Many political issues involve plans for an uncertain future. How can we better discuss opportunities and risks? (More)
Better Gossip, Part II – That Could Happen, But….
This week Morning Feature will distill the topics we’ve covered this fall into talking points we can use in Fred Whispering, conversations with coworkers, friends, family, and neighbors. Yesterday we examined how to critique political stories that sound true but are not reliable. Today we consider how to discuss opportunity and risk. Saturday we’ll conclude with how to avoid Pompous Expert Disorder.
Note: Many of this week’s talking points come from the “Speaking About” sections at the end of each chapter in Daniel Kahneman’s Thinking, Fast and Slow. We discussed that book in greater detail over a six-part Morning Feature series ending last Saturday. I have rewritten some of his examples to more directly apply in political conversations.
It’s Econ 101!
Yes, that’s Econ 101, but Humans aren’t economic robots.
This would give both of them the same benefit, but they won’t be equally satisfied because he expected more. He has a different reference point.
He weighs losses about twice as much as gains, which is normal.
She thinks the other side’s concessions are trivial compared to what she gave up. Losing feels worse than winning feels good.
Politicians and pundits often say “It’s Econ 101!” as if the simplified models of a survey course are enough to explain everything. But Humans are not Econs, and the ways we’re not have profound policy implications. For example, we weigh a potential outcome relative to where we are now, or what we expect – our reference point – and we weigh potential losses more heavily than potential gains, because “Losing feels better than winning feels good.”
Once Americans experience the benefits of the Affordable Care Act, they won’t want to give them up. That’s the endowment effect.
This reform will be hard to pass, because those who stand to lose will fight harder than those who stand to benefit. But on the whole, more people will benefit than lose.
Both individually and collectively, loss aversion reinforces the status quo. Working for change is (almost) always harder than working to keep things the same.
How likely is that, really?
That’s a very tiny chance, but a very tiny chance feels much bigger than no chance at all.
The scientists are almost certain, but we tend to hear the “almost” and downplay the risks.
Our intuition magnifies very tiny possibilities, and diminishes almost certain outcomes. Sophisticated organizations take advantage of that common mistake.
He’s passing up a great opportunity to get a much smaller sure thing. Finance whizzes make a lot of money on people like that.
She has no good options, so she should take the least bad option. Instead she’s risking too much on a sucker bet.
When it comes to a small but certain gain versus a much larger but less certain gain, we tend to avoid worthwhile risks. But when it comes to a small but certain loss versus a much larger but less certain loss, we tend to take unnecessary risks.
Let’s think that through
Vivid, scary stories feel more likely than they are.
That’s a tricky statistic. One-per-thousand is less than fifty-per-million, but most of us won’t hear it that way.
We respond instinctively to vivid, scary stories, and can easily be misled by tricky statistics. Both should warn us to pause and consider the claim more carefully.
He found something that works well enough and won’t try new ideas that might work better.
When we look at issues one-by-one, we’re more prone to respond emotionally. Considering how the issues fit together may lead to more reasonable decisions.
This system is set up so people have to opt-in to the better choice. We should make that the default and let people opt-out if they want.
We already have default choices. The real questions are who gets to set the defaults … and for whose benefit.
We also tend to focus on one piece at a time, making us more prone to snap responses that favor what’s familiar. Asking how two or more pieces might fit together encourages a more deliberative decision. If we know we’re likely to make weak choices – because the problem is too complex or we don’t bother to choose at all – we should demand better default choices. That may seem like “meddling,” but someone is almost always “meddling” already.
A bad ending doesn’t mean the entire process was a waste, but it usually feels that way.
He gave up too much for that feel-good moment. It’s called duration neglect, and it’s a common mistake.
We remember experiences in terms of peaks and end-points. That leads us to repeat mistakes that ended well and discount good decisions that ended badly.
He thinks more stuff would make him happy, because he’s competing with someone else who has more stuff. But he rarely enjoys the stuff he already has.
Rich people are no happier than upper middle class people, but very poor people are very unhappy. Ending extreme poverty should be a higher priority.
Our policy goal should be to reduce human suffering, rather than pamper the comfortable. Rich people competing to have more than other rich people, by definition, never think they have “enough.”
Things are rarely as good, or as bad, as they seem at the time.
Bad events never stop hurting, but as time passes we think about them less often.
We live moment-to-moment, but getting caught up in the moment is often a mistake.
How would you use these talking points?