The Art of Thinking Clearly

Rolf Dobelli

• Publisher: Harper Paperbacks
• Year: 2014
• Print ISBN: 9780062219695
• eBook ISBN: 9780062359803
• Topic: History
• Subtopic: Business Development
• Index: History

A world-class thinker counts the 100 ways in which humans behave irrationally, showing us what we can do to recognize and minimize these “thinking errors” to make better decisions and have a better life

Despite the best of intentions, humans are notoriously bad—that is, irrational—when it comes to making decisions and assessing risks and tradeoffs. Psychologists and neuroscientists refer to these distinctly human foibles, biases, and thinking traps as “cognitive errors.” Cognitive errors are systematic deviances from rationality, from optimized, logical, rational thinking and behavior. We make these errors all the time, in all sorts of situations, for problems big and small: whether to choose the apple or the cupcake; whether to keep retirement funds in the stock market when the Dow tanks, or whether to take the advice of a friend over a stranger.

The “behavioral turn” in neuroscience and economics in the past twenty years has increased our understanding of how we think and how we make decisions. It shows how systematic errors mar our thinking and under which conditions our thought processes work best and worst. Evolutionary psychology delivers convincing theories about why our thinking is, in fact, marred. The neurosciences can pinpoint with increasing precision what exactly happens when we think clearly and when we don’t.

Drawing on this wide body of research, The Art of Thinking Clearly is an entertaining presentation of these known systematic thinking errors--offering guidance and insight into everything why you shouldn’t accept a free drink to why you SHOULD walk out of a movie you don’t like it to why it’s so hard to predict the future to why shouldn’t watch the news. The book is organized into 100 short chapters, each covering a single cognitive error, bias, or heuristic. Examples of these concepts include: Reciprocity, Confirmation Bias, The It-Gets-Better-Before-It-Gets-Worse Trap, and the Man-With-A-Hammer Tendency. In engaging prose and with real-world examples and anecdotes, The Art of Thinking Clearly helps solve the puzzle of human reasoning.

1
Why You Should Visit Cemeteries

Survivorship Bias

No matter where Rick looks, he sees rock stars. They appear on television, on the front pages of magazines, in concert programs, and at online fan sites. Their songs are unavoidable—in the mall, on his playlist, in the gym. The rock stars are everywhere. There are lots of them. And they are successful. Motivated by the stories of countless guitar heroes, Rick starts a band. Will he make it big? The probability lies a fraction above zero. Like so many others, he will most likely end up in the graveyard of failed musicians. This burial ground houses ten thousand times more musicians than the stage does, but no journalist is interested in failures—with the exception of fallen superstars. This makes the cemetery invisible to outsiders.

In daily life, because triumph is made more visible than failure, you systematically overestimate your chances of succeeding. As an outsider, you (like Rick) succumb to an illusion, and you mistake how minuscule the probability of success really is. Rick, like so many others, is a victim of survivorship bias.

Behind every popular author you can find a hundred other writers whose books will never sell. Behind them are another hundred who haven’t found publishers. Behind them are yet another hundred whose unfinished manuscripts gather dust in drawers. And behind each one of these are a hundred people who dream of—one day—writing a book. You, however, hear of only the successful authors (these days, many of them self-published) and fail to recognize how unlikely literary success is. The same goes for photographers, entrepreneurs, artists, athletes, architects, Nobel Prize winners, television presenters, and beauty queens. The media is not interested in digging around in the graveyards of the unsuccessful. Nor is this its job. To elude the survivorship bias, you must do the digging yourself.

You will also come across survivorship bias when dealing with money and risk: Imagine that a friend founds a start-up. You belong to the circle of potential investors and you sense a real opportunity: This could be the next Google. Maybe you’ll be lucky. But what is the reality? The most likely scenario is that the company will not even make it off the starting line. The second most likely outcome is that it will go bankrupt within three years. Of the companies that survive these first three years, most never grow to more than ten employees. So, should you never put your hard-earned money at risk? Not necessarily. But you should recognize that the survivorship bias is at work, distorting the probability of success like cut glass.

Take the Dow Jones Industrial Average index. It consists of out-and-out survivors. Failed and small businesses do not enter the stock market, and yet these represent the majority of business ventures. A stock index is not indicative of a country’s economy. Similarly, the press does not report proportionately on all musicians. The vast number of books and coaches dealing with success should also you make skeptical: The unsuccessful don’t write books or give lectures on their failures.

Survivorship bias can become especially pernicious when you become a member of the “winning” team. Even if your success stems from pure coincidence, you’ll discover similarities with other winners and be tempted to mark these as “success factors.” However, if you ever visit the graveyard of failed individuals and companies, you will realize that its tenants possessed many of the same traits that characterize your success.

If enough scientists examine a particular phenomenon, a few of these studies will deliver statistically significant results through pure coincidence—for example, the relationship between red wine consumption and high life expectancy. Such (false) studies immediately attain a high degree of popularity and attention. As a result, you will not read about the studies with the “boring” but correct results.

Survivorship bias means this: People systematically overestimate their chances of success. Guard against it by frequently visiting the graves of once-promising projects, investments, and careers. It is a sad walk but one that should clear your mind.

2
Does Harvard Make You Smarter?

Swimmer’s Body Illusion

As essayist and trader Nassim Taleb resolved to do something about the stubborn extra pounds he’d been carrying, he contemplated taking up various sports. However, joggers seemed scrawny and unhappy, and bodybuilders looked broad and stupid, and cyclists? Oh, so bottom-heavy! Swimmers, though, appealed to him with their well-built, streamlined bodies. He decided to sign up at his local swimming pool and to train hard twice a week.

A short while later, he realized that he had succumbed to an illusion. Professional swimmers don’t have perfect bodies because they train extensively. Rather, they are good swimmers because of their physiques. How their bodies are designed is a factor for selection and not the result of their activities. Similarly, female models advertise cosmetics and, thus, many female consumers believe that these products make you beautiful. But it is not the cosmetics that make these women model-like. Quite simply, the models are born attractive, and only for this reason are they candidates for cosmetics advertising. As with the swimmers’ bodies, beauty is a factor for selection and not the result.

Whenever we confuse selection factors with results, we fall prey to what Taleb calls the swimmer’s body illusion. Without this illusion, half of advertising campaigns would not work. But this bias has to do with more than just the pursuit of chiseled cheekbones and chests. For example, Harvard has the reputation of being a top university. Many highly successful people have studied there. Does this mean that Harvard is a good school? We don’t know. Perhaps the school is terrible, and it simply recruits the brightest students around. I experienced this phenomenon at the University of St. Gallen in Switzerland. It is said to be one of the top ten business schools in Europe, but the lessons I received (albeit twenty-five years ago) were mediocre. Nevertheless, many of its graduates were successful. The reason behind this is unknown—perhaps it was due to the climate in the narrow valley or even the cafeteria food. Most probable, however, is the rigorous selection.

All over the world, MBA schools lure candidates with statistics regarding future income. This simple calculation is supposed to show that the horrendously high tuition fees pay for themselves over a short period of time. Many prospective students fall for this approach. I am not implying that the schools doctor the statistics, but still their statements must not be swallowed wholesale. Why? Because those who pursue an MBA are different from those who do not. The income gap between both groups stems from a multitude of reasons that have nothing to do with the MBA degree itself. Once again we see the swimmer’s body illusion at work: the factor for selection confused with the result. So, if you are considering further study, do it for reasons other than a bigger paycheck.

When I ask happy people about the secret of their contentment, I often hear answers like “You have to see the glass half full rather than half empty.” It is as if these individuals do not realize that they were born happy and now tend to see the positive in everything. They do not realize that cheerfulness—according to many studies, such as those conducted by Harvard’s Dan Gilbert—is largely a personality trait that remains constant throughout life. Or, as social scientists David Lykken and Auke Tellegen starkly suggest, “trying to be happier is as futile as trying to be taller.” Thus, the swimmer’s body illusion is also a self-illusion. When these optimists write self-help books, the illusion can become treacherous. That’s why it’s important to give wide berth to tips and advice from self-help authors. For billions of people, these pieces of advice are unlikely to help. But because the unhappy don’t write self-help books about their failures, this fact remains hidden.

In conclusion: Be wary when you are encouraged to strive for certain things—be it abs of steel, immaculate looks, a higher income, a long life, a particular demeanor, or happiness. You might fall prey to the swimmer’s body illusion. Before you decide to take the plunge, look in the mirror—and be honest about what you see.

3
Why You See Shapes in the Clouds

Clustering Illusion

In 1957, Swedish opera singer Friedrich Jorgensen bought a tape player to record his vocals. When he listened back to the recording, he heard strange noises throughout, whispers that sounded like supernatural messages. A few years later, he recorded birdsong. This time, he heard the voice of his deceased mother in the background whispering to him: “Fried, my little Fried, can you hear me? It’s Mammy.” That did it. Jorgensen turned his life around and devoted himself to communicating with the deceased via tape recordings.

In 1994, Diane Duyser from Florida also had an otherworldly encounter. After biting into a slice of toast and placing it back down on the plate, she noticed the face of the Virgin Mary in it. Immediately, she stopped eating and stored the divine message (minus a bite) in a plastic container. In November 2004, she auctioned the still fairly well preserved snack on eBay. Her daily bread earned her $28,000.

In 1978, a woman from New Mexico had a similar experience. Her tortilla’s blackened spots resembled Jesus’s face. The press latched on to the story, and thousands of people flocked to New Mexico to see the savior in burrito form. Two years earlier, in 1976, the orbiter of the Viking spacecraft photographed a rock formation that, from high above, looked like a human face. The “face on Mars” made headlines around the world.

And you? Have you ever seen faces in the clouds or the outlines of animals in rocks? Of course. This is perfectly normal. The human brain seeks patterns and rules. In fact, it takes it one step further: If it finds no familiar patterns, it simply invents some. The more diffuse the signal, such as the background noise on the tape, the easier it is to find “hidden messages” in it. Twenty-five years after uncovering the “face on Mars,” the Mars global surveyor sent back crisp, clear images of the rock formations: The captivating human face had dissolved into plain old scree.

These frothy examples make the clustering illusion seem innocuous; it is not. Consider the financial markets, which churn out floods of data every second. Grinning from ear to ear, a friend told me that he had discovered a pattern in the sea of data: “If you multiply the percentage change of the Dow Jones by the percentage change of the oil price, you get the move of the gold price in two days’ time.” In other words, if share prices and oil climb or fall in unison, gold will rise the day after tomorrow. His theory worked well for a few weeks, until he began to speculate with ever-larger sums and eventually squandered his savings. He had sensed a pattern where none existed.

oxxxoxxxoxxoooxooxxoo. Is this sequence random or planned? Psychology professor Thomas Gilovich interviewed hundreds of people for an answer. Most did not want to believe the sequence was arbitrary. They figured some law must govern the order of the letters. Wrong, explained Gilovich, and pointed to some dice: It is quite possible to roll the same number four times in a row, which mystifies many people. Apparently we have trouble accepting that such events can take place by chance.

During World War II, the Germans bombed London. Among other ammunition, they used V1 rockets, a kind of self-navigating drone. With each attack, the impact sites were carefully plotted on a map, terrifying Londoners: They thought they had discovered a pattern and developed theories about which parts of the city were the safest. However, after the war, statistical analysis confirmed that the distribution was totally random. Today it’s clear why: The V1’s navigation system was extremely inaccurate.

In conclusion: When it comes to pattern recognition, we are oversensitive. Regain your skepticism. If you think you have discovered a pattern, first consider it pure chance. If it seems too good to be true, find a mathematician and have the data tested statistically. And if the crispy parts of your pancake start to look a lot like Jesus’s face, ask yourself: If he really wants to reveal himself, why doesn’t he do it in Times Square or on CNN?

4
If Fifty Million People Say Something Foolish, It Is Still Foolish

Social Proof

You are on your way to a concert. At an intersection, you encounter a group of people, all staring at the sky. Without even thinking about it, you peer upward, too. Why? Social proof. In the middle of the concert, when the soloist is displaying absolute mastery, someone begins to clap and suddenly the whole room joins in. You do, too. Why? Social proof. After the concert you go to the coat check to pick up your coat. You watch how the people in front of you place a coin on a plate, even though, officially, the service is included in the ticket price. What do you do? You probably leave a tip as well.

Social proof, sometimes roughly termed the “herd instinct,” dictates that individuals feel they are behaving correctly when they act the same as other people. In other words, the more people who follow a certain idea, the better (truer) we deem the idea to be. And the more people who display a certain behavior, the more appropriate this behavior is judged by others. This is, of course, absurd.

Social proof is the evil behind bubbles and stock market panic. It exists in fashion, management techniques, hobbies, religion, and diets. It can paralyze whole cultures, such as when sects commit collective suicide.

A simple experiment, carried out in the 1950s by legendary psychologist Solomon Asch, shows how peer pressure can warp common sense. A subject is shown a line drawn on paper, and next to it three lines—numbered 1, 2, and 3—one shorter, one longer, and one the same length as the original one. He or she must indicate which of the three lines corresponds to the original one. If the person is alone in the room, he gives correct answers because the task is really quite simple. Now five other people enter the room; they are all actors, which the subject does not know. One after another, they give wrong answers, saying “number 1,” although it’s very clear that number 3 is the correct answer. Then it is the subject’s turn again. In one-third of cases, he will answer incorrectly to match the other people’s responses.

Why do we act like this? Well, in the past, following others was a good survival strategy. Suppose that fifty thousand years ago you were traveling around the Serengeti with your hunter-gatherer friends, and suddenly they all bolted. What would you have done? Would you have stayed put, scratching your head, and weighing up whether what you were looking at was a lion or something that just looked like a lion but was in fact a harmless animal that could serve as a great protein source? No, you would have sprinted after your friends. Later on, when you were safe, you could have reflected on what had actually happened. Those who acted differently—and I am sure there were some—exited the gene pool. We are the direct heirs of those who copied the others’ behavior. This pattern is so deeply rooted in us that we still use it today, even when it of...

Table of contents

• Dedication
• Contents
• Introduction
• 1 Why You Should Visit Cemeteries: Survivorship Bias
• 2 Does Harvard Make You Smarter?: Swimmer’s Body Illusion
• 3 Why You See Shapes in the Clouds: Clustering Illusion
• 4 If Fifty Million People Say Something Foolish, It Is Still Foolish: Social Proof
• 5 Why You Should Forget the Past: Sunk Cost Fallacy
• 6 Don’t Accept Free Drinks: Reciprocity
• 7 Beware the “Special Case”: Confirmation Bias (Part 1)
• 8 Murder Your Darlings: Confirmation Bias (Part 2)
• 9 Don’t Bow to Authority: Authority Bias
• 10 Leave Your Supermodel Friends at Home: Contrast Effect
• 11 Why We Prefer a Wrong Map to None at All: Availability Bias
• 12 Why “No Pain, No Gain” Should Set Alarm Bells Ringing: The It’ll-Get-Worse-Before-It-Gets-Better Fallacy
• 13 Even True Stories Are Fairy Tales: Story Bias
• 14 Why You Should Keep a Diary: Hindsight Bias
• 15 Why You Systematically Overestimate Your Knowledge and Abilities: Overconfidence Effect
• 16 Don’t Take News Anchors Seriously: Chauffeur Knowledge
• 17 You Control Less Than You Think: Illusion of Control
• 18 Never Pay Your Lawyer by the Hour: Incentive Super-Response Tendency
• 19 The Dubious Efficacy of Doctors, Consultants, and Psychotherapists: Regression to Mean
• 20 Never Judge a Decision by Its Outcome: Outcome Bias
• 21 Less Is More: Paradox of Choice
• 22 You Like Me, You Really, Really Like Me: Liking Bias
• 23 Don’t Cling to Things: Endowment Effect
• 24 The Inevitability of Unlikely Events: Coincidence
• 25 The Calamity of Conformity: Groupthink
• 26 Why You’ll Soon Be Playing Mega Trillions: Neglect of Probability
• 27 Why the Last Cookie in the Jar Makes Your Mouth Water: Scarcity Error
• 28 When You Hear Hoofbeats, Don’t Expect a Zebra: Base-Rate Neglect
• 29 Why the “Balancing Force of the Universe” Is Baloney: Gambler’s Fallacy
• 30 Why the Wheel of Fortune Makes Our Heads Spin: The Anchor
• 31 How to Relieve People of Their Millions: Induction
• 32 Why Evil Is More Striking Than Good: Loss Aversion
• 33 Why Teams Are Lazy: Social Loafing
• 34 Stumped by a Sheet of Paper: Exponential Growth
• 35 Curb Your Enthusiasm: Winner’s Curse
• 36 Never Ask a Writer If the Novel Is Autobiographical: Fundamental Attribution Error
• 37 Why You Shouldn’t Believe in the Stork: False Causality
• 38 Why Attractive People Climb the Career Ladder More Quickly: Halo Effect
• 39 Congratulations! You’ve Won Russian Roulette: Alternative Paths
• 40 False Prophets: Forecast Illusion
• 41 The Deception of Specific Cases: Conjunction Fallacy
• 42 It’s Not What You Say, but How You Say It: Framing
• 43 Why Watching and Waiting Is Torture: Action Bias
• 44 Why You Are Either the Solution—or the Problem: Omission Bias
• 45 Don’t Blame Me: Self-Serving Bias
• 46 Be Careful What You Wish For: Hedonic Treadmill
• 47 Do Not Marvel at Your Existence: Self-Selection Bias
• 48 Why Experience Can Damage Your Judgment: Association Bias
• 49 Be Wary When Things Get Off to a Great Start: Beginner’s Luck
• 50 Sweet Little Lies: Cognitive Dissonance
• 51 Live Each Day as If It Were Your Last—but Only on Sundays: Hyperbolic Discounting
• 52 Any Lame Excuse: “Because” Justification
• 53 Decide Better—Decide Less: Decision Fatigue
• 54 Would You Wear Hitler’s Sweater?: Contagion Bias
• 55 Why There Is No Such Thing as an Average War: The Problem with Averages
• 56 How Bonuses Destroy Motivation: Motivation Crowding
• 57 If You Have Nothing to Say, Say Nothing: Twaddle Tendency
• 58 How to Increase the Average IQ of Two States: Will Rogers Phenomenon
• 59 If You Have an Enemy, Give Him Information: Information Bias
• 60 Hurts So Good: Effort Justification
• 61 Why Small Things Loom Large: The Law of Small Numbers
• 62 Handle with Care: Expectations
• 63 Speed Traps Ahead!: Simple Logic
• 64 How to Expose a Charlatan: Forer Effect
• 65 Volunteer Work Is for the Birds: Volunteer’s Folly
• 66 Why You Are a Slave to Your Emotions: Affect Heuristic
• 67 Be Your Own Heretic: Introspection Illusion
• 68 Why You Should Set Fire to Your Ships: Inability to Close Doors
• 69 Disregard the Brand New: Neomania
• 70 Why Propaganda Works: Sleeper Effect
• 71 Why It’s Never Just a Two-Horse Race: Alternative Blindness
• 72 Why We Take Aim at Young Guns: Social Comparison Bias
• 73 Why First Impressions Are Deceiving: Primacy and Recency Effects
• 74 Why You Can’t Beat Homemade: Not-Invented-Here Syndrome
• 75 How to Profit from the Implausible: The Black Swan
• 76 Knowledge Is Nontransferable: Domain Dependence
• 77 The Myth of Like-Mindedness: False-Consensus Effect
• 78 You Were Right All Along: Falsification of History
• 79 Why You Identify with Your Football Team: In-Group Out-Group Bias
• 80 The Difference between Risk and Uncertainty: Ambiguity Aversion
• 81 Why You Go with the Status Quo: Default Effect
• 82 Why “Last Chances” Make Us Panic: Fear of Regret
• 83 How Eye-Catching Details Render Us Blind: Salience Effect
• 84 Why Money Is Not Naked: House-Money Effect
• 85 Why New Year’s Resolutions Don’t Work: Procrastination
• 86 Build Your Own Castle: Envy
• 87 Why You Prefer Novels to Statistics: Personification
• 88 You Have No Idea What You Are Overlooking: Illusion of Attention
• 89 Hot Air: Strategic Misrepresentation
• 90 Where’s the Off Switch?: Overthinking
• 91 Why You Take On Too Much: Planning Fallacy
• 92 Those Wielding Hammers See Only Nails: Déformation Professionnelle
• 93 Mission Accomplished: Zeigarnik Effect
• 94 The Boat Matters More Than the Rowing: Illusion of Skill
• 95 Why Checklists Deceive You: Feature-Positive Effect
• 96 Drawing the Bull’s-Eye around the Arrow: Cherry Picking
• 97 The Stone Age Hunt for Scapegoats: Fallacy of the Single Cause
• 98 Why Speed Demons Appear to Be Safer Drivers: Intention-to-Treat Error
• 99 Why You Shouldn’t Read the News: News Illusion
• Epilogue
• Acknowledgments
• A Note on Sources
• About the Author
• Credits
• Copyright
• About the Publisher