Noise, impacting human judgement (Daniel Kahneman)

Danny Kahneman is adding onto his work on heuristics and biases with research into noise, involving the high variability of judgements across individuals, as compared to the more moderated convergence produced through machine learning.

The book Noise: A Flaw in Human Judgment is officially released in May 2021. There’s some hints from a prior 2016 article.

The problem is that humans are unreliable decision makers; their judgments are strongly influenced by irrelevant factors, such as their current mood, the time since their last meal, and the weather. We call the chance variability of judgments noise. It is an invisible tax on the bottom line of many companies. […]

Noise vs. Bias

When people consider errors in judgment and decision making, they most likely think of social biases like the stereotyping of minorities or of cognitive biases such as overconfidence and unfounded optimism. The useless variability that we call noise is a different type of error. To appreciate the distinction, think of your bathroom scale. We would say that the scale is biased if its readings are generally either too high or too low. If your weight appears to depend on where you happen to place your feet, the scale is noisy. A scale that consistently underestimates true weight by exactly four pounds is seriously biased but free of noise. A scale that gives two different readings when you step on it twice is noisy. Many errors of measurement arise from a combination of bias and noise. Most inexpensive bathroom scales are somewhat biased and quite noisy.

Source: Kahneman, Daniel, Andrew M. Rosenfield, Linnea Gandhi, and Tom Blaser. 2016. “Noise: How to Overcome the High, Hidden Cost of Inconsistent Decision Making.” Harvard Business Review , October 1, 2016. https://hbr.org/2016/10/noise.

A recent web recording put me onto this trail.

Harari, Yuval Noah, and Daniel Kahneman. 2021. Global Trends Shaping Humankind . Web Video. Nexus Online Summit. American Friends of The Hebrew University. https://www.youtube.com/watch?v=7yhg7NmTeVg.

In listening to the audio for this conversation, I found little overlap between Harari and Kahneman (although Danny said that he mostly agreed).

[10:16] My problem in this conversation is that I tend to agree with just about everything that Yuval says. But on the other hand I’m not in the future as much as he is. I’m very much in the present. In the present, people make decisions that are both biased and noisy. And what we mean by noisy is that they’re unstable, and that they’re different from the judgments and decisions that other people would make in exactly the same situation. And that it turns out that the mistakes that people make, the errors that people make, in their judgments and decisions are due just about as much or possibly more to noise than they are to bias.

As a former student in Danny Kahneman’s graduate school class at UBC, I find this turn focus towards noise interesting.

One way to improve decision-making – in the sense of making decisions more rationally – is to not rely on the judgement of a single individual, but instead on a collective judgement (some might say wisdom) that comes through deliberation with a group of people. This is something that I’ve learned, personally, and try to practice (e.g. the Systems Changes Learning Circle is strong on diversity, across multiple dimensions).

This new direction by Danny Kahneman is something that I will have on my reading list (that is slow, with ideas emerging at opportune and inopportune times)

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