This was one of the most difficult things I’ve ever tried to write. And it wasn’t until I was over a hundred hours into it that I realized what it was actually about. It’s about why understanding the world matters and how it can alter the direction of our lives.
“Racehorses and Psychopaths.”
[14 minute read]
The perennially insightful investment strategist Michael Mauboussin often references a famous study of horse race handicappers. They first asked the handicappers to make race predictions with 5 pieces of information for each horse in the race. Then they asked the handicappers to make the same predictions with 10, 20, and 40 pieces of information. The handicappers didn’t get any more accurate with each additional piece of information, but they did get more confident.
Source: Getty Images
The handicappers were using each additional piece of information to confirm their preexisting opinion. We all now know how anyone armed with social media or a search engine can find infinite “evidence” for a falsely-held belief. In life and investing alike, confirmation bias is often the difference between sounding smart and being right. And sometimes something much, much worse.
Cognitive biases are not a particularly interesting topic to me. Just learning about biases doesn’t seem to change people’s behavior much. But I was fascinated by an excellent recent review of Julia Galef’s new book The Scout Mindset (below). Scott Siskind writes:
“Of the fifty-odd biases discovered by Kahneman, Tversky, and their successors, forty-nine are cute quirks, and one is destroying civilization. This last one is confirmation bias - our tendency to interpret evidence as confirming our pre-existing beliefs instead of changing our minds.”
Why is confirmation bias “destroying civilization?” I think it’s super helpful to step back for a second and examine this idea through the universal framework of map and territory. Consciousness exists on a spectrum from pure abstraction (map) to pure engagement (territory).
Galef’s Scout Mindset sets out to remove information to provide a clearer view of the territory. Soldier Mindset just adds more confirmations to make the map more elaborate, regardless of its accuracy.
The really, really dark side here is that the stronger an abstraction, often an outright lie, the more motivating it can be for tribal behavior. The soldier metaphor is doubly-appropriate. Taken to its most horrifying extreme, war and genocide is facilitated by abstraction. Beyond direct kinship bonds, we have developed common coordinating fictions like nationalities. We went from being able to mobilize a tribe of hundreds, to nations of millions. How many people do you personally think you’d be able to convince to risk their life for you? As the author of Sapiens, Yuval Noah Harari, puts it: “you could never convince a monkey to give you a banana by promising him limitless bananas after death in monkey heaven.” A motivating abstraction has to take over at the cognitive limits of empathy, beyond who you can really know and love personally. And yet we can compete and kill more easily by stripping universal humanity from our enemies by turning them into an out-group.
The single passage I have thought of most as I ponder the cultural events of the last two years, and last two thousand years, is from Karen Stenner:
"All the available evidence indicates that exposure to difference, talking about difference, and applauding difference - the hallmarks of liberal democracy - are the surest ways to aggravate those who are innately intolerant, and to guarantee the increased expression of their predispositions in manifestly intolerant attitudes and behaviours. Paradoxically, then, it would seem that we can best limit intolerance of difference by parading, talking about, and applauding our sameness.”
Social movements that create more in-groups are less likely to succeed than ones that emphasize our universal humanity. There’s a remarkable study where participants were shown a video of a hand being stabbed, while their empathic response was measured by fMRI. They found that the empathic response was larger when participants viewed a painful event occurring to a hand labeled with their own in-group, rather than a hand labeled with a different out-group. All it took was a single word emphasizing difference to change how people felt about others experiencing pain.
The abundance of bloody and horrific examples mean that this concept is intuitively well understood at a societal level. But we don’t always apply it to ourselves. To use my favourite hemispheric metaphor: extreme left-brain lateralization is like a shark-eyed psychopath who can stab you and feel nothing. You’re just an abstracted sack of meat and organs. In a cold, game theory context, it’s totally “rational” to exploit or harm someone else to get what you want. In contrast, extreme right-brain lateralization is like the experience of neuroanatomist Jill Bolte Taylor. Her massive left-hemispheric stroke left her feeling blissfully at one with everything, but so short of individual agency she struggled to call an ambulance. We still need separation and competition to act in the world, just not too much.
Returning to Galef, this is a key reason why her work is so special: it strikes the increasingly rare “hybrid thinker” balance. She offers really great tips and tools for getting more Bayesian and rational, but with a need for fundamental values. The remedy for confirmation bias initially seems weird and moralizing. But this makes sense! If maximum rationality is totally disconnected, its opposite needs to be connected to something beyond floating ideas and abstractions. As Siskind puts it:
“Dan Ariely or whoever promised you that if you read a few papers on cognitive bias, you’d become a better thinker. Scout Mindset also wants you to read those papers, but you might also have to become a good person.”
As cuddly as that may sound, this seems literally true, at least in terms of the way we think. Neuroscientist Antonio Damasio tells the story of Elliott, a man who lost the part of the brain that connects the frontal lobes with emotions. Despite remaining in the 97th percentile for IQ, he lacked all motivation and became paralyzed by every decision. His recurrent failure to learn from negative feedback cost him his wife, his job and his savings. His intellect wasn’t sufficient for him to make good decisions. It needed to be connected to something else, whether you call it emotion, intuition, values, or the unconscious.
The last piece I wrote explored the unpleasant way that our stale beliefs often need to be viscerally destroyed before we can see the world clearly. But, as the rubble clears, we still need to act. Once you know exactly where you are on the map, you still need to orient yourself and move in the territory. And this is the key insight I learned from writing this piece. If you rebuild your new model based on abstractions it’s no more likely to be correct than the old one. So, you need to rebuild it in harmony with the world around you. The Taoists realized that being able to make this distinction was the difference between effortless success and grinding failure.
In a remarkable synchronicity, this week a friend sent me a staggering interview with Philip Shepherd called “The World’s Hidden Harmony” (below). He talks about the nature of embodiment and achieving a more holistic flow with the world:
“That’s what the head specializes in—abstraction—and the word ‘abstract’ literally means ‘to draw away from.’ In many other cultures, the center of thinking is experienced in the body, which has a borderless affinity with the world around it. It is attuning to the world in every moment. We have ‘drawn away’ from the world and the body’s intelligence so that neither can be felt in its full reality. Being chronically disconnected like that leaves us feeling apart from, separate from, everything around us. So we feel chronically alone.”
This is the difference between dissonance and resonance. When head and body are aligned or conflicted. As in the famous example of George Soros and his back pain, bodily sensation is a key indicator of unconscious dissonance; of when your intellect is missing something important from the outside world. His back hurt when his portfolio was positioned poorly. Soros had laid down the experiential pattern recognition from years of trading, and experienced physical dissonance when something tripped his intuition. Because it’s running in the unconscious, dissonance is first experienced as a nagging felt-sense. But the ability to then intellectually interpret those sensations is the critical last step and meta-skill. You first have to know what the back pain means, and then pay attention to it.
How do you achieve resonance? In the second remarkable coincidence, a kind listener of my recent appearance on Infinite Loops reached out, while I was writing this. He recommended a podcast on…. genocide, investing, values, and utilizing your unconscious. Holocaust survivor and renowned value investor Arnold Van Den Berg discussed how resonant quotes are a way that he believed his unconscious communicated its values to him. Places your attention is drawn to and “sticky ideas” that you just can’t let go of are key indicators of your values. Nietzsche put it beautifully (in a quote I can’t stop thinking about…):
“For the most important inquiry, however, there is a method. Let the young soul survey its own life with a view of the following question: “What have you truly loved thus far? What has ever uplifted your soul, what has dominated and delighted it at the same time?” Assemble these revered objects in a row before you and perhaps they will reveal a law by their nature and their order: the fundamental law of your very self.”
Van Den Berg assembled a book of 5,000 quotes on every subject. I performed the same exercise several years ago, and it had a quite staggering impact on me. The process of synthesis also brings you together as a person.
The universal principle that comes out of all of this is of the power of your filter. Perhaps the simplest and best definition of wisdom I’ve heard is “knowing what information is important.” This kind of knowing is not solely done in the intellect. Data is constantly being fed into your unconscious, then cross referenced against your experience. The handicappers who have seen thousands of horses have expertise: the ability to filter downwards from 40 variables to the 5 that matter, rather than commit the reverse error of building abstractions upwards to confirmation bias. This is what’s behind the counterintuitive idea of “exformation” from The User Illusion (insights here). The value of information is determined by what’s discarded in the process of creating it. Purely as an illustration, this article represent a distillation of roughly 400 hours of reading and 6 years of thinking. The synthesis of these ideas may merely prove to be confirmation bias, but they are deeply resonant with me. And that’s the crux of the filtering process. That resonance hints at an internal alignment around values. You can intuitively detect it when you read it, when you hear it, and when you speak it. Shepherd wonders if what we hear as “eloquence” is actually people who are letting the words emanate from their whole selves.
It’s probably romantic nonsense, but I like to imagine our hearts as the mediator of the “value selection” filtering process between head and gut. It’s where resonance is felt. The staggering ubiquity of the metaphor in our art make me think it’s more than just an expression. The entertaining book Everybody Lies tells the awesome story of how a man called Jeff Seder attempted to decode what characteristics would determine a racehorse’s success. He sorted through a virtually limitless number of data-points to try and find what matters. He even developed a proprietary form of ultrasound to scan a horse’s internal organs. Eventually he discovered that that the size of the heart’s left ventricle was a major advantage. His analysis uncovered a previously unheralded horse that an Egyptian beer magnate was trying to offload. But it had a left ventricle that was in the 99.61st percentile. Seder told him not to sell “Horse No. 85,” and he ended up having to buy it back at auction. Horse No. 85 was renamed American Pharaoh; the first horse in three decades to win the Triple Crown. The heart revealed the truth.
- Read: Book Review: The Scout Mindset by Scott Siskind (39min read).
- Why Read: Speaking as someone who spends his entire life trying to squeeze himself into less than 2,000 words per article, a lot of Scott’s stuff is too long. And I’m obviously not a big fan of rationalism in general. But this one is really worth reading.
- “One of the genuinely new ideas in Scout Mindset is its endorsement of various counterfactual “tests”. The idea is, imagine yourself considering a similar question, under circumstances that would bias you the opposite direction. If you stick with your opinion, it’s probably honest; if you’d change your opinion in the counterfactual, you probably had it because of bias.”
- Here is a fun confidence calibration test. I didn’t get a lot right (64%), but my confidence was 64.4%. So at least I know I’m an idiot. Is this a humblebrag? I don’t know.
- Listen: Arnold Van Den Berg – A Must Listen Life, and Investing, Discussion with Bill Brewster (2hr podcast)
- Why Listen. As the title suggests, I feel this is a fantastic podcast. And just so, so strange that it was recommended to me this week of all weeks. Van Den Berg discusses how his experience in the Holocaust instilled the need for transcendent values.
- “If your principles are more important than your life, you sacrifice your life. If your life is more important than your principles, you sacrifice your principles.”
- On using quotes that resonate as a signal from the subconscious: “What that taught me is, the subconscious was guiding me. It guided me through that quote. From then on in, I figured that must be one of the ways to subconscious communicates. Whenever I had a quote that really hit me, I wrote it down”
- Read: The World’s Hidden Harmony- An interview with Philip Shepherd (19pp PDF).
- Why read: Yes, I know there’s a lot of material this week! But boy, this is amazing. Another serendipitous share from a friend who’s much smarter on the topic of embodied cognition. Although I personally do a terrible job, cough, embodying this philosophy, the interview is resonant throughout.
- “Our culture has many wounds, but to my way of thinking the deepest source of them is our belief that our thinking happens in the head, and that it can happen more clearly if we stifle all the noise that goes on below the neck.”
- "We want independence, and the safety it promises. Now I’ve personally observed that there’s no such thing as safety in this world. If you’re alive, you’re not safe. If you’re alive, you’re going to die; you are going to be hurt. There is, of course, security, the security of being, which no one can deprive you of. But we want to make ourselves safe. I think people generally understand that if you’re alive you’re not safe—but then they draw a corollary from it that says, “Well then, maybe if I’m less alive, I’ll be more safe.” So you see people compromising themselves, making themselves smaller, binding their aliveness with cautionary, inner barriers. They are diminishing not just their experience of life, but their capacity for entering an exchange of gifts with the world around them.”
- “I wonder if people who are considered “eloquent” are actually the ones who are most letting the words come from their whole body. Maybe eloquence is less about the picking the right words and more about being embodied.”
Have a great weekend!