This is the first part of a series on the topic of mental mistakes, thinking errors that we make on a daily basis. Read the others here.
How frequently would you guess car accidents occur?
To make this kind of judgement, you’re not going to try to count the number of car accidents you’ve seen over a 24 hour period then use some sort of complicated mental algorithm to expand that number into a general frequency. That would be mentally exhausting.
Instead, you’re going to use a shortcut. You’re going to make an educated guess, and more than likely, you’re going to be very wrong.
We make hundreds of mistakes like this on a daily basis, mistakes than can be attributed to mental biases or cognitive errors. Understanding them further can provide some insight into various aspects of our lives such as:
- How the media shapes your perception of the world
- Why you can’t accurately estimate the frequency of seven-letter words that have “n” in the sixth position
To understand these items and more, we have to take an insider look at one of the most common cognitive errors we make on a daily basis – the Availability Heuristic.
Let’s get back to the car accident example mentioned at the beginning. What kinds of experiences could impact your ability to estimate the number of car accidents that occur on a daily basis?
You probably could guess this one – car accidents themselves.
This is a classic example of something referred to as the Availability Heuristic. In short, if something is easier for you to remember, you’ll mistakenly think it happens at a higher frequency. In our example above, if you’ve been in a car accident recently, you will judge them as happening more frequently than someone else that’s accident free.
Don’t believe me? Let’s take a look at a more surprising example.
Amos Tverksy and Daniel Kahneman ran a simple experiment in which participants were asked to estimate the frequency of seven-letter words that have “n” in the sixth position and compare that to seven-letter words ending in “ing”. As a group, they estimated the latter occurring more frequently than the former.
Take a moment to consider that proposition.
If you think carefully, you’ll realize it’s not possible. Every seven-letter word that ends in “ing” also has “n” in the sixth position. Our ability to recall the frequency of seven-letter words ending in “ing” far outweighs our ability to recall seven-letter words with “n” in the sixth position. Since one is easier to recall in our memory, we estimate it occurs more frequently in the wild.
This bias has several downsides as you might imagine. The main downside being that you overestimate the occurrence of some actions (like car accidents) and underestimate the occurrence of others (like diseases). This leads to public misunderstanding as Shane Parrish explains on Farnam Street:
A 1982 study (Slovic, Fischhoff, and Lichtenstein) found that people estimate that accidents cause as many deaths as do diseases. Accidents are easier to recall than diseases, many of which receive little or no publicity. In fact, diseases cause 16 times as many deaths as do accidents.
16 times as many deaths! That’s a pretty huge mental error.
The Availability Heuristic also helps to form our opinions of restaurants, hotels, and other businesses and explains why our thoughts are so heavily influenced by mass media. Kahneman explains in his book Thinking Fast and Slow:
People tend to assess the relative importance of issues by the ease with which they are retrieved from memory—and this is largely determined by the extent of coverage in the media.
If the media is constantly covering drug busts, shootings, murders, and the like, those instances appear more frequently in our memory. As a result, we tend to think they occur more often than they actually do.
This can work the opposite way as well with less frequent memories leading us to hypothesize something has a lower rate of occurrence overall.
Los Angeles professor Craig Fox illustrated how this can work during class evaluations. He divided the class into two groups. On the evaluation form, one group of students was asked to provide two critical pieces of feedback. The other group was asked to provide ten feedback items.
Who do you think gave Fox the higher rating as a professor?
The group that was asked for ten areas of improvement.
When they sat down to create their list of ten items, they were quickly stumped. As a result, they estimated that Fox had fewer flaws overall leading to higher ratings. Meanwhile, their counterparts quickly rattled off two areas of improvement and gave Fox a lower rating as a result. It’s the Availability Heuristic in reverse.
It’s hard to imagine that our thinking is shaped so easily by recency and frequency. As we’ll see, this is a result of how your brain catalogs and retrieves hundreds of thousands of bits of information on a daily basis.
How Your Brain Stores information
If you were to store tupperware in your house, you’re more than likely going to put it alongside other tupperware. That way, when you want a piece of tupperware, you know it’s all in one spot, regardless of whether it has a red top or yellow top or if it’s large or small.
You’re brain does the exact same thing. As we experience new information, we tie it together with existing bits already stored. For example, car accidents are cataloged alongside other car accidents, shark attacks alongside other shark attacks, and so on.
Two aspects of an event influence how these memories are stored.
Frequency of an event helps to strengthen a memory. Say you’re driving home from a new job. The first time this happens, you might need to use your phone for directions. The area is new, and you have to make it home on time for dinner. Six months later, you’re not going to have to use those directions anymore.
Memories are a series of connections between neurons in certain patterns. If you just experienced something once, the brain would form a weak connection. Eventually, that memory would fall from importance, and we would forget.
With frequency, that pattern is continuously reinforced. Think of it like walking a path through a field. Walk it once, and your footsteps are easily overgrown. Walk it 1,000 times, and you’re going to leave a mark.
More frequent events create stronger connections in the brain.
Gruesome shark attacks are easier to remember than someone stubbing their toe on the beach.
Vivid details stick out and play a roll in memory storage and recall. You’re going to remember the time you totaled your car more vividly than the time someone bumped into your car in the grocery store parking lot. You can probably play the former back in your mind step by step. You can remember where you were at, which direction you were turning, what direction the oncoming car was coming from, and maybe even what song was playing on your iPod.
Details don’t just influence memories of our own experiences. It helps to reinforce every memory we store. In his book Moonwalking with Einstein, author Joshua Foer is trying to compete in the US Memory Championships. His trainer Ed Cooke emphasizes the importance of details when forming memories:
Things that grab our attention are more memorable, and attention is not something you can simply will. It has to be pulled in by the details. By laying down elaborate, engaging, vivid images in your mind, it more or less guarantees that your brain is going to end up storing a robust, dependable memory.1
Cataloging our brain according to frequency and vividness isn’t a terrible idea. Both help us to more easily recall events when we’re asked about them. The problem arises when we don’t realize the influence these factors have on our thinking.
Avoiding the Bias
So, how do you avoid the availability bias and make better decisions? Let’s look at two main strategies that are dependent upon one another.
Look at the facts.
There’s perhaps no better way to correct errors in judgement other than looking at the cold, hard data. Let’s take baseball players for example.
On the surface, baseball is a game filled with stats. There’s RBIs, batting averages, on-base percentages, strikeouts…you name it. Yet, despite the mass of data, many baseball managers still rely on the “intangibles” like “seeing the ball well” or “clutch ability”. This counterintuitive thinking was profiled by Michael Lewis in his book Moneyball. The book attracted the attention of economist Richard Thaler and law professor Cass Sunstein who elaborated on the fact that baseball professionals make many mistakes when evaluating players by allowing their decision to be clouded by preconceptions and prejudices. Thaler and Sunstein continue:
Now, it is not exactly dumb to use the availability heuristic. Sometimes it is the best guide that we possess. Yet reliable statistical evidence will outperform the availability heuristic every time.
Lewis found that the best information sometimes comes from baseball enthusiasts, software engineers, and the like that just look at the data without any preconceived notions or ideas.
Takeaway: Try to put your feelings aside and look straight at the facts.
Do your research.
This is obviously a prerequisite for the step above. Facts don’t magically appear out of thin air. Someone has to take upon the tedious task of collecting the data.
One of the easier applications for researching is the financial market.
Novice investors are heavily influenced by the current status of the market or the few, most recent market movements. When the market has had several down days in a row, novice buyers assume the market is on a slide. More down days must be ahead. Obviously, the flip-side is true as well with a continuous, upward trend encouraging novices to scoop up more with seemingly guaranteed returns.
As any advisor will tell you, future trends are impossible to predict. A rising market will eventually drop just as a dropping market will hopefully right itself. While a handful of investors might find that their gut feeling leads to success, the rest of us will do better by checking out performances from one year or even ten years prior.
Takeaway: Particularly for big decisions, avoid flying by the seat of your pants. Take control of the situation by doing your own research.
Biases are unavoidable, but with the appropriate steps, they can be minimized, particularly when making large decisions.
1. This helps to explain why I still remember Foer’s grocery list from the book that included items like “Claudia Schiffer swimming in a tub of cottage cheese.” ↩