Alex Pang's Future2: The Future of Futures

Another unintended consequences data point

From Paul Krugman:

In general, economists love models in which smart people make individually smart choices that end up being collectively dumb.

Brain science and debt ceilings

Johns Hopkins neuroscientist David Linden explains "the brain science behind gambling with the debt ceiling" on Reuters' Great Debate blog. It draws on, among other things, Barbara Mellers' work investigating how circumstances affect how people assess financial gains and losses.

The debt ceiling debate is raging in Washington. But what’s going on in the minds of the politicians working on the seemingly intractable problem? Barack Obama, Mitch McConnell, John Boehner and Eric Cantor are all taking calculated risks — bets — that they can win the standoff and get more out of the deal than the other side can. Their strategies are rooted in their political beliefs and theories on how government should operate, but their tactics come from the part of the brain that covets social acceptance and individual rewards.

Unpacking the Future

Jon Baron points out a new article on widening subjective confidence intervals:

Subjective probabilistic judgments are inevitable in many real life domains. A common way to obtain such judgments is to assess fractiles or confidence intervals. However, such judgments tend to be systematically overconfident. For example, 90% confidence intervals for future uncertain quantities (e.g., future stock prices) are likely to capture only 50-60% of the actual realizations. Furthermore, it has proved particularly difficult to de-bias forecasts and improve the calibration of expressed subjective uncertainty. This paper proposes a simple process that systematically leads to wider assessed confidence intervals than is normally the case, thus potentially improving calibration and hence reducing overconfidence. Using a series of lab and field experiments with professionals forecasting in their domain of expertise, we show that unpacking the distal future into intermediate more proximal futures has a substantial effect on subjective forecasts. For example, simply making it salient that between now and three months from now there is one month from now and two months from now increases the uncertainty assessors have in their three month forecasts, which helps mitigate the overconfidence in those forecasts. We refer to this phenomenon as the time unpacking effect and find that it is robust to different elicitation formats. We also address the possible reasons for the time unpacking effect and propose future research directions.

How disclosure can make professional judgment worse

An article in the Boston Globe describes some new research by Daylian Cain, George Loewenstein, and Don Moore, looking at the effects on conflict of interest disclosures on expert advice.

In just about any profession-- medicine or real estate, accounting or academia-- people giving information and advice may carry agendas that bias their judgments, or find themselves in situations where duty and personal benefit clash....

One of the most popular-- and least costly-- solutions is disclosure. The notion is that requiring experts to put everything on the table should give them an incentive to behave ethically and avoid tarnishing their reputation: Transparency begets honesty. But work by Cain, in collaboration with Don Moore at the University of California Berkeley and George Loewenstein at Carnegie Mellon University, finds that disclosure can have the opposite effect....

By assuming that disclosure is always a benefit, he and his colleagues argue, regulators may be failing to address the real problems caused by conflicts of interest. In fact, biases are rooted deep in our psychology, and can’t be dispelled with a simple confession. Policies of disclosure, far from being a panacea, may be drawing attention away from the much harder work of removing conflicts and making sure that people’s advice and their interests align.

The experiment itself was pretty straightforward:

Cain, Loewenstein, and Moore conducted a series of experiments meant to mimic a situation in which a person in authority-- such as a doctor, consultant, or real estate broker-- is giving advice that influences another person’s decision. Certain study participants were required to make an estimate-- evaluating the prices of houses, for instance. Meanwhile, other participants were selected to serve as experts: They were given additional information with which to advise the estimators. When these experts were put in a conflicted situation-- they were paid according to how high the estimator guessed-- they gave worse advice than if they were paid according to the accuracy of the estimate.

No surprise there: People with a conflict gave biased advice to benefit themselves. But the twist came when the researchers required the experts to disclose this conflict to the people they were advising. Instead of the transparency encouraging more responsible behavior in the experts, it actually caused them to inflate their numbers even more. In other words, disclosing the conflict of interest-- far from being a solution-- actually made advisers act in a more self-serving way.

"We call it moral licensing," Moore says. "After having behaved honestly and virtuously, you then feel licensed to indulge in being a little bit bad."... [I]t appeared that disclosing a conflict of interest gave people a green light to behave unethically, as if they were absolved from having to consider others’ interests.... In effect, what the experts were doing was passing the buck on managing their bias to the people they were advising.

Unintended consequences essay now available

The super-official, published, nice-looking version of my article "Feasting at the Banquet of Unintended Consequences" is now available online through MyForesight, the Malaysian futures Web site.

It's part of a very big PDF, but it looks GREAT. Excellent job, guys!

P.S. I've also posted my article as an extract. A smaller but still substantial PDF file. Boy, it looks good.

Our real products were the experts, not the papers

A very interesting article by Gregory Treverton (who I know from his distinction between puzzles and mysteries in forecasting) asks "What should we expect of our spies?" It's available to subscribers, so you may or may not be able to read the whole thing, but a couple points jumped out at me.

The main question he takes on is,

"What should people expect of their intelligence agencies?" Not "what would they like?"; for policymakers would like perfect prescience, if not omniscience. They know that they can have neither.

The first is his distinction between different types of tasks that intelligence analysts are called upon to undertake, and the danger of confusing one with the other. There are demands for both actionable intelligence or answers to specific questions-- i.e., the answers to puzzles-- and a broader awareness of large trends or potential disruptions-- in other words, mysteries-- and the pursuit of the two don't sit together well.

When the Soviet Union would collapse was a mystery, not a puzzle. No one could know the answer: it depended. It was contingent. Puzzles are a very different kind of intelligence problem. They have an answer, but we may not know it. Many of the intelligence successes of the cold war were puzzle-solving about a very secretive foe: were there Soviet missiles in Cuba? How many warheads did the Soviet SS-18 missile carry?

The second interesting point is that at the National Intelligence Council,

I came to think that, for all the technology, strategic analysis was best done in person. I came to think that our real products weren't those papers, the NIEs. Rather they were the NIOs, the National Intelligence Officers-the experts, not papers. We all think we can absorb information more efficiently by reading, but my advice to my policy colleagues was to give intelligence officers some face time. If policymakers ask for a paper, what they get will inevitably be 60 degrees off the target. In 20 minutes, though, the intelligence officers can sharpen the question, and the policy official can calibrate the expertise of the analyst.

This is a nice reminder how just how much our thinking about the future is a product of our current concerns-- that intelligence "is about creating and adjusting stories," as Treverton puts it, and thus "stories not imagined by policy are not likely to be answered or developed by intelligence"-- and how much knowledge about the future is irreducibly craft and tacit knowledge, not formal knowledge. Sure, you can produce a report, this line of argument goes, but that product will by its nature be misleading.

Chris Mooney on "motivated reasoning" (i.e. biased reasoning)

Chris Mooney has a good article in Mother Jones on "the science of why we don't believe science"-- why and how we manage to believe sometimes-outlandish things in the face of contrary evidence.

[A]n array of new discoveries in psychology and neuroscience has further demonstrated how our preexisting beliefs, far more than any new facts, can skew our thoughts and even color what we consider our most dispassionate and logical conclusions. This tendency toward so-called "motivated reasoning" helps explain why we find groups so polarized over matters where the evidence is so unequivocal: climate change, vaccines, "death panels," the birthplace and religion of the president, and much else. It would seem that expecting people to be convinced by the facts flies in the face of, you know, the facts.

The theory of motivated reasoning builds on a key insight of modern neuroscience: Reasoning is actually suffused with emotion (or what researchers often call "affect"). Not only are the two inseparable, but our positive or negative feelings about people, things, and ideas arise much more rapidly than our conscious thoughts, in a matter of milliseconds—fast enough to detect with an EEG device, but long before we're aware of it. That shouldn't be surprising: Evolution required us to react very quickly to stimuli in our environment. It's a "basic human survival skill," explains political scientist Arthur Lupia of the University of Michigan. We push threatening information away; we pull friendly information close....

We're not driven only by emotions, of course—we also reason, deliberate. But reasoning comes later, works slower—and even then, it doesn't take place in an emotional vacuum. Rather, our quick-fire emotions can set us on a course of thinking that's highly biased, especially on topics we care a great deal about.

As he puts it, "We apply fight-or-flight reflexes not only to predators, but to data itself."

It's well worth reading, and it makes me wonder how to square insights like these against claims about the value of brainstorming, which is supposed to be good because its speed and social character forces you past the normal social and logical barriers that keep you from being creative.

Models as self-defeating prophecies

Alex Pollock at the American Enterprise Institute writes about the role of models in economic science (or what "would be" a science "if it weren’t for the people") and financial decision-making. He argues that the widespread use of models tends to lead to their obsolecence:

Perversely, the more everyone believes the model, and the more everyone uses the same model, the more likely it is to induce changes in the market that make it cease to work.

In this cycle, the market and the regulators became enamored of the statistical treatments of risk, whereas the most important issue is always the human sources of risk. These human sources include short memories and the inclination to convince ourselves that we are experiencing "innovation" and "creativity," when all that is happening is a lowering of credit standards by new names.

As I understand his argument, there are a couple reasons for this. Some models-- ones that deal with very specific pieces of the future-- only work if they're obscure: if everyone "knows" that the price of magnesium is definitely going to rise, and everyone buys magnesium futures, the future price of magnesium changes. Models reinforce the belief that "this time it's different," and help people unlearn old, hard-won lessons. (As Pollock puts it elsewhere, one of the differences between science and finance is that scientists don't forget previous errors-- astronomers haven't gone back to geocentrism, and old ideas tend to die with old scientists-- while generational change in finance tends to wipe away wisdom, leaving only hubris and a belief in one's own youthful invincibility.) Models also tend to obscure the continued, lurking presence of uncertainty:

Because uncertainty is fundamental, sometimes disastrous mistakes will continue to be made by entrepreneurs, bankers, borrowers, central bankers, government agencies, politicians, and by the interaction of all of the above.

[Economics Frank] Knight wrote: "If the law of change is known, no [economic] profits can arise." Likewise: "If the law of change is known, no financial crises can arise." But in economics and finance, the law of change is never known. So change reflecting uncertainty goes on, bringing booms and busts periodically, and Adam Smith’s "progress of opulence" on the trend.

Have economists have tried to measure the impact of the popularity of models on markets? The Knight quote comes from his 1921 book Risk, Uncertainty, and Profit, and I have to assume that economists have tried to measure (a model, if you will) how widespread use of, say, a statistical model affects markets and either increases or decreases the reliability of that model. It seems to me that this would be one of those things that people would have tried to study, but I don't know enough about the field to know.

Why do people vote? "A sticker and a 0% chance of changing the results of the election."

Via Daily Dish, a very interesting article about why people vote.

On Tuesday, 42% of registered voters took time out of their day to travel to their assigned polling location, wait in line, exchange niceties with a grumpy volunteer, and fill in some bubbles with a Sharpie. What did they receive in return?: a sticker and a 0% chance of changing the results of the election.

Political scientists have tried to calculate the probability that one vote will make a difference in a Presidential election. They estimate that the chances are roughly 1 in 10 million to 1 in 100 million, depending on your state. This does not give an individual much incentive to vote. In a YouGov survey, we asked respondents to estimate the same probability. “If you vote in 2012, what are the chances that your vote will determine the winner of the Presidential election?” Some of the responses are illuminating.

Not surprisingly, Americans vastly overestimate the chances that their vote will make a difference. Our median respondent felt that there is a 1 in 1000 chance that their vote could change the outcome of a Presidential election, missing the true chance by a factor of 10,000. However, this dramatic overestimation does not explain the prevalence of turnout, because those who actually vote know that this probability is low. Over 40% of regular voters know that the chances of a pivotal vote are less than 1 in a million. Amazingly, turnout is negatively correlated with the perceived chances that one vote will make a difference—meaning the less likely you are to think your vote will actually matter, the more likely you are to vote [emphasis added].

This reminds me of a study that showed a complicated relationship between knowledge about climate change and a willingness to act on it. As I explained in my article "Futures 2.0,"

the presence of expertise about the future may encourage people to be less engaged in shaping their own futures. A study of popular responses to climate change suggests that a higher degree of confidence in the reality of climate change and the reliability of climate science can promote passivity and a sense that experts will deal with the problem, rather than inspire people to change their lives (Kellstedt et al., 2008; Swim et al., 2009). In another remarkable study, Jan Engelmann and colleagues used fMRI to observe the brains of people who received expert advice during a financial simulation. They found that subjects thought differently about their decisions when they received expert advice – even bad advice – than when they worked on their own. As the researchers put it, "one effect of expert advice is to ‘offload’ the calculation of value of decision options from the individual’s brain" (Engelmann et al., 2009). Put another way, "the advice made the brain switch off (at least to a great extent) processes required for financial decision-making" (Nir, 2009). In an era in which ordinary people play a bigger role in shaping the future, the prospect of an inverse relationship between how much confidence they place in expert opinion about complex problems, and how responsible they feel for acting to solve it, presents a substantial conundrum for futurists.

Clearly just giving people information about the future, or about the choices before them, and assuming they'll then act in a rational (or even straightforward, self-interested) manner doesn't quite work. We like to think we're rational, and we like to think other people are rational; but it's not quite so. As the voting example shows, sometimes that's a good thing; more often, though, it's not, and we need to better deal with that fact.

Feasting at the "banquet of consequences:" Unintended consequences and the future of futures

Robert Louis Stevenson once wrote, "Everybody, soon or late, sits down to a banquet of consequences." A few months ago, I had a burst of interest in unintended consequences: where the idea comes from, why it's popular now, and what its popularity means for the way we think about the future.

Following Stevenson, I've taken a first crack at preparing a dish that answers these questions. It's an essay that will be published (in a streamlined, edited, and doubtless much improved version) in a new Malaysian futures magazine. In the meantime, I'm making a PDF available. Here's the introduction:

How much of the future can we understand, and how responsible are we for anticipating the potential consequences of our actions? Futurists have traditionally answered these questions by debating the value of different kinds of futures methods and tools to strategic planning, policymaking, and other forward-looking activities. But popular expectations and the attitudes of our clients are just as important in shaping our work and the opportunities our work has to affect the world. Futures is defined, evaluated and used within a framework of understanding and expectations that we negotiate with our clients. This framework, in turn, is influenced by an environment of cultural and social norms that define how we think about the future; what we believe can and cannot be said about the future; what kinds of future events people are able to anticipate; and how accountable leaders should be for anticipating disasters and creating good futures. If something in this environment changes, it is worth assessing how it affects our work.

In a previous essay, I discussed how futurists could use recent insights from behavioral economics, neuroeconomics, and tools from social media to develop new ways of researching and communicating our work. Here, I want to map recent changes in our larger environment. To do this, I will look at an important "keyword" of the future: the concept of unintended consequences.

Unintended consequences seem to plague our best efforts to plan these days. Financial writer Shishir Nigam declared in mid-2010 that "one of the biggest themes in this current investment environment and in the next few years will be the dominance of unintended consequences - an environment where the unintended consequences of actions will speak much louder than the intended actions themselves." The concept of unintended consequences has been around for a long time, but still Nigam's claim that we live in an era of unintended consequences is striking. The term seems to have made its first appearance in English in the 1820s, but over the last twenty years its popularity has exploded:

Use of the term "unintended consequences" in English-language newspapers and magazines, 1990-2010 (source: Lexis-Nexis).

Well, it goes on from there, but I won't spoil the ending.

Coping with future longevity

This is an interesting idea, but how do you really do it?

Schools should teach life course skills to help children cope with future longevity

Sarah Harper, Professor of Gerontology and Demography of OIA [Oxford Institute of Aging], called on Schools to consider introducing life course skills to help children cope with future longevity.

"Half of the girls born in the UK at the end of last century are predicted to live into the 22nd Century," said Harper. "it is thus essential that our schools start to prepare our children for the significant increases in longevity which we are now facing.... Helping young children understand that they have many options over their lives - when to study, when to have children, when to work and for how long - and that their lives may not be the current pattern of 'education, work, retirement' - will be a first start. Older children will most certainly need to learn life course skills such as financial preparation for times of need, understanding healthy living, knowing how to increase their skills across their lives. Future generations will have to rely far more on their own resources, and not rely on government or others to look after them. We need to ensure that they have the skills to cope with the very varied life options that they will face in the 21st Century".

I'm certainly all for the idea of teaching people to cope with the future, and kids deserve as much attention among futurists as CEOs, but I think there's a big difference between explaining to kids that they could live longer than their grandparents, and making sense of that in their own lives. Translating those broad trends into a shadow that can fall on today's decisions is tough-- and something that very few futurists have really thought seriously about.

The statement that "Future generations will have to rely far more on their own resources, and not rely on government or others to look after them" is also striking. Is this mainly a reflection of the general anxiety among Western policy wonks over entitlements and the cost of social services, or is there a deeper claim here about either the relationship between individuals and the state in the next century, or even about the natural relationship between aging and the role governments play in your life?

A nice summary of the challenge of intelligence

Jay Rosen on the Post's reporting on the intelligence system post-9/11:

I’ve been trying to write about this observation for a while, but haven’t found the means to express it. So I am just going to state it, in what I admit is speculative form. Here’s what I said on Twitter Sunday: “We tend to think: big revelations mean big reactions. But if the story is too big and crashes too many illusions, the exact opposite occurs.” My fear is that this will happen with the Afghanistan logs. Reaction will be unbearably lighter than we have a right to expect— not because the story isn’t sensational or troubling enough, but because it’s too troubling, a mess we cannot fix and therefore prefer to forget.

Last week, it was the Washington Post’s big series, Top Secret America, two years in the making. It reported on the massive security shadowland that has arisen since 09/11. The Post basically showed that there is no accountability, no knowledge at the center of what the system as a whole is doing, and too much “product” to make intelligent use of. We’re wasting billions upon billions of dollars on an intelligence system that does not work. It’s an explosive finding but the explosive reactions haven’t followed, not because the series didn’t do its job, but rather: the job of fixing what is broken would break the system responsible for such fixes.

The mental model on which most investigative journalism is based states that explosive revelations lead to public outcry; elites get the message and reform the system. But what if elites believe that reform is impossible because the problems are too big, the sacrifices too great, the public too distractible? What if cognitive dissonance has been insufficiently accounted for in our theories of how great journalism works… and often fails to work?

That challenge of having "too much 'product' to make intelligent use of" struck me, though other things in the article. On one hand, clients think that more is better-- it must be, right?-- but more is also a lot harder to deal with. I've had clients who wanted to be able to see the raw material I work with, but certainly didn't have time to read it and think about it themselves. Partly they wanted me to be able to demonstrate that I wasn't just making up stuff, but there is this intuitive belief that when it comes to information, more and faster are better.

Unfortunately, that's not the case, and I think most of us recognize that, but we don't have a way to describe "less" as a virtue. All too often "less intelligence" (whether competitive or strategic) tends to translate into "only looking at the data that support my position," or it sounds like "being stupid," rather than being judicious and recognizing the impossibility of reading and digesting everything.

Likewise, the idea that if a "story is too big and crashes too many illusions" it will be ignored strikes me as a nice description of the problem of getting people to take the end of bubbles and Black Swans seriously.

The global leadership mindset and its implications for the future

I'm going to Singapore and Malaysia for a talk this week. For a futurist, going to Singapore is a bit like a salmon visiting the Pacific Northwest: it's where we all want to end up. Malaysia is on fewer people's radar, but it really should be: a study, led by Mansour Javidan and published in HBR a couple years ago, found that Malaysia is one of the most forward-thinking countries in the world (Singapore, Denmark and the Netherlands rank 1-3), and by far the most future-oriented predominantly Islamic nation. And the food is awesome.

I'm talking about Futures 2.0 and preferred futures, and one of the things I'm trying to think through is how futures might evolve in Asian countries, or other places with deep, non-Western ideas about leadership, temporal perspectives, etc.. Just as futures in the U.S. was strongly shaped by the Cold War, so too do I suspect it's shaped now by unconscious assumptions about leadership (Bob Johansen's Leaders Make the Future is a fine book, but it strikes me as very American). So it's worth trying to better understand both American presumptions, and those of other countries.

Fortunately, this is something Javidan has been working on. As he blogs in Harvard Business Review:

The best leaders:

• Are friends with their subordinates but make decisions on their own;
• Compete with their own direct reports and make sure they are better than others;
• Speak honestly, but take into account others' status;
• Use indirect language and metaphors rather than get straight to the point;
• Avoid taking risks

American readers are probably scratching their heads: what kind of a leadership profile is this? How can a leader ignore his direct reports when making key decisions? What happens to credibility when you're constantly massaging the message?

The brief profile above came from a survey of Chinese managers as part of the research program called the GLOBE project. Of course, there are also parts of the Chinese ideal leadership profile that are similar to the American profile, but it's usually the differences that get managers in trouble.

Interesting to think how a futures methodology for such a leadership style would differ from the ones we use with American companies (or global companies led by people who are mainly from UCLA and Stanford, and are veterans of GE and McKinsey).

Personal futures

If I didn't need to spend some time working out this evening, I would take the rest of the night off and read every issue of Futureorientation, which I discovered earlier today. The latest finding is Verne Wheelwright's essay on personal futures:

The personal futures process is a scaled-down version of the futuring process and methods commonly used by business and other organizations.... [It involves conducting research on life stages and events, then] constructing four personal scenarios, including positive, negative, normative and wild card scenarios. The scenarios in turn become the basis for creating a personal strategic plan.

For the individual, the initial benefit from the research is a better understanding of how life works by exploring life stages, the forces present in one's life, and the events that occur. From that research, the individual learns to apply futures methods, starting with developing scenarios of plausible futures. Creating these scenarios also creates an awareness of concepts of the future, suggesting what may happen and what is likely to happen, resulting in a longer-term view of life. Actually writing scenarios also lets individual understand how forces and events work together.

With this awareness, individuals can intelligently plan and prepare for the future, and take steps to help them achieve a future they prefer. The final product is a personal strategic plan that includes a vision of the future, strategies and an action plan for achieving that vision, and a contingency plan for wild card events.

This dovetails with the stuff I've written in Futures 2.0 on nudges, choice architectures, and thinking about the future. Personally, I think that Wheelwright's approach of scaling down a fairly traditional scenarios process isn't likely to be very effective-- in particular, I think it assumes that people are capable of balancing immediate choices and long-term goals puts too much faith in the rationality of people and their ability to take a long-range view-- but the idea that it would be worthwhile for individuals to think about their future in a more systematic way is right on.

A thought on strategic disconnect

We live in a world in which we can talk about "strategic corporals," who have to be cognizant of the fact that decisions they make can have long-term strategic consequences.

On the other hand, we also live in a world in which the impact of individual actions can seem vanishingly small: reducing my carbon footprint might have no visible impact on anyone by myself.

The connections between action, strategy, and feedback are being rewired, and no one yet has a good way to describe how that new wiring works.

Oil spills, financial crises, and black swans

Via Matt Steinglass, I came across this piece by New York Times economics writer David Leonhardt that compares the Deepwater Horizon blowout and the financial crisis, and argues that both reflect a failure to think adequately about black swans:

We make two basic — and opposite — types of mistakes. When an event is difficult to imagine, we tend to underestimate its likelihood. This is the proverbial black swan. Most of the people running Deepwater Horizon probably never had a rig explode on them. So they assumed it would not happen, at least not to them....

On the other hand, when an unlikely event is all too easy to imagine, we often go in the opposite direction and overestimate the odds. After the 9/11 attacks, Americans canceled plane trips and took to the road. There were no terrorist attacks in this country in 2002, yet the additional driving apparently led to an increase in traffic fatalities.

This echoes Christopher Beam's piece in Slate (which I wrote about recently) that argues that "the real lesson of the oil spill may be how bad we are at dealing with unlikely but disastrous events."

Clearly there's a short, very interesting book to be written that takes a handful of issues-- a few really spectacular failures like the financial collapse and Deepwater Horizon, and a couple really slow but equally important and complex problems like climate change-- and constructs a kind of Grand Unified Theory of Huge Mistakes around them.

On the power of presumption

I think behavioral economists, psychologists, and other students of decision-making are going to spend years analyzing the financial crisis and reactions to it. (The rest of us will just be trying to pick our financial lives back up.) One of the interesting things is how bankers have reacted to screwing up and getting bailed out. As James Kwak writes about Wall Street CEOs:

Wall Street CEOs like to think they are the adults, the big men in the room, the ones who know how the world works. Well, you know what? They screwed up their own banks, the financial system, and the economy like a bunch of two-year-olds. Every single major bank would have failed in late 2008 without massive government intervention — because of wounds that were entirely self-inflicted. (Citigroup: holding onto hundreds of billions of dollars of its own toxic waste. Bank of America: paying $50 billion for an investment bank that would have failed within three days. Morgan Stanley and Goldman Sachs: levering up without a stable source of funding. Etc.) The financial crisis should have put to rest for a generation the idea that the big boys on Wall Street know what they’re doing and the politicians in Washington are a bunch of amateurs. Yet somehow the bankers came out of it with the same unshakable belief in their own perfection that they had in 2005.

Joshua Lehrer on oil spills, ash clouds, and anchoring

Joshua Lehrer has a short piece arguing that anchoring bias slowed our ability to respond to the Icelandic ash cloud and the Deepwater Horizon oil spill:

In the last few months, the globalized world has endured two very different crises. First, there was the ash cloud over Europe, which paralyzed air travel for millions of passengers. Then, there is the leaking oil well in the Gulf of Mexico, which continues to spew somewhere between 5000 and 60,000 barrels of crude into the ocean every day.

While these disasters have nothing in common, our response has been plagued by the same fundamental problem. In both instances, officials settled on an early version of events - the ash cloud posed a severe danger to plane engines, and the oil well wasn't a very bad leak - and then failed to update that version in light of new evidence. As a result, valuable time was squandered.

This is a form of anchoring, a mental bias first outlined (of course) by Kahneman and Tversky.

As a commenter points out, we're not talking about exactly the kind of anchoring that Kahneman and Tversky studied, because the association is not completely random; but still, I think the basic point-- that initial reports and expectations made it harder to adjust plans in the face of new evidence-- holds true.

Early uses of the term unintended consequences

The idea of a piece on unintended consequences kept rattling around in my mind today, so tonight I spent a little time on the fantastic 19th Century Index tonight, looking for uses of it and related terms-- combinations of unintended, unexpected, and unanticipated, and effects or consequences.

Many of the early uses of the terms referred to politics and policy. William Penn, writing in 1829, warned that "If our Statesmen are about to interpret treaties, on the principle of favouring the party which assumed a superiority, they must take care lest there should be some very unexpected consequences." Nearly twenty years later, the British Spectator fretted over the "unintended consequences" of Parliamentary legislation, and gives a chilling example of how well-meaning policies can have negative consequences for those it means to help:

The opprobrium of Parliament is its unintentional legislation the unforeseen or at least unintended consequences of the laws which it is incessantly passing on partial views. It has been busy for years passing acts "to abolish the slave-trade"; while the most certain consequence has been an immense increase in the mortality of the slave-ships: to judge of causes by their effects, therefore, Parliament has for so many years been passing acts to increase the mortality in the slave-trade.

In 1853, the American magazine Albion expressed "perplexity" at the political situation in France arising from "unexpected effects proceeding from causes which at first were regarded as entirely personal." In 1856, New England magazine Littell's Living Age reported "on some of the unanticipated and unintended consequences of the war in the East."

Other publications use the term "unexpected effects:" in 1867, for example, Punch wrote of the "unexpected effects of recent legislation." (However, this phrase could also refer to things that were just unusual, rather than unforseeable: Harper's described the German songs and costumes that came out during fair days as "unexpected effects." ) Finally, in 1918, the British Saturday Review of Politics, Literature, Science and Art wrote that "of the unanticipated effects" of the Great War "is that it has brought home to us publicity-literally into our houses."

So the term goes back a ways. I wonder when it started being used to refer to technological change. I'll bet that's a post World War II thing.

And of course, Robert Merton wrote an article, published in the American Sociological Review in 1936 on "The Unanticipated Consequences of Purposive Social Action." I'll need to see if I stand a chance of saying anything new, or whether I can stand on the shoulders of that giant.

The tragedy of unintended consequences

Has anyone written a study of the concept of unintended consequences? The concept is very familiar, of course, but I'm curious when it emerged (did the ancient Greeks have it, for example?); how people distinguish between consequences that are unintended because they were unknowable or very difficult to foresee, versus ones that are unintended because, well, they just weren't an actor intended.

One thread in the debate over the financial crisis has been about this point, or a version of it-- was the collapse of the housing and capital markets a foreseeable event, or was it something that even brilliant people could never have possibly anticipated? The evidence now strongly suggests that it was predictable (look at the fact that some people made a lot of money shorting the market), and that the success that people enjoyed during the bubble made it harder for them to believe that the good times could end.

A more chilling example of an unintended consequence comes in an essay 2008 by German author Eckhard Fuhr, translated and republished in the very good site Sign and Sight. In a review of a new series of volumes documenting the origins of the Holocaust, he writes:

The decision [by German Jews] to go or to stay also depended not least on people's experiences in their immediate surroundings. "Seen from the point of view of Auschwitz," the editors write in their introduction, "a tragic insight opens up: the more openly anti-Semitic the 'Ayran' neighbours, customers, and co-workers were at the beginning of Nazi rule, the faster the victims were able to take the decision to flee and ultimately save their lives. If their Christian acquaintances and friends were friendly and helpful, the persecuted were more likely to opt to stay, thus cutting their chances of survival dramatically."

This is about as perfect an example of an unintended consequence as I think one could come up with-- not because it suggests an easy solution-- e.g., well-meaning Christian Germans should have seen the Holocaust coming and pushed their Jewish friends to get out while they could-- but because its two sentences capture all the difficulty and ambiguity of situations in which genuine unintended consequences flourish.

Actually, as I think about it, there's a really good article to be written about how we use the term "unintended consequences," and what it tells us about the ordinary ways we think about risk, uncertainty, and the future. The term is incredibly widespread-- a Google Scholar search returns more than 76,000 hits-- so there's no lack of material to work with.

Just thinking aloud... If it's possible to identify where the phrase comes from, you could then do a Raymond Williams Keywords-like analysis of its history. You could then focus more specifically on a few contexts in which the term appears, like regulation, technology, and finance, to get a more precise sense of how intelligent people invoke it-- when it seems appropriate, and what it means when it's used. Third, you could dive more deeply into the meaning of "unintended," and where the unintentionality (to coin a phrase comes from)-- from ourselves, from the world, our models of the world, etc. (This would have the benefit of making it harder to hide behind the term.) Finally, you would talk about what kinds of unintended consequences can be mitigated.