Posts Tagged ‘William Poundstone’

The Knowledge Premium

November 26, 2016

The Knowledge Premium is a section in “Head In The Cloud,”  an important book by William Poundstone.  In this section he computes the monetary value of having facts in our brains as opposed to being in the cloud.  He uses regression techniques  to relate the scores on his knowledge of facts tests and to hold constant demographic variables such as differences in age and education.  This allows the computation of a knowledge premium, the increased income accountable to the test scores alone.  Poundstone created a trivia quiz that found that individuals who aced the test earned $94,959 and those who scored zero earned $40,360.  The difference, or knowledge premium is $54,599 a year.  Here are some of the questions that were used on this ten item test.

Who was Emily Dickinson—a chef, a poet, a designer, a philosopher or a reality-show star?
Which happened first, the US Civil War or the Battle of Waterloo?
Which artist created this painting?  (Shown was Picasso’s 1928 Painter and Model)
Which nation is Cuba? (Respondents had to locate it on a map)

These questions were characterized as trivial not because the information is unimportant, but because it seems to have nothing to do with basic survival or with make money.  But the statistic computed from this test says that it has a lot to do with making money.

Answers:  Dickinson was a poet; the Battle of Waterloo.  The Emily Dickinson question was answered by 93% correct, with about 70 to 75% answering the other questions correctly.

Two Scientists in Congress

November 25, 2016

At the time of writing “Head In The Cloud”  by William Poundstone there were only two scientists total in the United States Senate and House of Representatives.  That is of 535 representatives only 2 (0.3%) are scientists.  It seems only appropriate that a low-information electorate have a low intelligence congress.  HM says low intelligence as it is science that has produced advancement and modernity.   Absent science we would be living in filth and ignorance.  Included here are both the physical and social sciences.

It is more than scientific knowledge that is important.  The empirical basis of science together with evaluation methodologies and statistics are important.  We need these to have a rational basis for policies and for a means of evaluating the benefits and dangers of different policies.  When debates in Congress are based upon data, rigorous research can be done to assist in defining the ways to proceed.  Scientists do not always agree.  Nor are the initial results of investigations always correct.  But eventually there is convergence with resulting better ideas and policies.  This is the democracy of the future.  Will it ever be achieved?

The low-information electorate complements nicely argumentation based on beliefs.  People fail to realize that beliefs are double-edged stores where both edges are blunt. One blunt edge makes it difficult, if not impossible, to see the problems with one’s own beliefs.  The other blunt edge makes it difficult, if not impossible, to see alternative ideas and courses of action.

Some religious beliefs force religion into its historical role of retarding science and keeping humans ignorant.  Moreover, many of the people holding these religious beliefs are not satisfied with the religious freedom guaranteed in the Bill of Rights.  Rather, they feel compelled to enforce their beliefs on others by changing the laws of the land. What happened to, “Judge not that ye be not judged” (Matthew 7 1-3). These same people are appalled at the sharia practiced by some Muslems, yet fail to perceive that what they are doing in the United States is indeed sharia.  These same beliefs forbid the teaching of science and engaging in scientific and medical practices that can advance humankind and relieve a great deal of misery.

© Douglas Griffith and, 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 with appropriate and specific direction to the original content.

The Low-Information Electorate

November 22, 2016

“The Low Information Electorate” is the title of Chapter Five in “Head In The Cloud”,  an important book by William Poundstone.  Both conservatives and liberals agree about how spectacularly dumb the great mass of conservatives and liberals are.  Poundstone notes that this statement is true and proceeds to prove his point.

Ignorance is probably most pronounced in judicial races.  In 1992  the well-respected California judge Abraham Aponte Khan lost an election to a virtually unknown challenger who had been rated “unqualified” by the Los Angeles County Bar Association.  The name of he challenger was Patrick Murphy, a name that sounded less foreign than “Khan.”  Should you ever have problems with judicial decisions, perhaps  the first factor to consider is how they are chosen.  There are ample data to show that judicial elections are a bad idea.

Poundstone conducted a survey of adults to name the holders of fourteen elected offices—national, state, and local.  He found that essentially everyone can name the president, 89% were able to name the vice-president, 62% could identify at leas one of their state’s US senators.  Slightly less than half could name both and 55% knew their district’s congressperson.  81% were able to name the governor of their state.  Barely half of those who said they lived in a municipality with a mayor or city manager were able to name that official.  These offices were the limit of the typical citizen’s knowledge.  Less than a third of the respondents could name the current holders of other offices.  These participants were asked to describe their political preferences on a five-point scale from “very conservative” to “very liberal.”  There was no correlation between these ratings and knowing the names of elected officials.

However, Poundstone did find a correlation between knowing the name and knowing something about the individual.  A voter who does not know the name of a mayor is unlikely to know much else about her, such as the issues she ran on and any accomplishments, failures, or criminal convictions that would bear on a bid for reelection.

in 2014 the Annenberg Public Policy Center conducted a survey of adults on facts that they should have learned in civics class.

*If the Supreme Court rules on a case 50 to 4, what does it mean?
21% answered, “The decision is sent back to Congress for reconsideration.”  Wrong!

*How much of a majority is required for the US Senate and the House of Representatives to override a presidential veto?
Only 27% gave the correct answer, two-thirds.
*Do you happen to know any of the three branches of government?  Would you mind naming any of them?
Only 36% were able to name all three (executive, legislative, judicial)

What is also striking is the ignorance among professional politicians.  In a 2015 speech presidential candidate Rick Perry quoted a great patriot:  “Thomas Paine wrote the ‘duty of a patriot’ is to protect his country from his government.”  Paine did not write this.  It appears in the writings of radical-left environmentalist Edward Abbey.

In 2011 another presidential contender, Michele Bachman told Nashua, New Hampshire, supporters, “You’re the state where the shot was heard around the world in Lexington and Concord.”  As the sharp readers of the healthy memory blog likely know that those towns are in Massachusetts.

Of course, these individuals are failed presidential candidates.  Bill Clinton, however, is a two-term president.  On October 16,1996 he said, “The last time I checked, the Constitution said, “Of the people, by the people and for the people”  That’s what the Declaration of Independence says.”  Unfortunately those words are from Lincoln’s Gettysburg Address and are not in either of the documents he cited. Bill Clinton has said many times, that Hillary is better than he is.  That is undoubtedly true, but unfortunately she had not proofread his speech.  All three individuals have staffs who should be vetting their speeches.  So what gives???

One might think that character can override ideology.  We hear of swing voters who say they will decide between two ideologically different candidates based on character, likability, or simply being the “better man or woman for the job.”  Unfortunately UCLA political scientist Lynn Vavreck has found the split-tickets—those who vote for candidates from more than one party—are less informed than those who hold to a party line.  She surveyed a sample of 45 thousand Americans, asking them to name the current occupations of politicians such as Nancy Pelosi and John Roberts.  She compared the survey results to voting patterns.  Those who fell in the bottom third of political knowledge stood a 12% chance of voting for senatorial and presidential candidates from different parties in the 2012 election.  Among the best-informed third, the chance of a split ticket was only 4%.

Under informed voters were also more likely to describe themselves as undecided on hot-button issues such as immigration, same-sex marriage, and increasing taxes on the wealthy.  These finds fit in with the notion of a “mushy muddle.”  Political pollers recognized that many who identify themselves as moderates are really just those who “don’t know.”

Poundstone writes, “We hope that voters in the middle supply a reality check to partisanship and help promote the compromise necessary to a democratic society.  There “are” voters who hold strong, well-reasoned political convictions that happen to lie in between those of the two parties.  There just aren’t too many of these voters, it seems.”

Given this epidemic of ignorance, how do democracies survive?   Here is an explanation offered by Poundstone.   “One way to think of it is that democracies are like casinos.  They exploit human irrationality—and, come to think of it, there aren’t many firmer foundations than that.  There are enough “irrational” voters to channel the wisdom of crowds and select candidates who are in tune with public sentiment and who are , usually not all that bad.”

HM is always annoyed and exhortations “to vote.”  The exhortation should be to get informed, and when once informed, consider voting.  There is already significant noise in elections.  What is the point of increasing the noise?

Poundstone concludes the chapter that relates knowledge of elected officers to personal wealth.  When he asked his respondents to name the current occupants of these seven elected offices:  at least one of your state’s two US senators, your state’s governor, you state senator, your county sheriff, your city of town councilperson, and your local school board representative.  The average adult can name only about three of the seven.  Those who could name all seven offices made about $43,000 more per year than those who couldn’t name any of the offices.

This fact points to the importance of certain information being in one’s brain rather than being found some place in the cloud.

© Douglas Griffith and, 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 with appropriate and specific direction to the original content.

The One-in-Five Rule

November 21, 2016

The One-in-Five Rule is chapter four of “Head In The Cloud” is an important book by William Poundstone.  Survey makers are aware of this rule, and so should you.  About 20% of the public believes just about any nutty idea a survey taker dares to ask about.  A 2010 “Huffington Post article sample survey reported that under informed 20%ers
* believe that witches are real
* believe the sun revolves around the earth
* believe in alien abductions
* believe Barack Obama is a Muslim, and
* believe the lottery is a good investment

Poundstone has a heading in this chapter titled “The Paranoid Style in American Cognition,” although HM is more inclined to believe that this paranoid style is a human problem rather than one specific to America.  However, the examples provided are regarding Americans.

In 2014 psychologists Stephan Lewandowsky, Gilles E. Gignac, and Klaus Oberauer reported a survey asking for True or False responses to the following experiences:

* The Apollo moon landings never happened and were staged in a Hollywood film studio.
* The US government allowed the 9/11 attacks to take place so the it would have an excuse to achieve foreign and domestic goals (e.g., the wars in Afghanistan and Iraq and attacks on American civil liberties) that had been determined prior to the attacks.
* The alleged link between secondhand tobacco smoke and ill health is based on bogus science and is an attempt by a corrupt cartel of medical researchers to replace rational science with dogma.
*US agencies intentionally created the AIDS virus and administered it to black and gay men in the 1970s.

These respondents were also asked whether they agree or disagreed with the following statements:

* The potential for vaccinations to maim and harm children outweigh their health benefits.
* Humans are too insignificant to have an appreciable impact on global temperature.
* I believe that genetically engineered food have already damaged the environment.

Poundstone concludes the chapter with the following paragraph”
“Those who believed in flat-out conspiracy theories were also more likely to agee with the above statements ()the first two are wrong, and the third is unproven).  Unlike the typical  conspiracy theory, these beliefs affect everyday behavior, both in the voting booth and outside it.  Should I vaccinate my kids?  Are hybrid cars worth the extra cost? Which tomato do I buy?  The One-in-Five American casts a long shadow.”

More Facts Citizens Should Know

November 20, 2016

This post is based on information in “Head In The Cloud”  by William Poundstone. From 1993 to 2010 the US violent crime rate dropped precipitously.  The firearms homicide rate dropped from 7.0 to 3.6% per 100,000, almost in half.  The nonviolent crime rate plunged to a little more that a quarter of what it had been.  It is difficult to think of another major social problem that had shown such dramatic improvement, but were people aware of this improvement?

A 2013 Pew Research Center poll asked whether gun crimes had gone up, down, or stayed the same over the last twenty years.  56% thought that the crime rate had gone up (wrong), and 26% thought it had stayed the same (also wrong).  Just 12% thought it had gone down.

It is interesting that both sides of the gun issue believe that they have a better remedy for a surging crime rate that doesn’t  actually exist.

Poundstone did a survey for an estimate of “the average amount of memory for a new tablet computer.”  The most common answer, 10-99 gigabytes was the most reasonable one at the time of the survey.  This answer got 40% of the responses.  The second most common answer was gigabytes and that got slightly over 20% of the responses.  So at least these respondents had the correct prefix before bytes.  But the range of responses  was from less than a kilobyte to more than hundreds of petabytes.

Poundstone also found that Americans think that there are far more Blacks, Asians, Gays and Moslems than there are actually are.   In the public mind, Latinos, black, Asians, gays, and Muslims constitute about 25%, 23%, 13%, 11%, and 15% of the populations, respectively.   This adds up to 87% of the population.  Poundstone notes that even when you account for overlap, these high-profile minorities account for about two-thirds of the US population.  So according to what these people think, whites are already a minority, and they feel threatened. The correct values are 17%, 15%, 6%, and 1%, respectively, which yields a total of 39%.

Facts Citizens Should Know

November 19, 2016

This post is based on information in “Head In The Cloud”  by William Poundstone.  It might be difficult to find someone who did not know what the national debt was.  And it would seem to be reasonable for citizens to have at least ballpark estimates of its size.  In October 2013 Internet Panel survey that was conducted by “Business Insider” when Ted Cruz was engineering a partial shutdown of the federal government over the federal deficit.  The survey asked a representative sample of 500 respondents nationwide to estimate the size of the US deficit.  The question was multiple choice, and guesses were grouped by order of magnitude.  The most common answer was the range $1 billion to just under $10 billion.  This answer was chosen by 23% of the respondents.  The actual 2013 deficit was $642 billion, which is about a hundred times bigger than the typical response.  Others estimated the deficit even more drastically.  More than 10% put it at a few million dollars or less.  Poundstone notes “That segment of the public inhabits an alternative universe in which a retired optician in Boca Raton could write a check covering this year’s federal deficit.

It is possible to think that these numbers are so large that they are incomprehensible to the average Joe.  So the survey also asked what had happened to the deficit in the previous year.  Was it bigger, smaller, or about the same?  As Poundstone writes “Well-informed citizens would have known that the slowly recovering economy, spending cuts, and tax increases had combined to cut the deficit from $1.09 trillion in 2012 to $642 billion in 2013.  Still, 68% believed that the deficit was larger in 2013.

Poundstone followed up on this survey with a similar one using the same Internet panel firm.  A new randomized national sample was asked the same two questions, except he replace the word “deficit” with “debt”.  Many people confuse these two terms, but they are quite different.  Deficit refers to a budget shortfall.  Debt refers to borrowed money for which the government is responsible.  Deficits are annual and debt is cumulative.  It can either increase or decrease.

Poundstone provides historical context for the national debt.  Under George Washington the United  States ran up huge Revolutionary War debt that wasn’t paid off until 1830,  The United States remained debt free for about a decade after than, but since 1840 the United States has always had debt.  At the time of the survey the US debt stood at more than $17 trillion.  Only 27% picked the correct range ($10-100 trillion) and it was not the most popular response.

The meaningful statistic is per capita debt.  But to compute per capita debt one needs to know the population of the US.  A National Geographic survey asked participants to pick the US population from four multiple-choice ranges.  69% picked outrageously wrong answers or said they didn’t know.

What do citizens know about the distribution of individual wealth?  Psychologist Dan Ariely and business professor Michael I. Norton ran an Internet Panel survey asking 5,522 Americans to estimate the distribution of wealth in 2011.  The participants were instructed to divide the nation into quintiles (fifths of the population) by wealth.  There would be the wealthiest 20%, the second-wealthiest 20% and so on down to the poorest 20%.  The survey was regarding wealth and not income.  It asked about net worth defined as the total value of everything someone owns minus any debt.

The reality is the the top 20% of American possess about 84% of the wealth.  The second and middle quintiles split between themselves almost everything else.  The two poorest quintiles account for only 0.2% and 0.1% of the total.  This bottom 40% is living mostly paycheck to paycheck if they have paychecks.

Although the public is aware  that there is a lopsided distribution of wealth, they have a poor idea of how lopsided this distribution is.  Survey subjects gestated that the top quintile holds about 58% of the total wealth and that a each succeeding quintile has progressively less, down to about 3% of the poorest group.  In other words the public estimated the top quintile to be 20 times richer than the bottom quintile.  The top quintile is 840 times wealthier in reality.

When asked to describe the ideal wealth distribution, the top fifth would hold about 32% of the nation’s wealth and the bottom fifth would have 10%.  So the top to bottom quintile shrinks to barely threefold.

A surprising finding was that there wasn’t much variation among the estimates, either actual or ideal, made by different political and demographic groups.  As expected Republican voters and men favored a bit more wealth inequality than Democratic voters and women did, but not much.  The wealthy had a better ideal on how much the top quintile owned, and they envisioned a utopia with greater wealth disparity than the poor did, but, again, the difference was only a few percentage points.

Another study by Michael Norton an Sorapop Kiatpongsan asked a sample of 55,000 respondents in 40 industrialized nations to estimate the actual and ideal incomes of unskilled worked in their respective nations.  They also asked for the actual and ideal incomes of the CEO of a large corporation.  Using these responses they computed CEO-to-worker ratios, based on the estimates, and compare them to the reality.

In the United States the ratio in the book was 354 to 1.  It continues to worsen year after year.   But Americans estimated it to be only 30 to 1.  The expressed ideal pay ratio was 6.7 to 1.  The discrepancies between actual pay ratio and ideal pay ratio hell throughout the world, but they were no where as outlandish as in the United States.

Please allow HM a digression here as it is something he feels very strongly about.  A business professor he published CEO to worker pay ratios with the intention of showing how outlandish they were.  Unfortunately, the law of unintended consequences raised its ugly head.  Corporate boards of directors used this as a metric for hiring under the following assumption:  to get the best CEOs they needed to increase their compensation.  CEOs from entirely different industries are hired on the assumption that they have a certain genius.  HM argues that there usually is someone within the company who can do a much better job, one who knows the companies workings and problems intimately.

The result is that corporate governance in the United States is rotten.  The Board of Director scratches the CEOs back and the CEO returns the favor.  The result is not good for individual stockholders, employees, or customers.  Employees have the most interest in the actual company and in the long-term welfare and growth of the company.  This is not true for either the CEO or the Board of Directors who might be interested in flipping the company or getting involved in some merger that most often does not benefit employees or customers, and might not provide long-term benefits to individual stockholders, especially value investors.

The benefits of CEO compensation can be compared across nations.  There is absolutely no evidence that the exorbitant compensation of CEOs has any benefits for anyone other than the CEO and the Board of Directors.

An obvious solution might be to require legitimate elections in publicly owned companies where there are at least two candidates for every position.  Although obvious, this might be difficult to implement.  One might argue that stockholders do not know whom they are voting for, but one could provide evidence that this is also the case in democracies.  But a more viable solution might be to do what they do in Germany. In Germany half of the board of directors must be employees.  Employees are not only interested in wages and benefits, but they have a long standing interest in the health and growth of the company.

© Douglas Griffith and, 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 with appropriate and specific direction to the original content.

Head In The Cloud

November 18, 2016

“Head In The Cloud” is an important book by William Poundstone.  The subtitle is “Why Knowing Things Matters When Facts Are So Easy to Look Up.”  Psychologists make the distinction between information that is accessible in memory and information that is available in memory.  Information that you can easily recall is obviously accessible in memory.  However, there is other information that you might not be able to recall now, but that you know that you know it.  This information eventually becomes accessible and can appear suddenly unsummoned in consciousness.

Transactive memory refers to information you can get from our fellow humans or from technology.  Most information available in technology can readily be summoned via Google searches.  An extreme view argues that since all this information is available, we do not need to remember the information itself as long as we know how to search for the information.  Whenever we encounter new information we are confronted with the question as to whether we need to commit this information to our biological memory.  This is a nontrivial question as committing information to memory requires cognitive effort, thinking, or in terms of Kahneman’s Two Process Theory, engaging our System 2 processes.  The healthy memory blog  has a category devoted to mnemonic techniques explicitly designed to assist in memorizing information as well as other discussions regarding how to make information memorable.  But all of this involves effort, so why bother if it can simply be looked up?  “Head in the Cloud” explains the benefits of moving some information from the cloud into our brains.

Poundstone describes an experiment done in 2011 by Daniel Wegner.  He presented volunteers with a list of forty trivia facts—short, pithy statement such as “An ostrich’s eye is bigger than its brain.”  Half of the volunteers were told to remember the facts.  The other half were not.  Within each of these groups half were informed that their work would be stored on the computer, and half were told that their work would be immediately erased after the task’s completion.    All these volunteers were later given a quiz on the facts they typed.  It did not matter whether they had been instructed to remember the information or not.  It only mattered if they thought their work was going to be erased after the task.  These volunteers remembered more regardless of whether they were told to remember the information.

The following is directly from the text “It is impossible to remember everything.  The brain must constantly be doing triage on memories, without conscious intervention.  And apparently it recognizes that there is less need to stock our minds with information that can be readily retrieved.  So facts are more often forgotten when people believe the facts will be archived.  This phenomenon has earned a name—the Google effect—describing the automatic forgetting of information that can be found online.”

HM does not disagree with any of the above quote.  However, he is alarmed by what is omitted.  That omission regards a conscious decision as to whether the information should be further processed to increase its accessibility without technology and whether it is related to other information that might require further research.  It is true that we are time constrained, so that depending on the situation the time available for such consideration will be important.  But as Poundstone will show, it is important to get some information out of the cloud and into the brain, and we can consciously alter the processing we give to the retrieved information.  Sans attention, it will likely remain in the cloud.

Poundstone reports an enormous amount of research conducted by a new type of polling called an Internet panel survey.  These are conducted by an organization that has recruited a large group of subjects (the panel)  who agree to participate in surveys.  When a new survey begins, the software selects a random sample of the panel to contact.  E-mails containing links are sent to the selected participants, typically in several waves to achieve a demographic balance closely approximating the general populations.  The sample can be balance for sex, age, ethnicity, education, income, and other demographic markers of interest to the research project.

A prior healthy memory blog post appropriately titled “The Dunning-Kruger Effect” discusses the Dunning-Kruger Effect.  Dunning is a psychology professor and Kruger was a graduate student.  The effect is that “Those most lacking in knowledge and skills are least able to understand their lack of knowledge.”  The flip-side of this effect is that those most knowledgeable are most aware of any holes in their knowledge.

“Actor John Cleese concisely explains the Dunning-Kruger effect in a much-shared You Tube video:  ‘If you’re very, very stupid how can you possibly realize that you’re very, very stupid?  You’d have to be relatively intelligent to realize how stupid you are…And this explains not just Hollywood but almost the entirety of Fox News’”

The chaos and contradictions of the current political environment can perhaps best be characterized as a glaring example of the Dunning-Kruger effect.  Just a few moments of contemplation should reveal the potential danger from this effect.  Poundstone’s book reveals the glaring lack of knowledge in many important areas by too many individuals.  He also provides ample evidence of the benefits of moving certain information from the cloud and into our brains.

© Douglas Griffith and, 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 with appropriate and specific direction to the original content.