided voters, it is quite cheap to swing the results by bombarding the few undecided voters with ads.

Mathematicians use this concept coined "influence" of a variable, or "influence function" to analyze properties of random boolean functions in percolation for instance.

ucaetano• 8 years ago

People are more rational when the cost to them of being irrational is larger.

This isn't strictly true, and I'd love to see you provide extensive data on such a exceptional claim.

There is a lot of evidence showing that harsher punitive measures often have little to no impact on crime and wrongdoing.

pm90• 8 years ago

On commenting on an article about why people have difficulty comprehending complex systems, you have just delivered an example of the phenomena.

Your basic point seems to be that a big Government will be so well run that individuals would rely on it to provide them with benefits, even in the case that the Government make poor decisions on policy choices. That is the whole point of a Government: to make life easier for people by taking care of things that are too expensive or complicated for people to do individually.

webkike• 8 years ago

People will be irrational regardless of its cost. Here's some evidence to support my claim with no citation: people will gamble their entire life savings away, regardless of how much money they have.

kadenshep• 8 years ago

People are more rational when the cost to them of being irrational is larger.

This was directly negated in the article.

rhizome• 8 years ago

People are more rational when the cost to them of being irrational is larger

People are not fundamentally rational, and people do not know how rational they themselves are in any given context.

dstroot• 8 years ago

Is there more I could read to get educated about this? How can we construct polical systems that are better?

Koshkin2• 8 years ago

No, this is one of the greatest arguments for small government

Well, soon enough, I am sure, the AI will satisfy both views on the government: it will control everything, and it will fit in your pocket.

thaumaturgy• 8 years ago

I really wish this notion of "society by survival of the fittest" would die its long-overdue death.

What actually happens, in the real world, in situations like this, is that people suffer and die. They don't become Ayn Rand's ideal man; there's just lots of needless suffering.

And because people are capable of violence, and because people don't like suffering very much, they commit violence against each other to improve their own position -- which increases the suffering.

And then other people, who don't want to suffer and don't want to commit violence, try to leave. And they come to countries like the United States, which they've heard at some point is a great and welcoming land of opportunity, only to discover that it's all a big marketing sham and the majority of the US wants to put up a sign that says, "Go away, we're closed."

Given the number of failing or failed states around the world recently, you have to have your head quite deep in the sand, or maybe far up in some body part, to still subscribe to this idea that anarcho-capitalism is a solution to anything.

There are many complex problems with many governments around the world right now. "Get rid of government" will not make any of it better.

matt40772• 8 years ago

I don't think it's valid to discount the individual's power by the number of voters. If the low impact of any single vote had the sort of effect you're suggesting, people would be much more likely not to vote at all.

When a voter is just one of millions, their share of power is necessarily low. Yet the total power obviously rises linearly. (or even super-linearly, considering the outsize influence the US has in the world). Your comment also suggests that you believe people are fundamentally open to altruistic decisions. It should therefore not matter if the power they have is over themselves, or their compatriots.

I also doubt widespread agreement with the policies you mention. Answers to such survey questions depend on the phrasing more than anything. And to use one recent datapoint: we all know a recent candidate who embodied those policies more than anyone before him. Yet they actually got fewer votes than their free trade / pro-immigration opponent.

mcguire5• 8 years ago

"People are more rational when the cost to them of being irrational is larger."

We may need a source on that. Are you are familiar with Thaler's work?

jhanschoo• 8 years ago

Other commenters have addressed how your claim that people behave more rationally when government is small. I would like to address the fact that even if we assume that citizens behave rationally, this does not mean that behavior maximizing personal benefit translates to behavior maximizing net benefit.

Consider, for example, the international politics arena, wherein there is no government over state actors, and where sufficiently important players pursue sufficiently rational actions, since the cost of not pursuing it is so high. Yet even with good evidence that current human activities are leading to future food and environmental insecurity via climate change, the rational actors have been struggling to coordinate on a plan.

b1daly• 8 years ago

This is an unorthodox way of looking at this, and could only be persuasive with actual data.

The economic argument for government providing public services is actually that for public goods, the incentives on the individual lead to sub-optimal outcomes (that’s partly just the definition of a public good).

Just because voters vote for government that may be less good at providing that public good (let’s say police protection) is not an argument that this completely eliminates any benefit from that service being provided as a public good.

From the simple example, the Democrats may provide less optimal policing than Republicans (wasting money on nanny state directives) does not mean the service can effectively provided by the private market.

You’re positing that sort inverse incentives apply when voters are choosing the governmental provision of public services. This seems unlikely to be true in the aggregate because voters do not get to choose politicians who are going to pursue policies to benefit themselves, as an individual, when they vote. As you point out, they may vote for totally psychological benefits.

So the tension is not really over the size of government; it is over making the correct determination of how much of a good or service is comprised of being a “public good.”

Classic public good problems, like imposing the correct costs on pollution, can’t be solved by wishing them away.

What you’re complaint more seems to be with is that democracy allows elements of self, or class, interests into individuals voting choices. The solution to this would be some kind of perfect benevolent dictator, who would make the optimum determination as to which goods should be provided by the government, and dedicate the correct resources to them.

The problem with this, of course, is again the incentives on the holders of power distort their decision making to their own benefit, as had be shown over and over in the real world.

ppeetteerr6• 8 years ago

People are more rational when the cost to them of being irrational is larger.

Do you mean like buying a house they cannot afford for some ideal of home ownership? ;)

JumpCrisscross4• 8 years ago

This is probably the greatest argument for big government

The article talks about institutional inertia. The advantage of a market economy is your Blockbusters get replaced by Netflix. Imagine if film renting were a public agency. It would be much harder to disrupt. Governments are, by design, immortal. A crucial design decision is choosing what, in our society, we want to be immortal and what we want to be replaceable.

Retric2• 8 years ago

Netflix is still mailing out DVD's and library's have both computers and books. Which is very telling, most often new methods supplement existing systems not simply replace them. The real transition has been cheaper shipping costs replacing the need for local retail and that's been spreading across the economy for decades.

Further governments are often first adapters. Many legacy government IT systems exist, but as they generally work and cost less to maintain than replace. Really the advantage of free markets is information exchange and diminishing returns not simply building large scale systems.

Consider, some cars come with built in refrigerators yet we ended up with roadside stores selling cold beverages. That's the kind of tradeoff markets are great for identifying.

frockington3• 8 years ago

The "immortal" term and Blockbuster are great concreate examples. I will have to keep those in mind as it accurately portrays some of the pros and cons of government

ppeetteerr6• 8 years ago

There is a difference between immortal and slow to change. I don't think people want government to fail fast and be replaced with another government in the span of two years.

notahacker3• 8 years ago

The elected component of the government sector in a properly functioning democracy is far more mortal than large corporations and newly elected Cabinets generally more zealous about reforming (for better or worse) the way agencies and services are run than newly appointed corporate board members. Sure, some services are prioritised more than others; no government is going to get voted out of office solely for running the nationalised film rental agency into the ground, but the main reason for the institutional inertia is the same scale, complexity and principal/agent problems large corporations also suffer from.

DesiLurker• 8 years ago

My preferred solution for governance problems is basically to have smaller governing units (nations/states/districts). this gives people better representation and is pretty effective in managing the 'tyranny of the majority'. considering the environment in US today the majority is essentially 51%. Now if one considers how bi-polar favorite policies for each side has become, it (mandate) is nowhere near enough to justify forcing their views on the other 49%.

The subtle mechanism behind most problems in public policy today is collapsing of decision tree into just one yes or no answer (red/blue) that IMO is killing the nuanced policy development (or more accurately used by politicians to do whatever half-aed measures they can come up with). having smaller units also help with even more meta-manipulations like gerrymandering so prevalent in US. if we want to hold congress accountable for their constituents this is pretty much the only sustainable path to it. Until this happens IMHO most good policies will continue to be lost in poor/unimaginative implementation.

ref: https://mises.org/wire/us-should-have-10000-members-congress

kzrdude• 8 years ago

It's a very popular theory that smaller polities have better governance. Picking single examples would maybe not capture it but I'd think of NZ vs Aus, Ireland vs UK, Switzerland vs France, or even Canada vs USA. (All pairs picked to have similar location in the world, but I guess you want to say the (former) empires of USA, France and the UK put them in entirely separate categories..)

Magmatic• 8 years ago

We could also collapse the yes/no questions with better voting systems, something not first pass the post.

While local government is totally necessary, I don't think we can afford to not have big government. If wind currents made air pollution a non-issue in say, Ontario because wind currents blew it all down to Nebraska, how would we deal with that? Many of our most pressing societal problems live at the interstate or international level and need a corresponding governing body.

StanislavPetrov3• 8 years ago

it would be very time consuming to handle every single aspect of it.

Life is complicated. It is time consuming to become an knowledgeable, aware person capable of contributing intelligently to society. It is also absolutely necessary if we want to have a self-governed society worth living in. You can't have a worthwhile government - let alone a big government - governed by the will of the masses when the masses are largely ignorant and unable to offer informed consent due to lack of understanding.

ppeetteerr6• 8 years ago

That is where domain experts come in. It would be impossible for me, as an individual, to understand the repercussions of tax credits on the solar energy industry. I vote instead for competent people who I believe are best positioned to find the right people to answer these questions on my behalf.

c3534l• 8 years ago

Centralized systems can only handle so much complexity before the collapse. You can only handle the kind of society we have today through a distributed, decentralized model. The complexity of modern society is emergent, not the result of central planners. This is a foundational finding of economics and one of the primary reasons why communist dictatorships tend to fail to function.

ci5er2• 8 years ago

And that right there is the reason that technocrats are dumber than they think.

tvanantwerp• 8 years ago

I don't think this follows at all. True, I probably don't want zero health and safety regulations. But government--an institution notorious for both pervasiveness and inertia--can get things wrong just like individuals and market institutions. And when the government does it, it does it at massive scale and for a very long time.

Thaler's "libertarian paternalism" is not about controlling choices, but making better choices easier to make while allowing people to still choose something else. Big government in practice is typically about picking an option and not allowing anything else. And if that one chosen option turns out to be wrong, it will take ages to undo it as the now-vested interests who manage to benefit lobby to keep the status quo.

kumartanmay• 8 years ago

If behavioural economists are so good at predicting human behaviour, why aren’t they popular among consumer facing companies? Why don’t such companies have a special position for behaviourial evonomists? Why none of the behaviourial Economists have ever tried starting up?

haskellandchill• 8 years ago

Some companies do. AirBnB had an economist at one point I recall.

myth_buster• 8 years ago

Your assumption _why aren’t they popular among consumer facing companies_ is incorrect. Almost all UX and product development takes into consideration. Ex: gamification, pricing, freemium model etc.

jcutrell4• 8 years ago

To be honest, this is kind of my hope for a future job.

I've wanted to practice behavior economics meets technological innovation for a long time now - but you're right, there doesn't seem to be a demand for this.

Ironchefpython• 8 years ago

but you're right, there doesn't seem to be a demand for this

You mean outside the entire advertising industry? Now you might argue that advertising companies are more focused on selling ads to clients than optimizing the ad experience for victims, but it's an entire sector of the economy focused on exploiting the poor decision-making abilities of humans.

throwawayjava• 8 years ago

If behavioural economists are so good at predicting human behaviour, why aren’t they popular among consumer facing companies?

For the exact same reason that most software companies don't have a Computer Science Ph.D. on staff. Many companies don't need a high-caliber research department.

People who learn and understand how to apply ideas and theories from behavioral economics in biz and econ courses are well-represented in sales and marketing roles. Just like people who learn and understand how to apply ideas and theories from Computer Science in CS courses are well-represented in engineering roles.

why none of the behaviourial Economists have ever tried starting up?

I'm sure many have lucrative consulting portfolios, but generally speaking: because they already have a pretty cushy and very well-paying job doing what they love.

thousandautumns• 8 years ago

They are. The companies I’ve worked at have all employed behavioral economists, and they have all ramped up their head count over time.

abetusk• 8 years ago

Boy does it take a while to get to the main topic of the title. From the article/podcast:

    ...
    THALER: Well, first of all, when we use this phrase 
    libertarian paternalism, we’re using libertarian as
    an adjective. And so we’re trying to say we’re going
    to design policies that don’t force anyone to do anything.
    So the claim that we’re trying to tell people what to
    do, or force them to do things, is just completely wrong.
    We are also not trying to tell them to do what we think is
    smart. We’re trying to help people do what they want to do.

    I like to use G.P.S. as an analogy of what we’re trying to
    do. So, I have a terrible sense of direction. And Google
    Maps is a lifesaver for me. Now, if I want to go visit you,
    I can plug in your address, and suppose I’m walking across
    the park, and I see, “Oh, there’s a softball game over
    there. I think I’ll go watch that for a while,” Google Maps
    doesn’t scold me. It will re-compute a new route if I’ve
    gone a bit out of my way. It doesn’t suggest addresses to
    me. It just suggests a route. And if there’s a traffic jam,
    it suggests maybe you should alter your route.

    So, we don’t think people are dumb. We think the world is
    hard. I mean, figuring out how much to save for retirement
    is a really hard cognitive problem that very few economists
    have solved for themselves. And it’s not only cognitively
    hard, it involves delay of gratification, which people find
    hard. It’s just like navigating in a strange city is hard.
    So, why not try to help? When I first was working with the
    U.K. Behavioral Insight Team, the first “Nudge unit,” the
    phrase I kept saying in every meeting with some minister
    was, “If you want to get people to do something, make it
    easy. Remove the barriers.” That’s what we’re about.
    ...

jerf• 8 years ago

"suppose I’m walking across the park, and I see, “Oh, there’s a softball game over there. I think I’ll go watch that for a while,” Google Maps doesn’t scold me."

I've noticed just in the past few days an update has been pushed so that now every time Google has to recalculate the route, instead just saying the new directions "turn right on third street", now it says "OK, turn right on third street", and I find myself having a somewhat negative reaction to the OK, like, yes, of course it's fucking OK you stupid computer, I just did it.

I think it may be an uncanny valley effect; when the computer just blindly told me the next turn after recalculation, I treated it like a tool and wasn't offended that it was giving me output in reaction to my unexpected input. With the addition of "OK" prefixing the new announcement, suddenly it's taken a half-step towards being more human and conversational, and now my brain can't help but run it through my human conversation templates, and none of them are giving me a very friendly interpretation of the "OK" for the scenario "Someone told you what you should do, you silently did something else without telling them you were going to, so they said 'OK, do this thing instead'." My brain hears sarcasm, like "OK fine make this turn instead", or exasperation, or something like that. Especially as my current commute has a place where I'm dodging around some construction that Google just hasn't picked up on so I get three "OKs" in about a minute, and my brain says "ah, that must be increasing exasperation with you".

Obviously, as I've described it to you this way, I intellectually and rationally know that nothing has changed other than the simple addition of a single word announcing a recalculation. But that doesn't invalidate the processing I'm getting from the rest of my brain. It just means I can identify why I'm reacting the way I'm reacting. Many other people will not be so introspective.

Which, getting back on topic, shows how hard all this stuff can be to get right.

fjsolwmv• 8 years ago

I haven't noticed that's but it's hilarious. "OK" is how you boss Google tech, so "OK" is how it bosses you too.

sib• 8 years ago

Agreed, this is annoying. Little things like this make a big difference in voice UIs.

But not quite as bad as the old Hertz Neverlost (r) system, which would tell you, in a huffy voice, "Please return to the highlighted route!" Rather than just recalculating the route from where you are.

carapace2• 8 years ago

My microwave display says "Enjoy your meal" when you open the door after it dings.

Every time under my breath I mutter something like, "Don't tell me what to do." or "Not because you said so." (And then I laugh at myself.)

I know the designers weren't trying to be the Sirius Cybernetics Corp.

dugluak• 8 years ago

sometimes some people purposely create hard systems for others for their own benefit.

expertentipp4• 8 years ago

The competition for resources, influence, safety, and sexual partners is an attrition warfare. Try working in more than two countries in the same year and preparing the tax declaration becomes an impossible task. Those with power or money don’t even see their tax own declarations. Local politician or some significant figure gets beaten - all media scream for justice, prosecutors investigate, courts process the case. Average Joe gets beaten - welcome the medical expenses, nobody cares, don’t even bother with the police procedures. Freaking frontend development - HTML was designed as permissive so that anyone can put together their silly website. Since Google, Facebook, and Microsoft took over it’s among the most frustrating domains to work on, and so on...

hanshan4• 8 years ago

The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.

-John Kenneth Galbraith, Money: Whence it came, where it went (1975)

jcutrell4• 8 years ago

B.E. is a subject I'm incredibly excited about. I'm glad to see this at the top of YC today.

Every (somewhat major) decision I'm making now, I'm constantly reminding myself of various biases and silliness that I participate in unwillingly (or even sometimes willingly).

I would say this study has been immensely helpful, and Thaler is a huge contributor to this for me. (Freakonomics, also, has been a great learning resource.)

For anyone interested in this subject, I recommend Thinking Fast and Slow by Kahneman. (You'd think I should get a referral bonus as often as I talk about this book.) It quite literally changed my life. Of course, Nudge is the other juggernaut in the field.

In fact, if anyone is particularly interested, I'd love to chat. Profile has contact details.

mattnewport2• 8 years ago

Behavioral Economics falls prey to the same kinds of over simplifications it was a reaction to in regular economics. There are useful insights to be gained from both over simplifications but it's also good to remain aware of their flaws. To over simplify myself, traditional economics starts from the assumption that people are rational and then tends to over simplify the way they reason and the models of the world they reason about; behavioral economics questions whether people are rational and 'demonstrates' they are not compared to over simplified models of the world they reason about.

A simple example is the "default choice" effect. The standard explanation is that people are too lazy to check a box. A more sophisticated explanation would be that people infer information from the default they are presented with and allow it to influence their decision based on their assumption that the form creator is well informed and looking out for their interests. There is in general an under appreciation in behavioral economics that people are likely being more rational than the over simplified models they are benchmarking them against. There are lots of examples of this in the most widely known results.

jcutrell4• 8 years ago

I think a "good" behavioral economist would not explain exactly why, but instead provide theories with as much data to describe why those theories exist.

A trial shows that people often exhibit behavior A. Why they exhibit behavior A may be complicated.

In your example, there's a sense of authority and conforming to a norm that can be used to describe those behaviors. But there's also the cognitive barrier (which we call lazy) that requires someone to exert mental effort to change away from a default.

It's not that one is wrong and the other is right. All of these may be right. But B.E.'s best contribution to society isn't to explain so much of _why_ we act in these ways - but instead to accept that despite our desires or perspectives of rationality, we do act in these ways.

Understanding the "why" may help us to make better decisions, certainly; however, being too prescriptive about "why" may lead us down the wrong path.

pnutjam• 8 years ago

It's similar to the classic spherical cows in many physics experiments.

curo• 8 years ago

I know this is off-topic, but does anyone know if these interviews are scripted? It feels like their reading their back-and-forth banter to each other. (Nothing wrong with that.)

skadamat4• 8 years ago

I would really really encourage everyone here to watch Alan Kay's recent talks on how poorly we understand systems and why it's critical we get better at managing them.

Some good ones: - https://www.youtube.com/watch?v=R1R2jH4PQEo - https://www.youtube.com/watch?v=N9c7_8Gp7gI

Some people have strong opinions about Alan Kay's CS / programming work and I'd really encourage them to put them aside and deeply understand his points + context. The programming parts aren't ever the point, he's deeply interested in how as humans we improve our ability to collaboratively manage systems.

asdffdsa321• 8 years ago

But can he solve a whiteboard coding question in 30 minutes?

jonsen• 8 years ago

He will get away with small talk.

skadamat4• 8 years ago

Some more talks by Alan, for people who are interested: https://tinlizzie.org/IA/index.php/Talks_by_Alan_Kay

skadamat4• 8 years ago

Wish I could edit my first comment to include this, not sure why I can't.

copperx• 8 years ago

Some people have strong opinions about Alan Kay's CS / programming work

I'm curious. I wasn't aware of this. What are these strong opinions about?

skadamat4• 8 years ago

Common ones I hear:

- He hasn't shipped anything popular (he's a researcher, expanding the tree of knowledge, not an engineer optimizing for shipping) - Smalltalk isn't as great as Alan makes it out to be (again he's a researcher) - That the computer revolution has happened but he's stuck in the 70's - Many, many more things

extralego3• 8 years ago

For similar reasons, I highly recommend a book called Capital: Critique of Political Economy. And likewise, some people may have strong opinions about the author’s work. I'd really encourage them to put them aside and deeply understand his points + context.

HenryTheHorse• 8 years ago

I can't quite tell if you're being sarcastic or earnest.

Fukkaudeku• 8 years ago

This, but unironically.

x0f1a• 8 years ago

I would complement it with a second book about capital: Capital in the Twenty-First Century - Thomas Piketty. I am not sure neither of this books have the solutions but they were enlightening for me.

smhost• 8 years ago

What did he mean at 1:09:22 (https://youtu.be/R1R2jH4PQEo?t=1h09m22s) when he says "nobody complains about multiplying one fraction by another because it looks reasonable, but it turns out it isn't reasonable at all"?

rlayton2• 8 years ago

I'm pretty sure he means "it is an easy equation to memorise, but it's not trivial". People can remember the formula, but have no idea how it actually works.

ballenf2• 8 years ago

He explains that it was a "triumph of Greek mathematics" to prove that multiplying the top and bottom of a fraction is how you multiply two fractions. That is, we accept as true that you can multiply fractions this way, but we kind of just got lucky that it does work that way. Proving that it always works is non-trivial, but that is totally glossed over in math classes, doing a disservice to students.

This is in context of dividing two fractions where kids are taught an arbitrary rule too early in their studies and it turns them off to math overall because it's become a class of memorizing arbitrary procedures instead of learning concepts.

(That's all my summary of that segment with a little reading between the lines, not my personal view of it. Or it might be later, but have to consider it more.)

sametmax3• 8 years ago

The word being hard does not justify the success of reality tv, tabloids, lotery, music that is forgotten the next year or smoking.

Who do you think has the most chance to buy a lotery ticket. Somebody with 130 or 90 IQ ?

opportune• 8 years ago

It's arguably pretty poor design if the world is only livable for people in the top 2.5% of intelligence (>130 IQ)

sametmax3• 8 years ago

High intelligence is nowhere closed to be the most important factor to be successful in our society, gene propagation wise. Or being happy. It's merely a tool.

gdubs• 8 years ago

Reminded of this timeless Carl Sagan quote:

"We live in a society exquisitely dependent on science and technology, in which hardly anyone knows anything about science and technology."

enraged_camel2• 8 years ago

Asimov’s Foundation series is an excellent commentary on this very phenomenon. One of the antagonists is a galactic empire that is technologically advanced, but has been stagnating and decaying slowly as those in power start viewing scientists with disdain and distrust. Over time the empire loses the ability to develop new technology, and ends up with those who can only maintain/repair existing technology (which eventually becomes so old that it is scrapped).

bitwize• 8 years ago

I'm a bit reminded of the Zentraedi from Macross, who know how to fly and fight with advanced spaceships/mechs, but not how to repair them or how they work. Except in that case it's because their patron race, the Protoculture, deliberately kept them dependent; Protoculture factories supplied as many ships and weapons as the Zentraedi might need, meanwhile, the average Zentraedi was kept at about a five-year-old human's level of cognitive development. (After Zentraedi culture integrated with human culture (thanks to a frickin' idol singer), adult Zentraedi were at cognitive parity with adult humans.)

All of which makes you wonder: on actual Earth, is there a class of tech-company Morlocks keeping the disposable-income Eloi dependent with their endless supply of disposable gadgets?

eli_gottlieb3• 8 years ago

Eh, that kinda boils down the entire social, political, and technological arc of Asimov's Galactic Empire into the caricature we later got in the form of the Adeptus Mechanicus.

bjelkeman-again• 8 years ago

those in power start viewing scientists with disdain and distrust

Are we talking about a novel or the current government in power in some prominent countries at the moment?

mbroncano• 8 years ago

Having also grown up with Asimov novels, recently I was pleasantly surprised to discover Vernor Vinge's A Deepness In the Sky[1] which contains also a discussion on the very same topic.

[1] https://en.wikipedia.org/wiki/A_Deepness_in_the_Sky

avip• 8 years ago

Profession also discusses the same theme and it's shorter (IMO his best short story, and in a way prophecies how modern SW development works).

tootie2• 8 years ago

On that topic, I think you can directly equate Behavioral Economics to Psychohistory. In fact, fellow Nobel winner Paul Krugman claims to have become an economist because it was the closest he could come to being a pyschohistorian in real life.

shostack2• 8 years ago

This is very much a theme in the Warhammer 40k universe. Tech priests "pray to the Omnissiah" while applying various sacred ointments (lubrication for parts?) to machinery and such to get tech to work [1].

[1] http://warhammer40k.wikia.com/wiki/Tech-Priest

Symmetry2• 8 years ago

Our civilization has attained its complexity by encompassing such knowledge that it would take a million lifetimes to learn all of it. I have made my career learning about technology and learning about science is a great hobby of mine. But I have only the dimmest understanding of even how much there is to know.

rogerbinns• 8 years ago

That is fine! In economics there is a famous essay I, Pencil[1] explaining that no one knows how to make a pencil. Sure you put some graphite in some wood, but how do you make graphite? And how do you make the machines that make it. And how do you make the components that go into that. Or updating this, no one knows how to make a computer mouse. (You'd need some hydro-carbons for the plastic, machines, machines that make machines etc.)

In reality people know bits about small bits (think of every person involved in making a mouse back through all materials). And yet without coordination these folks all collaborated to make a mouse. I'm an optimist because people all over the world are making the world better. The rate at which it is happening is picking up, and in general benefiting more and more people. We use communication (including Amazon and Facebook), markets, social movements, regulation etc as feedback loops to find and improve.

The one thing I can guarantee is that there will keep being more to understand, and that as an individual you will keep understanding a smaller and smaller proportion of it.

I enjoy perpectives from Matt Ridley about this (eg The Rational Optimist book) and his Ted talk[2]. A nice tidbit is that King Louis XIV of France had about 500 people preparing meals for him each night. You can go to town and have the same, with far better food and service than he had. By historic standards, we live like royalty, all because we don't understand everything.

[1] https://en.wikipedia.org/wiki/I,_Pencil

[2] https://www.ted.com/talks/matt_ridley_when_ideas_have_sex

delecti2• 8 years ago

I've been bingeing my way through a youtube channel [1] that's largely focused on old/outdated consumer technology. I'm astounded by how little I knew about how any of it worked. In particular, I was astonished when I watched the one about how VHS tapes works. There's just so much knowledge underpinning even relatively obsolete technology. As time goes on the fantasy trope of "ancient lost knowledge" becomes less hard to understand. In a hundred years will anyone know how a VHS works? Or how they encoded color information alongside a backwards compatible black-and-white analog TV signal (IMO another incredible feat)?

[1] https://www.youtube.com/channel/UCy0tKL1T7wFoYcxCe0xjN6Q

agumonkey2• 8 years ago

You don't need to know a lot to change league though. Most kitchen appliances, tools are basic geometry and a bit of time. It's damning when you open them to see how there's nothing to it. It's damning to see that kids get to learn geometry in the abstract and unless they go for some kind of technical or engineering career, will never know "life critical" use of it.

Also a surprising amount of devices are overly complex because there's this historical separation between business and users (and because economic incentives are compiled into the implementation).

Koshkin2• 8 years ago

Actually, we depend on many things (not just science/tech) most people do not understand.

agumonkey2• 8 years ago

I always found this odd. Maybe civilization as a group has progressed in knowledge of the universe, but the populations are in yet another form of religion. A reincarnation of plato's cave.

deathanatos• 8 years ago

I am particularly fond of this sketch by Dara O'Briain on essentially this topic: https://www.youtube.com/watch?v=BVxOb8-d7Ic

raywalters2• 8 years ago

Having worked front line technical support, I have to disagree. People are indeed dumb, many choose to stay that way.

expertentipp4• 8 years ago

It’s as if a person working in geriatric care claimed thet people are old. I rarely call or contact the support, the though of being treated as a dumb person make me solve the problem myself of abandon the service/product instead.

relic• 8 years ago

Well to be fair a lot of people contacting a front-line service center for a non-specialized product/service can't even articulate their problem accurately, if at all. I'm sure it'd be pretty easy to get jaded about people after hearing "I don't know if it's on or not, it just doesn't work...fix it" enough times.

rebuilder5• 8 years ago

There's a difference between being dumb and being ignorant. Most people aren't dumb, they could learn to handle their technical issues if they were motivated to spend the time. But time is valuable, and if you can have a specialist handle your problems for you, is it really worth the trouble of learning and keeping up to date on something that doesn't really interest you?

Cobord• 8 years ago

They are probably wasting more time being on hold and explaining the problems to someone else. Also problems repeat, so if you know how to solve it yourself you save time.

vkou2• 8 years ago

Having used things that require technical support, I have to disagree. I'm not an idiot, I just don't have time to learn the idiosyncrasies of the problem that I have.

outworlder• 8 years ago

Are you able to determine if some piece of equipment you use every day is turned on or not, and able to accurately relay this information?

If so, you are not part of the demographic the parent is talking about.

D-Coder• 8 years ago

But you're seeing a selection bias. The people who are doing just fine don't contact you.

Broken_Hippo• 8 years ago

No, this just shows some folks aren't specialized in the same way you are. Everyone has their areas of non-specialty, and everyone has limited mental energy to devote to things. Everyone sometimes has a "stupid" moment. But I'm going to guess every one of these folks you talk to have things they know that, if you tried them, you'd seem pretty stupid as well.

arminiusreturns• 8 years ago

Ignore these haters mate, I'm greybeard sysadmin type who did his time in the helpdesk trenches, and it's a fact despite the many protestations of the others here. Prost!

ps. I would correct though and say some people are dumb. I've met others on the other end of the spectrum too. Also, something something, the difference between ignorance and stupidity, etc.

raywalters2• 8 years ago

Having worked front line tech support, I have to disagree. People are inherently dumb, and choose to stay that way in many cases.

rc_hadoken• 8 years ago

pats back Indeed, but you might be missing the forest for the trees.

JumpCrisscross4• 8 years ago

People are inherently dumb, and choose to stay that way in many cases

This is called optimisation and is in most cases okay. I choose to be dumb about cars. I ask specialists dumb questions and expect them to give me useful answers. Computers are similarly ancillary to many people’s core value added.

Spivak• 8 years ago

Maybe it would be better to say that describing a person as ignorant without a scope rarely makes sense.

I mean I've worked with literal rocket scientists that can't figure out how to attach a PDF to an email. I would have a hard time describing them as 'dumb'. And don't even get me started on trying to help doctors and surgeons when I worked in medical.

Just because we might find something easy or 'intuitive' after spending most of our lives in front of computer doesn't mean it's actually easy.

aswanson• 8 years ago

Your physician, airline pilot, CFO, or lawyer could most likely easily point out the same about you, for a given context.

lwelyk• 8 years ago

I'm sure your car mechanic, doctor, electrician, plumber, etc feel the same about you. You can't know how to do everything.

anticensor2• 8 years ago

The opposing view is also true: You cannot ignore everything.

JTbane• 8 years ago

Consider your sampling bias- the only people that regularly call support are the bottom of the barrel.

_greim_• 8 years ago

The cross section of people you deal with is inherently skewed toward the less capable and less competent, though, which can bias your thinking on the topic.

nathias• 8 years ago

and the world is hard(er) because people are dumb

captainbland• 8 years ago

The world isn't that hard, some people just like to hoarde resources.

loa-in-backup4• 8 years ago

And the incentive for this is emotional, to the detriment of rational needs of everybody around except some kind of gang-resembling circle s.

mattbrewsbytes2• 8 years ago

An interesting bit from the article was that he talks about 'sunk cost' with the defining example of ordering a dessert when you're nearly full and feeling compelled to finish it.

There was an economist once early in my career who said to me, “You know, if you’re right, what am I supposed to do? What I know how to do is solve optimization problems.”

A career economist not wanting to change their ways because they have spent a career doing things when presented with a possible outcome that maybe those things didn't matter as much. Also:

If you think of companies that have come and gone, like Kodak, which invented the digital camera, but they had an almost-monopoly in film, and didn’t really think this digital thing would go anywhere. Blockbuster Video, which came along and put tens of thousands of mom-and-pop video stores out of business, only to be put out of business by Netflix.

These are human behaviors to recognize - sunk cost. It can sink a company. Something to be wary of as a startup grows past adolescence and into adulthood.

RickS• 8 years ago

My understanding with Kodak is that they invented digital tech far earlier than expected (pre 80s) and hushed it to avoid cannibalizing their existing film business.

I suspect Blockbuster behaved similarly. It's hard to kill the golden goose.

Still examples of the sunk cost fallacy, for sure, but it feels like "lack of realization" is perhaps the wrong attribution.

mattbrewsbytes2• 8 years ago

In a way, it is sunk cost all the way down. Those companies' entire existance - supply chain, manufacturing, down to identity of what they do was so etched into everything it was hard to change.

tonyedgecombe• 8 years ago

I don't think Kodak did hush it, they had some pretty advanced digital cameras early on, they were pioneers. The problem was they were a film company not a camera company, those businesses are so distinct they were never likely to cross from one to the other.

They would have been better ignoring the whole digital camera thing and looking for other opportunities where they could leverage their skills and assets. Or just wound down gracefully.

tynpeddler• 8 years ago

Sometimes it's a mistake to think about how these companies could pivot to adapt to new technology. A major feature of capitalism is that companies are (relatively) unimportant and it's the market and society that really matter. Without companies collapsing, it can be really difficult to recycle the manpower and capital invested in obsolete business models.

Blockbuster's organizational, legal and physical infrastructure was wholly devoted to video rental via physical stores. Decommissioning those organizational components and creating the systems necessary to spin up and run an online video portal would have required changes in the company so massive that it would effectively be a different company.

Even if Blockbuster had bought Netflix early on, Blockbuster would have been left running an organization they did not understand in a market that only vaguely resembled something it was familiar with. Even worse, and totally contrary to modern management theory, management skills alone are necessary but not sufficient to operate a growing and dynamic company on the forefront of technology. The entire management organization of Blockbuster would have been totally unequal to the task of operating Netflix competently.

azernik2• 8 years ago

This is, by the way, a problem I see with a lot of public policy - in a market system, what's good for companies is not necessarily what's good for the system.

Steve Eisman puts this well in [1] when talking about why he's investing in bank stocks even though he thinks prospective rollbacks in Dodd-Frank reforms are a bad idea: "There's two issues. There's what I think about the financial system and what I think about financial stocks, and the two don't necessarily correlate."

[1] https://youtu.be/NJodqhzqPKQ?t=4m10s

BookmarkSaver• 8 years ago

I've seen this sort of justification of Blockbuster's demise before, but it's hard to buy.

I mean, sure, the business model and support systems between original Netflix and video rental store are fairly different, but Blockbuster still had a huge leg up over starting from scratch. They already had vast inventories, sorting systems, a distribution network (albeit one that would have to be heavily modified), name recognition in a market that consumers considered interchangeable (common consumers just think "video rental", not "brick-and-mortar retail vs. online direct delivery") and I assume a lot of production industry connections and relationships.

It seems like they were already over halfway there, and given that the biggest hurdle is getting off the ground, their existing brand recognition and membership records are a massive advantage.

hinkley• 8 years ago

I’ve been an employee in a buyout twice by a company that didn’t get it. One of those times they thought they did, but they still crushed us anyway. It was hard to watch. Especially from a front row seat. :/. I’ve worked at two places a year or two after the buyout. Not as real for me but my coworkers were clearly frustrated.

For a while I was pretty sure I knew what a healthy buyout should look like. Now I’ve no idea. How do people pull this off?

randomdata• 8 years ago

It can also sink individuals. I don't know how many times I have watched people fail to make a living in a dead-end career because "it is what I went to school for".

pascalxus• 8 years ago

I understand that a nobel peace prize winner can NOT say that people are dumb.

However, there are people on this planet that believe the earth is flat.

expertentipp4• 8 years ago

There are just periodical hysterias orginating from America (vaccinations, the earth is flat, religious sects, bucket challenges, etc) which like a shockwave created by the explosion of Tsar Bomba travel around the globe multiple times but finally, most extinguish.

frockington3• 8 years ago

Intelligence like everything else in nature has outliers on both sides. I have no idea why people seem to disagree with you, it's simple biology and statistics

hutzlibu6• 8 years ago

I admit I only skimmed the article, but I still throw in a potential controversal counterthought (even though I don't disagree with the article from what I read):

People* are dumb.

Why?

They have been breed like that for many generations. Because all the classic Civilisations and Empires needed lots of dumb workers and peasants who were able to do their simple work, but not smart enough, to organize any opposition against the current empire.

And this in many different forms, from total slavery to all kinds in between.

Now with the Hypothesis, that smart people don't want to get exploited, they would rise up sometimes, where they grew in numbers - and got beaten down and crucified, hanged, quartered, etc. - so strong selection pressure for smart people not born into the elite and not wanting to become a monk.

Now with all that being said, I believe it is probably more a cultural mindset of "stupidness" than "stupid" DNA in the people, because smart people also keep their heads low and pretend to be stupid, when they can't win a fight. But this got into a habit of not wanting to think. So the solution to all the complex problems in the world I don't think is a super government, thinking for all their dumb sheeps, but rather smaller systems, less complex - and letting people get smart again, by giving them the opportunity to make decisions again about their life. Not just a allmost meaningless vote which allmost counts nothing among the millions of other votes, but voting the decisions down at their very local lifes. When you have to think for yourself, you will start thinking again. And then you don't want those decisions taken away from you. Thats only comfortable when you forgot how to do it.

* with "people" I mean the average person in the street, the one from the famous Churchill quote

taeric2• 8 years ago

Oddly, I think if you were to take that in a slightly different direction, you'd get more traction. Specifically, take your * and have it say * by "people" I mean collections of people. Individuals often show remarkable intelligence.

Even that, of course, ignores that there is some wisdom in crowds. I'd guess there is a sense of "inertia" in how people behave/think. With more people, more inertia. Slower changes and seemingly slower progress sometimes.

hutzlibu6• 8 years ago

You got me wrong. I never said that groups in general are stupid.

I meant specifically a average group of average people today. And stupid in the sense that they fail to see any big picture(and also the picture in front of their eyes is usually quite blurry). Quite problematic in a globalised world.

jimbofisher12• 8 years ago

I think its extremely unlikely that there is any actual evolutionary process selecting for less intelligent people, in fact the opposite is probably more likely to be true. I'm not sure you were really sugesting that though.

hutzlibu6• 8 years ago

There is different kinds of intelligence. Like said, it can be smart to not be smart, if you want to survive under a stupid, but powerful regime. Smart in that moment, not so smart now, when it is wise, to understand more, than just be able.to follow simple orders. Robots can do that better.

gilbetron3• 8 years ago

That seems like an incredibly uneducated view of what the world was like previously.

hutzlibu6• 8 years ago

Interesting, care to provide arguments?

I provided mine: we had empires as default, they needed lots of slaves. Slaves must be strong, but stupid. Smart slaves were trouble. So got sorted out.

Simplified, yes, but "uneducated" where?

ppeetteerr6• 8 years ago

* with "people" I mean the average person in the street, the one from the famous Churchill quote

Most people are dumb about most things, good at a small number of things, and excel in one to three things.

tootie2• 8 years ago

"Because all the classic Civilisations and Empires needed lots of dumb workers and peasants who were able to do their simple work, but not smart enough, to organize any opposition against the current empire."

I think that's a pretty preposterous claim. Selective breeding of humans has happened in earnest very rarely in human history. Far too little to have created an evolutionary bottleneck. The Flynn Effect would seem to indicate that the opposite has been happening at least in recent history.

https://en.wikipedia.org/wiki/Flynn_effect

jokoon• 8 years ago

This scene of ex machina describes what human intelligence is really about:

http://www.criticalcommons.org/Members/ccManager/clips/the-t...

"imperfect, impulsive, chaotic, fluid, patterned"

This is where the politics of emotion and marketing are winning the most. Rational economics are only serving our moral standards, sense of merit and our fascination with order.

nixpulvis• 8 years ago

The world doesn't need to be as hard as it is. Or what I should really say is, we spend more time/energy dealing with things than we shouldn't really need to, taking away from the time/energy we should be spending on other things.

invalidOrTaken• 8 years ago

...but what this works out to is that you should behave as if people are dumb. So.

jjtheblunt• 8 years ago

Some people are dumb. I'm sure of that. Myself included at times.

carapace2• 8 years ago

I remember starting to study economics as a kid and thinking "this is garbage" for two main reasons, one of which is now addressed by behavioral economics, to wit: the models of human behavior they were using were ridiculous. The other reason is that economists occupy a critical nexus in the feedback loops in human affairs. The best operational economists accrue wealth and keep their science a secret as best they can, and as an obvious part of that exterior economics can be (and is) filled with fluff and nonsense. It is little better than numerology. It doesn't surprise me that Thaler "has been an irritant to mainstream economists." More like an embarrassment, pointing out their lack of grounding in reality.

simonh3• 8 years ago

I think people are dumb, and I'm not being derogatory about 'the 'masses' or any such crap. I'm unbelievably dumb. It often takes me a ridiculously long time to come to a solution to a problem, where the answer seems like it should be obvious. Instead my slow, feeble mammal brain takes forever to grope blindly around the issue before getting any traction.

Lets say there is a scale of sentience that goes from 1, which is the lowest level of sentience necessary to develop a technological civilization, up to who knows how high. Where are we on that scale? Well, given that we literally, in evolutionary terms, only just barely got our civilization off the ground we're pretty clearly very close to 1. I discussed this with my brother and he pointed out most of us are below that, because we get taken along for the ride by people who are at 1.0 or higher. They're the geniuses that truly drive innovation forward.

So we are literally at the dumbest, most intellectually feeble level of sentience required to get where we are, otherwise we'd have done it sooner.

hohenheim• 8 years ago

Its hard to argue with what you are saying. You defined our most intelligent types scaled as 1 and unbounded it for most intelligent. Then obviously majority falls under the line and are considered dumb. I don't know if there is any insight in that other than feeling disappointed at self.

On the other hand the article is arguing the opposite. Trying to be empathic towards human nature and look for solutions with that in mind. I think that is refreshing and useful.

ci5er2• 8 years ago

Thank you for being you. It has been very lonely for me to propagate that very idea, esp. given how tied humans are to the idea that they are smart. On the spectrum humans use, I'm certainly on the high-end of it, but, gosh, we are such retards. We only think that we think.

Rainymood• 8 years ago

To truly argue on this point you need to, I think or at least in my opinion, settle on a definition of "smart" and "dumb".

I like to view our intellect as a tool for survival of our species. By that measure, we are doing fairly well. We used to get wiped out by minor stuff like not enough food, not enough protection from the elements and other animals, diseases, we have eradicated the majority of these things hindering our survival.

I hypothesise that most of the people here (on average) on HN are highly educated. It's kind of fashionable and almost necessary social behavior to be humble in your own intellect. By all objective measures the people on HN are really fucking smart but you can't say that of course because that's "arrogant". Yes, I too think I'm stupid and suffer from impostor syndrome having two graduates degree in applied math.

Anyway, humans, compared to other animals we compete with for survival, food, and territory, are doing really well. I don't see any cows on the moon yet.

deltron3030• 8 years ago

Anyway, humans, compared to other animals we compete with for survival, food, and territory, are doing really well. I don't see any cows on the moon yet.

Would all this be possible without other mammals? Or is the ecosystem (including mammals) the enabler for us?

simonh3• 8 years ago

To truly argue on this point you need to, I think or at least in my opinion, settle on a definition of "smart" and "dumb".

That's exactly what I just did - the level of intelligence necessary to build a technological society. On that scale we only just register above the threshold, as a species.

I'm not saying our intellectual capacity is rubbish or useless, we make the grade to be significant on this scale. Yay us!

I'm just trying to put our intellectual achievements in perspective given that we have no other intelligences on the planet anywhere close to competing with us on this scale. Making a comparative analysis of a single data point is alway difficult, but I think this is a useful way to think about the problem.

freeflight4• 8 years ago

So we are literally at the dumbest, most intellectually feeble level of sentience required to get where we are, otherwise we'd have done it sooner.

But do we all want to be "super thinkers": Is that actually progress? Especially in the context of "sentience", maybe it's not just a blessing but also a curse?

Imho animals mostly run on instinct in a kind of "intuition mode", this even applies to humans. What makes humans, and maybe some other animals, different is their ability to have self-awareness, which allows them to have an inner monologue and active thought to influence their actual actions and decisions, instead of just leaving it all to intuition.

But we don't all constantly do that, "thinking" that is. When speaking with friends and family about this, how do they perceive their thinking, I was shocked to learn that some don't know/understand this "inner monologue" aka "active thinking" at all.

These people are not stupid, that's not what I'm suggesting, these are very productive people, who often manage to stay positive, wise and happy through some rather nasty hardships that would probably have broken me, due to my tendency to overthink things.

As weird as it might sound, sometimes I wish I could just turn the thinking off. That's when I pursue hobbies, to take my mind off, but usually results in my thinking being refocused on something more enjoyable, but in the end I'm still thinking about something.

wool_gather2• 8 years ago

Though I hesitate to suggest it because it's a fad right now, you might want to give "mindfulness" meditation a try for a month or so.

sometimes I wish I could just turn the thinking off

I have this same feeling, a lot. Sometimes it just goes into overdrive. It's so easy to get wrapped up, when I want to be doing something else. It's fun, but doesn't always have a positive result.

Taking 10, 15, 20 minutes every day to do this exercise of being still and just watching the monologue has been really valuable to understand and recognize that state, which makes it easier to deflect. And I haven't lost anything; that thinking mode is still available if I really need to puzzle something out. But it's in service of something, rather just than a runaway train.

Nasrudith4• 8 years ago

I doubt that is true given the literal forms of intellectual disorders. Given sufficient time a society with say limited to be just shy of mentally disabled could progress but slower. Say a few centuries "tech period" at 1700s Europe scale. We could still have done much better however in reduced generation times between advances just by not being stubborn about inconvenient new facts and theories from upstarts.

Also ability to drive things forward is limited/driven by things other than just intelligence. Look at Hero's steam engine - without the other metalworking technologies it was a curiosity. Having slave workers do the task was more efficient than having them gather more expensive fuel for an expensive machine to do the task. Also look at the "discovery" that Aristotlian flight paths for thrown objects was wrong. Who already knew for centuries? Literally anyone who actually worked or fought with projectiles but they weren't in contact with them. (Eastern warrior-elites generally would also mock them given the prevalence of aristocratic archery there).

By geographic time scales (read: compared to every other species) we still look like a division by near zero near assimtope.

dahart• 8 years ago

So we are literally at the dumbest, most intellectually feeble level of sentience required to get where we are, otherwise we'd have done it sooner.

I totally agree with you, and you have some interesting points. But, this is a subjective definition of “dumb” that is tautological. It ignores the possibility that it could have taken longer. For example, there are other sentient species on this planet for which it hasn’t happened yet.

You could also phrase what you said with the optimist’s glass-half-full phrasing: we are literally the smartest and most intellectually capable beings to get where we are, otherwise it would have taken longer.

Do you know of Sturgeon’s eponymous Law, “90% of everything is crap”? I didn’t realize at first (maybe because I’m dumb) that this isn’t a statement that things are bad. It’s a subjective and un-arguable proposed definition of what bad is. There’s a distribution of stuff, let’s just call the top 10% good and the bottom 90% crap. Sturgeon’s law applies to people as much as anything else.

most of us are below that, because we get taken along for the ride by people who are at 1.0 or higher.

This thought has occurred to me before, and I think it’s super interesting to ponder. Today I’m not as sure as I once was that this paints an accurate picture of how progress works. History tends to over-inflate the importance of individual contributions and leave out the vast majority of context and help that luminary figures had. The progress we feel around us today takes immense commercial effort that involves uncountable numbers of people. The US launched first into modern computing because the political and economic conditions were right, not because we had more geniuses.

Perhaps it’s not the top sliver of civilization that is driving innovation at all, perhaps the it’s the average intelligence that hit a threshold, or perhaps it’s not much to do with intelligence but with economy and culture, or maybe it’s inevitable once written language happens. It’s hard to speculate about these things since we have no basis for comparison.

dasil0032• 8 years ago

How do you quantify "sooner" on an evolutionary time scale?

simonh3• 8 years ago

I'm not sure I understand the issue. The same way you quantify 'shorter' on a height scale. Sooner isn't a quantity, it's just a direction.

aeorgnoieang3• 8 years ago

I discussed this with my brother and he pointed out most of us are below that, because we get taken along for the ride by people who are at 1.0 or higher. They're the geniuses that truly drive innovation forward.

This is basically the theme of "Atlas Shrugged".

durzagott• 8 years ago

I'd say your scale is heavily mis-calibrated and demonstrates nothing more than your personal pessimism. As an alternative:

  A scale of 1-10:
  - 1 is the minimum threshold for civilisation
  - 10 is the most advanced civilisation the universe has ever known

We are a 10.

Unless you know of any other civilisations out there we can measure ourselves against?

pixl97• 8 years ago

Eh, your scale is off. Let's surmise, only in this case, that the universe is sentient, and knows all civilizations. This universe could then judge where we are on the scale of have made.

The issue here is you have conflated humanity with the universe. Simply, we can't know, and it may be unknowable to any civilization where they are on the scale in an absolute measure, only a relative one.

On a relative scale, we are a 10. On an absolute one, we are no where close.

grosjona• 8 years ago

> THALER: So my toast began by saying that my fellow winners had discovered things like gravitational waves, and circadian rhythms. And I discovered the existence of humans in the economy.

Funny quote. It's a testament to how complex things are and how far people go to simplify them.

anotheryou• 8 years ago

Title gets discussed at ~50min of a 60min podcast...

People Aren’t Dumb, the World Is Hard

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