Posts Tagged ‘Freakonomics’

The Upside of Quitting

July 27, 2016

The title of this post is identical to a chapter in “Think Like a Freak” by Steven D. Levitt & Stephen J. Dubnar.  Given the many posts that this blog has devoted to “GRIT,” it is obligatory to pay some time to the benefits of quitting.  The posts on “GRIT” did offer some cautions on choosing passions, on compromising on passion, and of indicating the plausibility of searching out new passions.

The “Think Like a Freak” authors offer three biases against quitting.  The first is a lifetime of being told that quitting is a sign of failure.  The second is the notion of sunk costs.  It is tempting to believe that once we’ve invested time, money, and sweat equity into a project, it seems counterproductive to quit.  However, continuing this activity can result in additional costs without any guarantee of success.  Perhaps the best example of the sunk cost fallacy is the War in Viet Nam.  However, noble the original motivation, more and more resources were put into it, and lives lost without a good result.  In the end, no victory was achieved.  Losses and lives could have been saved the earlier the United States withdrew from Viet Nam.

The third force that keeps us from quitting is a tendency to focus on concrete costs and pay too little attention to opportunity costs.   For every moment and dollar spent on the effort could have been better spent on a an effort with more potential.  The authors note that for every ten Freakonomics research projects they take up, roughy nine are abandoned within a month.  Although they do not say so, it is possible that had they not abandoned these projects it is unlikely that they would have enough successful material to fill three books.

The authors do offer a methodology to help decide if quitting is appropriate.  It is called a “premortem” by the psychologist Gary Klein.  It is common for institutions to conduct a postmortem on failed projects, with they hope that they can learn exactly what killed the project.  This risk can be mitigated can be avoided by doing a premortem as a preventive measure.  This involves thinking of all the factors that could lead to failure of the effort.  Then assess the likelihood of these factors occurring, as well as how these factors are dependent on each other.  That is what needs to occur before other factors can succeed?  This task involves subjective probabilities.  One can do both optimistic and pessimistic projections.  It is your overall subjective assessment as to whether to proceed.  This procedure does not guarantee success, but it should be helpful in identifying points of failure and provide some estimate regarding the likelihood of success.

© Douglas Griffith and healthymemory.wordpress.com, 2016. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Douglas Griffith and healthymemory.wordpress.com with appropriate and specific direction to the original content.

Think Like a Freak

July 24, 2016

The title of this post is the title of a book by ”Steven D. Levitt & Stephen J. Dubnar.  The subtitle is “The Authors of Freakonomics Offer to Retrain Your Brain.”  The beginning chapter offers the following two  sentences, “The modern world demands that we all think a bit more productively, more creatively, more rationally, that we think from a different angle, with a different set of muscles, with a different set of expectations, that we think with neither fear nor favor, with neither blind optimism nor sour skepticism.  That we think like—ahem-a Freak.

Their first two books, “Freakonomics,” and “Superfreakpnomics” were animated by the follow set of ideas:
Incentives are the cornerstones of modern life.
Knowing what to measure, and how to measure it, can make a complicated world less so.
The conventional wisdom is often wrong.
Correlation does not equal causality.

They also warn us about letting our biases color our view of the world.  “A growing body of research suggests that even the smartest people tend to seek out evidence that confirms what they already think, rather than new information that would give them a more robust view of reality.”   HM would like to inset here that one of the major sources of biases are from ideologies.  Ideologies are dangerous as are the ideologues who promulgate them.

They also warn us about running with the herd.  “Even on the most important issues of the day, we often adopt the views of our friends.”

The authors also note, “Another barrier to thinking like a Freak is that most people are too busy to rethink the way we think—or to even spend much time thinking at all.”  To underscore this point they quote George Bernard Shaw, a world-class writer and a foundered of the London School of Economics who wrote, “Few people think more than two or three times a year.”  He reportedly said, “I have made an international reputation for myself by thinking once or twice a week.”

HM would like to cast these statements in terms of Kanheman’s  Two System view of cognition.  System 1 is fast, automatic, and emotional.  System 2 requires mental effort and can be thought of as thinking.  Clearly Shaw was speaking about serious and prolonged System 2 processing.

There will be several more posts base on “Think Like a Freak,” but there is much more to be found by reading the book.

© Douglas Griffith and healthymemory.wordpress.com, 2016. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Douglas Griffith and healthymemory.wordpress.com with appropriate and specific direction to the original content.