Cognitive Biases: Endowment Effect and Loss Aversion

February 13, 2010

Another good real-world example of cognitive biases was present in the January 16th edition of The Economist. This time, it’s two similar biases, the “endowment effect” and “loss aversion”:

A man may say he would not pay more than $5 for a coffee mug. But if he is told that the mug is his, and asked immediately afterwards how much he would be willing to sell it for, he typically holds out for more. Possession, it appears, lends things an added allure. […]

At the beginning of the week, some groups of workers were told that they would receive a bonus of 80 yuan ($12) at the end of the week if they met a given production target. Other groups were told that they had “provisionally” been awarded the same bonus, also due at the end of the week, but that they would “lose” it if their productivity fell short of the same threshold.

Objectively these are two ways of describing the same scheme. But under a theory of loss aversion, the second way of presenting the bonus should work better. Workers would think of the provisional bonus as theirs, and work harder to prevent it from being taken away.

This is just what the economists found. The fear of loss was a better motivator than the prospect of gain (which worked too, but less well). And the difference persisted over time: the results were not simply a consequence of workers’ misunderstanding of the system. (source)

The fact that it kept working over time, even if the workers understood what was being done, shows how powerful these biases are. The reason for that is almost certainly because they helped our ancestors survive and reproduce; in a very dangerous environment, it is better to be risk-averse and live to see another day than to take a chance and die, and over-valuing what you already have probably made sense in an environment where acquiring desirable things was much harder than it is now.

For more on these biases, see:

See also: Rationality Resources

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Cognitive Bias: Halo Effect

February 10, 2010

While in the waiting room at a clinic, I read the following in the January 16th issue of The Economist:

Simon Anholt, an analyst, heroically estimates the value of the “Obama effect” on America’s global brand at $2.1 trillion. Each year, Mr Anholt commissions a poll of 20,000-40,000 people to find out how much they admire various countries’ people, culture, exports, governance, human-rights record and so on. He finds that admiration in one area often translates (illogically) into admiration in others. When George Bush was president, foreigners expressed less positive views of American goods, services and even the landscape. Under Mr Obama, he finds, America is once again the most admired country in the world (having slipped to seventh place in 2008). Using the same tools that consultants use to value brands such as Coca-Cola or Sony, he guesses that the value of “Brand America” has risen from $9.7 trillion to $11.8 trillion. Writing in Foreign Policy magazine, Mr Anholt calls this “a pretty good first year”. (source)

This is a good example of a cognitive bias called the Halo Effect. It can apply to individuals, groups, things, and even abstract concepts like brands or ideologies.

For more on the Halo Effect, see:

See also: Rationality Resources

Less Wrong Q&A with Eliezer Yudkowsky: Video Answers

January 8, 2010

Eliezer’s video answers to 30 questions from the Less Wrong Q&A can be found here.

Robert H. Lustig on Sugar (Video)

January 4, 2010

This video is an hour and a half long, but I think it’s worth watching:

For more on how the Western Diet (high in refined carbohydrates) is causing metabolic syndrome, I also recommend “Good Calories, Bad Calories: Fats, Carbs, and the Controversial Science of Diet and Health” by Gary Taubes.

Aubrey de Grey on Mitochondrial Mutations and Aging

December 25, 2009

Less Wrong Q&A With Eliezer Yudkowsky

November 11, 2009

A couple weeks ago I made a suggestion to the Less Wrong community: How about a Q&A with Eliezer?

Some were against, but a majority of people seemed to think it was a good idea, and Eliezer agreed to participate (he will film his answers to the questions that have received the higher number of votes), so I went ahead and created a thread where people can ask their questions:

If you have a question for Eliezer, all you need is a Less Wrong account. The rules are simple.

Allocate Your Studies Wisely

October 14, 2009

Studies photo

There’s a danger that lurks for those of us who are curious about lots of things and love learning, and it is that our “learning efforts” (of which there is a scarce supply) end up being allocated by external factors rather than by internal priorities. These outside forces bring us somewhere – and it might seem like a good place to be – but if we had initially asked ourselves where we wanted to go, it probably would’ve been somewhere else.

That might not be very clear, so allow me to demonstrate what I mean with three real-world examples:

Whole Brain Emulation
Earlier this year, during a trip to Detroit, I read a paper by Anders Sandberg and Nick Bostrom titled: Whole Brain Emulation: A Roadmap.

Going in, I knew that my goal was only to get a good idea of what was currently possible and where things were headed with whole brain emulation (WBE). I didn’t understand most of the paper (a lot of it is very technical), but the ~10-15% that made sense to me was enough to reach my goal, so I accepted that a lot of it was over my head.

To get to a level of comprehension significantly higher than the one I had would’ve required a massive amount of efforts, and that would have been disproportionate in relation to my target (my goal was not to become a brain scientist, but rather to understand the challenges and opportunities of WBE specifically).

Causality
Not long ago, I got Judea Pearl’s Causality (a book I’ve been meaning to read for years).

Read the rest of this entry »

Miscalibrated Minds: Why Don’t We Apply What We Know About Twins to Everybody Else?

September 30, 2009

Diane Arbus identical twins photo

We’re Inconsistent About How Much Weight We Attribute to Genes
I think our intuition might be miscalibrated when it comes to evaluating how much a person’s genes impact how they turn out physically (which isn’t surprising). What’s a bit strange is that we seem to be closer to the truth when it comes to twins.

Nobody’s surprised when identical twins turn out to have very similar bodies (weight, muscle mass, etc), even into adulthood.

But when it comes to non-twins, people seem to think that “making the right choices” and “willpower” are primary factors in how human bodies turn out, and that we can assign a good amount of personal credit or blame to individuals for good and bad outcomes.

There is a disconnect between these two visions, and I think that it’s the latter that needs to be updated.

After all, even if we put aside the direct ways in which our genes build our bodies (encoding how our tissues grow) and instead look at our abilities to “make the right choices” and exert “willpower”, we find that those are also greatly determined by genetic factors. Identical twins probably turn out very similar in good part because they have almost identical amounts of those qualities of mind.

Wrong by Degrees
This doesn’t mean that all is pre-determined and that if we all stop trying we’ll turn out the same we would have otherwise, but rather that we are playing within certain parameters, and that the part we control is probably smaller than most people think (not non-existent — we still deserve some credit — just more modest).

To be clear, I’m not saying the situation was white and we thought it was black, or even that it’s a black & white thing, but rather that most people’s intuition might be the wrong shade of gray. Otherwise, I would think there would be a bigger variation between identical twins, but they spend their lives making different choices yet most stay very similar to each other (as far as I know — if you know of a study on this, please send it my way).

This article has been cross-posted on LessWrong. There’s more discussion of it in the comments over there.

Most Crashes Happen On Dry Roads…

September 26, 2009

Traffic by Tom Vanderbilt image

The excerpt above is from page 185 of Traffic: Why We Drive the Way We Do (and What It Says About Us) by Tom Vanderbilt.

It comes at the end of a chapter on risk perception, ie. roads that seem safer can be more dangerous than we think because they encourage us to drive more dangerously, while roads that seem dangerous can actually be safer than we think since they make us slow down and pay more attention. The dangerous-looking roads might still be more dangerous than the safe-looking roads in the absolute, but both of them might not be respectively as safe or dangerous as drivers tend to think…

Anyway, what annoyed me is the last sentence of the excerpt. I think it’s a good real-world example of misleading statistics.

While it might be literally true that most crashes “happen on dry road, on clear, sunny days, to sober drivers” (I wouldn’t swear to it, I haven’t seen the stats), it doesn’t take into account the difference in sample sizes. In most places, the roads are dry more often than not, and most days are sunny, and most drivers are sober.

These conditions might produce a higher total number of crashes, but what really matters is how many crashes they produce per driver. If you look at it this way, it’s probably pretty obvious that wet roads, at night, with drunk drivers cause a lot more crashes.

See also: Rationality Articles

Invisible World

September 25, 2009

Pollen photo

I Can’t See You, But I Know You’re There
I don’t think I spent a day of my life without thinking about invisible things. Of course I’m not talking about truly invisible things as in supernatural thing, but rather things that are invisible to the naked eye but that we know are there because we can see or measure them with instruments.

Every single day I randomly think about things like allergens (the photo above is of pollen), DNA, cells, viruses, atoms in various conformations (proteins, lipids, hydrocarbon chains, neurotransmitters, etc) and of various kinds, radio waves, photons and electrical flows (from how much energy is used when I flip various switches to the incredibly fast pulses that encode everything in my computer and over my broadband connection). I also often think about the large invisible things, like stars, galaxies, nebulas, black holes, and the vastness of space in between it all.

Our brain has a hard time with these things because, as Richard Dawkins would say, it has evolved in “middle world” and is simply not equipped to grasp these things properly at scale.

What’s Your Relationship With the Unseen?
I know that it’s probably not that way for everybody, and it makes me wonder how it changes my perception of the world.

How do you see the world? Do you naturally think about invisible stuff, or do you rarely consider these things? Please let me know in the comments below.

Amazon Text Stats

September 20, 2009

Amazon Text Stats image

Analyzing and Comparing Books
I have just noticed that Amazon has a “Text Stats” section on its book pages. I’m not sure how long it has been there, but it’s very interesting.

  • The Fog Index was developed by Robert Gunning. It indicates the number of years of formal education required to read and understand a passage of text.
  • The Flesch Index, developed in 1940 by Dr. Rudolph Flesch, is another indicator of reading ease. The score returned is based on a 100 point scale, with 100 being easiest to read. Scores between 90 and 100 are appropriate for 5th and 6th graders, while a college degree is considered necessary to understand text with a score between 0 and 30.
  • The Flesch-Kincaid Index is a refinement to the Flesch Index that tries to relate the score to a U.S. grade level. For example, text with a Flesch-Kincaid score of 10.1 would be considered suitable for someone with a 10th grade or higher reading level.

Information Technology & Book Writing
I wonder how long before publishers and writers start to use this data to better zero in on certain targets in the hope of better reaching their target demographics. I’m sure that someday – if it hasn’t already happened – writers will get notes from editors asking them to “bring the Fog Index rating of their manuscript down by at least 20%” or “reduce the number of complex words by 10%”, all based on statistical analysis of the composition of recent best sellers.

A kind of Search Engine Optimization (SEO) for books, in a way.

Like all tools, it could be abused and lead to bad results. But if used properly, it could result in more readable books and reduce the variability in quality output between individual editors (probably not by much, but any improvement would be welcome).

The pic on top of this post is from the Amazon page for I Am A Strange Loop by Douglas R. Hofstadter (which I’m currently reading).

Here’s an excerpt that I liked:

I Am A Strange Loop book

Update: Just to make it clear, this post isn’t an ad for I Am A Strange Loop. It’s just the book I looked up on Amazon when I noticed the Amazon Text Stats feature, and I thought some people might be curious to know which book the Text Stats in the screenshot came from.

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Aubrey de Grey’s Paper on the Methuselarity

September 17, 2009

Aubrey de Grey photo

Photo: So we got a Chalkboard

August 9, 2009

Chalkboard with rainy cloud photo

I think the weather this summer has inspired Mélanie…

Photos: Kayaking

August 3, 2009

Kayaking

Kayaking

Discipline for my Information Diet

June 14, 2009

Problem
One of the demons I’m wrestling with when it comes to my information diet is keeping a high signal to noise ratio for an extended period of time. I know that the time and mental energy I’m spending reading news items about business, politics and technology are taking away from the energy I have for settled science and more timeless information (I mentioned this previously in Curiosity: Good Friend, Bad Master).

I think my problem is mostly discipline. I know that I’ll get more out of reading books and textbooks from my to read list than by reading The Economist and whatever interesting blog posts are featured on Hacker News, but even after I resolve to focus on the highest-quality material first and read other fun things on the side, as weeks pass I get less and less vigilant about it… until I some day I realize that I open the ‘hard’ books infrequently and spend most of my time reading lighter things that give me less lasting value. Once in a while there’s a big spike of willpower that brings me back on track, but it doesn’t last and at the bottom of the cycle I end up feeling feeling that I wasted an opportunity to learn new things and grow.

Why is it such a big deal to me? Because I feel that there’s a qualitative difference in how much I benefit from the highest quality material compared to whatever’s being written about this week. In short: More life-changing books like Gödel, Escher, Bach, and fewer articles about what’s happening this week in Myanmar.

Solution (?)
Maybe what I need is a way to keep track of my commitment, both as a reminder and a motivator. It worked pretty well with my molecular biology textbook… Until I moved to Ottawa. I haven’t opened that textbook in a month. You see what I’m talking about?

In fact, if I’m totally honest with myself, I’m thinking that maybe what will give the best result is a more drastic change. I’ve already unsubscribed to a few periodicals in the past, but maybe I should make deeper cuts and even create some rules about which websites I can visit and when (or maybe just re-arranging my bookmarks and RSS feeds would be enough to modify my behavior?).

If you’ve had a similar problem and found an effective way to deal with it, let me know in the comments.

See also:

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Lack of Updates

June 2, 2009

Sorry about the lack of updates recently. This is the longest hiatus that this blog ever had.

I simply haven’t felt like writing here recently, and decided not to force it.

For those who are curious: The move to Ottawa went well. Mélanie and I have started to plan our wedding, which should take place during the summer of 2010 (we’d like August 21st, since that would be the 7th anniversary of us going out together, but we might have to settle for another date).

I suspect I’ll start writing here again soon. I’m getting the itch, but I’m not sure what to write about yet.

What I’ve Been Up to Lately

April 2, 2009

Beach in Cancun, taken by Michael Graham Richard

Moving to Ottawa
In a little less than a month, Mélanie and I will be moving to Ottawa. We’ve found a small but comfortable apartment, and it will be our first time actually living together.

While doing research to prepare for the move, I found many cool things that I think will help make our lives better. They are:

  • Dumping the phone company and going 100% voice-over-IP. I find Bell Canada’s prices for plain old voice phone outrageous in the Internet era, and felt it wouldn’t be right to support them out of inertia. The company I signed up with is Babytel.
  • Switching to a new ISP (TekSavvy) that can do dry-loop DSL, so that I can connect to the internet from a phone line that isn’t active for voice calls. This ISP doesn’t throttle traffic (unlike most big ISPs in Canada) and offers premium routing for better pings.
  • We bought a Mac Mini so we can use it as a media center (music, photos, films, TV series, etc). Plex is a free and open source app that allows you to do that and use a remote. This should replace a bunch of other electronics while also allowing me to do more scientific distributed computing.
  • I read up on the best air-filtering plants; NASA had a study on this, and one of the authors of that study wrote a book that I’ll borrow from the library as soon as we move. I like having some plants around, and figure I might as we get those that will have the biggest impact on air quality.
  • Mélanie has asthma and some allergies, so I did a bit of research on ways to help her breathe easier. Found some air vent filters that look like they could help some.
  • The apartment is small, and I tend to go to bed later than Mélanie… So at first I looked into air purifiers, figuring the noise they make could help her sleep better and we’d have better air quality, but my research mostly told me that these devices didn’t do a very good job. So instead I looked into white noise machines. This one sounds good (literally). I figure that if it gives us both better sleep, it’s worth the money.
  • I also want to get headphones in case one of us wants to read, and the other wants to listen to music or something like that. Not sure which model to get yet, but I’ve heard good things about Sennheisers.

Follow Up on “What You Can Measure…”
I recently wrote about some challenges I gave myself. I’m happy to say that it’s working well, possibly better than I expected.

On the fruits & vegetables side, I’ve kept to the “5 extra portions a day, what goes in regular meals doesn’t count” rule and since then (about 5 weeks ago) I’ve eaten 198 portions of fruits and vegetables (lots of carrots, bananas, apples, bell peppers, oranges) that I wouldn’t have eaten otherwise. That’s a big win for me, and I intend to keep doing it for as long as possible.

My other challenge was to read at least 4 pages a day from a molecular biology textbook (on top of the other things I read — yesterday I finished reading a biography of J. Robert Oppenheimer, for example). The reason was that while I loved reading it, it was more arduous than the other books I was reading, the textbook is big and heavy… I was always finding excuses to avoid it and wasn’t making good progress. At the rate I was reading it, it would have taken me years to go from cover to cover.

Well, in the past ±5 weeks I’ve read about 155 pages, and I’ve only missed two days (completely forgot about it). This means my real average is higher than 4 pages a day, and I should hit the back cover in about 6-7 months. I consider this another win, and plan to keep doing this – or something similar – with technical books (and maybe also with online video lectures). The goal is to avoid the “hay fire” trap, where I start with really high motivation and burn out quickly and kind of forget about the book (even if when I do actually pick it up I find it fascinating).

Reading on the beach in Cancun, taken by Michael Graham Richard

Trip to Cancun
In February, Mélanie and I went to Cancun, Mexico, to visit her grand-parents for a one-week vacation. It was my first time south of New York City, and I enjoyed it quite a lot. The first photo in this post was taken on the beach there, and the second one shows what I spent a lot of time doing (in this case, reading a compilation of letters by Richard P. Feynman).

“He is a genius. And strange to say, I think he’s smarter than I am.”

March 22, 2009

Yale history professor David W. Blight photo

I’m now watching the third lecture in a Yale history class by professor David W. Blight about the U.S. Civil War and Reconstruction Era (1845-1877). This particular lecture deals with the pro-slavery ideology. As a Canadian, a lot of this is new to me.

I think this passage says a lot:

But it’s amazing to read the letters and the language of slave traders when they write to each other, the complacency, the mixture of just pure racism on the one hand and just business language on the other. “I refused a girl 20-years-old at $700.00 yesterday,” one trader wrote to another in 1853. “If you think best to take her at 700, I can still get her. She is very badly whipped but has good teeth.” “Bought a cook yesterday,” wrote another trader, “Bought a cook yesterday that was to go out of the state. She just made the people mad, that was all.” “I have bought a boy named Isaac,” wrote another trader, “for $1100.00.” He writes this in 1854 to his partner. “Bought a boy named Isaac. I think him very prime. He is a house-servant, first-rate cook, and splendid carriage driver. He is also a fine painter and varnisher, and says he can make a fine panel door. Also, he performs well on the violin. He is a genius. And strange to say, I think he’s smarter than I am.” Truth always creeps through all of our language–it doesn’t always but sometimes–creeps through our language, doesn’t it?

I’m also four lectures in a MIT Physics class by Walter Lewin (8.01, classical mechanics), and it’s excellent so far. I also recommend it.

For more free online classes, have a look at Academic Earth.

Update: Another great resource is Youtube EDU.