"Risk Savvy" Book Review

"Risk Savvy" by Gerd Gigerenzer shows why most people make dumb decisions -- We were never trained how to interpret risk. Here are some things to be learned from this book. 

Risk is a language most of us don't speak:

Literacy—the ability to read and write—is the lifeblood of an informed citizenship in a democracy. But knowing how to read and write isn't enough. Risk literacy is the basic knowledge required to deal with a modern technological society. The breakneck speed of technological innovation will make risk literacy as indispensable in the twenty-first century as reading and writing were in previous centuries. Without it, you jeopardize your health and money, or may be manipulated into unrealistic fears and hopes. One might think that the basics of risk literacy are already being taught. Yet you will look in vain for it in most high schools, law schools, medical schools, and beyond. As a result, most of us are risk illiterate ...

People aren't stupid. The problem is that our educational system has an amazing blind spot concerning risk literacy. We teach our children the mathematics of certainty—geometry and trigonometry—but not the mathematics of uncertainty, statistical thinking.

And we teach our children biology but not the psychology that shapes their fears and desires. Even experts, shockingly , are not trained how to communicate risks to the public in an understandable way. And there can be positive interest in scaring people: to get an article on the front page , to persuade people to relinquish civil rights, or to sell a product. All these outside causes contribute to the problem.

The more complex a risk is, the simpler a solution we need to find: 

When we face a complex problem, we look for a complex solution. And when it doesn't work, we seek an even more complex one. In an uncertain world, that's a big error. Complex problems do not always require complex solutions. Overly complicated systems, from financial derivatives to tax systems, are difficult to comprehend, easy to exploit, and possibly dangerous. And they do not increase the trust of the people. Simple rules, in contrast, can make us smart and create a safer world.

Technology and sophistication increases our confidence in predictions faster than the accuracy of those predictions: 

Many of us ask for certainty from our bankers, our doctors, and our political leaders. What they deliver in response is the illusion of certainty, the belief that something is certain even when it isn't. Every year we support a multibillion-dollar industry that calculates future predictions, mostly erroneous, from market tips to global flu pandemics. Many of us smile at old-fashioned fortune-tellers. But when the soothsayers work with computer algorithms rather than tarot cards, we take their predictions seriously and are prepared to pay for them. The most astounding part is our collective amnesia: Most of us are still anxious to see stock market predictions even if they have been consistently wrong year after year.

Good decision-making requires multiple ways of thinking:

In an uncertain world, it is impossible to determine the optimal course of action by calculating the exact risks. We have to deal with "unknown unknowns." Surprises happen. Even when calculation does not provide a clear answer, however, we have to make decisions. Thankfully we can do much better than frantically clinging to and tumbling off Fortuna's wheel. Fortuna and Sapientia had a second brainchild alongside mathematical probability, which is often passed over: rules of thumb, known in scientific language as heuristics. When making decisions, the two sets of mental tools are required:

RISK: If risks are known, good decisions require logic and statistical thinking.

UNCERTAINTY: If some risks are unknown, good decisions also require intuition and smart rules of thumb.

Most of the time, a combination of both is needed. Some things can be calculated, others not, and what can be calculated is often only a crude estimate.

Rules of thumb are really powerful: 

Because those who took part in the experiment were German, we came up with questions about the population of German cities (which we assumed would be easy) and U.S. cities (hard ).

We chose the seventy-five largest cities in each country. For instance, "Which city has a larger population: Detroit or Milwaukee?" "Which city has a larger population: Bielefeld or Hanover?"

The result blew our minds. Germans didn't do best on questions about German cities, about which they knew lots, but slightly better on American cities, about which they knew little. We'd made an error in assuming that knowing more always leads to better inferences. The experiment was ruined. 

But this error led us to discover something new, which we called the recognition heuristic: If you recognize the name of one city but not that of the other, then infer that the recognized city has the larger population. Many Germans had never heard of Milwaukee, and so they correctly concluded that Detroit has the larger population. Because they were familiar with both Bielefeld and Hanover, however, the rule of thumb didn't work for this question.

An American who has never heard of Bielefeld will correctly infer that Hanover has more inhabitants, but Germans have a hard time. Similarly, in another study, only 60 percent of Americans correctly answered that Detroit is larger than Milwaukee, while some 90 percent of Germans got it right. The recognition heuristic takes advantage of the wisdom in semi-ignorance.

This is really important stuff:

If we spent the same amount of money on developing a health literacy program to make children risk savvy as on developing new cancer drugs, I wager that the health literacy program would save many more lives from cancer.

We may not save every child from an unhealthy lifestyle, but if we save as few as 10 to 20 percent of the next generation, we will be more successful than further research on new drugs in the fight against cancer. We would also see more teenagers without obesity, smoking, and alcohol problems, as well as more healthy adults in general. We do not have to wait until the children grow old to see if it's successful. The efficacy of such a health literacy program can already be measured when the children are adolescents , by the number of those who smoke, get drunk, are obese, or have other health problems. And the skills children learn cannot only increase health in general but also help to lead a more self-controlled life.

Currently Reading: Nassim Nicholas Taleb's "Antifragile - Things That Gain From Disorder"

Aside from businessmen and investors, anyone who is uneasy with uncertainty, like anxiety disorder and OCD sufferers, can benefit from the profound insights of this book. You can learn to face uncertainty, It follows Nassim Nicholas Taleb's other great books, Fooled by Randomness and The Black Swan. I highly recommend it.

Nassim Nicholas Taleb

Antifragile is a standalone book in Nassim Nicholas Taleb's landmark Incerto series, an investigation of opacity, luck, uncertainty, probability, human error, risk, and decision-making in a world we don't understand. 

The other books in the series are Fooled by Randomness, The Black Swan, and The Bed of Procrustes. Nassim Nicholas Taleb, the bestselling author of The Black Swan and one of the foremost thinkers of our time, reveals how to thrive in an uncertain world. 

Just as human bones get stronger when subjected to stress and tension, and rumors or riots intensify when someone tries to repress them, many things in life benefit from stress, disorder, volatility, and turmoil. What Taleb has identified and calls "antifragile" is that category of things that not only gain from chaos but need it in order to survive and flourish. 

In The Black Swan, Taleb showed us that highly improbable and unpredictable events underlie almost everything about our world. In Antifragile,  Taleb stands uncertainty on its head, making it desirable, even necessary, and proposes that things be built in an antifragile manner. The antifragile is beyond the resilient or robust. The resilient resists shocks and stays the same; the antifragile gets better and better. Furthermore, the antifragile is immune to prediction errors and protected from adverse events. Why is the city-state better than the nation-state, why is debt bad for you, and why is what we call "efficient" not efficient at all? Why do government responses and social policies protect the strong and hurt the weak? Why should you write your resignation letter before even starting on the job? How did the sinking of the "Titanic" save lives? 

The book spans innovation by trial and error, life decisions, politics, urban planning, war, personal finance, economic systems, and medicine. And throughout, in addition to the street wisdom of Fat Tony of Brooklyn, the voices and recipes of ancient wisdom, from Roman, Greek, Semitic, and medieval sources, are loud and clear. 

Antifragile is a blueprint for living in a Black Swan world. Erudite, witty, and iconoclastic, Taleb's message is revolutionary: The antifragile, and only the antifragile, will make it. 

Praise for Antifragile:

"Ambitious and thought-provoking . . . highly entertaining."-- The Economist. "A bold book explaining how and why we should embrace uncertainty, randomness, and error . . . It may just change our lives."--Newsweek.  "Revelatory . . . Taleb pulls the reader along with the logic of a Socrates."--Chicago Tribune. "Startling . . . richly crammed with insights, stories, fine phrases and intriguing asides . . . I will have to read it again. And again." -- Matt Ridley, The Wall Street Journal. "Trenchant and persuasive . . . Taleb's insatiable polymathic curiosity knows no bounds. . .  You finish the book feeling braver and uplifted."--New Statesman. "Antifragility isn't just sound economic and political doctrine. It's also the key to a good life."-- Fortune. "At once thought-provoking and brilliant."-- Los Angeles Times.

Nassim Nicholas Taleb

"Changed my view of how the world works." -- Daniel Kahneman, Nobel laureate "[This] is the lesson of Taleb . . . and also the lesson of our volatile times. There is more courage and heroism in defying the human impulse, in taking the purposeful and painful steps to prepare for the unimaginable." -- Malcolm Gladwell, author of The Tipping Point "[Taleb writes] in a style that owes as much to Stephen Colbert as it does to Michel de Montaigne."--- The Wall Street Journal "The most prophetic voice of all . . . [Taleb is] a genuinely significant philosopher . . . someone who is able to change the way we view the structure of the world through the strength, originality and veracity of his ideas alone." --GQ.

Nassim Nicholas Taleb

Nassim Nicholas Taleb

Clustering and Mind-Mapping

Clustering is very similar to mind-mapping. Here's a tutorial blog from the Texas A&M University site:

Developing Content

“Invention” or “discovery” is the means whereby a writer or orator either finds (discovers) or creates (invents) content. In academic writing or speaking, invention often is thought to begin with research, but students also use invention techniques to help them prepare for research. Invention fosters critical thinking skills, so that as students do their research, they are more open to various problems and perspectives and more able to connect what they learn to their personal experiences and knowledge; invention also helps writers or speakers narrow a topic, clarify a thesis, develop ideas, or find arguments. In addition, once some preliminary reading or drafting is done, invention techniques can help he writer or speaker to refocus. Finally, these techniques are helpful for students who are blocked.

Not all invention techniques are suited to all communication tasks. Encourage students to experiment with these strategies to find out which work for them.

Clustering

For those who need a visual picture of their ideas, clustering (also called visualizing) is a helpful method of invention. Clustering can be done as a part of brainstorming groups (see below) or by students working alone.




What follows is a procedure for clustering:

1. Write a word related to the topic in the middle of a page and circle it.
2. Think of other words that come to mind when you think of the word. Let your mind be playful. Don’t judge or evaluate; just let the words flow.
3. As you write other words, circle them.
4. If you draw a blank thinking of more words, draw lines between the words you have written that are similar and draw arrows when one word leads to another.
5. Don’t think or analyze too long about any word or connection.
6. Continue this activity from two to five minutes.
7. Look through your cluster to get an idea of where to begin.
8. If you bog down in writing, resume the clustering process for another two to five minutes

You don’t need to evaluate clustering. You’ll find it difficult to follow someone else’s train of thought and probably won’t be able to tell much from the diagram. In fact, students will benefit more if you allow them to keep the diagram they produced so that they can refer to it as they write a draft. Instead, spend a few minutes of class time discussing the results of the clustering experience, to reinforce how to do it and to encourage students to think carefully about their results.

Brainstorming

Brainstorming, probably the most widely used invention technique, was codified in a set of techniques by Alex Osborne in the late 1950′s (Applied Imagination. NY: Scribner, 1957). According to Osborne, the ground rules for brainstorming are as follows:

1. Don’t criticize or evaluate any ideas during the session. Simply write down every idea that emerges. Save the criticism and evaluation until later.
2. Use your imagination for “free wheeling.” The wilder the idea the better, because it might lead to some valuable insights later.
3. Strive for quantity. The more ideas, the better chance for a winner to emerge.
4. Combine and improve ideas as you proceed. (Osborne 8)

Students can brainstorm alone or in pairs, of course, but small groups are more conducive to opening up new perspectives. They can brainstorm once or, better yet, over a series of class periods. To set up a brainstorming group in a class, try the following procedures:

1. Provide a topic or let the students select one.
2. Have students select a recorder who will keep notes on ideas that emerge. The recorder may also want to use a clustering format (see above) so as to make relationships between ideas more apparent.
3. Ask students to call out ideas and to use courtesy. They should not interrupt or ridicule.
4. Set aside a certain amount of time (10 to 15 minutes or longer) during each class for the students to brainstorm about the topic.
5. If students are writing on the same topic, you can allow them to work together in pairs or groups.
6. Never grade or evaluate the students’ work in any way.
7. Do this each class meeting for a period of time leading up to the drafting stage of a writing assignment.
8. Follow up the group session with a 10-minute writing period. Ask each student to select at least one idea the group came up with and elaborate on it. Remind them the writing won’t be graded or collected.
9. If you don’t have time in class, you can assign brainstorming for outside work and grade the quantity (but never the quality) of their work. Have students brainstorm a list of ideas about the topic for at least 10 minutes and then write for one hour elaborating on the ideas on the list without stopping.

Students may find this exhausting; they may discard most of what they write. However, they will discover ideas about the topic that they never knew they had.
This should take 20-30 minutes of class time. You can cut the time by omitting the follow-up. Don’t cut the brainstorming to less than 10 minutes, however, because students need at least that much time to warm up and push themselves to think more deeply and reflectively.

For a handout on Brainstorming geared to students, see the University Writing Center online handouts.

Think/Pair/Share

This is a quick and easy way to encourage both deeper thinking and fluency in public speaking in a low-stakes environment. Have students spend about 3-5 minutes thinking about the topic under consideration in class. For example, they might think about how diseases spread through needle pricks and what can be done to prevent it.  Preferably, they should jot down some of their ideas. Let them know that recording their thoughts will make them more effective and less nervous for the sharing that is to come.

Next, ask each student to pair up with a classmate and share their ideas.  Again, it is helpful if they jot something down, and for the same reasons.

At the end of the activity, depending on the time allotted and the size of the class, ask at least two of the pairs to share with the whole class. Think/Pair/Share can be a good springboard for class discussion, but even if the activity stops after two shares, the students will have taken the time to think more deeply about the topic.

Focused Freewriting

One of the best ways to get inexperienced writers used to the idea of writing is freewriting, which is writing without judgment or limits (except for time). The theory behind freewriting is that the writer’s conscious mind may be inhibiting ideas. While this theory is controversial, research does support the idea that writers attending too closely to rhetorical, grammatical, and mechanical issues (what is called “monitoring”) may be less fluent and may tend toward writer’s block (For example, see Mike Rose, Writer’s Block: The Cognitive Dimension,1985 and Peter Elbow, Embracing Contraries,1986).

Although some writing instructors advocate freewriting on any topic as a way to increase fluency and comfort with writing, in a content course it is likely that a more appropriate method would be focused freewriting, whereby the writer’s attention is drawn to a particular topic or problem.

In summary, the benefits of freewriting are many:

1. Inexperienced writers can become familiar with the physical act of writing.
2. Freewriting helps writers to match their writing process with their thinking process.
3. Writers can produce without the editorial judgments that make writing more difficult.
4. Freewriting demystifies the process of writing.
5. Students see that writing is not so difficult and that it does not require some innate gift.
6. Freewriting demonstrates to the students that good writing is not normally produced on the first try.

The procedure for focused freewriting, which you can share with students, is as follows:

1. Begin by writing your topic at the top of the page.
2. Write for a preset amount of time (usually 10 minutes) without stopping for anything. Do not lift your pen from the paper.
3. If you can’t think of anything to write, write “I can’t think of anything to write” or rewrite the last word that you wrote over and over until you think of something.
4. Do not worry about correct spelling, punctuation, wording, or mechanics. This is for your eyes only.
5. Do not judge your own ideas. Write whatever comes into your mind.
6. The only requirement is that you do not stop writing until the time is up.

A variation on freewriting called “looping” was described by Peter Elbow in Writing With Power. Add the following steps to the process above:

1. At the end of 10 minutes, read over what you have written. Look for a “center of gravity”–that is, a phrase or sentence that grabs your attention, makes you want to elaborate, challenges you, or otherwise engages you.
2. Rewrite that sentence at the top of a clean sheet of paper.
3. Begin another 10 minute freewrite.
4. Repeat again for a total of three “loops” or freewriting cycles.

The products of freewriting are best left to the student. You can’t evaluate what they have done except, perhaps, in terms of quantity. If you don’t have much class time to devote to freewriting, do it once or twice to teach students the procedure and then encourage them to do it themselves. Try doing it along with them, and you will get a better sense of its value.

For a handout on  Freewriting geared to students, see the University Writing Center online handouts.

Heuristics

Heuristics are systems of questioning. The Greek word “heurisis” means “finding” and is related to Archimedes’ cry of “Eureka!” (“I have found it!”). Most methods of prewriting fit into this category. You can formulate your own heuristics to fit your discipline, but below are listed two of the most useful general sets.

Reporters’ Questions

The simplest heuristic is the one reporters use: who? what? when? where? why? and how?

Classical Rhetoric

Ancient Greek and Roman rhetoricians saw Invention as a primary step in preparing a speech, and they used a system of Topics (“places”), where rhetoricians could “find” arguments. They discussed both Special Topics (that is, appropriate to a given discipline) and Common Topics (those general enough to be of use for any rhetorician). Their systems were codified by the great Roman educator, Quintilian.
Below is a modern version of Quintilian’s Common Topics:
Definition. “What is it/what was it?” The answer to the question can be in a variety of contexts:

• The World Trade Center towers were the two tallest buildings in New York City. (immediate context)
• The attack on September 11, 2001, was a damaging blow to the financial industry in the United States. (larger context)

Analogy . “What is it like or unlike?” Explain something that is not familiar by comparing it to a more familiar historical or general element.

• For many Americans, the days after the attack on the World Trade Center were like the days after the attack on Pearl Harbor.
• Flying commercial airplanes into the World Trade Center towers was unlike ordinary military use of aircraft.

Consequence. “What caused/causes/will cause it?” The answer can be explanatory or can predict an outcome.

• The attack on the World Trade Center brought America’s concern about homeland security to the forefront.
• If the governmental agencies in charge of security in the United States do not coordinate their information and efforts, another attack such as the one on the World Trade Center will occur.

Testimony. “What does an authority say about it?” The authority can be an expert, statistics, an eye-witness, or accepted wisdom.

• Even after the attack on the World Trade Center towers, New York City Mayor Rudy Guilliani said that the city was still strong and united.
• Over 100,000 square feet of office space was destroyed and more than 2,000 people died in the attack on the World Trade Center.
• People on the ground near the World Trade Center said they saw many people jumping from the top floors of the towers after the airplanes hit.
• Survivors of the attack on the World Trade Center towers will suffer much grief and depression.

The topics of definition, analogy, and consequence are the most useful in creating a thesis statement. Testimony is better for supporting the thesis.

For further help refer to our handout, specifically, Brainstorming in the Composing Process section. Another good source is the computer program Invent.

Terror Management Theory

I'm enjoying Wray Herbert's On Second Thought, which explores the many "mental shortcuts" used by the "down and dirty," "low road," "quick processing" system of our "parallel processor" brains. From Wikipedia, "Heuristic ( /hjʉˈrɪstɨk/; or heuristics; Greek: "Εὑρίσκω", "find" or "discover") refers to experience-based techniques for problem solving, learning, and discovery. Where an exhaustive search is impractical, heuristic methods are used to speed up the process of finding a satisfactory solution. Examples of this method include using a rule of thumb, an educated guess, an intuitive judgment, or common sense."

In Chapter 19 Herbert explores the "Grim Reaper Heuristic," about how our mind copes and keeps at bay the existential pain that humans experience because of mortality salience (we're aware of our own mortality). In this chapter he mentions "Terror Management Theory."

Again, from Wikipedia, "Terror Management Theory (TMT), in social psychology, states that human behavior is mostly motivated by the fear of mortality. According to TMT theorists, symbols that create cultural worldviews are fiercely protected as representations of actual life. The Terror Management Theory posits that when people are reminded of their own deaths, they more readily enforce these symbols, often leading to punitive actions, violence, and war. Experiments have been performed to lend evidence to TMT, primarily carried out by Sheldon Solomon, Tom Pyszczynski, and Jeff Greenberg, seeking to provide proof that mortality salience, or the awareness of one's own death, affects the decision-making of individuals and groups of people.

The theory purports to help explain human activity both at the individual and societal level. It is derived from anthropologist Ernest Becker's 1973 Pulitzer Prize-winning work of nonfiction The Denial of Death, in which Becker argues all human action is taken to ignore or avoid the inevitability of death. The terror of absolute annihilation creates such a profound -- albeit subconscious -- anxiety in people (called cognitive dissonance) that they spend their lives attempting to make sense of it. On large scales, societies build symbols: laws, religious meaning systems, cultures, and belief systems to explain the significance of life, define what makes certain characteristics, skills, and talents extraordinary, reward others whom they find exemplify certain attributes, and punish or kill others who do not adhere to their cultural worldview. On an individual level, how well someone adheres to a cultural worldview is the same concept as self-esteem; people measure their own worth based on how well they live up to their culture's expectations."

On Second Thought: Heuristics and Framing

Once again, the pioneering research of Daniel Kahneman and Amos Tversky serves as the foundation for this breezey Malcolm Gladwell-type book, On Second Thought, by Wray Herbert. I never tire of reading about heuristics and Prospect Theory. Check out the subtle visual pun on the cover design.

From the almighty Amazon, "Our lives are composed of millions of choices, ranging from trivial to life-changing and momentous. Luckily, our brains have evolved a number of mental shortcuts, biases, and tricks that allow us to quickly negotiate this endless array of decisions. We don’t want to rationally deliberate every choice we make, and thanks to these cognitive rules of thumb, we don’t need to. 


Yet these hard-wired shortcuts, mental wonders though they may be, can also be perilous. They can distort our thinking in ways that are often invisible to us, leading us to make poor decisions, to be easy targets for manipulators…and they can even cost us our lives. 


The truth is, despite all the buzz about the power of gut-instinct decision-making in recent years, sometimes it’s better to stop and say, “On second thought . . .”


The trick, of course, lies in knowing when to trust that instant response, and when to question it. In On Second Thought, acclaimed science writer Wray Herbert provides the first guide to achieving that balance. Drawing on real-world examples and cutting-edge research, he takes us on a fascinating, wide-ranging journey through our innate cognitive traps and tools, exposing the hidden dangers lurking in familiarity and consistency; the obstacles that keep us from accurately evaluating risk and value; the delusions that make it hard for us to accurately predict the future; the perils of the human yearning for order and simplicity; the ways our fears can color our very perceptions , and much more. 


Along the way, Herbert reveals the often-bizarre cross-connections these shortcuts have secretly ingrained in our brains, answering such questions as why jury decisions may be shaped by our ancient need for cleanliness; what the state of your desk has to do with your political preferences; why loneliness can literally make us shiver; how drawing two dots on a piece of paper can desensitize us to violence, and how the very typeface on this page is affecting your decision about whether or not to buy this book.   


Ultimately, On Second Thought is both a captivating exploration of the workings of the mind and an invaluable resource for anyone who wants to learn how to make smarter, better judgments every day."

Malcolm Gladwell's Masterworks

Three outstanding popular science books by Malcolm Gladwell, who has spawned a whole style of writing, emulated by so many others.