The past week has been marked by a collapse in markets, pessimistic statistics on key U.S.indicators, and widespread fears that things will get worse. Right now only the lazy one is not writing about a possible global recession. I am lazy, so I won’t. Rather, I will write about how we repeatedly puddle in our assessments. And it doesn’t matter what we’re evaluating: our professional qualities, the deadline of the project, or the share price. It’s all due to positive bias.
I haven’t found an adequate translation (literally, "positive distortion"), so I’ll call it that from now on. Let’s make a little experiment. Here are three numbers: 2, 4, 6. This sequence follows a certain rule. Your task is to guess this rule. You tell me the three numbers and I will tell you if they fit or not. You have as many tries as you want. The odds are 5 to 1 that you name sequences like 8, 10, 12 (N, N+2, N+4) or 3, 6, 9 (N, 2N, 3N). It is quite possible that you will test several triplets that confirm your theory. In both cases above, my answer would be yes. Extremely pleased with yourself, you will propose your theory. And you will be wrong.
So what’s the problem? First of all, the average test taker is likely to test triplets that confirm his theory. Only 1 in 5 will try variants that might disprove it. Which brings us to "second": once you have thought up/accepted a thought/theory, it is very hard to give it up. We look for positive examples that confirm it and ignore negative examples that disprove it. 2-4-6 experiment was conducted more than once and only 20% of subjects correctly formulated the desired rule: numbers just have to be in ascending order.
More generally, we generally believe that good things happen to us more often than bad things – Valence effect Repeated experiments confirm this. In one very funny one, people opened cards with a funny or sad face on them. All other things being equal, the experimenters thought the cheerful face had a greater chance of falling out. As far back as Francis Bacon wrote : "The human mind, after accepting an opinion, gathers all the facts in support of it.".
If you still find it hard to believe that consciousness is playing games with you, here are a few more examples:
- MBA students (4th semester) overestimated the number of job offers they would receive as well as their future starting salary.
- Students systematically overestimated the results of their upcoming exams.
- Virtually all newlyweds believed that their marriage would last until the very end despite knowing the divorce statistics.
- Most smokers believe that their own risk of getting smoking-related diseases is less than that of other smokers.
- Professional financial analysts have consistently overestimated corporate earnings. Do you still want to trust your savings to your broker who keeps telling you that the market is bound to go up?
The U.K. Department of Transport even released a document titled "Methodology for dealing with positive bias in transportation planning." Bloated estimates are not just a Russian problem.
Another type of this effect is publication – the tendency of researchers, editors, and pharmaceutical companies to publish positive findings and ignore negative or neutral ones. To at least combat the problem, serious medical journals even require that studies be registered in advance and that all results be published on a mandatory basis.
The stronger your interest in one of the outcomes, whether moral, material, or any other, the stronger your positive bias.
So the next time, for example, when you give an assessment of your professional qualities, call a deadline for the end of the project, or claim that there is no crisis or it will bypass you – think about it, and maybe it speaks for you?
For those who are interested in this book I recommend the following Tali Sharot – The Optimism Bias: A Tour of the Irrationally Positive Brain