The tradeoffs of diversity

Robert Putnam, a pretty well known Harvard Professor and a someone with a tradition of having liberal views, was doing some research on social capital and found some results that disturbed him. He was tempted not to publish them. The ethics and incentives of this decision are a great topic that I will post on later.

But for now, let me focus on the research itself. What he found is not surprising really, but in the context of his research, it has some possibly disturbing implications for a liberal viewpoint.

It turns out that homogeneous populations (people of the same age, gender, race, ethnicity, religion, etc) tend to interact more and better than heterogeneous populations. Men seem to know how to talk to other men than they do to women (surprise surprise!!). But also old people with old people and Catholics with Catholics. This leads to more trust among neighbors in the more homogeneous community.

And the effects on the neighborhood encompass relations among everyone. It seems that just being in a heterogeneous neighborhood reduces trust overall so we even trust people very similar to us less when we live among a diverse group. This difference in trust has broader implications. Trust leads to greater social capital, which increases the overall success and welfare of the community. Less crime, higher income growth, and overall community success. And when you look in detail at the research that shows that diverse teams make better decisions, it turns out that demographics is one of least effective kinds of diversity. Differences in experience, personality, approaches, and thinking styles are all more important. So taken together, demographically homogeneous groups will be more successful in the long run.

Where Dr. Putnam got worried is that this suggests we should stop integrating neighborhoods, schools, companies, and the country at large. Even immigration policy should be affected in countries that are still largely homogenous, such as Scandinavia. This was counter to everything he believed in from a more ethical point of view. Again, the ethics is a topic for a later post.

There is also research that shows smarter people build more social capital, regardless of demographics. So perhaps the solution is to make sure we surround ourselves with smart people. Then we can be integrated. Of course, we quickly bang up against the limitation that not everyone is endowed with the gift of superior smarts. We could try to use immigration policy to let in lots of demographically diverse smart people (which is a good policy for all sorts of reasons). But we would also have to limit immigration for the other half of the curve – another illiberal policy.

So what is the answer to this conundrum? For ethnic and racial differences, maybe all we really need to do is wait a few generations. With the rapid increase in inter-racial mixing, pretty soon there won’t be such big differences among us. I see this in Miami to an extent I never would have dreamed years ago. Almost every couple in the city is mixed in some way. Then we just need to find better ways to communicate between genders and age groups. This is easier than with race and ethnicity because of course we grow up in families that have all different ages and genders so we get more used to it at ages when we are still malleable.

Until then . . . . Let’s just work hard on open communication and trust, even when your gut is not so sure.

Doing the right thing?

I have been reading a lot of research lately that are in different domains but have one common finding that seems to appear over and over again. When we do something that makes us feel virtuous, we feel entitled to go out and do something less virtuous afterwards. Sometimes this is harmless but other times it can be really serious.

A harmless example: When you eat something healthy, you are more likely to eat something unhealthy afterwards. So for example, research shows that when you select a healthy main course from a menu, you are more likely to order unhealthy sides, drinks and desserts with it. You are also more likely to eat unhealthy food in later meals. The problem here is that in the end, you wind up eating more calories at the end of the day then if you selected something neutral in the first place.

Another harmless example: When grocery shopping, when you put a healthy food in your cart, you are more likely to go to the less healthy food aisles and put unhealthy food into your cart. So for every apple you buy, you also get the Oreos.

But then there are the serious examples. Another study gave people ethics scenarios and had multiple choice answers for what the person would do. If they answered ethically for question A, they were more likely to answer unethically for question B. They mixed up the order of the questions for each person to cancel out the differences in the scenarios. So it seems that acting ethically makes you feel like an ethical person – like ethicality is your true nature. So then, you can act unethically and it doesn’t count because it’s not your nature it’s just a choice you made.

The same thing happened when people gave to charity. They were more likely to do unethical things afterwards. Apparently, giving to charity makes you feel like you are a “good” person. So now, you can do whatever you want. I suspect Bernie Madoff had a lot of this in him.

Some of these happen in the reverse also. When people started out behaving unethically, they were more likely to do an ethical thing later. Apparently, they felt bad about themselves and had to make up for it. They tried to see the original unethical act as the “choice” and the later ethical act as their “true nature.”

I am sure that there are some people who don't take advantage of this balancing game and are virtuous all the time. But what bothers me is that this is largely unconscious (the subjects of the studies didn't realize they were doing this). And it is so easy too. All you need to do is one virtuous thing up front, and then you can keep doing less virtuous things forever, always thinking about the virtuous thing as your "true nature" and rationalizing the rest. The human brain is set up to facilitate this kind of behavior, so it is much more common than you might think.

Most of the people reading this do it without even realizing. Even you!

Calorie listings on menus work

I just read a some follow-up research to the study I blogged about earlier. These researchers looked at what happens when you put nutritional information on the menu. They found it to be effective in several ways:

• When the calories listed were high, it increased the customer’s expectations that they would gain weight and/or get weight-related disease. This may seem obvious, but they compared it to a menu condition with a label of “low calorie” and a menu condition with the ingredients listed. These could have had the same effect, but didn’t.
• When customers discovered that their food had more calories than they expected, they ate less over the course of the day to compensate. So the calorie listings had real effects on behavior, not just perceptions or expectations. This is important because we often see people say they will do the healthy thing “later” but then don’t. With menus that list calories, there is a real behavior change.
• Customers that had intentions to eat right rated the menu items lower when they had higher calories. But other customers didn’t change their ratings at all. But they did eat less later.

So what does this tell us? Basically, it means that menus really should have at least the total calories listed. It may be too much to have other things (fat, saturated fat, sodium, sugar, etc) even though these would help people with specific health issues like diabetes. But because research has also found that people have high perceived correlations among food attributes (when we think something has lots of calories, we also think it has lots of the other bad stuff and vice versa), people with these conditions would stay away from menu items even if they are just listed as high calorie. The sacrifice here is that some foods are high calorie but are really healthy otherwise (e.g. almonds). But on most menus I have seem, usually the perceived correlations are right on target. The hamburger where they add butter to the bun, oil to the meat, and then stack on a few extra slices of cheese and “special sauce” is more likely.

Eating in restaurants

I read some very fascinating research from INSEAD and Cornell Universities. To briefly highlight some of their findings:

• we significantly underestimate the number of calories in food we order in restaurants, even if we see the list of ingredients and even after we eat it. In one example, a 1000-calorie Subway sandwich was perceived as having only 585 calories.
• this underestimation is even larger for restaurants that have a brand image that promotes healthy food. The 1000-calorie McDonalds burger was perceived as having 750 calories – closer to the truth (although still pretty far off).
• when we order main dishes that we think are healthy, we are more likely to order less healthy sides, drinks, and desserts. Subway customers ordered sides with twice the calories as the McDonalds customers.
• these errors compound with each other: “Good Karma Healthy Foods” customers estimated that their “famous classic Italian sandwich” had 409 calories and were then more likely to order chips with it than customers ordering the same sandwich at “Jim’s Hearty Sandwiches” which they thought had 622 calories. So they thought they were eating less at Good Karma, but were actually eating more.

So when you put these four results together, you can conclude that people are even more likely to gain weight from eating at “healthy” restaurants than at standard restaurants. It’s that large soda and small-looking cookie that get you. Ouch!! They found the same result with customers who said they were trying to eat healthfully. Healthy eaters also underestimated calories and ate more sides and drinks in general, and even worse at “healthy” restaurants.

This is even more evidence that we need to have nutritional information on menus. Food descriptions are just not enough to allow us to make informed decisions. It is too easy for restaurants to generate a “healthy” brand image with images of salads and lean meats and then make it taste incredible with a slathering of butter. We will never know what we are eating and obesity will just get worse.

And for personal advice, next time you are ordering in a restaurant – just assume the meal has several hundred calories more than you think. And just because you are at a restaurant that bills itself as “healthy” doesn’t mean that everything (or even anything) on the menu is actually healthy.

How rational is irrational?

Behavioral economics bills itself as an alternative to the standard economics approach which assumes people make decisions rationally. Behavioral econ doesn’t say we are totally irrational, it just shows that the devil is in the details.

Let me illustrate with one of my favorite topics – the obesity epidemic. The rational economic model describes the decision thusly (I love that word :-D): When Joe is deciding whether to eat the jelly donut or to go for a jog, he evaluates the various tradeoffs (gain the pleasure of eating the donut along with the cost of extra weight or gain the advantage of losing weight along with the cost of jogging) and decides accordingly. Free will and the free market allow him to make the decision that best meets his priorities. All is good.

The behavioral economic model describes it somewhat differently. Joe figures he can get the best of both worlds by eating the donut now (gain the pleasure of the donut) and starting his diet tomorrow (gain the advantage of losing weight). But then tomorrow he is faced with the same decision, and can put off the diet for “just one more day.”

The problem is twofold. What seems like an obvious hypocrisy is made possible by the fact that there are two different parts of the brain that make these decisions without coordinating with each other. One part of the brain makes decisions about what to do right now (a more instinctive, emotional center that is dominated by sensory experience). This brain wants the donut.

A different part of the brain decides what to do in the future (a more analytical center that can delay gratification for higher level objectives like health). This brain agrees to jog.

The way the two brains resolve their disagreement is to eat the donut now and agree to jog tomorrow. It’s like two different people.

The second part of the problem is that the decision making process is recursive. The next day when we are supposed to go for the jog that our logical brain promised, our emotional brain takes over (because it is again a "now" decision) and says “hey, I never promised nothin’.” And our logical brain is limited to complaining about the irresponsible emotional brain and again promising what to jog “next time.”

Behavioral economics recognizes that this can go on forever, even with the best of intentions. The solution is to add some emotional component to the process that favors the long term benefits. So for example with 401(k)s, we can counteract the emotional brain’s desire to enjoy our money NOW by making it a real pain to opt-out of contributing to the 401(k). Stickk.com makes us give money to charity (which is emotionally painful, especially when you give it to an organization you DISAGREE with) every time we eat a donut. These are artificial situations, but they can be effective by recruiting the emotional brain to help us do what our logical brain knows is best.

Youth Sports is an Arms Race

This is a great article for anyone who has kids that play youth sports or who is interested in behavioral science. I love analogies that tie together seemingly disparate situations (although the analogy on NPR earlier this week comparing rappers to geopolitics was a bit of a stretch).

But in addition to the basic premise, what do you think about the statement:

“It's crucial to recognize the difference between intensive athletic practices and something like studying. Competitive athletic success is a zero sum game. There will be the same number of major league players making the same salaries if everyone in the world became twice as good at playing baseball.

Studying, on the other hand, makes people smarter, more educated and more productive. And that makes your life better, regardless of what everyone else is doing. Economic productivity is not a zero sum game. If we all became twice as smart, we would all be richer, healthier, safer and so on.”

Is it true? I think there also are positive externalities of athletic training. Not just better fitness, but the ability to practice intensely also transfers (read Talent is Overrated for more on this). Or the ability to be a team player (although does this get better or worse if you are intensely competitive in sports?).

More questions than answers. My favorite kind of reading!!

Can we trust customer service?

I recently did some business with a British publisher who offered me a choice of £50 ($80) or a book up to £150 in value as compensation. I don’t often buy books that cost more than $80, so I figured I should take the cash. But just in case, I contacted my bank (Wachovia) to see what the service fee would be to deposit a check in pounds. They told me that as long as the currency of the bank matched its nationality (both are British), then there is no extra fee. I knew they would hit me on the conversion rate, but cash still gave me the best deal. So I took the cash.

This morning, I went to the bank to deposit the check (first time I used a human teller in years!!). The teller told me that because it was a foreign check, it had to go to collections. This has a $75 fee and a week or two delay. And given the conversion rate hit of 7 cents/pound, I would only get $3. Needless to say, I was a bit angry. For $3, I would taken the book. Or I would not have done the work in the first place.

Given enough complaining, any major company will waive a fee like this, so I got to keep the $78. But I have now lost faith that contacting customer service to check on fees in advance works. If people want to sign up for a credit card, get a loan, or whatever, how can you make good decisions if you can’t trust the information they give you? Do I need to get official letters on company letterhead signed by the “VP of whatever” every time I want to engage in some kind of transaction? Just the frictional costs of this requirement could add up to a real pain.

Has anyone else experienced something like this, or is it rare?

Can we trust reviews and ratings??

I am reading a book on applying brain science to management. I am only on chapter 3, but so far the book really stinks. I will write a review to warn you about it somewhere else. The topic of my post today is on social networking and reputation management systems (ratings and reviews).

The book got some fantastic reviews from brain scientists who seem to have good credentials. Maybe they liked the book, but so far it’s such a trivialization and oversimplification of brain science I just can’t imagine they did. Could they have done it for the social networking benefits – getting their reviews out there and read? Is this so valuable that it would be worth exaggerating the value of the content you are reviewing – especially since most readers probably don’t know enough about brain science to realize how bad the book really is? Here’s a paradox – if writing reviews is valuable in and of itself, we may not be able to trust them because people will be writing them just to get the reviews listed. And when reading reviews isn’t valuable anymore, writing them will not be either. So the more we value reviews now, the less we will be able to use them in the future.

Here is another reputation management question. The book references some of the world’s leading brain science researchers. But these are not the people whose reviews are shown. If they were, I think I would be second guessing my own opinion instead of the reviewer’s honesty. How do we judge the quality of a reviewer? Are rate the rater systems (e.g. 90% of customers rate this reviewer’s reviews as 4 or 5 stars) helpful? Or do you want to see a bio (maybe not for reviewing music, but for technology?)?

I am starting a research project to look into these questions, so any thoughts would be greatly appreciated.

Why we may never solve the obesity crisis

Ezra Klein shares a story that is all too true for many of us. When we are eating out, we have no clue what the fat or calorie content is of the dishes on the menu. Not only that, the dishes that sound like good choices may turn out to be the worst ones. He writes (about the Cheesecake Factory menu):

On first glance, I would have figure the salmon for the lightest entree, followed by the chicken piccata, the carbonara, and the crispy beef. Not so. The salmon weighs in at 1,673 calories -- which is to say, a bit more than 75 percent of the food an adult male should eat in a day. The piccata is a comparably slim 1,385 calories. The crispy beef is 1,528 calories. And the carbonara? 2,191. The answer might be that someone looking for a healthful meal shouldn't go to the Cheesecake Factory. But insofar as you're already there, or your family wants to go there, making a good decision isn't a particularly straightforward proposition.

The problem here is threefold. Cheesecake creates their dishes with the intention of maximizing taste. And fat, sugar, and calories taste GOOD!! This is America and we have the right to eat whatever we want, even if it blows up our waistline (and our healthcare bills). So I would not want any regulations that prevent Cheesecake from serving up these dishes. But the other two problems are more worthy of attention.

First, if anyone wants to make a more healthful choice, they should have the information to do so. Again, this is America and we have that right. So either the descriptions need to give eaters a better idea of what’s in the dish or we need to require nutritional information on the menu (like several cities are already starting to do). You are free to ignore it if you want to, but it should be there for people who want it, or especially for people who need it for health reasons (diabetics, medically obese, etc).

Second, the costs of treating obesity-related disease is often covered by other people, either through Medicare/Medicaid or through shared insurance risk pools. If we have a new “public option” in the Obama plan, that would increase shared costs even further. I am OK if you want to overeat and get obese, but don’t make ME pay for the resulting medical care. Some company health plans are starting to offer discounts for people who are fit. But we need a way to make this more systematic to make it societally acceptable.

In essence, it comes down to what it always comes down to. We should have the freedom to make bad choices if we want to (smoking, eating, etc). But this freedom is taken away from us if we don’t have the information we need to evaluate the costs and benefits of our choices. We deserve both kinds of freedom.

And as soon as there are externalities (shared health costs, second hand smoke) on other people, we are infringing on THEIR rights. So we need mechanisms to either eliminate the externality or a payment system that compensates for it.

In-your-face TV news

I am very interested in the concept of decision making bias and polarization. The challenge is that we focus on ideas that we agree with much more than those we disagree with. The result is that we learn more and become more confident in our previous opinions whether they are right or wrong. This is of course an overgeneralization, but it happens much more than we would like to admit. I just read a study that looked at the effects of in-your-face TV news. You know the ones – one person from each side of a debate argue back and forth, uncivilly, and with lots of close-up camera shots to magnify the heat of the argument.

This is a long excerpt, but I think worth reading (the article is by Diana Mutz in the 11/2007 issue of American Political Science Review):

Incivility alone does not dampen enthusiasm for political advocates nor the arguments they make. However, when uncivil discourse and close-up camera perspectives combine to produce the unique “in-your-face” perspective, then the high levels of arousal and attention come at the cost of lowering regard for the other side. The “in-your-face” intimacy of uncivil political discourse on television discourages the kind of mutual respect that might sustain perceptions of a legitimate opposition. Here the pattern of findings is quite consistent; close-up perspectives on uncivil discourse routinely damage perceptions of the candidates and issue arguments that subjects are already prone to dislike; that is, attitudes toward the least-liked candidate, and the perceived legitimacy of rationales for opposing issue positions.

When we lose respect for the experts/politicians on the other side of the argument, we are less likely to really listen to what they say. It becomes that much harder to change our minds in the face of counter evidence. It’s no wonder that our politicians can never agree on anything. Are they even listening to each other any more?

Interacting with brands on social networks

An article in yesterday’s Advertising Age discussed a survey of people who had used social networking sites at least once a month and developed basic demographic and psychographic profiles. The article was not very insightful (Myspace users are younger, LinkedIn users are richer), but one subject got me thinking.

Half of us have “friended” or become a fan of a brand. Just under 20% react positively when they see brands on our social networks and about the same react negatively. 20% of us want more communication from brands and 35% want less.

Why did this part get me thinking? Because as usual, the real answer is that “it depends.” General questions like this are pretty useless. If Hershey’s wants to contact me with a free sample, then I will want more communication and react positively. If they put up some inane ad, then I want less and react negatively. Since this is an Advertising Age article, what they should talk about is how the brands can craft their communications to fit into the positive categories and avoid the negative ones. Like this newly viral video that is really an Evian ad.

Compared to your neighbors

This is really important so please think hard. What would you do if you got an insert in your electricity bill praising you for using 10% less electricity than your neighbors? What if it criticized you for using 10% more? In Sacramento, it decreased total electricity use by 2%. This sounds small (so it means it doesn’t really impact peoples’ lifestyle), but in terms of cost for the utility (not having to build more power plants) and reducing global climate change, the impact can be huge.

Soon, people in California, Washington, Minnesota, Illinois, and New York will be getting these notices. It’s Behavioral Economics in action. Then the next step is to apply this to your water bill. And then . . . . well, I don’t know what comes after that. But this is the basic idea of Sunstein and Thaler’s concept of paternalistic libertarianism. Don’t force people to do things, just give them information that helps them make the right decision and then create a process that makes the right decision easy (like making a max donation to your 401(k) the default option and then allowing people who want to to reduce it, instead of the opposite which we have now).

How much would you improve about your life if it were easier? And if your neighbors were informed? And if you got community recognition from them for doing the right thing? I wonder what else we can change about our society . . . . .

Design solves problems

In many cases, design is all about making a product look good. It also has to be functional. But sometimes, design can solve systemic problems that go beyond the product itself. If designers understand the context in which their design will be used, it is amazing what design can solve.

Here is an example.

In Nepal, airport personnel have a bad habit of accepting bribes. Nepal decided it would easier to use a design solution than a regulatory or police solution. They simply redesigned the airport uniforms so they don’t have pockets. If they don't have a place to put the money, they can't accept it. A simple solution that shows the elegance of design.

its easy to fool ourselves, even when our life depends on it.

Great example of confirmation bias yesterday on NPR. A small town in Texas has been receiving tons of money in royalties from a natural gas company that is drilling the Barnett shale. They are getting up to tens of thousands of dollars per person per MONTH!!

In June, they experienced the first earthquake EVER in the recorded history of this region. Then another. Then another. Six so far in just one month. If it weren’t for the royalty checks, I am sure that the townspeople would have jumped to the conclusion that the drilling is causing them. But because the drilling is their golden egg, they have jumped to the conclusion that it can’t be the drilling. Or that the earthquakes are too small to matter.

Either way, the townspeople are making decisions based on no real information. The interesting thing is how easy an unrelated fact (the payments) is impacted their cognitive processes. I don’t think that they are consciously deluding themselves. I think this is a natural manifestation of what cognitive science has known about for years. Cognition is not a logical process. We often start out with the answer we want and then collect and interpret information to fit that answer. And this is unconscious, so it’s insidiously hard to overcome.

Hurray for Simplicity !!

Hurray for simplicity.

One of my favorite authors, Nassim Taleb, just posted an excerpt from a book that really caught my attention. It’s a small excerpt that tells a story about a statistician who tried to prove that statistical short cuts were costing businesses a bundle. He wanted to prove that companies should use state of the art extensive econometric models. Horror of horrors, he found out that the simple methods actually worked better.

Hurray for simplicity !!

DC Metro crash and the financial crisis

Yesterday’s Washington Post had a great article on the DC metro accident. It highlights a very important limitation of automation that we have studied in the Human Factors field for decades, but few people probably recognize. And they quote three human factors specialists too, so it’s a great plug for us :-D.

The point is that people have a certain unconscious cost/benefit analysis that underlies what they pay attention to. So when you make automation better, people can rely on it more and pay attention to it less. But then when the automation finally does fail, it fails BIG because no one was watching. It’s actually the same thing that happened with the financial industry. We relied on the banks’ ability to judge risk, so we deregulated them at the government level and trusted them more at the consumer level. No one was watching, so when they finally did fail, they failed BIG.

So what changes is not the cost/benefit ratio, but rather the likelihoods. Instead of small costs at a high frequency, we have large costs at a low frequency. Is this better? I don’t know but it is more palatable to human nature. Just read Nassim Taleb’s great book to see why.

The conclusion that everyone should realize is that this is not something that we can fix with short term design changes (DC Metro) or regulations (banking industry). Because if we make the systems more reliable, we will increase the time between failures, but also increase the size of the failures when they do happen. I’m not sure this is better. A more effective solution is a fundamental change in the system, but of course this is much harder.

And the other thing we know about human nature is that we rarely take the harder path.

Milk is the new gateway drug

Tennessee Representative Steve Cohen made a comment (sarcastic I think) that illustrates one of the most common decision making errors - correlation is not causation. People call marijuana a gateway drug because people who use cocaine or other hard drugs often did marijuana first. But because they used it first (correlation), doesn't mean the use of marijuana CAUSED the hard drug use. If that were the case, then milk (up to age 8?) would be a gateway drug to juice (ages 5-12?), which would lead to soda (10-15), then to marijuana or maybe beer (I'm not sure which is easier to get in high school now) and then on to hard drugs. Maybe I should start this chain at infant formula?

Because legalization or at least decriminalization of marijuana has so many good features (for example), it would be nice to know for sure if it is or if it isn't. But with so many studies in both directions, it is impossible for anyone to know for sure. If someone tells you they know, they are succumbing to some other decision making fallacy (Read this to know more about DM fallacies. Great book and a quick read. But it will scare you about your own ability.).

I would like to see the same approach to this that we are taking in several other areas. Let's encourage a few states to decriminalize, with perhaps a 3-5 year sunset provision. Then we can see what happens. It won't be a perfectly controlled scientific study, because people will cross state lines to get it and other confounding factors. But I suspect we would still learn a lot. And on the off chance that it really does significantly reduce organized crime, overcrowded prisons, and other possible benefits - WOW.

Kelloggs customer service???

I recently sent an email to Kelloggs customer service notifying them that a box of Corn Flakes I recently bought had zero taste and that I wanted a refund. Their response could have taken two approaches:

What they did:

Their response basically informed me that they disagree with my assessment because their QA department has determined that Kelloggs quality is consistently the best among corn flakes. This does two things. It discourages me from trying Kelloggs again because their claim is that my box tasted the way Kelloggs ALWAYS does. And they also insulted my sense of taste.

What they COULD have done:

Instead, they could have said that their QA department has determined that Kelloggs is meets is quality benchmark 99.9% of the time and when it does, it is the best tasting. Then they could have thanked me for identifying the bad batch and that they would look into it. This would have done two different things. It would have encouraged me to try Kelloggs again because what are the chances that I would get a bad batch twice. It would also have complimented me on my discerning taste to notice the difference and my initiative to notify them.

I'm no expert in marketing, but this seems like a no brainer. Unless they don't WANT me as a customer. You think????

Avoiding the long line at the bar

There is a bar in Amsterdam that has solved the problem of long lines at the bar. They have incorporated minibars all along a huge wall. Each minibar has a selection of drinks so you can pick out whatever you like. You have to leave your drivers license with the concierge in exchange for they key so that they can charge you at the end. They also have snack minibars. I can't say if the prices are competitive because I don't know what regular bars charge in Amsterdam, but beer is EU 3.50, wine is EU 5.50, and liquors range from EU 4.20 to 6.50.

Interesting idea in customer service innovation. It follows the growing do it yourself trend (e.g. online airport check-in, pay at the pump gas). People like control and are willing to serve themselves if it saves time or money.

Invisible Hand v Irrational Hand

This is better than Alien v Predator. In one corner we have Adam Smith's invisible hand. He says that when each of us pursue our self-interest, the aggregate will promote the general welfare. Although we are all selfish, by pulling in opposite directions we cancel each other out.

In the other corner we have Dan Ariely's (and many others) behavioral economics research that shows that we are all quite irrational in our decision making. This creates cascades that pull the aggregate way out of balance. The recent stock market bubbles and real estate bubble are pretty good evidence too.

Adam Smith's invisible hand is also challenged by the problem of asymmetric information. When some people have better information than others, they can exploit their advantage in the market.

If the Irrational Hand is stronger than the Invisible Hand, we need some kind of oversight (not necessarily government) to help out. The problem we have had over the years is that our regulations have been equally biased and irrational, so they don't help as much as they could and certainly don't SOLVE the problem. Maybe we need to elect fewer lawyers and former lobbyists and more behavioral economists.

Religion makes you who you are, but maybe not how you think.

There is some fascinating neurological research being done by Andrew Newberg on the effects of religious thought on the wiring of the brain. What he has found is a great argument for the power of top down processing.

If you believe in a loving G-d, these thoughts build up the connections in your frontal lobes and anterior cingulate. This is where reason and empathy reside. So this belief can make you more rational and more empathic. But a belief in a vengeful G-d builds up connections in your limbic system where emotions like aggression and fear reside. So this belief can make you more aggressive and afraid. By building up connections in the brain, these effects can create positive reinforcement loops. Belief in a benevolent G-d makes you into the kind of person more likely to see good in things and people, strengthening these brain areas still further in a virtuous cycle. Belief in a vengeful G-d has the opposite effect in a vicious cycle.

These findings can easily be extrapolated beyond religion. People who have positive or negative beliefs about the external world in general probably experience similar neurological effects. In essence, it illustrates the power of positive or negative thinking in general. This is not some new age psychobabble. Our outlook on life can actually create the life that we want to some extent by wiring our brains to see it that way and guide our experiences to make it so.

Understanding Laziness

One of the benefits of studying human performance is that we develop insights into our everyday behavior too. This is a great example.

Laziness is more complicated than you may think. Instinctively, you may assume that laziness means doing a task in the way that takes the least amount of time. Or the least amount of physical effort. But its often not the case. A kind of effort that often trumps time and physical effort is mental effort. In other words, people often take the long way, which takes more time and more effort, to avoid thinking too hard. We get into ruts that we know are not efficient, but its better than thinking to find a quicker alternative.

Driving down a crowded highway, you could avoid traffic by finding a detour. But we rarely do this. One of the reasons GPS devices fail is that they don't convince you to follow alternate routes.

Software is frequently guilty of this. Most of us don't use 90% of the functionality of our office productivity software (word processing, spreadsheets) because we are too cognitively lazy to figure it out, even if it could save us a lot of time to use advanced functions and feature.

This morning, I had a choice of walking across my office to get a CD backup of a paper or going to the company network backup. I knew that the network was running slow, so it would take several minutes (compared to just a few seconds to walk across the room). But I couldn't build up the motivation to get up off my chair.

Of course, a few minutes later I needed some coffee. If I could have downloaded some, I would have. But unfortunately, I had to walk 20 feet. And then back again!!!

Dumb car design blunders

This has me really wondering. Its a short article outlining nine blunders that the major car brands made in designing their cockpits. Some of them are so obvious that I can't imagine a halfway decent human factors analysis could have uncovered them and saved the companies millions in redesigns, lost sales, and possible lawsuits when they cause someone to crash. They range from simple ergonomic issues like a handbrake that bruises anyone taller than 5'8" to a touch screen on the dashboard that requires taking your eyes off the road for several consecutive seconds to use.

Duh.

User Requirements through Edge Cases

One of the hardest stages of the design process is to understand user requirements. Part of the difficulty is that it starts out easy. The requirements for someone to use a cell phone are making a call, checking voice mail, caller ID, call waiting, call forwarding, and a long list of functions that every cell phone supports. The challenge is to implement these features in a way that is not just easy for users but also satisfies the “edge cases.” Edge cases are the less common scenarios that really separate good designs from average ones. They are worth pursuing because they differentiate your product from the competition and give customers a reason to choose your product.

Take for example a simple function on a cell phone – the clock. I am sure every cell phone has one. But there are differences that make some better than others, especially for the edge cases. In a previous post, I described my recent switch from a Motorola cell phone to a Sony Ericsson one. They implement the clock function very differently. The Motorola always had the clock visible as long as the phone was on, even in standby mode. I stopped wearing a watch because I always had this with me. I even used when teaching classes when there wasn’t a wall clock in the room. I just put the phone (on silent of course) on the table and all I had to do was walk by and I could see the clock.

But on my Sony, you have to push a button or open the flip to get the clock to appear. This is distracting to my students because they think I am checking my phone. The same problem happens in business meetings. I don’t know how many people have needs like this, but it’s got to be substantial. I don’t even know if I would call this an edge case, just a regular use case. I think Sony made this decision to maximize battery life. But at least make it an option. I could keep the clock visible during classes and meetings and then back to the original mode at other times.

They got the basic function right – the phone has a clock. But they didn’t look into the use cases that would make the clock more useful.

Decision Making Bias

You know by now that decision making biases are one of the centerpieces of my academic research and my consulting. So it was great to read about a series of studies that changed my mind about something I thought I knew pretty darn well. It was also good to see that I still have an open mind.

Confirmation bias happens when we have an opinion about something as big as whether the death penalty works or as small as which team to pick in tonight's basketball game. When there is mixed evidence, there is a slew of research that shows the evidence that supports our first impression has a much bigger impact on our final decision then the evidence that contradicts it.

But what I learned from these studies is about how this happens. I always thought it was because we ignored the contradictory evidence and focused on the confirming evidence. But it turns out to be just the opposite.

In a study of football betting, they found that when people win a bet they don't think about it much at all. They just chalk it up to being smart about football. The subjects thought things like "Of course they won. I knew the quarterback would pull them through." And then they move on.

But when they lose, they think about it in much more detail to explain the error. They think things like "Well, they only lost because of that bad call in the second quarter. And because the receiver dropped that easy pass. Otherwise they would have won and I would have been right." So instead of counting it as a bad bet, they count it as a bet they "should have won." There are two possible outcomes of a bet. Either you are right, or you were right but had bad luck. Either way, the outcome supports whatever process you used to pick the winner.

The same thing happened in a study of people's views on the death penalty. They had subjects read two articles about the death penalty. One with evidence that supports it and one with evidence against. Both articles had some flaws, but an equal number in each one. What happened was that when people read the article they agreed with, they just skimmed it and added a mental check mark in their opinion that they were right. They didn't notice the flaws. But when they read the opposing article they scrutinized it very carefully to find flaws and of course found them. So they discounted that article. In the end, supporters and opposers of the death penalty ended up with stronger beliefs of their prior opinion after reading the same two studies.

So the basis of confirmation bias is not necessarily that we ignore contradictory evidence. Instead, we work very hard to prove it wrong. If you want to be a convincing person, the best thing to do is keep details to yourself and don't reveal any ammunition to discredit you. The adage that "It's better to be quiet and be thought a fool then to open your mouth and remove all doubt" seems to be supported by the evidence.

the yogi Lord Shiva knew his human factors

A saw a quote attributed to the great yogi Lord Shiva by Deepak Chopra: “I use memories, but I do not allow memories to use me.”

This is a great example of good human factors. We know that there are many decision making biases that are caused by our memories "using us." Two of these are salience bias and recency bias. When something is easily called to mind we greatly overestimate its prevalence. Things are easily called to mind when they are sensorily salient (strong sensory experience), semantically salient (had a large impact on us) or when they are recent. But our brains incorrectly assume that if it is easily brought to mind, it must be a frequent occurrence. There are many examples of these effects steering us wrong.

Another memory-related bias is the representativeness bias. When something looks like a good example of something, we assume it must be a likely case. I am reading the book "How we know what isn't so" that proves hot and cold shooting streaks in basketball are really just a figment of our imagination. The author cites a significant body of research in his proof. But when we see a player hit 3 or 4 in a row, we just "know" he is hot because this "looks" like a streak.

Deepak Chopra's solution is pretty good too. Its kind of long, but in essence he says "Be a witness to your thoughts, your moods, your reactions, your behaviors. They represent your
memories of the past, and by witnessing them in the present, you liberate yourself of the past. By observing your addictive behaviors, you observe your conditioning. And when you observe your conditioning, you are free of it, because you are not your conditioning; you are the observer of your conditioning."

From a human factors perspective the idea is to consider the memories that are telling you something is true or false, and evaluate whether they are really frequent or proof or if they are just salient and easily recalled. If we do this consciously, we can avoid many common errors.

But I am still disappointed that basketball streaks aren't real. Maybe I will choose to keep believing that one anyway. Who does it hurt?

In Honor of MLK

In honor of MLK Day, I want to comment on his Letter from Birmingham jail. In reading his intentions, I realized that he could have used some lessons in human factors that may have improved his chances of influencing the incoming Birmingham administration.

We have learned a lot about human cognition since the 1960s that would have served MLK better in his approach. When people make decisions, big or small, their first impression becomes anchored and is tough to overturn even in the face of strong evidence. And if that impression is stated publicly the effect is even stronger. If the decision maker acts on the decision, it is stronger still.

So MLK should have thought of a way to get the incoming Birmingham administration to do something publicly, no matter how small, in support of his movement. It didn't even have to be directly relevant to equal rights. That could have come later. Instead, he forced their first act to be directly opposed and guaranteed that they would continue to oppose him.

Perhaps he was more interested in gaining national attention and preferred a public conflict. That is often what civil disobedience is designed for. But not for influencing the local pols, he did the exact opposite of what might have worked. Of course, MLK did not have the benefit of the past 40 years of cognition research.

Joe Nocera has a great article in the NYTimes about risk and investing. Its really long, but there is one point I want to talk about because it is relevant to research and many other things as well. As a human factors professional, its an important thought.

Researchers and designers often think in terms of 95% (or 99%) confidence intervals. That is what we use as a design criterion or p-value for accepting a hypothesis. Nocera talks about it in terms of what financial firms used to evaluate their value at risk (VaR). If an investment has a 95% confidence interval of going up $25 million or going down $25 million, they worked under the assumption that these were the boundaries. But what this interval means is that 2.5% of the time, $25 million is the LEAST you can lose. No one seems to have thought of that.

Also, this creates perverse incentives, which is not only an area where I do research, but also the main reason I suspect the financial crisis arose in the first place. Basically, the financial innovators were trying to maximize the 99% confidence interval of the VaR of the securities they were creating. So it didn't matter if the security had a 0.5% chance of losing a trillion dollars, it wasn't included in the analysis (or the calculation of their bonuses). It is easy for the employee to rationalize that this could never really occur (0.5% is soooo small). And if the company was using the 99% VaR CI, then they didn't seem to care either.

For the financial industry, the solution is not regulations that prevent financial innovation. Its to make sure that the incentives are aligned for the company and for the employees.

Sony Ericsson cell phone

I just bought a new Sony Ericsson cell phone and my first impression is that the usability leaves a lot to be desired. And that's saying a lot considering my previous phone was 4 years old.

The problems are not learnability - everything is learnable. It just takes more steps to do everything. Accessing menus takes 1 or 2 more steps than the same things on my old Motorola. And getting out of a menu requires steps too. On my old phone, closing it did this automatically. And hanging up also requires a keypress when its on non-auto mode.

What a pain.

[update]

And there's more. There is no way to quickly put the phone on vibrate. You have to go four steps deep into the menu. Even putting it on silent requires opening the flip. This is often done under time pressure (one person's phone rings in the middle of a meeting and everyone else realizes they forgot). A basic tenet of HF is to create simple shortcuts for anything done under time pressure. Hello Sony? Anyone there?

The Human Factors of Bernie Madoff

The Bernie Madoff scandal presents a very interesting illustration of confirmation bias (for his early investors as well as for him). I am assuming some of what went through his mind to make the point. And some is based on rumors that spread around Wall St in the 1990s about him.

In the beginning, Madoff engaged in a perfectly legal (although ethically questionable) practice of front running trades. When any large investor makes a big trade, they force up the price of what they are buying because they are sucking up the available shares. Its simple supply and demand. If they are selling, the same thing happens to force down the price. Madoff basically paid floor traders to buy shares for him ahead of large purchases or after large sales. He made a few extra points on each trade. This way, he was able to make profits that were a few points above the market. This was legal throughout the 70s and 80s. His customers got used to the great returns and were rewarded for sticking with him.

But eventually, Arthur Levitt, chairman of the SEC, was able to get this practice severely limited (although there are still loopholes from what I understand). Madoff could no longer make the gains he used to. Imagine you go from making 12% a year to only 8%. This doesn’t happen in a straight line; some months he probably made 12% (annualized) and others 5% (annualized). But each month that he made 12% his confirmation bias could convince him that he was “back on track” and that the 5% months were exceptions. But rather than disappoint his investors, he fudged a little bit what he reported to them on their statements on the assumption that he would make it up later. As long as they didn’t all try to withdraw money at the same time, this would work (if he actually got back to 12%, which he was sure he could do). Each time he had a 12% month, he was sure he was “back” and convinced him to continue the “little bit of fudging” on the statements. Since he also owned the trading operations and had an accounting firm with only one employee dedicated to him, he probably was able to convince these few people too.

For his customers, there were two types. The naïve investors didn’t really know about the frontrunning or what the probability of a consistent 12% return really was. All they knew was that he delivered. Each month, their statement showed a 12% return. There was the evidence. Maybe they heard rumors that he was doing in unethically, but it was legal so why complain. And when frontrunning became illegal, they may never have realized anything had changed. As long as their statements had a 12% (annualized) increase each month, there was no reason to question anything.

For his professional customers, they knew how he was doing it, and were happy to get the returns. And when frontrunning was limited, they figured he was exploiting the loopholes or he had found another way to game the system. After all, their statements had 12% returns. Why question it? If he was willing to be unethical in the 1970s and 1980s, of course he would do the same in the 1990s and 2000s.

Some interesting evidence for this is based on the amount of money people are claiming to have lost with him. If you give me $1 and I promise to magically turn it into $5, but instead I put it in my pocket and run away, how much did I steal from you? If you say $5, congratulations, you are a Madoff customer. Their last statement had $5 on it, so they assume that’s how much they lost. But in fact, the $5 never existed. All he really stole from them was their original $1 investment, which he never really turned into anything. I saw a couple on TV last night who had been a Madoff investor for decades. If you add up their original investment and subtract what they have withdrawn over the decades, they actually withdrew more than they invested. But their last statement said $1.65 million. So they accused Madoff of stealing the $1.65 million.

The value of a new innovation

Amar Bhide asks in his new book (excerpt) how we estimate the value of new innovations. he describes a study that asked participants how much would they would pay to kiss the famous person (movie star, musician, athlete) of their choice? Try this for yourself. If is really hard to put a value on things that we have never done.

Part of this problem is directly related to Human Factors. What is the true need that the innovation is addressing? What is the (behavioral) cost of the current method(s) used to accomplish the goal. How much better is the innovation at doing it? How hard will it be to learn? How hard will it be to use? What side effects/interactions will there be?

There are some famous quotes that under- or over-estimate the value of new innovations. "Who would want a computer in their house?" "Subprime mortgages will allow millions of additional people to own homes." (at least until they are foreclosed on :-(.

This is one of the great challenges of HF. First, we need to understand the real needs that users have. Then we need to understand our designs and how they will be used in the real world. Unfortunately, this is so much tougher than it seems.

peer influence and safety behavior

I just read a study that found a strong mediating influence of co-worker voice on the relationship between organizational support for safety and the likelihood a worker will speak out about safety.

Basically, they found that even when a company visibly supports safety, workers only speak out when they see a hazard if their coworkers also support safety.

The implication is that all of the efforts companies make to support safety are minimized if some jerk in the workplace makes fun of you for trying to be safe. Although the study couldn't look at every variable, I bet that this effect is subtle. If a worker is unsure how his/her coworkers feel, he/she still will hesitate before speaking out. Only when the company visibly supports safety and the coworkers buy in to it will you get people speaking out when they see a hazard. This is sad, and reminds me of recess in junior high. But its the way our world works I guess.

Erasing memories

Scientists at the Medical College of Georgia just found a protein that can help erase selected memories in mice. After the protein is injected in the mouse, they have the mouse recall the memory, and then after a consolidation period the memory is gone. Related memories don't seem to be affected, so they conclude that only the targeted memory is erased.

In the cognitive model that I use, this can be explained by postulating that the connections composing the target memory schema's composite cell assembly connections are weakened enough so that they don't reach threshold during normal activity. But the related memories are intact because those connections have a different combination of cell assemblies. So while some are weakened, there is enough strength left that the total schema can still reach threshold during normal activity.

But here is the key question. What long term effects would there be during normal and extreme situations for humans? Weakening of the target memory connections, even if they don't erase related memories, would weaken them. This would make them less likely to activate during periods of divided attention and would slow down the activation even during focused attention.

Also, the erased memories would be easy to recreate with a reminder. Erasing a traumatic memory (the hoped for long term goal of this research team) would be possible, but perhaps would only be temporary.

A full extinction of the memory would only be possible if related memories were also erased or significantly weakened or skewed. And even unrelated memories could be affected if they happen to share some connections with the target memory. This was not tested (and would be really hard to test) in the mice used in this study.

Of course, the point of research is not to solve the problem conclusively but to get us one step closer. More research on this protein and others will help us better understand memory and maybe lead one day to practical interventions and therapies. But if the model I use is correct (or close to it), this path will be a lot harder than the Georgia researchers are hoping for.