How to reduce the noise that spoils our decisions
THE WASHINGTON POST – A friend of mine suffered from back pain so severe that it was difficult for him to walk or stand. He consulted three doctors on the best treatment. The first was adamant that he needed surgery immediately. The second informed my friend that he did not need surgery and that if he continued physical therapy his condition would gradually improve over the next few months. The third prescribed strong steroids and recommended that if his condition does not improve within a month, he should have surgery. My friend took the advice of the third doctor and it seems to be working. But he was very upset and confused by all of these conflicting perspectives. And he still doesn’t know if this third doctor’s approach is the right one.
This unwanted variability in professional judgment is an example of the noise, pervasive and often overlooked human failure that is at the center of this well-researched, compelling, and practical book. Noise: a flaw in human judgment was written by the all-star team of psychologist and Nobel Laureate Daniel Kahneman, former McKinsey partner and management professor Olivier Sibony, and productive lawyer and behavioral economist Cass Sunstein. Kahneman won the Nobel Prize for his pioneering work with Amos Tversky on systematic judgment bias. This has prompted armies of psychologists and behavioral economists (including Sibony and Sunstein) to study the causes and cures for many of these flaws, including overconfidence, stereotypes, and confirmation bias – or the seeking, memorizing, and overemphasizing information that supports our beliefs.
The authors kick off by distinguishing bias (systematic deviations) and noise (random scattering). The book then relentlessly focuses on explaining and documenting the impact of the simple, ubiquitous noise error – and what policymakers can do about it. He mixes up stories, studies and statistics to convincingly demonstrate that noise does at least as much damage as prejudice: undermines fairness and justice, wastes time and money and damages health. physical and mental.
Kahneman and colleagues show how unwanted variations in judgments (evaluations) and decisions (choices) create “noisy systems” – which plague professionals, including criminal judges, insurers, forensic scientists, futurists, and physicians. , which regularly render extremely varied judgments and decisions on similar cases. The systems are noisy, in part because different professionals have different standards. There is troubling evidence, for example, that when multiple doctors assessed identical cases for evidence of heart disease, tuberculosis, endometriosis, skin cancer and breast cancer, they would not agree on the diagnoses. that about two-thirds of the time. In such noisy systems, errors add up rather than cancel out. As the authors say, “if two criminals who should both be sentenced to five years in prison receive terms of three and seven years, justice has not, on average, been served.”
Noise delves into the details of unwanted variation, including its causes and components, how to measure it, and the interaction between noise and bias. The authors explain why groups (vs. individual decision makers) can amplify noise and how guidelines, rules and algorithms can reduce it. And they provide a well-rounded toolkit to help decision makers identify and reduce system noise. They suggest that performing a “noise audit” is a useful first step. When an insurance company made one, executives were stunned – estimates from several insurers who assessed identical claims were five times louder than expected. Executives calculated that such noise costs the company hundreds of millions of dollars each year.
Kahneman, Sibony, and Sunstein devote eight chapters to noise reduction methods, along with three appendices to help readers perform noise audits, develop checklists to improve group decisions, and improve predictions. We learn about the characteristics of people who dampen rather amplify the noise of the system.
Noise is long and nuanced. The details and evidence will satisfy rigorous and demanding readers, as will the multiple perspectives it offers on noise. I was distracted, however, by sometimes jarring changes in writing style. Some sentences and sections read like a psychology or statistics textbook, others like a scientific article, and still others like the Harvard business review. But that’s a minor complaint. All academics, policy makers, managers and consultants should read this book. It convinced me that we already know how to reduce much of the systemic noise that plagues our organizations and governments. People with the power and perseverance to apply knowledge Noise will make more humane and fair decisions, save lives and avoid wasting time, money and talent.