In today’s world Intuition is highly overrated, so is decision making just by using numbers. It is the combination that makes world changing decisions

But studies after studies have shown that humans are not good at perceiving the macroeconomic trends happening around the world let alone acting on them.  For example, a survey was conducted in Sweden and USA requesting the answer to the following question: “How many years of schooling does a woman aged 30 have globally?”. They were also provided with a clue that the mean for a man aged 30 for the same question is 7 years. Whilst the correct answer was that man and woman in a global construct have the same number of years of schooling, only 9% of the Swedes and 24% of the Americans were able to answer the question correctly

This is not an isolated phenomena. Hans and Ola Rosling of the Gapminder Foundation had done this study throughout the world and they found that they were getting similar answers throughout. Hans and Ola came up with the following four reasons as to why we answer the way we do:

  • Personal bias -> Basically the environment which surrounds us, our family, friends and our neighbourhood is not a true representative of the world. This statement holds true for the most of us.
  • Outdated facts -> Most of the world view which we hold is taught basically through the out-dated history books in school. I have personally seen that the advanced grade textbooks which were in use a decade ago are still in use today.
  • News Bias -> We consume news only from sources we like. We do not like to be challenged on the world views we hold. Even social media curates our newsfeeds to provide us only the information we like. This provides us only with a constrained view of the world
  • Human Intuition -> The most dangerous of the four. Humans have been conditioned to make decisions out of incomplete information. This has made us  made to search for patterns where none exists and create a world-view totally out of sync with reality

In short,

Skewed info + intuition = Increasing ignorance

But in today’s world, both professional and personal most of our decisions are made based on our understanding of the macroeconomic and social trends happening in the world. For example, strategy teams of the fortune 500 enterprises of the world should provide ideas for new products and geographic expansions based on the incomplete information before them and human intuition.

Not, all of us have the luxury of time nor the inclination to sit and go through every economic and social metric and trends as given by the reports put out by the think-tanks of the world.

In this scenario, the following shortcuts as given by Hans and Ola Rosling will help us make sense of the world and make our  intuition into our strengths

  • Everything is getting worse –> That is not true. For example, more humans died of war in the first half of the 20th century than they did in the 2nd half but the perception that we were in much higher danger in the second half than in the first half. The rule of thumb is things always get better
  • Rich and poor gap is increasing –> Again not true. Although it may look that way since 1975 the number of people living in extreme poverty has more than halved and now most people are in the middle.
  • Countries have to first be rich to be socially responsible –>Again not true.India is the best example, Although not one of the richest country in the world, India is the first to create a universal income scheme for its rural population called the MENREGA scheme
  • Sharks are dangerous –> but they are not very important. Although any shark attack is given huge coverage the truth is more humans die because of cows than sharks. This is a very important misconception because this shows that problems are always exaggerated

In summary, be less ignorant about the world, for it may one day enhance and save your life and your career.

Source:

Heavily derived from the TED talk  given by Hans and Ola Rosling of the Gapminder Foundation

Advertisements