Thread by @wilte

Started to read @rorysutherland 's Alchemy: The Surprising Power of Ideas That Don't Make Sense goodreads.com/book/show/2621…

Our need for logic and certainty brings costs aa well as benefits.

Hidden price oflogic: you destroy magic.

Discover Inner Alchemist. The alchemy of this book's title is the science of knowing what economists are wrong about.

Matrix: fails vs works & makes sense vs seems weird (p.7)

How we make decisions has a psycho-logic; rather than being designed to be optimal, it has evolved to be useful

In theory, you can't be too logical, but in practice, you can.

Yet we never seem to believe that it is possible for logical solutions to fail

This book attacks a dangerous kind of logical overreach, which demands that every solution should have convincing rationale before it can even be considered or attempted.

If you are wholly predictable (being rational means you are predictable), people learn to hack you

Irrational people are more powerful, because their threats are so much more convincing.

Become fixated on the same theory (one single perspective): privileging the hypothesis

Explaining things in reverse: the plausible post-rationalisation is the stock-in-trade of the commentariat.

Evolutin doesn't need to know why it works - it just needs to work.

Perhaps a plausible 'why' should not be a pre-requisite in deciding a 'what'

p.24: it is perfectly possible to be both rational and wrong

p34: The problem that bedevils organisations is that narrow, conventional logic is the natural mode of thinking for the risk-averse bureaucrat or executive.

Simple reason for this: you can never be fired for being logical.

Easier to be fired for being illogical than it is for being unimaginative

p42 on work Trivers and Kuzban: our conscious brain has not evolved to be aware of many of the instinctive factors that drive our actions.

Better of not knowing, evolved to deceive ourselves

David Ogilvy: "trouble with market research: people don't think what they feel, don't say what they think, don't do what they say"

Trivers and Kuzban explained evolutionary science behind Ogilvy's conundrum: we simply don't have access to our genuine motivations, because it is not in our interest to know.

We patently need a level of self-delusion to function as a social species.

Only people not to suffer from overoptimism/overconfidenxe-bias are people with severr depression

Evolution cares nothing for accuracy and objectivity: it cares about fitness

Broaden our possible solutions if we are able to discover what people really want [zigazig ah!], rather than what they say they want or what we think they should want

Zigazag ah! -joke explanation

Part 1.1: the broken binoculars, with two (cracked & distorting) lenses: market research and economic theory

Sometimes the old binoculars work well, of course

Logic and psycho-logic do overlap frequently, as you would expect.

However, we still need a new set of lenses: stubborn problems are probably stubborn because they are logic-proof.

1.2 I know it works in practice, but does it work in theory?

Problem-solving is a strangely status-conscious job: there are high-status approaches and low-status approaches

1.3 We are wrong about psychology to a far greater degree than we are about physics, so there is more scope for improvement

1.6 In trying to encourage rational behaviour, don't confine yourself to rational arguments.

Who cares why people recycle, as long as tgey do it? (p.80)

What people do with their own money (their 'revealed preferences') is generally a better guide to what they really want than their own reported wants and needs.

1.8 Christopher Llewellyn Smith (ex-CERN) on changing patterns energy consumption in Britain: "When I ask an economist, the answer always boils down to just bribing people"

1.10 Anyone can easily build a career on a single eccentric talent, if it is cunningly deployed.

@rorysutherland's asvice to young people: "Find one or two things your boss is rubbish at and be quite good at them"

p109: policy-makers might benefit from paying more attention to consumer marketing

Tiny things thay you discover when selling bars of chocolate can be relevant in how you encourage more consequential behaviour

1.17 on post-rationalisations

In coming up with anything genuinely new, unconscious instinct, luck and simple random experimentation play a far greater part in the problem-solving process than we ever admit.

p123: the argumentative hypothesis (Sperber & Mercier): reason arose in the human brain not to inform our actions and beliefs, but to explain and defend them to others

Never-mentioned, slightly embarrassing but nevertheless essential facet of free market capitalism that it does not care about reasons

Markets are happy to reward and fund the necessary, regardless of the quality of reasoning

Part 2: Why magic really still exists

Reluctance to entertain magical solutions results in limitation in number of ideas people are allowed to consider;

it often confines governments to the twin levers of legal compulsion and economic incentive

p158: Who is the Steve Jobs of tax-return design?

In the same way that McDonald's omitted cutlery to make it obvious how you were supposed to eat its hamburgers, by removing the recording function from Walkmans, Sony reduced possible applications to a single use and clarified what the device was for

3.3 Continuity probabilty signalling: another name for trust

The shadow of the future (Axelrod)

Social capital is the shadow ofthe future at a societal scale (Clay Shirky)

Continuation probability also predicts that, when a business focuses narrowly on short-term profit maximisation, it will appear less trustworthy to its customers

3.4 signalling has to be costly to be believable. Otherwise it is cheap talk

It is difficult to produce good advertising, but good advertising is only good because it is difficult to produce

p184: One of the most important ideas in this book is that it is only by deviating from a narrow, short-term self-interest that we can generate anything more than cheap talk

3.7 -3.10: nice to see some chapters on evolutionary biology (sexual selection, costly signaling, mimicry)

p210: if you talk to economists, they tend to hate advertising and barely understand it at all, while if you talk to biologists they understand it perfectly

ACCC targets alleged false and misleading Nurofen claims

@rorysutherland: ACCC have their psychology wrong. Promoting a drug as a cure for a narrowly defined condition, as Nurofen did, also increases placebo power

accc.gov.au/media-release/…

p227 references Nicholas Humphrey theory on our immune system.

Interview with Richard Dawkins:

Oneof Nicholas Humphrey's rules about what makes an effective placebo is that there must be some effort, scarcity or expense involved.

E.g. Red Bull (tastes weird, smaller can, expensive)
Diet Coke has to taste slightly more bitter, otherwise ppl won't believe it's a diet drink

Part 5: Satisficing

Keynes: "It's better to be vaguely right than precisely wrong"

Blurry 'pretty good' decision-making has simply proven more useful than precise logic

The footnotes are quite good

Herbert Simon: "decision makers can satisfice either by finding optimum solutions for
a simplified world, or by finding satisfactory solutions for a more realistic
world. Neither approach, in general, dominates the other"
nobelprize.org/prizes/economi…

An overemphasis on the importance of some metrics will lead to weaknesses developing in other overlooked ones

But just because it's irrational (satisficing), it doesn't mean it isn't right

5.3 We buy brands to satisfice

People don't choose Brand A over B because they think A is better, but because they are more certain that it is good.

No good judging things on their average expectation without considering possible level of variance

Heuristic look second-best to people who think all decisions should be optimal.

In a world where satisficing is necessary, they are often not only the easiest option but the best.

Defensive Decision-Making (Gigerenzer): marking a decision which is unconsciously designed not to maximise welfare overall but to minimise the damage to the decision maker in the event of a negative outcome (p270)

Part 6: Psychophysics - the study of how the neurobiology of perception varies among species, and how what we see, hear, taste and feel differs from 'objective' reality

Example: shape of blocks of chocolate bar were changed, rounding their corners. And smoother shapes taste sweeter

Mant female marmosets see in three colours, while males only see in two

Policymakers, designers and businessmen would be wise to spend less time trying to improve objective reality and more time studying human perception and moral instinct (p293-294)

Focusing illusion: causes us to vastly overestimate the significance of anything to which our attention is drawn (Kahneman & Tversky)

6.14 If people adopt behaviours that benefit the environment (or "are the right thing"), we shouldn't really care what their motives are

Getting people to recycle: one bin is rubbish-campaign.

'bin-hacks' to increase recycling, solving the problem backwards

thedrum.com/creative-works…

It is only the behaviour that matters, not the reason for adoptingit.

Give people a reason and they may not supply the behaviour; but give people a brhaviour and they'll have no problem supplying the reasons themselves (p.315)

Would people voluntarily pay more taxes if they could specify which service would receive the money? And if you give them a sticker to signal they paid more?

Some suggestions by @rorysutherland to make pensions more appealing:
1 tell people how much the state is giving them
2 Restrict how much ppl can save
3 make contributions flexible
4 slightly decrease tax rebate with age
5 allow ppl to draw money before retirement

The easier, reframed version of the Wason selection task (p.334)
en.m.wikipedia.org/wiki/Wason_sel…

Bill Bernbach observed: conventional logic is hopeless in marketing - as you end up in the same place as your competitors

What often matters most to those making decisions in business or government is not a successful outcome, but their ability to defend their decison, whatever the outcome may be (p.344)

Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally. - John Maynard Keynes,

Amos Tversky said in 1984 of his work as a cognitive psychologist: "What we do is take what is already instinctively known by used-car salesman and advertising executives, and we examine them in a scientific way"

Rory's rules of Alchemy