The Art of Thinking Clearly

by Rolf Dobelli

  Psychologist Robert Cialdini can explain the success of this and other such campaigns. He has studied the phenomenon of reciprocity and has established that people have extreme difficulty being in another person’s debt.

  Many NGOs and philanthropic organizations use exactly the same techniques: First give, then take. Last week, a conservation organization sent me an envelope full of postcards featuring all sorts of idyllic landscapes. The accompanying letter assured me that the postcards were a gift to be kept, whether or not I decided to donate to their organization. Even though I understood the tactic, it took a little willpower and ruthlessness to throw them in the trash.

  Unfortunately, this kind of gentle blackmail—you could also call it corruption—is widespread. A supplier of screws invites a potential customer to join him at a big sports game. A month later, it’s time to order screws. The desire not to be in debt is so strong that the buyer gives in and places an order with his new friend.

  It is also an ancient technique. We find reciprocity in all species whose food supplies are subject to high fluctuations. Suppose you are a hunter-gatherer. One day you are lucky and kill a deer. You can’t possibly eat all of it in a day, and refrigerators are still a few centuries away. You decide to share the deer with the group, which ensures that you will benefit from others’ spoils when your haul is less impressive. The bellies of your buddies serve as your refrigerator.

  Reciprocity is a very useful survival strategy, a form of risk management. Without it, humanity—and countless species of animals—would be long extinct. It is at the core of cooperation between people (who are not related) and a necessary ingredient for economic growth and wealth creation. There would be no global economy without it—there would be no economy at all. That’s the good side of reciprocity.

  But there is also an ugly side of reciprocity: retaliation. Revenge breeds counter-revenge, and you soon find yourself in a full-scale war. Jesus preached that we should break this cycle by turning the other cheek, which proves very difficult to do, so compelling is the pull of reciprocity even when the stakes are far less high.

  Several years ago, a couple invited my wife and me to dinner. We had known this couple casually for quite some time. They were nice but far from entertaining. We couldn’t think of a good excuse to refuse, so we accepted. Things played out exactly as we had imagined: The dinner party was beyond tedious. Nevertheless, we felt obliged to invite them to our home a few months later. The constraint of reciprocity had now presented us with two wearisome evenings. And, lo and behold, a few weeks later, a follow-up invitation from them arrived. I wonder how many dinner parties have been endured in the name of reciprocity, even if the participants would have preferred to drop out of the vicious cycle years ago.

  In much the same way, if someone approaches you in the supermarket, whether to offer you a taste of wine, a chunk of cheese, or a handful of olives, my best advice is to refuse their offer—unless you want to end up with a refrigerator full of stuff you don’t even like.

  7

  Beware the “Special Case”

  Confirmation Bias (Part 1)

  Gil wants to lose weight. He selects a particular diet and checks his progress on the scale every morning. If he has lost weight, he pats himself on the back and considers the diet a success. If he has gained weight, he writes it off as a normal fluctuation and forgets about it. For months, he lives under the illusion that the diet is working, even though his weight remains constant. Gil is a victim of the confirmation bias—albeit a harmless form of it.

  The confirmation bias is the mother of all misconceptions. It is the tendency to interpret new information so that it becomes compatible with our existing theories, beliefs, and convictions. In other words, we filter out any new information that contradicts our existing views (“disconfirming evidence”). This is a dangerous practice. “Facts do not cease to exist because they are ignored,” said writer Aldous Huxley. However, we do exactly that, as super-investor Warren Buffett knows: “What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact.”

  The confirmation bias is alive and well in the business world. One example: An executive team decides on a new strategy. The team enthusiastically celebrates any sign that the strategy is a success. Everywhere the executives look, they see plenty of confirming evidence, while indications to the contrary remain unseen or are quickly dismissed as “exceptions” or “special cases.” They have become blind to disconfirming evidence.

  What can you do? If the word “exception” crops up, prick up your ears. Often it hides the presence of disconfirming evidence. It pays to listen to Charles Darwin: Since his youth, he set out to fight the confirmation bias systematically. Whenever observations contradicted his theory, he took them very seriously and noted them down immediately. He knew that the brain actively “forgets” disconfirming evidence after a short time. The more correct he judged his theory to be, the more actively he looked for contradictions.

  The following experiment shows how much effort it takes to question your own theory. A professor presented his students with the number sequence 2–4–6. They had to calculate the underlying rule that the professor had written on the back of a sheet of paper. The students had to provide the next number in the sequence to which the professor would reply “fits the rule” or “does not fit the rule.” The students could guess as many numbers as they wanted but could try only once to identify the rule. Most students suggested 8 as the next number, and the professor replied: “Fits the rule.” To be sure, they tried 10, 12, and 14. The professor replied each time: “Fits the rule.” The students concluded: “The rule is to add two to the last number.” The professor shook his head: “That is not the rule.”

  One shrewd student tried a different approach. He tested out the number –2. The professor said: “Does not fit the rule.” “Seven?” he asked. “Fits the rule.” The student tried all sorts of numbers: –24, 9, –43. Apparently he had an idea, and he was trying to find a flaw with it. Only when he could no longer find a counterexample, the student said: “The rule is this: The next number must be higher than the previous one.” The professor turned over the sheet of paper, revealing those very words. What distinguished the resourceful student from the others? While the majority of students sought merely to confirm their theories, he tried to find fault with his, consciously looking for disconfirming evidence. You might think: “Good for him, but not the end of the world for the others.” However, falling for the confirmation bias is not a petty intellectual offense. How it affects our lives will be revealed in the next chapter.

  8

  Murder Your Darlings

  Confirmation Bias (Part 2)

  In the previous chapter, we met the father of all fallacies, the confirmation bias. Here are a few examples of it: We are forced to establish beliefs about the world, our lives, the economy, investments, our careers, and more. We deal mostly in assumptions, and the more nebulous these are, the stronger the confirmation bias. Whether you go through life believing that “people are inherently good” or “people are inherently bad,” you will find daily proof to support your case. Both parties, the philanthropists and the misanthropes, simply filter disconfirming evidence (evidence to the contrary) and focus on the do-gooders and dictators who support their worldviews.

  Astrologers and economists operate on the same principle. They utter prophecies so vague that any event can substantiate them: “In the coming weeks you will experience sadness,” or “In the medium term, the pressure on the dollar will increase.” But what is the medium term? What will cause the dollar to depreciate? And depreciation measured against what—gold, yen, pesos, wheat, residential property in Manhattan, the average price of a hot dog?

  Religious and philosophical beliefs represent an excellent breeding ground for the confirmation bias. Here, in soft, spongy terrain, it grows wild and free. For example, worshippers
always find evidence for God’s existence, even though he never shows himself overtly—except to illiterates in the desert and in isolated mountain villages. It is never to the masses in, say, Frankfurt or New York. Counterarguments are dismissed by the faithful, demonstrating just how powerful the confirmation bias is.

  No professionals suffer more from the confirmation bias than business journalists. Often, they formulate an easy theory, pad it out with two or three pieces of “evidence,” and call it a day. For example: “Google is so successful because the company nurtures a culture of creativity.” Once this idea is on paper, the journalist corroborates it by mentioning a few other prosperous companies that foster ingenuity. Rarely does the writer seek out disconfirming evidence, which in this instance would be struggling businesses that live and breathe creativity or, conversely, flourishing firms that are utterly uncreative. Both groups have plenty of members, but the journalist simply ignores them. If he or she were to mention just one, the story line would be ruined.

  Self-help and get-rich-quick books are further examples of blinkered storytelling. Their shrewd authors collect piles of proof to pump up the most banal of theories, such as “meditation is the key to happiness.” Any reader seeking disconfirming evidence does so in vain: Nowhere in these books do we see people who lead fulfilled lives without meditation, or those who, despite meditation, are still sad.

  The Internet is particularly fertile ground for the confirmation bias. To stay informed, we browse news sites and blogs, forgetting that our favored pages mirror our existing values, be they liberal, conservative, or somewhere in between. Moreover, a lot of sites now tailor content to personal interests and browsing history, causing new and divergent opinions to vanish from the radar altogether. We inevitably land in communities of like-minded people, further reinforcing our convictions—and the confirmation bias.

  Literary critic Arthur Quiller-Couch had a memorable motto: “Murder your darlings.” This was his advice to writers who struggled with cutting cherished but redundant sentences. Quiller-Couch’s appeal is not just for hesitant hacks but for all of us who suffer from the deafening silence of assent. To fight against the confirmation bias, try writing down your beliefs—whether in terms of worldview, investments, marriage, health care, diet, career strategies—and set out to find disconfirming evidence. Axing beliefs that feel like old friends is hard work but imperative.

  9

  Don’t Bow to Authority

  Authority Bias

  The first book of the Bible explains what happens when we disobey a great authority: We get ejected from paradise. This is also what less celestial authorities would have us believe—political pundits, scientists, doctors, CEOs, economists, government heads, sports commentators, consultants, and stock market gurus.

  Authorities pose two main problems to clear thinking: First, their track records are often sobering. There are about one million trained economists on the planet, and not one of them could accurately predict the timing of the 2008 financial crisis (with the exception of Nouriel Roubini and Nassim Taleb), let alone how the collapse would play out, from the real estate bubble bursting to credit default swaps collapsing, right through to the full-blown economic crunch. Never has a group of experts failed so spectacularly. The story from the medical world is much the same: Up until 1900 it was discernibly wiser for patients to avoid doctor’s visits; too often the “treatment” only worsened the illness, due to poor hygiene and folk practices such as bloodletting.

  Psychologist Stanley Milgram demonstrated the authority bias most clearly in an experiment in 1961. His subjects were instructed to administer ever-increasing electrical shocks to a person sitting on the other side of a pane of glass. They were told to start with 15 volts, then 30 volts, 45 volts, and so on, until they reached the maximum—a lethal dose of 450 volts. In reality, no electrical current was actually flowing; Milgram used an actor to play the role of the victim, but those charged with administering the shocks didn’t know that. The results were, well, shocking: As the person in the other room wailed and writhed in pain, and the subject administering the shock wanted to stop, the professor would say, “Keep going, the experiment depends on it.” The majority of people continued with the electrocution. More than half of the participants went all the way up to the maximum voltage—out of sheer obedience to authority.

  Over the past decade, airlines have also learned the dangers of the authority bias. In the old days, the captain was king. His commands were not to be doubted. If a copilot suspected an oversight, he wouldn’t have dared to address it out of respect for—or fear of—his captain. Since this behavior was discovered, nearly every airline has instituted crew resource management (CRM), which coaches pilots and their crews to discuss any reservations they have openly and quickly. In other words: They carefully deprogram the authority bias. CRM has contributed more to flight safety in the past twenty years than have any technical advances.

  Many companies are light-years from this sort of foresight. Especially at risk are firms with domineering CEOs, where employees are likely to keep their “lesser” opinions to themselves—much to the detriment of the business.

  Authorities crave recognition and constantly find ways to reinforce their status. Doctors and researchers sport white coats. Bank directors don suits and ties. Kings wear crowns. Members of the military wield rank badges. Today, even more symbols and props are used to signal expertise: appearances on talk shows and on the covers of magazines, to book tours and Wikipedia entries. Authority changes much like fashion does, and society follows it just as much.

  In conclusion: Whenever you are about to make a decision, think about which authority figures might be exerting an influence on your reasoning. And when you encounter one in the flesh, do your best to challenge him or her.

  10

  Leave Your Supermodel Friends at Home

  Contrast Effect

  In his book Influence, Robert Cialdini tells the story of two brothers, Sid and Harry, who ran a clothing store in 1930s America. Sid was in charge of sales and Harry led the tailoring department. Whenever Sid noticed that the customers who stood before the mirror really liked their suits, he became a little hard of hearing. He called to his brother: “Harry, how much for this suit?” Harry looked up from his cutting table and shouted back: “For that beautiful cotton suit, forty-two dollars.” (At that time, it was a completely inflated price.) Sid pretended as if he hadn’t understood: “How much?” Harry yelled again: “Forty-two dollars!” Sid then turned to his customer and reported: “He says twenty-two dollars.” At this point, the customer would have quickly put the money on the table and hastened from the store with the suit before poor Sid noticed his “mistake.”

  Maybe you know the following experiment from your school days: Take two buckets. Fill the first with lukewarm water and the second with ice water. Dip your right hand into the ice water for one minute. Then put both hands into the lukewarm water. What do you notice? The lukewarm water feels as it should to the left hand and piping hot to the right hand.

  Both of these stories epitomize the contrast effect: We judge something to be beautiful, expensive, or large if we have something ugly, cheap, or small in front of us. We have difficulty with absolute judgments.

  The contrast effect is a common misconception. You order leather seats for your new car because, compared to the $60,000 price tag on the car, $3,000 seems a pittance. All industries that offer upgrade options exploit this illusion.

  The contrast effect is at work in other places, too. Experiments show that people are willing to walk an extra ten minutes to save $10 on food. But those same people wouldn’t dream of walking ten minutes to save $10 on a $1,000 suit. An irrational move because ten minutes is ten minutes, and $10 is $10. Logically, you should walk back in both cases or not at all.

  Without the contrast effect, the discount business would be completely untenable. A product that has been reduced from $100 t
o $70 seems a better value than a product that has always cost $70. The starting price should play no role. The other day an investor told me: “The share is a great value because it’s 50 percent below the peak price.” I shook my head. A share price is never “low” or “high.” It is what it is, and the only thing that matters is whether it goes up or down from that point.

  When we encounter contrasts, we react like birds to a gunshot. We jump up and get moving. Our weak spot: We don’t notice small, gradual changes. A magician can make your watch vanish because, when he presses on one part of your body, you don’t notice the lighter touch on your wrist as he relieves you of your Rolex. Similarly, we fail to notice how our money disappears. It constantly loses its value, but we do not notice because inflation happens over time. If it were imposed on us in the form of a brutal tax (and basically that’s what it is), we would be outraged.

  The contrast effect can ruin your whole life: A charming woman marries a fairly average man. But because her parents were awful people, the ordinary man appears to be a prince. One final thought: Bombarded by advertisements featuring supermodels, we now perceive beautiful people as only moderately attractive. If you are seeking a partner, never go out in the company of your supermodel friends. People will find you less attractive than you really are. Go alone or, better yet, take two ugly friends.