A book about why we have a desperate need to try and predict the future but why we will always be doomed to fail. Although there are some traits that make some people slightly better at it than others.
A must read book for all those struggling to compose Strategic Plans or Budget submissions.
A really telling insight was that those who are most confident that they are right are the worst at predicting the future with any degree of certainty. Statistically the best prediction is that the future will be the same as today (because for most of the time it is) this will be wrong for sure but more accurate than most forecasters.
The book looks at our evolutionary drive to understand what is going to happen and to the biases this builds into our judgement and our memory.
So how do we get better:
- Gather information from as many sources as possible
- Accept you may well be wrong and actively seek out views that do not agree with yours. Draft a list of reasons why your belief may be wrong
- Display humility, nothing is certain and your predictions should never be so.
- Consider how your decisions will play out if your predictions turn out to be wrong. A good decision is robust in the face of various futures.
No matter how often expert predictions fail, we want more. This strange phenomenon led Scott Armstrong, an expert on forecasting at the Wharton School of the University of Pennsylvania, to coin his “seer-sucker” theory: “No matter how much evidence exists that seers do not exist, suckers will pay for the existence of seers.” Sometimes we even go back to the very people whose predictions failed in the past and listen, rapt, as they tell us how the future will unfold. This book explains why expert predictions fail and why we believe them anyway.Read more at location 365
Certain styles of thinking and decision making do a far better job of groping amid the inky blackness of the future to find a path ahead. These styles can be learned and applied, with results that are positive, although far from perfect. And that leads to the ultimate conclusion, which is one we do not want to accept but must: There are no crystal balls, and no style of thinking, no technique, no model will ever eliminate uncertainty.Read more at location 398
Experts who did better than the average of the group – and better than random guessing – thought very differently. They had no template. Instead, they drew information and ideas from multiple sources and sought to synthesize it. They were self-critical, always questioning whether what they believed to be true really was. And when they were shown that they had made mistakes, they didn’t try to minimize, hedge, or evade. They simply acknowledged they were wrong and adjusted their thinking accordingly. Most of all, these experts were comfortable seeing the world as complex and uncertain – so comfortable that they tended to doubt the ability of anyone to predict the future. That resulted in a paradox: The experts who were more accurate than others tended to be much less confident that they were right.Read more at location 581
Put all that together and there’s a very clear lesson: If you hear a hedgehog make a long-term prediction, it is almost certainly wrong. Treat it with great skepticism.Read more at location 595
economists Ron Alquist and Lutz Kilian published a paper in which they examined all the sophisticated methods one could use to determine the price of oil one month, one quarter, or one year in the future. They looked at fancy econometric models. They looked at oil prices in futures and spot markets. They looked at the consensus opinion of oil analysts. And they found that anyone could do better than all these crystal balls, sometimes far better, by applying a mindless rule: Always predict that the price in the future will be whatever the price is now. True, this technique is far from accurate. In fact, it’s pretty awful. But the others are worse.Read more at location 707
Foxes are okay with that. They like complexity and uncertainty, even if that means they can draw only cautious conclusions and they have to admit they could be wrong. “Maybe” is fine with them.Read more at location 1671
“This effect contributes to the appeal of scenarios and the illusory insight they often provide,” Kahneman and Tversky wrote. And it’s so easy to do. Just add details, colour, and drama. And pile on the predictions. The actual accuracy will plummet but the feeling of plausibility will soar.Read more at location 2107
People who try to peer into the future – both experts and laypeople – are very likely to start with an unreasonable bias in favour of the status quo. Today’s trends will continue, and tomorrow will be like today, only more so. With that belief in place, the confirmation bias that so misled Arnold Toynbee kicks in. Evidence that supports the belief is embraced without question; evidence that contradicts the belief is treated with extreme suspicion or, more often, ignored. Steadily, the belief that tomorrow will be like today grows into a strong conviction. Occasionally, a surprise – the decline of Japan, the terrorist attacks of 9/11, the crash of 2008 – slaps us in the face and we are reminded that tomorrow may not be like today. Suitably chastened, we get imaginative and think of all the ways the surprise that just happened could happen again … and we are right back in the mental rut of the status quo. Genuinely imaginative attempts to portray change – including scenario planning – may help pull us out of that rut but they may also cause us to develop an unrealistic sense of how likely those imaginative futures really are. And all the while, no matter what happens, we are convinced we are right.Read more at location 2129
In an unsettling study, elderly residents of a nursing home were placed in rooms where everything was handled by others, right down to the arrangement of the furniture and the selection and care of a house-plant. With no decisions to make, their environment was pleasant but completely out of their control. Other residents of the home were given the same room and treatment, but they were asked to decide how the furniture would be arranged and they were asked to select and care for a plant. A year and a half later, 30 per cent of the residents without control had died, compared to 15 per cent of those with control.Read more at location 2456
“Survival requires urgent attention to possible bad outcomes,” the review noted, “but it is less urgent with regard to good ones.” People whose brains gave priority to bad news were much less likely to be eaten by lions or die some other unpleasant and untimely death than those whose brains did not, and so “negativity bias” became a universal human trait.37Read more at location 2571
The experts who dominate the media won’t be the most accurate. In fact, they will be the least accurate. And that is precisely what Philip Tetlock discovered. Using Google hits as a simple way to measure the fame of each of his 284 experts, Tetlock found that the more famous the expert, the worse he did.Read more at location 2721
In much the same way, a strong, enthusiastic, confident speaking style has a power that transcends mere rationalityRead more at location 2791
researchers concluded that “persuasion is a function not of intelligence, prediscussion conviction, position with respect to the issue, manifest ability, or volubility, but of the expression of confidence during the discussion itself.” Very simply: confidence convinces.Read more at location 2808
Robertson doesn’t deny that his story is very simplistic, or that there’s far more to his thinking. But he doesn’t go further because this story is what people want. Anything more is needless complication. “You don’t have to sit there and bring in all these charts and stuff,” he says. “If you don’t trust me, it won’t make a difference.”Read more at location 2925
For experts who want the public’s attention, Paul Ehrlich is the gold standard. Be articulate, enthusiastic, and authoritative. Be likeable. See things through a single analytical lens and craft an explanatory story that is simple, clear, conclusive, and compelling. Do not doubt yourself. Do not acknowledge mistakes. And never, ever say “I don’t know.”Read more at location 3014
It’s especially true among those who put together business forecasts; managers and executives know that someone who wishes to keep her job will not announce to a roomful of superiors that the future is complex, unpredictable, and out of her control – no matter how true that may be. But more than all the rest, the news media know the lesson of Paul Ehrlich.Read more at location 3040
the different emphasis we put on predictions that hit and those that miss. We ignore misses, even when they lie scattered by the dozen at our feet; we celebrate hits, even when we have to hunt for them and pretend there was more to them than luck. This discrepancy is so extreme and pervasive it even has a name. It’s the “Jeane Dixon Effect,”Read more at location 3238
They may be wrong far more often than they are right. They may do worse than flipped coins and stopped clocks. But they never fail to deliver the certainty that we crave. And we never fail to ask for more.Read more at location 3476
Memory is an organic process, not a recording. While memories can remain sharp and fixed for decades, they can also evolve, sometimes subtly, sometimes dramatically. These changes aren’t random. Memories serve the present: We misremember in ways that suit the needs of the moment.Read more at location 3778
Knowing the world is fundamentally uncertain and unpredictable, and knowing that the brains we use to understand this uncertain and unpredictable world contain psychological biases and other tripwires that skew our judgement, a little humility is in order. The future is dark, and much as we might like to see in the dark, we cannot. Imagining otherwise is dangerous. Stride confidently forward in the dark and you’re likely to feel quite pleased with yourself right up until the moment you walk into a wall.Read more at location 4434
While our decisions have to be made on the basis of what we think is going to happen, we must always consider how our decisions will fare if the future turns out to be very different. A good decision is one that delivers positive results in a wide range of futures.Read more at location 4475
Recall that people whose thinking style marks them as “foxes,” in Philip Tetlock’s terms, are modest about their ability to forecast the future, comfortable with complexity and uncertainty, and very self-critical – they are always questioning whether what they believe to be true really is. Foxes also reject intellectual templates, preferring to gather ideas and information from as many sources as they can get their hands on.Read more at location 4591
By grabbing on to whatever information is available, from whatever source, foxes aggregate. They may not do it as well as a prediction market, but the fundamental process is the same, and it helps make their judgement superior to that of hedgehogs who know One Big Thing and aren’t interested in finding out more.Read more at location 4608
The second element at work is what psychologists call metacognition. This is simply thinking about thinking. Alan Barnes constantly pushes his analysts to reflect on their conclusions, to question them, to ask themselves where they came from and whether they really make sense or not.Read more at location 4616
A basic method for overcoming confirmation bias, for example, is to draft a list of reasons why your belief may be wrong, but the analysts “are reluctant to use even that extremely simple tool,”Read more at location 4629
The last of the three key elements at work is humility. “I think when you’re dealing with future events, pretending that you have absolute certainty is doing the reader a great disservice,” Barnes says.Read more at location 4633
Anyone who reads history with sufficient imagination to overcome hindsight bias knows this. What appears most likely, or even certain, does not happen, while what happens is something quite unexpected. It was true for my grandfather’s generation. It was true for my mother’s. It is true for mine. And it will be true for my children’s, which is one of the few grand-scale predictions I am comfortable making. As journalist James Fallows observed, “What looks like tomorrow’s problem is rarely the real problem when tomorrow rolls around.”Read more at location 4764
