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- 👂#33: Noise: A Flaw In Human Judgment by Daniel Kahneman, Olivier Sibony & Cass Sunstein - Book Summary & Key Takeaways
👂#33: Noise: A Flaw In Human Judgment by Daniel Kahneman, Olivier Sibony & Cass Sunstein - Book Summary & Key Takeaways
How does Noise affect our decision making? What's the difference between Noise and Bias? How do we turn down the Noise and make better decisions? What is Decision Hygiene and how do we implement it?
Hello courageous people! 👋 Welcome to Edition 33.
📣 Exciting news - Post Traumatic Growth Weekly is officially rebranding to the Read Your Mind newsletter as of next week!! I’m also shifting the newsletter from Substack over to a different platform called Beehiiv, so all this is to say please bear with me if things are a little clunky for the next week or two! 🙏
This week, we are reading 📚 Noise: A Flaw In Human Judgment 🖋 by Daniel Kahneman, Olivier Sibony and Cass Sunstein.
According to some studies, we make in excess of 35,000 decisions every single day. Thirty. Five. THOUSAND. 🤯 And the quality of our decisions dictates the outcomes of our lives. So how can we make the best decisions possible, and make sure we aren’t getting derailed by the noise? This book is here to help.
In short, I would recommend you read the whole book if: you want to reeeeeeally deep dive on decision making, bias, with a lot of numbers, statistics and examples. This book is well suited to people who have high levels of strategic responsibility at work, where your decisions have a huge impact on outcomes.
Just read the summary if: you don’t like maths, stats, details. It is a heavy lift.
So let’s jump in! All text in italics are quotes taken directly from the book.
💪What is the take home message from Noise?
The decisions we make every single day are affected by noise, whether we realise it or not. From the weather, to the time of day, to our mood, to the type of information we are receiving and how we are receiving it, every single one of these things can—and do—change our lives.
If we can get better at identifying and filtering out the noise, we will be better equipped to make judgments and decisions. This can have astounding consequences, from life or death, to the amount of money we make, to the relationships we have—literally everything.
🧐 What are some examples of how noise can affect our decision making?
👩⚕️ In Medicine:
“Faced with the same patient, different doctors make different judgments about whether patients have skin cancer, breast cancer, heart disease, tuberculosis, pneumonia, depression, and a host of other conditions. Noise is especially high in psychiatry, where subjective judgment is obviously important.” - page 15
Specifically, (and this is just ONE example!)
“A study of nearly seven hundred thousand primary care visits, for instance, showed that physicians are significantly more likely to prescribe opioids at the end of a long day. Surely, there is no reason why a patient with a 4 pm appointment should be in greater pain than one who shows up at 9 am.” - page 109
👨⚖️ In Child Custody Decisions:
Case managers must assess whether children are at risk of abuse, and then whether to place them in foster care or not. There is a huge amount of variability in how those decisions are made.
“ … some managers are much more likely than others to send a child to foster care. Years later, more of the unlucky children who have been assigned to foster care by these heavy-handed managers have poor life outcomes: higher delinquency rates, higher teen birth rates, and lower earnings.” - page 15
🧑💼 In Forecasting:
“Professional forecasters offer highly variable predictions about likely sales of a new product, likely growth in the unemployment rate, the likelihood of bankruptcy. Not only do they disagree with each other but they also disagree with themselves.
For example, when the same software developers were asked on two separate days to estimate the completion time for the same task, the hours they projected differed by 71% on average.” - page 16
🌦 By the weather:
“Judicial sentences tend to be more severe when it is hot outside; stock market performance is affected by sunshine. College admissions officers pay more attention to the academic attributes of candidates on cloudier days and are more sensitive to nonacademic attributes on sunnier days.” - page 110
It’s crazy, right?!
👯♀️ What’s the difference between Noise and Bias?
This question is asked very early on, and for good reason. Because obviously bias affects our decision making as well - so what’s the difference between noise and bias?
“Bias and noise—systematic deviation and random scatter—are different components of error.
[…] Some judgments are biased; they are systematically off target. Other judgments are noisy, as people who are expected to agree end up at very different points around the target.” - page 13
The thing is, bias is much more widely recognised and spoken about when it comes to our decision making (not that we don’t still have a looooot of work to do there, don’t get me wrong!!) - and those things that we can see and recognise, we can do a better job of accounting for.
Noise is harder. It’s more random. But it has just as much of an effect as bias does when it comes to our outcomes.
👀 When do we need to watch out for noise the most?
The answer is when we are making Predictions and Evaluations. These are the two different kinds of judgments we continuously make.
🔮 A Prediction is when we are making a judgment about something that is going to happen in the future, one that affects how we decide to proceed.
✏️ An Evaluation is a judgment about how something went in the past. The events have already happened, and we are using that information to decide the next steps on the pathway.
😎 How do we turn down the Noise and make better judgments and decisions?
By using better Decision Hygiene. In the same way a surgeon washes their hands and puts on their sterile gloves and gown in a very deliberate way (in order to decrease the possibility of negative patient outcomes), we can also be more deliberate when we are making our decisions by applying a system and process.
Now of course we aren’t going to be able to do this for all 35,000 decisions in our days BUT we can bring this into play for particularly important, life changing choices we are faced with making.
Here are 4 key ways we can improve our Decision Hygiene:
✅ 1. Is the judge competent?
In any situation, the person making the decision is called the judge. They are the one making the prediction or the evaluation, but:
“ … some judges know what they are talking about, others do not. When there is such a skill gap, the priority should of course be to improve the deficient skills.” - page 257
In essence this question asks if we have enough information and are we qualified to be able to make this decision effectively?
📝 2. Judgment Guidelines
When we are making decisions with other people, from colleagues to our partners to our families, we need to be able to agree on what are the judging guidelines. What are the criteria that we are taking into account in order to reach our conclusion?
Only by stating out judging guidelines can we realise that for example, one person is prioritising time efficiency over quality and hasn’t taken cost into account, and another person is purely making a decision on a financial basis.
🤝 3. Talking in common language and having a Shared Scale
Once we have our Judgment Guidelines and we know what different factors are being taken into account, the next step in our decision hygiene is to apply a shared scale.
For example, are we using a scale from zero to 10? And then once the scale has been agreed, defining what does zero mean, and what does 10 mean.
👨👩👦👦 4. Using the Wisdom of Crowds
This is probably the most powerful strategy of all, and it is one that is repeated time and time again in the book.
“The “wisdom of crowds” principle is based on the averaging of multiple independent judgments, which is guaranteed to reduce noise.” - page 259
This means the more people we ask a question to, our ability to find the best answer continues to increase. This is common sense in many ways, but identifying it specifically as a tool to use I think is extremely helpful.
But there is a caveat: the people must be independent from each other so that groupthink doesn’t occur. On a small scale this simply looks like two people rating an application and coming to a conclusion independently before sharing their opinions with each other, as opposed to speaking aloud to each other throughout the process.
When applying the wisdom of crowds, the person asking the question still must consider the competence of their interviewee and their competence to be “a judge” on the matter.
Well I hope this has helped in some way to put a framework around the decisions we are making and the way noise has been affecting our lives without us even realising it. I know I’m going to be more purposeful and mindful about my decision hygiene from now on!
Until next week my friends,Eleanor ❤️🙏
🧠 Resources & Links
Sidebar: there isn’t a whole lot relating to the book Noise on social media and its authors. But,
📕 Next week’s book
Coming out next Wednesday 21st September 2022 is #34:📚 The Obstacle Is The Way🖋 by Ryan Holiday
“The book draws its inspiration from stoicism, the ancient Greek philosophy of enduring pain or adversity with perseverance and resilience. Stoics focus on the things they can control, let go of everything else, and turn every new obstacle into an opportunity to get better.
Ryan Holiday shows us how some of the most successful people in history--from John D. Rockefeller to Amelia Earhart to Ulysses S. Grant to Steve Jobs--have applied stoicism to overcome difficult or even impossible situations. Their embrace of these principles ultimately mattered more than their natural intelligence, talents, or luck.
If you're feeling frustrated, demoralized, or stuck in a rut, this book can help you turn your problems into your biggest advantages. And along the way it will inspire you with dozens of true stories of the greats from every age and era.”