I'm reading an interesting book entitled The Wisdom of Crowds, which is full of counter-intuitive insights until you think about them for a moment and realize that they're not really so counter-intuitive at all.
Surowiecki's main point is that groups are often smarter than the smartest individuals. Anyone who knows anything about economics knows that this certainly applies to the allocation of scarce resources, which decentralized free markets accomplish much more efficiently and effectively than any individual ever could, no matter how brilliant.
But it turns out that the collective wisdom of crowds generally surpasses experts in most realms, so long as the crowd satisfies four conditions: diversity of opinion (note: the very opposite of the leftist definition of diversity), independence of thought (opinions are not determined by the opinions of those those around them), decentralization (in particular, the ability to draw on local knowledge), and aggregation (a mechanism for converting private judgments into a collective decision).
It turns out that if you assemble a group of just the brightest people to solve a problem, it will actually be less effective at solving the problem than a more diverse group with fewer brilliant people. (One immediately thinks of how our liberal looniversity bins have become such cognitively sealed asylums of foolishness.) For one thing, smart people tend to resemble each other in what they can do and how they think: "Adding in a few people who know less, but have different skills, actually improves the group's performance..... The development of knowledge may depend on maintaining an influx of the naive and the ignorant.... Groups that are too much alike find it harder to keep learning, because each member is bringing less and less new information to the table."
To cite just one example, between 1984 and 1999, almost 90 percent of all mutual find managers underperformed the Wilshire 5000 Index, "a relatively low bar." In short there was no correlation at all beween expertise and accuracy in predicting the stock market. Nevertheless, the more educated one is, the more one is likely to overestimate one's abilities and judgment, not just in the field of finance, but among "physicians, nurses, lawyers, engineers, entrepreneurs," who all believe they know much more than they actually do. Here, Paul Krugman comes to mind, an expert economist who is merely wrong about everything, every time.
Obviously there are unwise crowds, but for very specific reasons. Surowiecki cites the example of what entomologists call a "circular mill." In the early 20th century a naturalist came upon a group of army ants in the Guyana jungle. They were moving in a huge circle some 1,200 feet in circumference, one ant following the next, in a closed loop that took each ant two and a half hours to complete. The circle went on for a couple of days, as one ant after another eventually dropped dead from exhaustion and starvation.
Surowiecki explains: "The [circular] mill is created when army ants find themselves separated from their colony. Once they're lost, they obey a simple rule: follow the ant in front of you. The result is the mill, which usually only breaks up when a few ants straggle off by chance and the others follow them away..... The simple tools that make ants so successful are also responsible for the demise of the ants who get trapped in the circular mill."
This is an example of an unwise group. Why? Because its members are not independent decision makers. They just follow each other blindly. As Surowiecki explains, independence prevents people's mistakes from becoming correlated, from everyone making the same mistake. Secondly, "independent individuals are more likely to have new information rather than the same old data everyone is already familiar with. The smartest groups are made up of people with diverse perspectives who are able to stay independent of each other."
Exactly like the internet. And exactly unlike the MSM and its political action wing, the Democratic party. (And, I might add, the liberal R & D facility known as the university system.)
Let's hearken back to last week's post on Political Entomology and Blue-Bellied Liberals. There I noted that the liberal world is full of "media ants, Hollywood ants, academic ants, singing ants, judicial ants, educational establishment ants, and lastly, political ants who all run around randomly bumping their heads together, so that they're constantly regurgitating little half-digested bits of information and feeding them to one another. Pretty soon, just like the ants, they're all the same color."
In fact, it's even worse than I thought--our hopelessly lost and disoriented liberal elites are caught in a circular mill! They've lost touch with reality, but each is simply obeying the simple rule that he should blindly follow the liberal ant in front of him, even if it means going around in circles or taking the country over the cliff.
Remember the words of Thomas Lifson, writing on The Liberal Bubble: our liberal elites inhabit a "comfortable, supportive, and self esteem-enhancing environment. The most prestigious and widest-reaching media outlets reinforce their views, rock stars and film makers provide lyrics and stories making their points, college professors tell them they are right, and the biggest foundations like Ford fund studies to prove them correct." Liberals "are able to live their lives untroubled by what they regard as serious contrary opinion. The capture of the media, academic, and institutional high ground enables them to dismiss their conservative opponents as ill-informed, crude, bigoted, and evil." Liberalism has been reduced to an "in-group code, perfectly understandable and comforting among the elect, but increasingly disconnected from everyone else, and off-putting to those not included in the ranks of the in-group."
Not only have liberals become detached from the greater colony--as reflected in plunging ratings, fleeing readership, and diminished influence--but they have become increasingly detached from reality itself. Plodding along in a grim circle, the New York Times following behind Ted Kennedy and Howard Dean, Time and Newsweek trudging along behind the New York Times, CNN trundling behind Time and Newsweek, academics apeing other unoriginal academics, Air America slinking behind Howard Dean, dailykos goose-stepping after George Soros, George Soros shuffling behind Ted Turner... it's endless and yet finite, because it's a circle. The circle is certainly internally consistent--in fact, there's no diversity at all. Nor is there much contact with what you or I would call reality.
It couldn't be more different than the mighty internet, more on which tomorrow.
Subscribe to:
Post Comments (Atom)
14 comments:
And yet, people DO get away from the circle; generally they don't have their entire being invested in the circle. The cost of admission is high, and the dues are assessed daily.
ed in texas
1. george soros consistently way overperformed the wishire 5000 during his tenure.Wisdom of an expert ?
2. 60% + of the american people believe the world was literally created in 7 days, a similar percentage (including the president if he is truly evangelical) believe the bible is the literal word of god. Wisdom of crowds ?
3. the wsj/fox oped and it's ilk msm consistently assert that tax cuts will create enough tax receipts through growth to prevent an increase in the deficit and that there is a correlation between tax cuts and economic growth and dividend tax cuts and stock mkt performance despite the lack of empirical evidence. Studies by both objective economists at the Fed and CBO debunk these wsj - msm myths. Pls cite a refereed academic paper that supports the Laffer (laugher) curve. It was written on the back of an envelope for a reason - there is no evidence. Wisdom of the conservative msm ?
Hmm let's see WSJ op ed following the american enterprise and heritage institute, weekly standard following the national republic following fox news following rush, folling sean following Bill O following krauthammer following medved prager coulter ingraham...no conservo msm echo chamber ? As for all economists knowing crowds best allocate resources: take a look at Robert Shiller (Yale), Richard Thaler(univ of chicago, Daniel Kahneman (Princeton, nobel prize in economics) on how irrationally crowds allocate that all important scarce resource called capital. State of the art in economics is benavioral economics which focuses precisely on the irrationality of individuals' economic choices.
My Dear Doctor,
Your opus arrived while I was visiting the relatives for Christmas, and I avidly consumed the first pages late last night even as I was nodding off into my warm milk after the long drive home.
Meanwhile your F.U.Q. post of yesterday provided a spindle to wrap my bloggic refocusing about...AND, I gave you a new nickname, The Celebrated Jumping Gagdad of Calabasas.
Here--http://newvictorian.blogspot.com/2005/12/politics-must-aim-at-something-that.html
Not a bad day's work, sir.
We're going to laugh all the way to the First Universal Uninentity Cosmic Bank and Grill...
Dr. Godwin,
I've been a regular reader of yours since very near the beginning of your blog, and am also about half-way through your book.
In my layman's understanding, your explanation for leftism/narcissism centers on the person as an infant.
Would you care to comment on the Large Group Awareness Programs (LGATs) like EST and LifeSpring that were so popular in the 70’s and 80’s?
What did these “reprogramming” programs actually do to their participants? Was there more good than harm, or more harm than good? Could they have made narcissists out of normal persons, or were they all predisposed to the message?
l am glad to see lalarry weigh in immediatly after I refferred him to Bob. And I am hoping that some (more) sophisticated debate emerges.
That's it, lalarry. Rove is going to hear about this.
Damn. Nicely summarized piece, Bob.
> lalarry said...
You'll note the lack of an original thought, here. He just aped what you already did with his own perspective.
> nobel prize in economics
Nuff said. Not quite as damning as, say, a Nobel PEACE prize, but close.
The award selectors tend to be Pseudo-Marxist NeoKeynesians all, and rarely does a sensible, workable theory or notion ever poke into their mill.
Hint: Keynes. The 1970s. BAAAADD JUJU.
Now, if you quote the Austrians or the Chicago school (I dunno about Thaler) on this, it might carry some weight... but
Yale?
Princeton?
Pfeeagh!
Oh, yeah:
Hint #2: Keynes. The 1990s. Japan. Still more BAAAADD JUJU.
Plodding back in the direction of the thread, it occurred to me that a telling example of independent decision-makers were those on 9/11/01 who ignored the WTC's designated "anti-panic" but clueless security employees, consulted their intuition, and headed for the stairwells.
As to Soros and others, of course the occasional "expert" pulls it off, hence their reputations. I think Surowiecki is referring to the probabilities, the most likely fostering environment, for obtaining practical wisdom on an amorphous multi-variable matter. However, it's more a provocative "new-model" book than one persuasively documented. Metaphors, not data.
On an anecdotal level, I have discovered the very idea of emergent, practical, unpredictable and sometimes counter-intuitive conclusions makes progressives uncomfortable. They just huff about popular stupidities and give counter-examples in which experts seem to know best.
From a new and wildly uncharacteristic posture, I won't try to figure out why.
Soros did very well attacking the British Pound with excellent timing. You will notice he's not doing as well lately.
lalarry, here's a bit of concrete evidence you can chew on. Despite the conventional wisdom and the MSM counting the November election -- or at latest the inauguration -- of a president as the beginning of "his" economy, a moments thought will reveal that a newly elected president has virtually no influence on the economy and even after inauguration, very little effect at first. The debating and legislation tend to take a bit of time, the laws have to actually go into effect, and their influence on the economy takes some time to develop.
When you superimpose the very sensible 18-24 month delay between election and dominant policy effect of the new president, it becomes blindingly obvious what tax cuts do for an economy. The Bush economy runs from 2002-2010; the Clinton economy from 1994-2002; Bush 41 1990-1994; Reagan 1982-1990; Carter 1978-1982.
Funny. About opposite of the Keynesian -- and your -- claim.
nick bwrote:
"the award selectors tend to be Pseudo-Marxist NeoKeynesians all, and rarely does a sensible, workable theory or notion ever poke into their mill."
milton friedman,grandaddy of the libertarians holds a nobel prize in economics
other prominent conservative economists who have won the prize in the last 20 yrs: Joseph Stiglitz, Gary Becker, Robert Mundell (father of the "laffer" curve).
Most of the others didn't have a particularly ideological bent. Although you may feel that " rarely does a sensible, workable theory or notion ever poke into their mill."
In fact many of the prize winners have written theories so workable they are used on a daily basis by the millions of us working on a daily basis in the financial markets. Ever heard of 'portfolio theory" "beta" "option pricing" just a few of the "workable" theories from Nobel Prize winners
You can peruse the whole list and draw your own conclusions at
http://nobelprizes.com/nobel/economics/economics.html
but you might have to know something about economics to make an informed judgement.
btw the Nobel Prize in economics began in 1969. It was never awarded to Keynes
damn those facts, they always get in the way
btw good way to judge an academic's work - dismiss them if their university doesn't meet your ideological standards. Exactly what you decry about the pc lefties
assistant village idiot: check your freshman economics textbook: deficit spending creating larger deficits used to stimulate economic growth (particularly when accompanied by increased government expemditures as currently) = keynesian economic stimulus
most notable recent examples: Reagan and especially President W
but please cite any reputable economic analyst that argues otherwise
you might also want to look at the congressional budget office study at
http://www.cbo.gov/ftpdocs/69xx/doc6908/12-01-10PercentTaxCut.pdf
that concludes that contrary to the "laffer curve" acolytes such as the wsj op ed folk, a 10% tax cut would at best stimulate enough economic activity to create tax revenues to recoup 22% of the lost taxes. The acolytes claim that the laffer curve teaches the cuts would be self financing.
Again a reputable contrary source is welcome.
Otherwise how about this: concede you know nothing about economics, and keep to metaphysics
And since I don't, and don't care much to, understand your metaphysics (if that's what it is), I'll stop posting comments on this metaphysical and (soon to be) non economic analysis blog.
Otherwise, I am here at the ready to, in the interest of intellectual clarity, debate your economic views.
your explanation for leftism/narcissism centers on the person as an infant.
____________________
krishna dc
Wide Circles
Post a Comment