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Powerful Comment from Volokh Conspiracy

Don't Believe Everything You Think: The 6 Basic Mistakes We Make in Thinking

Thinking is a skill.  But how often do we train our thinking?  Does reading the newspaper or even general-interest non-fiction improve our thinking?  Is sitting around just thinking sufficient?  Perhaps not, if you believe that your mind can play tricks on you.

The tricks our mind plays on us is explored in Don't Believe Everything You Think: The 6 Basic Mistakes We Make in Thinking.  The author, Thomas Kida, explores in detail six of the major tricks our mind plays on us.

The narrative fallacy.  We're still primitive beasts more used to sitting around campfires than computers.  It's easier for us to understand the world through stories than through calculations.  Accordingly, we focus on "stories rather than statistics." 

What are the odds that your child will be molested by a stranger?  Less than 3-5%.  The odds are much higher that a relative will molest your child.  Yet stories involving kidnapped children predominate.  A story about a child being buried alive with her stuffed animal is compelling.  But it distracts us from the truth: If your child gets molested, it almost certainly won't be by a stranger.

Confirmation bias.  People hate being told they are wrong.  People love being told they are right.  Consequently, people only look for data proving themselves right.  Yet, in so doing, who knows what evidence we are missing proving ourselves wrong?

This can have devastating effects on public health.  It was recently revealed that the New England Journal of Medicine does not readily publish articles showing what treatments do not work for a given disease.  Yet how can we learn what works if we don't know what does not work?  As Sherlock Holmes taught us: "Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth."

Mistaking coincidence for causation.  This mistake we make is mind-blowing when applied to the markets.  You just invested some money in a mutual fund.  After all, the mutual fund has been up every year for the past five years.  The fund manager must know what he's doing, right?  Prepare to have your stomach turned into knots, because that's wrong.

What if, 5 years ago, there were 10,000 new mutual funds.  As a matter of chance, some funds would go up each year.  Some funds would go down.  Given enough mutual funds, it would have to be the case that some funds would be up at the end of five years. 

But this would all be because of chance!  Consider the implications!

Warren Buffett is considered a financial genius.  After all, he's made money for so many consecutive years.   But what is he just happens to have been the last man Chance left standing?

Memory sucks.  I've read so many books and articles about human memory, that I did not take away much new from this chapter.  But it was a horrifying reminder that much of what we remember experiencing is delusion.  We "remember" things that never happened and forget things that actually happened.  We are constantly reconstructing our memories, filling in gaps to create a more sensible narrative.  (Yep, the narrative fallacy creeps affects our memory's circuits, too.)

Do you really remember where you were when you found out that JFK was assassinated or when you found out about 9/11?  One-hundred percent of you will, with unshakable confidence, state that you remember.  And I should go to Hell for suggesting otherwise.  Over half of you will be wrong.

Think about that the next time an eyewitness takes the stand.  And count your blessings that, as of yet, you haven't been at the wrong place at the wrong time.

We are super simple Simons.  Why do stock markets rise and fall?  Why did your wife leave you?  We have one or two sentence explanations of very complex events.  In a sense, our need to oversimplify stems from the narrative fallacy and our inability to appreciate chance.   Give us a show story that makes the world seem logical, and we're sold.

Because of that, we prudently invest in mutual funds and worry about the child molester next door rather than the one in our own homes.

We are delusional.  Two men walk past you - one black, one white.  One of them quickly pulls a gun out.  Was it the white man or black man?  You guessed it.

Even when the white man is the one pulling out the gun, a majority of white viewers will report the black man as having pulled the gun.  That's because we don't objectively perceive what we see.  We perceive things through our own biases.  We literally see what we want to see

Couple our inability to accurately perceive, and our ability to remember what we actually didn't see, and, well, you can see why so many of us are concerned with wrongful convictions.  Life is scary.

Overall, the book is excellent.  It's a breezy read, even though it deals with a complex subject.  But it's not perfect. 

The author lists six thinking errors we make.  But the book has 12 chapters that aren't organized around the six errors.  Some of the chapters jump around. 

But the book still rocks.  Get your own copy here.

UPDATE: More thoughts here.