This is a bit longer than my normal posts, but this is an important idea worth exploring. Grab a coffee and put your feet up.
When I was a kid, proving I was sick enough to stay home from school required either a show of vomit or a fever. Back then, checking one’s temperature involved the use of a thin piece of hollow glass, filled with dangerous liquid mercury, and tiny degree markings that would be readable if the curved glass thermometer was held at just the right angle. My Mom would have to shake the thermometer vigorously (to wake up the mercury? did it solidify upon disuse?), stick it under my tongue, and I would have to hold it just so for what felt like an eternity.
By the time my oldest child was born, the vision-busting glass tube of poison had given way to the digital thermometer. Thanks to the advancement of technology, shaking or squinting was no longer required of parents. Now, a mere push of a button would make it ready, and the result was easily readable on the liquid crystal display. Despite this electronic advancement, actually getting a temperature reading still took about the same amount of time holding the thermometer under the tongue … but at least eyesight strain was no longer an issue, and dropping it on the floor no longer required a call to Poison Control.
Then, one day I was at the pediatrician’s office with my youngest child. In came the nurse to take his temperature, and out of her scrub pocket came a magic wand. I watched in dumbfounded amazement as the nurse ran this wonder across my son’s forehead down to his temple, turned it around to read the result, and recorded it on his chart … all in under three seconds! I asked how it worked and heard “something something temporal artery something something.”
I didn’t understand it, but that didn’t stop me from buying my own temporal thermometer while picking up my son’s prescription on the way home. Soon it was time to put this mystical piece of technological wizardry to work. The instructions for use were simple enough:
Time to show off my new technological find to my Wife: “Hon, come here and check this out.”
Press and hold button … swipe … release button … Presto! Result: –.-°.
A quick check revealed that “Step 1” wasn’t actually the first step. I had missed the vital instruction that was in tiny print and without the benefit of the eye-catching step number circle label: “Remember to remove protective cap …”
With a fuller understanding of how to operate this magical device, it was time to try it out for real.
Remove protective cap … press and hold button … swipe … release button … Presto! Result: 99.2°.
Barely a fever worth concerning ourselves with. But then the newness of this device gave way to a seed of doubt. What if I didn’t do it correctly? After all, I had just tried to do it with the cap on, proving that operating this thing wasn’t as easy as advertised. Maybe I should double-check? Fortunately, because this thermometer is so simple to use and generates results in a second, a confirmatory swipe took no time at all.
Press and hold button … swipe … release button … Presto! Result: 99.5°.
Uh oh. What’s up with that? Lemme try again:
Press and hold button … swipe … release button … Presto! Result: 99.1°.
Press and hold button … swipe … release button … Presto! Result: 98.9°.
Now my Wife is giving the side-eye to me and my $35 replacement for our perfectly capable digital thermometer. Once more with feeling:
Press and hold button … swipe … release button … Presto! Result: 99.4°.
Thoroughly unimpressed with what is the clinically proven most accurate thermometer in the world, my Wife pulled out the trusty digital thermometer, pushed the button, stuck it into my son’s mouth, and waited.
Five readings and five different results for one; one reading with one result for the other. To this day, guess which thermometer’s results are viewed as reliable and which one’s are viewed with suspicion?
Our world is full of interesting paradoxes (paradoxi?). As we continue to accelerate up the ever-more-vertical curve of technological progress, we are now encountering with increasing regularity the following paradox: as access to information increases, the ability to make a good decision based upon being “well informed” can actually decrease.
Take my experience with the temporal thermometer. Compared to the thermometers of the past, the new one made it orders of magnitude easier to obtain a data point. It takes about 3 minutes of holding the glass/mercury thermometer under one’s tongue to get an accurate reading. For the temporal scanner wand, the result is available in 2 seconds … 90x faster. When getting data is that much easier and faster to obtain, getting more of it — lots more of it — is the natural result.
Rather than taking my son’s temperature once and making a decision based on the result like in the past, I measured it five times … but that didn’t make us better informed about his health. Instead, the extra data just made us confused. What to make of the four different readings? Did the variance among the different readings of the temporal thermometer reveal it to be inaccurate? No. The only thing those additional readings added was the noise of volatility.
There are times, of course, when viewing data through the zoomed-in focus of shorter and shorter periods of time is actually necessary — think of the continuous monitoring of a patient’s vital signs that takes place in any modern hospital room. Yet, that same approach of measuring data metrics often over short periods of time can work mischief in other contexts. Take the example from the world of stock trading described by Nassim Taleb in his book, Fooled by Randomness:
Imagine an experienced stock trader — Taleb proposes “a happily retired dentist, living in a pleasant, sunny town.”
We know a priori that he is an excellent investor, and that he will be expected to earn a return of 15% … with a 10% error rate per annum (what we call volatility). … He subscribes to a Web-based service that supplies him with continuous prices … He puts his inventory of his securities in his spreadsheet and can thus instantaneously monitor the value of his speculative portfolio.
So we have our Dentist-Trader — let’s call him “Tim.” Given those facts and the math of probabilities (spelled out in Table 3.1 of Fooled by Randomness), the chances that Tim will experience the happy feeling of seeing his portfolio’s growing performance in the green depends on the time period at which he opens that spreadsheet to check:
In other words, if Tim checks the numbers on his investment once a month, there’s a 2/3 chance he will see good news. On the other hand, if he obsessively checks it daily or hourly, his chance of seeing good news are little better than a coin flip.
Why does that matter? Because even though the performance of Tim’s portfolio at the end of the year will be the same (+15% return with 10% volatility), the frequency with which Tim gathers information about his portfolio will radically alter how Tim subjectively experiences his investment’s year-long journey. The more often Tim checks, the more likely his experience will be guided by the impact of the volatility instead of the actual trajectory.
The experience of riding the roller-coaster of short-term volatility will be an emotional net-negative over time thanks to our psychological propensity for “loss aversion.” According to this theory of behavioral economics first proposed by Nobel Prize-winning psychologist Daniel Kahneman, we experience loss roughly twice as intensely as we do gains, even when they are similarly proportional. In short, we generally all feel as Jimmy Connors famously put it: “I hate to lose more than I love to win.”
The explanation for why we experience gains and losses asymetrically lies deep within the evolutionary wiring of our brains. Over the millennia, the harsh lessons of survival realities taught us that avoiding losses was more critical than securing gains. As one writer describes it,
Imagine being a hominid in Africa a million years ago, living in a small band. To pass on your genes, you’ve got to find food, have sex, and cooperate with others to help the band’s children (particularly yours) to have children of their own: these are big carrots in the Serengeti. Additionally, you’ve got to hide from predators, steer clear of Alpha males and females looking for trouble, and not let other hunter-gatherer bands kill you: these are significant sticks.
But here’s the key difference between carrots and sticks. If you miss out on a carrot today, you’ll have a chance at more carrots tomorrow. But if you fail to avoid a stick today – WHAP! – no more carrots forever. Compared to carrots, sticks usually have more urgency and impact.
Even though finding opportunities and avoiding threats are both key to survival, they were experiences with a distinct heirarchy: being wrong about opportunities resulted in a range of experience from mere postponement of enjoyment to prolonged misery. On the other hand, as recently as a couple hundred years ago, being wrong about dangers usually meant “game over.”
Somewhere along the Oregon Trail …
More information — more data, more measurement, more analysis — does not always lead to more insights. Such is the noise effect that excess information can have: when this flood of data continually washes over us minute-by-minute and distorts perspective, it can cause the informative messages — the signal — to be lost. Even when we find information that actually matters, correctly understanding its importance becomes quite difficult without a proper sense of context. When our view is zoomed in to a microscopic level of focus on the minutiae in high-resolution, even the most insignificant of cracks in a piece of smooth steel can appear as massive canyons.
Everything at this level of magnification looks like a big deal.
The solution to this conundrum isn’t to make like a salmon and try to swim upstream against the currents taking us into the Big Data Age. Hiding from new information isn’t the answer, both because it is backwards-looking and because it will continue to become more impossible as time marches forward.
Context, rather than avoidance, is the prescription. By consciously seeking out the proper context for the information before us, we can avoid falling into the evolutionary trap of reacting to the feelings of fear and loss that can be stimulated by the rapid influx of new information. Remember that —
Discussing at length the counter-intuitive downside to having more information isn’t a call to plug our ears. Instead, it is a call to better open our eyes and see things with a wiser sense of purpose and perspective … to seek out information that informs and set aside the trivia that merely interests … to focus on connecting the newly uncovered details to the much more important big picture … to recognize that more and more information is not, by itself, always an unalloyed good. It is a call to recognize that the more information we have at our disposal, the more intention thought we must bring to bear to focus it, understand it, and make better decisions with it.