How does skin in the game help solve the Black Swan problem?

As I was reading Skin in the Game, Nassim Taleb’s latest book, the thought crossed my mind that the author might classify me as an IYI (intellectual yet idiot). He puts economists in the IYI category along with psychologists.

Taleb writes: 

“Knowing ‘economics’ doesn’t mean knowing anything about economics in the sense of the real activity, rather than the theories … produced by economists”. 

I agree. Some economists know little about the real world.

Despite his low opinion of economists, the author acknowledges that some of the economists I admire, including Friedrich Hayek, Ronald Coase and Elinor Ostrom, had useful insights about the real world. He even suggests that Paul Samuelson made a useful contribution by pointing out that people reveal their preferences in their market behaviour rather than in what they say.

Rather than viewing Nassim Taleb’s offensive anti-intellectualism as evidence that he suffers from SFB, I think economists and psychologists should view it as a clever ploy to attract the attention of their students. I hope Taleb succeeds, and also hope that his book helps students to pose difficult questions for some of their professors.

There is some irony in the fact that Taleb has a low opinion of intellectuals, since Daniel Kahneman views Nassim Taleb as “one of the world’s top intellectuals”. Kahneman, a psychologist, won the Nobel prize for economics, largely for his research on asymmetry in the way people value potential gains and losses in making decisions. Taleb is critical of that research.

The question I raised at the outset was prompted by the following passage:

“Skin in the game helps to solve the Black Swan problem and other matters of uncertainty at the level of both the individual and the collective: what has survived has revealed its robustness to Black Swan events and removing skin in the game disrupts such selection mechanisms. Without skin in the game, we fail to get the Intelligence of Time".

It is worth trying to take that apart to understand the reasoning behind it.

Skin in the game is about more than just sharing in the benefits of an activity. It involves symmetry and reciprocity – paying a penalty if something goes wrong as well as sharing in the rewards for risk taking.

Most people who provide us with goods and services still pursue occupations where they have skin in the game. The problem is that many of the people who don’t have skin in the game - for example, politicians, bureaucrats, bankers and university professors - occupy positions where their mistakes can have far-reaching consequences.

The Black Swan problem arises when we ignore extreme events – potential disasters - that occur infrequently. Taleb’s main point is that there are some risks that we can’t afford to take even though there is a low probability that they will occur at any point in time. His book, The Black Swan, was published in 2007 and made him famous following the 2008 financial crisis. Taleb contends that banks and trading firms are vulnerable to hazardous Black Swan events. The bank blow-ups occurred in 2008 as a result of hidden and asymmetric risks in the financial system.

At the level of the individual, skin in the game helps to solve the Black Swan problem because it helps people to focus on their need to survive in order to succeed. Taleb argues for profiting from risk-taking that doesn’t threaten survival. He points out that Warren Buffet made his billions by picking opportunities that passed a high threshold, rather than by applying cost benefit analysis.

At the collective level, skin in the game helps to solve the Black Swan problem because it requires decentralization of decision-making. Under a decentralized system the costs of the mistakes made by individuals are borne by those individuals, without necessarily affecting other participants. Centralized systems are exposed to the Black Swan problem because they can only be run by people who are not directly exposed to the cost of errors.

What has survived has revealed its robustness to Black Swan events. That applies to ideas, institutions, technologies, political systems, procedures, intellectual productions, car models, scientific theories etc. The only effective judge of things is time, because time is equivalent to disorder. The longer things survive, the more likely it is that they will have survived Black Swan events.

Removal of skin in the game disrupts selection mechanisms. When people have skin in the game they are less likely to reject ideas that have withstood the test of time in favour of new ideas that that have been published in peer-reviewed journals. A lot of findings published in peer reviewed journals fail subsequent replication tests.  

Without skin in the game, we fail to get the Intelligence of Time. Time removes the fragile and keeps the robust. The life expectancy of the nonfragile lengthens with time. Taleb writes:

The only definition of rationality that I’ve found that is practically, empirically, and mathematically rigorous is the following: what is rational is that which allows for survival."

I think Nassim Taleb is correct in his view that skin in the game helps to solve the Black Swan problem. Unfortunately, however, when it is comes to consideration of potential Black Swan events that threaten the survival of humanity, the political systems we have inherited do not ensure that political leaders have enough skin in the game for their minds to focus appropriately. Political leaders focus on their survival at the next election rather than on the survival of humanity. It is up to citizens who are concerned about potential Black Swan disasters to initiate appropriate action themselves.

How can we overcome confirmation bias?

This guest post by Leah Goldrick was originally published on her excellent blog, Common Sense Ethics. Leah acknowledges that confirmation bias is linked to pattern recognition, which serves a useful purpose. The confirmation bias problem arises when we seek out information to confirm what we believe and ignore everything else.

The documentary that Leah refers to in her first paragraph is worth watching. It illustrates how easy it was for a group of people who did not appear likely to be particularly gullible to acquire an unshakeable belief that the end of the world would occur on 21 May 2011.

Why is it so hard to for us the change our beliefs or to get other people to change their minds? A new documentary film Right Between Your Ears, examines the science and psychology of how people form convictions. According to producer Kris De Meyer, a neuroscientist, certain aspects of human psychology make it very hard for us to be objective or unbiased.

People usually form beliefs by accepting what they've been told by someone they trust: parents, teachers, media and so on. Our beliefs can change when we learn new things. But when we become convinced of something, it is similar to a religious belief in the way our brain operates. We may react with anger when challenged. This human tendency often leads us to seek out information which confirms what we already believe and ignore everything else - it's a cognitive bias actually - called confirmation bias.

It seems obvious why confirmation bias can be a problem - it can prevent us making good decisions. It makes us rigid thinkers. Someone can easily fool us by simply appealing to our established belief systems. The good news is that there are some practical strategies to overcome this natural human shortsightedness that I'll let you in on at the end of the post.
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How We Form Beliefs

Let me back up for just a second. What led me to write this post (besides my abiding interest in critical thinking) was the Shakespeare authorship course I recently took online via the University of London. Along with being just about the most interesting topic ever, the instructor, Dr. Ros Barber, focused the first lesson on the science of how beliefs are formed, cognitive bias, and how belief systems can crystallize into orthodoxies which may not be questioned without ridicule.

Dr. Barber interviews ​Kris De Meyer, a neuroscientist and documentary film maker currently working at the Department of Neuroimaging at King's Institute for Psychiatry, Psychology and Neuroscience, about how we form our beliefs in the first place.

According to De Meyer, we form fairly rigid belief systems or perceptual frameworks out of necessity as we go through life in order to handle the information continually coming at us. Usually, our perceptual framework serves us quite well. But it can also be a major intellectual handicap when we are confronted with information which undercuts our established belief systems. De Meyer states:

"But beliefs become strongly held and particularly if we build our identity around them, they begin to act as perception filters. Indeed, it might be useful to think of a belief as a perceptual framework, something that helps us make sense of the world around us." 

Confirmation Bias

The problem with our perceptions being filtered through our belief structures is that it can create something called confirmation bias. We tend to interpret new information in a way that strengthens our preexisting beliefs. ​​When we are confronted with information which conflicts with our beliefs, we will often find ways to discard it. We also tend to search out information which confirms our beliefs rather than looking for more neutral or contradictory information.

For our general functioning in the world, we must keep our perceptual frameworks fairly rigid. So even when our brain finds data that is anomalous, confirmation bias can lead us to explain it away as an error. Experiments in the 1960s hinted that people are biased towards their beliefs. Later experiments focused on our natural tendency to test ideas in a one-sided way, focusing on one possibility and ignoring alternatives.

Anyone can suffer from confirmation bias: teachers, Shakespeare scholars, even scientists. In one study on confirmation bias involving scientists, over half of laboratory experimental results were inconsistent with the scientists' original hypotheses. In these cases, the scientists were reluctant to consider that data as valid. The anomalous finding was usually classified as a mistake. Even after scientists had produced an anomaly more than once, they would often choose not to follow up.

When we perceive, we construct systems of beliefs inside of our heads like a lawyer trying to prove a case. The more strongly we are engaged in a topic, the more likely we are to dismiss contradictory evidence. Basically on both sides of any debate, we have a system beliefs that tells us that we are right and the other side is wrong.

​According to Ros Barber, "[When any conflict happens] it's been described as "a dialog of the deaf" because people can't hear the other point of view. They just think it's totally invalid." 

Cognitive Dissonance

So why does confirmation bias happen? It might be because of wishful thinking, or because of our limited mental capacity to process information. It could also have to do with a failure to imagine alternate possibilities (more on this later). Another explanation for confirmation bias is that people are afraid of being wrong, and fail to ask the right probing questions about their beliefs, instead reasoning from their already held conclusions.

When we are confronted with contradictory evidence, it causes something called cognitive dissonance - mental distress caused by information that doesn't fit in with our current understanding of the world. Cognitive dissonance is uncomfortable and people will sometimes go to great lengths to avoid it.

​Cognitive dissonance was first theorized by psychologist Leon Festinger who argued that we have an inner drive to hold consistent beliefs. Holding inconsistent beliefs causes us to feel disharmonious. Festinger studied a cult whose members believed that the earth was going to be destroyed by a flood. He investigated what happened to the cult members, especially the committed ones who had given up their homes and jobs, after the flood did not happen on the proposed date.

The most committed cult members were more likely to rationalize their original beliefs (confirmation bias) even after experiencing cognitive dissonance in the face of the flood not happening. Loosely affiliated members were much more likely to admit that they had simply made a mistake and to move on. The more attached we are to a belief, the harder it is to change it. 
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How To Think (and Debate) With Less Bias

​So what are the best strategies to overcome our natural human shortsightedness and bias? The first is to keep emotional distance in reasoning, and the second is to consider the other side (or sides) of any debate, a technique called the "consider the opposite," strategy.

1. Keep Emotional Distance When Reasoning

Given the natural human tendency towards confirmation bias, it is important to be at least somewhat dispassionate when reasoning and debating. I like to call this emotional distance. Emotional distance is just as much a character trait of a reasonable person as it is a strategy for handling cognitive biases.

Confirmation bias may in part stem from our desire not to be wrong, so by keeping emotional distance, you essentially are willing admit to yourself that you could have some things wrong. Don't be too attached to any particular piece of evidence. In any difficult debate we all may get certain parts of the puzzle incorrect.

Look out for signs of confirmation bias in yourself. ​ Remember that the more strongly held your beliefs are, the more likely you are to refuse to consider alternative evidence - like the cult members who invested everything in their belief in an impending flood.

Emotional distance also involves viewing debate as dialog rather than an angry fight. If your ego gets too caught up defending a certain belief, you are more likely to get angry when contradicted. Angry people usually double down and become more extreme on their point of view rather than considering someone else's. Keep in mind that politeness might actually be the secret weapon for getting someone to overcome their bias. Kris De Meyer suggests:

"When we do feel a pang of anger at being challenged, rather than responding very quickly we can step away from it for maybe a few hours or a day, think carefully about where that person is coming from, and then see if we can give them more constructive comments that then doesn't spark his or her angry response. Because it's those feelings of anger at being misunderstood and of being misrepresented that really are the ones that drive us towards more certainty. And if the conversation becomes amicable, it can be heated and passionate without being acrimonious and negative. The way to use [your knowledge of confirmation bias] is to question yourself and to reflect on your own assumptions and your own interactions with other people."

Maintaining emotional distance is powerful, but it may not be enough to overcome biases, which is why we should also use this second strategy:

2. Consider the Opposite

Confirmation bias may in part be the result of our limited mental capacity to imagine alternative scenarios. The consider the opposite strategy helps us to envision how else things might be. In a recent study, this technique was proven to work better than just attempting to remain objective.

Considering the opposite in everyday practice works like this: you take a look at a set of facts about something. Generally, you would try to discern whether the facts support your belief or not. If you are experiencing confirmation bias, you would probably imagine that the facts do actually support your belief. But when you force yourself to consider the opposite, you instead imagine that the facts point the opposite way, disproving your belief. This helps you to imagine alternatives to what you already believe.

The consider the opposite strategy works particularly well with diametrically opposed beliefs, but always bear in mind that there may be more than one alternate possibility. Be willing to entertain various possibilities rather than falling victim to false dichotomies. 

How can people become more open to critical evaluation of their own views?

It might not be obvious to everyone that it is desirable for people to be open to critical examination of their own views. The process of critical examination takes time and energy and can be unsettling. If it leads a person to change his or her view, relatives and friends might disapprove.

What is the problem with immunity to change? One problem is failure to actualize potential. In the first chapter of their book, Immunity to Change: How to overcome it and unlock the potential in yourself and your organisation, Robert Kegan and Lisa Laskow Lahey provide evidence suggesting that immunity to change of attitude tends to hinder mental development of adults. Survey data indicates that there is potential for mental development to continue throughout adulthood, at least until old age. Development tends to occur unevenly, with periods of change followed by periods of stability.

Researchers have identified three adult plateaus of development corresponding to different meaning systems that people use to make sense of the world and operate within it:

·         A socialized mind enables an individual to be a faithful follower and team player.

·         A self-authoring mind can generate an internal belief system/ ideology/ personal code and is self-directed. It places priority on receiving the information it has sought and creates a filter which determines what information it allows to come through.

·         A self-transforming mind can step back from and reflect on the limits of personal ideology and systems of self-organisation. Individuals at this level of mental development value the filter they have created to separate the wheat from the chaff, but they also value information that may alert them to limits of their filter.

Individuals at each successive level of mental development can perform the mental functions of the prior level as well as additional functions. A person who had attained the self-transforming stage of development can be self-authoring when required to develop and execute a plan of action, and can also be a team player when that is appropriate.

Studies involving several hundred participants suggest that most people (58% of respondents) have not attained a self-authoring level of development. Of the remainder, only a tiny percentage have self-transforming minds. The studies probably exaggerate the level of personal development of most of the population because they were skewed towards middle-class professionals.

This research seems highly relevant to questions considered recently on this blog about echo chambers in the social media and the reluctance of many people to listen to opposing viewpoints, as well as to consideration of the ingredients of good leadership. The vast majority of those who aspire to be able to reflect objectively on the limitations of their views of how the world works are likely to be biased against seeking information that might challenge those views.

As the title of the book suggests, Immunity to Change is about overcoming the psychological resistance that that prevent us from making the changes we want to make in our own lives and within organisations. The book is replete with examples, drawn from the extensive consulting experience of the authors, to illustrate how people can identify and deal with hidden fears that prevent them from making the changes they want to make. Most readers of this book are probably aspiring to leadership positions or attempting to change organisations, but much of the material in it is relevant to anyone who is attempting to make changes in their lives.

I will focus here on the approach to overcoming internal resistance that the book might suggest for a person who wants to become more open to critical evaluation of his or her own views on issues that have become highly politicized. I will provide my own responses to the series of questions suggested by the authors, rather than speculate about how others might respond. Hopefully my introspection will have some relevant to others.

1.       What is your improvement goal?

As already noted, I want to be more open to critical evaluation of my views on issues that have become politicised. My reason for doing this is that I suspect the opposing side on such issues might sometimes have genuine concerns that are worth considering.

2.       What are you doing/ not doing instead?

I rarely read opinion pieces by commentators whom I consider likely to be opposed to my views on controversial issues. I have sometimes expressed the view that I need to be paid to read such commentary.

When friends and relatives challenge my views on controversial issues, my response is often overly defensive. I begin such conversations with the intention of ensuring I understand the opposing point of view, but I am easily diverted to point scoring.

3.       What hidden competing commitments prevent achievement of your improvement goal?

When I imagine myself reading commentary that is opposed to my views I feel that I am likely to be bored by a recitation of views that I have previously rejected. It seems like a waste of time. However, I must also acknowledge fear that reading such commentary could be unsettling. The authors of these pieces often do their best to appeal to the emotions of their readers. I acknowledge some concern that I might need to modify my views if I start feeling sympathy for the plight of victims of policies that I support. The hidden commitments underlying those concerns are not feeling unsettled and not being swayed by appeals to emotion.

My defensiveness in conversations on controversial topics with people with opposing viewpoints seems to be related to the tendency for such conversations to degenerate into point-scoring exercises in which participants attempt to attach labels to each other. I am concerned that I might respond in kind if conversation partners disrespect me. The hidden commitments are to avoid being labelled and to avoid losing self-control.

4.       What are the big assumptions that underlie this immune system?

I accept that the hidden commitments identified above act as an immune system to prevent progress toward my improvement goal. I can see why I am unlikely to be able to make much progress merely by forcing myself to read commentary that is opposed to my views, or by telling myself not to become defensive when discussing controversial issues. The hidden commitments identified above have been acting as an anxiety reduction system.

 The authors of Immunity to Change explain the concept of “big assumption” as follows:

"We use the concept of big assumptions to signal that there are some ways we understand ourselves and the world (and the relationship between the world and ourselves) that we do not see as mental constructions. Rather, we see them as truths, incontrovertible facts, accurate representations of how we and the world are.

These constructions of reality are actually assumptions; they may well be true, but they also may not be. When we treat an assumption as if it is a truth, we have made it what we call a big assumption."

The big assumptions underlying the hidden commitments I have identified seem to be related to self-trust. There is an assumption that I can’t trust myself to feel sympathy for the plight of some unfortunate people without losing my mental faculties. There is also an assumption that I can’t trust myself not to lose control if I am disrespected.

Identifying those big assumptions was an “aha” moment for me. The absurdity of the assumptions seemed obvious as soon as they were identified.

However, Kegan and Lahey emphasize that the process of overcoming immunity to change does not end with identifying big assumptions. The next step is to design tests capable of disconfirming the big assumptions. The tests involve changes in usual conduct that generate information that we can reflect upon to challenge the big assumptions. The authors emphasize that the purpose of running the tests is not to see whether performance has improved, but to generate information to provide a learning experience.

This is where my story ends. In writing this article I have ‘tied myself to the mast’ with a public commitment to test my big assumptions. However, it could be counterproductive to disclose what tests I have in mind, and I’m certainly not going to promise to write a sequel to tell you what happens.

Even if it achieves nothing more, this exercise of identifying big assumptions has made me more appreciative that the difficulty other people have in being open to critical evaluation of their own views could well be attributable to deep-seated fears.

I recommend Immunity to Change to anyone struggling to understand why they are having difficulty in making the changes they want to make in their own behaviours.

What is to be gained by listening to opposing viewpoints?

It is comforting to listen to people espouse views like our own. Perhaps it makes us feel that our views are being validated.

Listening to an opposing viewpoint can feel challenging. There are several reasons for that. There may be times when we are not in the mood for the intellectual stimulation involved in considering the merits and demerits of an opposing viewpoint.

A more deep-seated reason for feeling challenged arises when we identify strongly with views that are being attacked. We may even feel offended. That has traditionally been seen to be likely when views on politics, religion and sex are being criticized. Ethnicity and culture should be added to that list. People also tend to be highly offended if anyone casts aspersions on the sporting teams they support.

However, taking offence is optional. Many Collingwood supporters, and many people of Irish and Scottish descent even seem to be able to see the humour in some of the jokes made at their expense.

From my childhood memories, in the farming community in which our family lived in the 1950s, there seemed to be greater willingness to listen to opposing political viewpoints than exists anywhere today. There seemed to be widespread acceptance that you need to listen to opposing political viewpoints if you want to argue against them effectively. People steered clear of discussion of religious differences and if anyone had views about sex and marriage that were at variance with conventional morality they didn’t discuss them openly.

The civility of the participants is obviously an important determinant of the amount of heat generated when contentious political issues are discussed. From my own experience, and limited discussions with others, I have the impression that in the 1950s people were generally more intent than they are now on maintaining civility when participating in political discussions. It seemed common for discussions to end in a meeting of minds on some points and respectful disagreement on others. Occasionally, when one of the main participants was intent on giving offence, discussions would end in an exchange of insults, or worse.

Have people become more open to listening to opposing views on other contentious issues since the 1950s?  A few years ago, I would have argued that the shibboleths had diminished as the major religions had become more tolerant of each other and a revolution in attitudes had caused many people to moderate their views of sexual morality.

It now seems that the old shibboleths have been replaced as new issues have become politicised. When issues become politicised it now seems to be much more common for people to parrot the views of the leaders of their political tribe and to refuse to consider opposing viewpoints. The art of listening seems to be disappearing from the public realm.

Steven Pinker has an interesting discussion of the politicization of issues in his recent book, Enlightenment Now: The case for reason, science, humanism and progress. He refers to research by the Dan Kahan, a legal scholar, who argues that bitter public disputes over science are now “the exception rather than the rule”. The exception arises when certain beliefs become symbols of cultural allegiance. To help make this point Kahan refers to recent U.S. history regarding vaccines for Hepatitis B and the HPV virus (a major cause of cervical cancer). Both vaccines prevent sexually transmitted diseases. Hep B vaccination has apparently been accepted without much opposition, but HPV vaccination has become a political firestorm because of fears that it would encourage teenage promiscuity. Kahan suggests that the difference stems from the way the two vaccines were introduced.  Hep B vaccination was treated as a routine public health matter, but the manufacturers of the HPV vaccine lobbied state legislatures to make vaccination of adolescent girls mandatory. Kahan’s view is supported by Australian experience of a voluntary HPV vaccination program being introduced successfully without the issue becoming politicised.

Issues often become politicized when they are taken up by political leaders. For example, it seems likely that by politicising the global warming debate, Al Gore’s documentary An Inconvenient Truth made it more difficult for conservatives to acknowledge the merits of any proposed policy action on climate change.

The media also plays a role in politicising issues by converting disagreement on public policy into a spectator sport.  In my view Australia’s public broadcaster, the ABC, is a major offender. The ABC’s charter requires it to inform and entertain, but unfortunately does not require it to encourage the reasoned debate and respectful disagreement necessary for liberal democracy to function effectively. In particular, the Q&A program seems to me to be designed to politicize policy debate. It entertains viewers by providing a forum for activist and conservative tribes to clash on totemic issues. Although some panellists and audience participants do their best to engage in reasoned debate, it would be difficult for any viewers to obtain a better understanding of alternative viewpoints from this program.

How can we have a useful exchange of views on issues that have become politicised? In a recent article on this blog I suggested that people who approach issues from different ideological perspectives would be able to have more useful policy discussions if they could turn their attention to what they can learn from the actual experiences of people in different institutional and policy settings. That is rarely straight forward, of course, because interpretation of experience is not immune to ideological bias. But it is still good advice!

It can also be useful to ask people to explain views you disagree with, rather than asserting that they are talking nonsense. Steven Pinker notes that when people are asked to explain an opinion they often realize that they don’t know what they are talking about and become more open to counter-arguments. That is more likely to occur when they are aware that someone is listening intently to the answer they are giving.

This view is consistent with Leah Goldrick’s conclusion in a recent article about the know-it-all syndrome. On her blog, Common Sense Ethics, Leah writes:

“Thinking is fundamentally driven by questions, not answers. This is why doubt, not certainty, is so important. Doubt is the starting place that leads us to question the assumptions that have lead us to a particular conclusion, and doubt is what drives us to learn more if we will humble ourselves enough to consider that we may be wrong. Constant learning, from a place of humble confidence, rather than a place of arrogance, is the antidote to know-it-all syndrome”.

You are more likely to have useful exchanges of view if you “assume that the person you are listening to might know something you don’t”. That is one of the rules that Jordan Peterson lists in his recent book, 12 Rules for Life (recently reviewed on this blog). Peterson suggests that we remain threatened by disease, self-deception, unhappiness and many other causes of suffering because we are too ignorant to protect ourselves. There is always potential for us to improve our own lives if we respect the personal experience of our conversational partners.

Some of my readers may be wondering whether there is any organisation they could joint to help cultivate a listening culture and improved communication in the community in which they live. A few weeks ago, the realisation dawned on me that for the past 16 years I have been a member of an organisation whose founder believed that “in bringing improvement in the way of better thinking, better listening, better speaking to individuals we are contributing to the improvement of the society which is made up of these individuals”. The quote is from an article by Ralph Smedley, founder of Toastmasters International, which appeared in the February 1958 issue of The Toastmaster. (The article, entitled, ‘The Toastmasters Club … Its Meaning and Values’, has been reproduced in Personally Speaking: Selections from the Writings of Dr Ralph C Smedley.)

The mission of Toastmasters is to develop communication and leadership skills of individual members so that they can achieve greater self-confidence and personal growth. The benefits that can bring to the lives of individual members are obvious but, as Ralph Smedley maintained, members of Toastmasters - now numbering more than 352,00 – also have an opportunity to contribute to “the building of a better society made up of individuals who must act in groups”.

Are nature and biodiversity essential to health and happiness?

There is no prize for guessing the answer given by Susan Prescott and Alan Logan in The Secret Life of your Microbiome: Why nature and biodiversity are essential to health and happiness.

This recently published book is written for a popular audience, but the authors have expert knowledge of the microbiome – the microbes and their genetic material found in the human gut and skin. Susan Prescott is an immunologist and paediatrician. Alan Logan’s background is in research relating to naturopathic medicine. It is obvious that the authors have spent a lot of time sifting through scientific evidence in writing the book.

Some of the evidence suggesting that nature and biodiversity are essential to health and happiness is derived from inspection of the stools of our Paleolithic ancestors. Evidence from archaeological sites suggests that our hunter and gatherer ancestors ate a wide variety of plant food and had a greater diversity of micro-biota than most people living modern lifestyles. The same is true today of people who are still living traditional lifestyles close to nature.

The authors accept that modern medicine and hygiene have brought great benefits, but they point to evidence that a diet with a great deal of sugar, ultra-processed food and drinks – as well as excessive use of antibiotics, stress and physical exhaustion – can lead to gut permeability, an increase in blood endotoxins, and an increase in central nervous system inflammatory chemicals. Intestinal permeability is apparently associated with a range of chronic conditions including autism, asthma, allergies, chronic fatigue, depression, fibromyalgia, heart disease, irritable bowel, obesity, type 2 diabetes, psoriasis and schizophrenia.

Prescott and Logan argue that we have a symbiotic relationship with the human microbiome, which co-evolved with our ancestors. The microbiome provides functional benefits such as nutrient extraction, protection against harmful microbes, regulation of metabolism and production of important biochemicals. Researchers don’t yet understand what microbes would comprise an ideal microbiome, but the key seems to be diversity, which is encouraged by dietary diversity. The authors suggest that the human immune system has evolved to expect a kaleidoscope of biodiversity.

The authors view commercially available probiotics and prebiotics as a useful supplement that can help defend against dysbiotic forces in the modern environment, rather than as a substitute for the adoption of a healthy lifestyle. They emphasize the importance of dietary choices, physical activity, sleep and experience of natural environments.

There is substantial evidence, some previously discussed on this blog, that experience of natural environments has a positive impact on health and happiness. Prescott and Logan provide an interesting account of Japanese research relating to shinrin-yoku – the absorption of the forest into the body and mind:

“Remarkable studies have demonstrated that, individually, the sounds of nature, the sights of nature, the invisible chemicals secreted from trees (phytoncides, or phytochemicals), and the touch of natural products like wood (compared to synthetic resin), can positively influence stress physiology and our parasympathetic nervous system, the “rest and digest” branch of the nervous system that cools the jets of over-stimulation. The sum of research shows that our sensory system understands nature like an old friend.”

One of the authors’ aims seems to be to promote nature relatedness – fascination with nature and a desire for contact with it. They note evidence that nature relatedness is associated with high levels of psychological wellbeing, lower anxiety and greater meaning and purpose in life. Experience in nature tends to lift nature relatedness scores. Practicing mindfulness while walking in nature has additional emotional benefits. Moreover, the combination of nature relatedness, mindfulness and meaningfulness of life promotes pro-environmental behaviours.

Prescott and Logan leave readers in no doubt that they view pro-environmental behaviours to be desirable. I agree with them.

However, I strongly disagree with authors about economics and politics. They argue:

“It’s up to governments, insulated against lobbyists, to help curb the wild west that is fueling the dysbiosphere. Time and time again industry has shown it just can’t stop itself from pushing dysbiotic choices on our children.”

They oppose the view that “an individual can assume responsibility for personal health problems by simply adopting what biomedicine has to offer”. They suggest that view is deficient because it “doesn’t consider that a broken socio-ecological system might be the driving force for the need of biomedicine in the first place”.

When I read such views I have to remind myself that in writing about supporters of socialism Friedrich Hayek insisted “that it is neither selfish interests nor evil intentions but mostly honest convictions and good intentions which determine the intellectual's views”. (Quote from ‘The Intellectuals and Socialism’). It is not necessarily a waste of time to try to correct the errors of well-intentioned people.

Some of the errors made by Prescott and Logan are as follows:

1.       The view that government can be insulated against lobbyists is contrary to everything that is known about government and human nature.

2.       The phrase “pushing dysbiotic choices on our children” refers to advertising and selling products that are only harmful to human health when consumed inappropriately. There is nothing in our legal or economic system that requires parents to buy such products for their children or to allow them to over-indulge. Firms already offer foods for sale that are beneficial to health and will have a greater incentive to do so as consumers become more aware of the health implications of the choices they make on behalf of their children.

3.       The widespread human misery (and environmental catastrophes) caused by socialist economic experiments during the 20^th century should make us wary of claims that the socio-ecological system is broken. In what respects is it broken? What precise interventions are proposed to fix it? And, are we sure, beyond reasonable doubt, that those interventions will produce better overall outcomes?

Susan Prescott and Alan Logan were unwise to include ill-informed rants on economics and politics in this book. It seems to me that those rants detract from their efforts to promote a revolution in attitudes toward the micro-biome and the environment.

In my view this book is nevertheless worth reading because of the substantial body of scientific evidence it provides that many aspects of human health and happiness depend on the microbiome.

What caused the narcissism epidemic?

It seems obvious that there is a narcissism epidemic in many countries: people taking selfies everywhere we look; adolescents saying that their goal in life is to become famous; celebrities behaving like gods; people exploding in rage in response to imagined affronts; charlatans, shysters and jerks everywhere betraying trust. Psychologists have been written books about it: “The Narcissism Epidemic”, by Jean Twenge and Keith Campbell, tracked scores of U.S. college students on the Narcissistic Personality Inventory (NPI) across generations and found that there had been an increase in narcissism.

Claims based on the NPI have been disputed by Kari Trzensniewski, who conducted research using a slightly different data set and found no increase in NPI scores. In the face of ambiguous evidence, I wonder whether it might be narcissistic of me to continue to accept that there is a narcissism epidemic. Nevertheless, I will persist. A national survey conducted in the U.S. suggests that about 10 percent of people in their 20’s have experienced symptoms of Narcissistic Personality Disorder (NPD) at some time during their lives. So, even if narcissism hasn’t been increasing it might still be reasonable to view it as an epidemic.

NPD is a long-term pattern of abnormal behavior characterized by exaggerated feelings of self-importance, exaggeration of achievements and talents, an excessive need for admiration, and a lack of understanding of others' feelings. The Mayo Clinic has published a longer list of symptoms that are referred to in the DSMv. Narcissism exists on a spectrum, ranging from exhibiting a few traits to the full-blown personality disorder.

Anne Manne, an Australian journalist has provided an interesting discussion of the nature and causes of narcissism in her book, The Life of I, The new culture of narcissism, updated edition published 2015.

She notes that Twenge and Campbell have taken aim at myths regarding the relationship between narcissism and self-esteem. They point out that narcissism is not just high self-esteem, in the sense of a quiet and sturdy confidence in oneself. Narcissists feel superior; they are arrogant and unwilling to accept criticism.

Twenge and Campbell also suggest that it is a myth that narcissism is a mask for low self-esteem. They are opposed to the psychodynamic view that narcissists are flawed people who are ‘hurt deep down inside’. According to their view a narcissist is ‘just a jerk’.

However, Manne notes that Erin Myer and Virgil Zeigler Hill found that narcissistic people revealed lower self-esteem than non-narcissistic people when a bogus lie detector test was used in assessing self-esteem and narcissism. Narcissists don’t like to admit weakness or vulnerability.

Manne points to a corresponding division of views on the causes of narcissism. Twenge and Campbell argue that what makes a child into a narcissist is spoiling, indulgence, an absence of moral discipline in building character, and a culture of excessive praise, of telling children they are special. However, findings of research by Lorna Otway and Vivian Vignoles, using recollections of young adults to test a range of views of the role of parenting in development of narcissism, support a Freudian view. Apparently future narcissists receive constant praise from their caregivers that is accompanied by implicit messages of coldness and rejection rather than warmth and acceptance. This helps explain the combination of grandiosity and fragility exhibited by many narcissists.

Manne also discusses evidence that infants whose dependency needs are rebuffed by parents tend to become aggressive adults. Studies by Alan Sroufe suggest that preschoolers forced to self-reliance too early tended to bully others and engage in repeated acts of cruelty. Their early experiences at home made such behaviour seem natural.

The author also draws attention to research suggesting that affluent families are not immune to problems arising from parents being emotionally distant from their children. While insisting on high levels of achievement, such parents are often indulgent towards bad behaviour.

Manne sees the problems of parenting as linked to limited government support for parental leave. After a brief discussion of this topic she concludes:

“This brave new world is a whole lot larger than its symptoms – the self-esteem movement or the college kids with unrealistic ambitions or the helicopter parents rushing in to rescue a child whose grades are poor. Another way of looking at narcissism is that it is a quality required for survival in the hyper-competitive paradise of the new capitalism”.

That is indeed another way to look at the issue. Manne attempts to support that view in the second part of her book, holding Ayn Rand responsible for the “new capitalism”. She refers to Rand as “a monstrously narcissistic character” and suggests that “she practiced what she preached” in her philosophy of selfishness.

The main problem I have with that claim is that some of Rand’s behaviour seems to me to have been more selfish – showing less regard for other people - than that of the heroes of her novels. The behaviour of the heroes of her novels was presumably intended to illustrate the selfishness that she saw as a virtue, but I have difficulty, as previously noted, in recognising these fictitious characters as being particularly selfish

At one point Manne states that Rand’s “heroes are all young, male, wealthy … “. That left me wondering whether Manne had ever taken the trouble to read Atlas Shrugged. If she had done so, or even if she had looked up the list of characters on the internet, she would have been aware that Dagny Taggart was female.

Manne’s claim that Rand promoted “an ideology of narcissism” can be much better answered by an Objectivist, than by a reader of Rand’s novels like myself.  John Galt said:

“Happiness is not to be achieved at the command of emotional whims. Happiness is not the satisfaction of whatever irrational wishes you might blindly attempt to indulge. Happiness is a state of non-contradictory joy – a joy without penalty or guilt, a joy that does not clash with any of your values and does not work for your own destruction, not the joy of escaping from your mind, but of using your mind’s fullest power, not the joy of faking reality, but of achieving values that are real, not the joy of a drunkard, but of a producer”. (Atlas Shrugged, p 1022)

Manne raves on about what she refers to as “the neoliberal revolution” as creating an ideological framework for narcissism to flourish at an individual level. Yet she doesn’t specify the nature of the incentives that could have caused that to occur. If “neoliberalism” means free markets, how do free markets provide an incentive for appointment of narcissistic business leaders? Under normal circumstances the last thing individual investors want is to have their wealth depend on the actions of a narcissistic chief executive.

Some investors might think it makes sense to take a punt on a narcissistic entrepreneur in highly regulated industries where there may be something to be gained by hoodwinking politicians and voters. Otherwise, why take the risk that the narcissist might run off with your money or spend it to enhance his own image?

It is disappointing that Manne has not considered whether narcissism might be a problem in occupations other than business. Markets expose private sector narcissists to financial disciplines for failure to deliver on their promises unless they can use their skills to persuade governments to bail them out. Casual observation suggests that some other occupations - such as politics and some parts of the media - provide a breeding ground for narcissism and a sanctuary for narcissists.

Anne Manne has not, in my view, made a persuasive case that Ayn Rand’s philosophy played a large role in the partial return to classical liberalism in the U.S., the U.K, and a few other countries including New Zealand and Australia, during the 1980s and 90s. And she certainly hasn’t made a persuasive case that free markets promote narcissism.

Nevertheless, I enjoyed reading The Life of I. I particularly enjoyed reading her explanation of the behaviour of Anders Breivik and Lance Armstrong. The book seems to provide a good introduction to psychological research on the nature of narcissism and parenting styles that lead to narcissism.

How do we know what we value?

“Although feelings are the one output of the adaptive unconscious that is likely to reach consciousness, sometimes even feelings are unconscious. And other contents of the adaptive unconscious, such as personality traits and goals, are likely to remain beneath the surface, unavailable to conscious scrutiny (the beam of the flashlight).”

The quoted passage is from Timothy Wilson’s book, Strangers to Ourselves: Discovering the adaptive unconscious. The author views the adaptive unconscious as a “necessary and extensive part of a highly efficient mind”. Its functions include “warning people of danger, setting goals, and initiating action in a sophisticated and efficient manner”.

The context of the quote is a discussion of introspection as a means by which people can “try to decipher their feelings, motives, traits, or values, not to mention what they want for dinner”. The “beam of the flashlight” refers to a metaphor in which the mind is thought of as a cave, with consciousness constituting those objects that are not currently in the beam of the flashlight. The quote seems to imply that our values and preferences are not necessarily easily accessible by just focussing our awareness inwards.

Tim Wilson argues that because people “cannot directly observe their nonconscious dispositions, they must try to infer them indirectly, by, for example, being good observers of their own behaviour”. He suggests that when we discover important truths about ourselves through introspection we do so by constructing stories about our lives, much as a biographer would. Trying to access unconscious goals and motives results in “a constructive process whereby the conscious self infers the nature of these states”.

I felt somewhat bemused when reading that - presumably because of my training as an economist. The idea of being able to discern our values and preferences from our behaviour seems to have more in common with the neoclassical economists’ notion of ‘revealed preference’ than with the view of many psychologists (and behavioural economists) that people are prone to make irrational choices because of cognitive biases that reflect non-conscious influences.

Of course, Tim Wilson does not suggest that the adaptive unconscious always makes the right choices for us. He notes that it is important to distinguish between “informed and uniformed gut feelings” by gathering as much information as possible to allow your “adaptive unconscious to make a stable, informed evaluation rather than an ill-informed one”.  His main point seems to be that in order to make good decisions, e.g. in choosing a spouse or buying a home, you need to avoid over-analysis by the conscious mind.

Does it make sense to try to try to infer your values from your past behaviour? If the aim of the exercise is self-improvement that approach might appear to be futile. If you see need for improvement in your behaviour, it isn’t immediately obvious how the values that can be inferred from your past behaviour could provide helpful guidance.

So, how can people bring their values to awareness in order to engage in self-improvement exercises? Tim Wilson has some suggestions, but before considering them it might be useful to consider approaches adopted by some psychologists engaged in therapy and personal training.

Acceptance and Commitment Therapy (ACT) places a heavy emphasis on living according to values, so the approach adopted by ACT therapists might be of particular interest. One approach used in ACT is the life compass, which ask people questions to elicit values in various domains of their lives – relationships, health, work, leisure etc. People are asked what is important or meaningful to them, what sorts of strengths or qualities they want to develop and what they want to stand for. That approach obviously works if you can find what you value by just shining the flashlight into your cave. But to do that you must have a fair amount of self-knowledge already, and you would probably have constructed a story about where your values have come from.

ACT offers a range of techniques to elicit values if they don’t readily come to consciousness. One technique noted by Russ Harris in ACT Made Simple is to imagine what you would love to hear people say about you, and what you stand for, in short speeches at your 80^th birthday party. (Dr Harris presumably doesn’t have many readers who are over 80.) In The Reality Slap, he suggests that it is also possible to elicit values by remembering a “sweet spot”, a memory that encapsulates some of life’s sweetness for you. After appreciating that memory, he asks people to notice the personal qualities they were exhibiting and what this reveals about the personal qualities they would like to embody.

The Authentic Happiness web site (stemming from Martin Seligman’s book of that name) has, among other things, an extensive questionnaire that enables people to discover their ‘signature strengths’. People taking the questionnaire are asked to what extent 240 statements describe themselves. The statements seem to be largely about dispositions rather than past behaviours, so seem to assume prior knowledge of dispositions.

The Enneagram Institute offers people an opportunity to discover more about their personality type through a questionnaire (the RHETI) which asks participants to choose between 144 paired statements relating to their past behaviour. One of the potential benefits of this approach is that it seems to offer a way for people to identify values that can guide them toward attainment of higher levels of personal development, without having to attempt to make fundamental personality changes.  For example, a person who has a persistent desire for self-control could see himself, or herself, as having many of the characteristics of a Reformer, and thereby see potential for growth by becoming more reasonable, and progressively acquiring greater wisdom. Some more examples might help to make the point: a person who seeks to avoid conflict through accommodation might have many characteristics of the Peacemaker, and see potential for growth by acknowledging her or his peacefulness and seeking to become indomitable; a person who is highly defensive much of the time might have many characteristics of a Loyalist, and see potential for growth by becoming more trusting, cooperative, reliable and courageous; and a person who is restless and constantly seeking stimulation might have many of the characteristics of an Enthusiast, and see potential for growth by becoming more productive and more grateful. Similar personal growth paths exist for the five other personality types.

A couple of the approaches described above bring values into conscious awareness through an explicit consideration of past behaviour. The sweet spot approach builds on selection of a particular memory, whereas the RHETI may help people to identify their potential by providing them with a systematic way to understand their past behaviour and personality. Unfortunately, although the RHETI is being widely used in personal training exercises, its predictions do not yet appear to have been subjected to a great deal of rigorous scientific testing.

One approach that Tim Wilson advocates is Pennebaker’s exercise which involves writing about the deepest thoughts and feelings associated with an important emotional issue. Although writing about emotional experiences is distressing in the short run, it apparently has positive long-run effects. The exercise seems to help people make sense of a negative event by constructing a meaningful narrative that explains it. A possible downside of this approach is that some people may dwell on negative life experiences by constantly revising their narratives. I expect that some people might also have a tendency to fuse with stories that make their lives miserable.

Tim Wilson acknowledges that some narratives are better than others. He writes:

"As with any biography, there are multiple ways of telling the story. A good biography, though, has to account for the facts of the person’s life and capture his or her inner goals and traits. The better a story does at accounting for the “data” of the person’s adaptive unconscious, the better off the person is. By recognizing their nonconscious goals, people are in a better position to act in ways to fulfill them, or to try to change them."

How can we change our non-conscious states in order to match our more positive self-stories? Tim Wilson suggests we follow Aristotle’s advice to acquire virtues by first putting them into action. We can change our feelings and traits by changing our behaviour. In order to “change some aspect of our adaptive unconscious, a good place to start is deliberately to begin acting like the person we want to be”.

Is economics becoming a branch of psychology?

I began pondering this question while reading Misbehaving, Richard Thaler’s entertaining and somewhat triumphalist account of his career in helping to establish behavioral economics. The fact that Thaler was made president of the American Economic Association in 2015 might signal growing acceptance within the profession that economics should be built on the insights that psychology provides about human motivation and behaviour, rather than on conventional neoclassical assumptions about individual rationality. For those who accept Lionel Robbins famous definition of economics as “a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses” and consider the rise of behavioral economics in that context, it would not involve a huge leap to suggest that all economics is behavioral economics, and therefore a branch of psychology.

It is acknowledged that behavioral economists seem to behave in many respects more like economists than psychologists, but that could, perhaps, be interpreted as a clever use of psychology. In the absence of behavioural economics, it would have been easy for economists to continue to ignore psychologists who suggest that the it is not realistic to assume that individuals maximize utility. It has been much more difficult for economists to ignore one of their number who makes the same point, while suggesting that the assumption that humans behave like mythical Econs should be retained as a benchmark against which actual human behaviour should be assessed. Early in the book Thaler writes:

“Theories based on the assumption that everyone is an Econ should not be discarded. They remain useful as starting points for more realistic models” (p7).

When it suits his purpose I think Thaler also uses the conventional utility maximizing assumption as a normative benchmark (just as many economists have wrongly used the concept of perfect competition as a normative benchmark). Although he claims that it “has never been my point to say that there is something wrong with people”, a lot of his efforts have been directed toward suggesting that humans make systematic cognitive errors that can be ameliorated by the “nudges” provided by wise government agencies. I have previously argued (here and here) that while the libertarian paternalism Thaler advocates is preferable to coercive paternalism, people need to be vigilant to ensure that they not being nudged toward choices that are contrary to their interests. We need apps to advise us whether or not to accept the default options offered to us by “choice architects”.

I cannot resist feeling bemused that during the period while psychology was gradually being welcomed into economics, like a Trojan horse, neoclassical economists were widely held to be behaving like imperialists, invading the subject matter of other social sciences, following the leadership of Gary Becker. Paradoxically, using the neoclassical assumption of individual welfare maximization, economists have been able to provide some useful insights to the study crime, the family, education and many other topics. Even when disciplinary overreach was fairly obvious, as in the theory of rational drug addiction, it has been plausibly argued that people like Becker challenged researchers to develop alternative theories and to confront those theories with data. The challenge of economists’ imperialism lives on in popular discourse, such as Freakonomics, as well as universities.

Perhaps the Trojan horse of behavioural economics will thrive within the broad domain of economic imperialism. We might see a convergence of psychology and economics in the study of a wide range of issues.

However, as I see it, the fundamentals of economics will continue to remain largely unaffected by both behavioural economics and the conventional neoclassical assumptions about individual welfare maximization. The theory of choice is worthy of study, but it is not as central to economics as it has commonly been claimed to be. Lionel Robbins definition of economics as being about solving allocative problems has tended to distract from the more important role of economists in studying “the propensity in human nature” to “truck, barter, and exchange one thing for another” and how this promotes “general opulence” or human flourishing.  The quoted words were, of course, used by Adam Smith in The Wealth of Nations.

In his article “What should economists do?”, published in 1964, James Buchanan argued that the theory of choice should be removed from “its position of eminence in the economist’s thought processes”. He suggested that economists should concentrate their attention on human behaviour in market relationships and other voluntaristic exchange processes, and upon the various institutional arrangements that can arise as a result of this form of activity.

Since Vernon Smith has studied how such institutions can emerge in experimental settings, it is fitting that he should be given the last word here:

“Individual choice … is not where the action is in understanding economic performance and human achievement. … The main work of socioeconomic systems is in specialization and the exchange systems that make possible the wealth they create, not the minutiae of choice and preference representation. The functioning of these systems is far beyond the field of vision of the individual, but it should not be beyond the vision of economic science” (Rationality in Economics, p 156). 

Postscript:

By coincidence, not long after I had finished writing this post I was enjoying my daily quota of Bourgeois Equality by Deirdre McCloskey, when came across this:

“Nowadays the behavioral economics of, say, Dan Ariely does a job of demolishing claims of individual rationality in moderns. Yet it too commits the Weberian mistake of focusing on individual psychology instead of group sociology and market economics. The experimental economics of Vernon Smith, Bart Wilson, Erik Kimbrough, and others, by contrast, works always with groups, showing that a wisdom of crowds often prevails over psychological shortsightedness and calculative confusion. And by the way, it makes a good case that property arises without the help of the state or the nudging of the clerisy” (p 282).