The Art of Thinking Clearly: Book Review

July 24th, 2013   •   no comments   

The Art of Thinking Clearly Rolf Dobelli

This man wants you to think more clearly (courtesy of Wikimedia)

You’ve heard the saying “to err is human and forgive divine”.

What you may not know, however, is that us Homo sapiens have been hardwired over the millenia to be illogical, distorted in our perception of reality, and inaccurate in our judgements.

In other words, to err repeatedly is human.

Eliminating Our Cognitive Biases

Also known as cognitive biases, these simple errors can occasionally be highly costly.

Examples include purchasing a home which we eventually disdain, agreeing to a marriage which brings more pain than pleasure, and coughing up cash for a dream car which turns out to be a nightmare.

How do we rid ourselves of these maladies of the mind?

Enter Swiss author Rolf Dobelli’s bestselling volume The Art of Thinking Clearly.

Comprising 99 mini-chapters – each addressing a unique psychological/behavioural quirk – the highly readable volume used layman language to describe and explain the numerous cognitive biases which beset all of us. Distilled from the disciplines of social and cognitive psychology, these systematic errors account for the irrational behaviours of human beings in various contexts.

Apparent Psychological Traits

Some of these traits are common knowledge – well at least if you spend any amount of time reading about behavioural economics.

They include the well-known confirmation bias (interpreting new information to suit existing beliefs), authority bias (deferring to folks like government heads, scientists, economists, and consultants), groupthink (people in groups tend to go with majority view), cherry picking, reciprocity, halo effect (where a single attribute overshadows all others), and liking bias (we’re more likely to be convinced by somebody we like).

Quirkier Thinking Errors

Others, though less apparent, aren’t any less common.  These have rather novel names, and they include:

  1. Salience effect: The phenomenon where outstanding features receive far more attention than they deserve. Like the nail which sticks out;
  2. Zeigarnik effect: How we automatically erase something from our memory once we have completed it in our “to-do” list. This also implies that leaving something half-way or three-quarter done actually keeps it at the forefront of our mind;
  3. Will Rogers Phenomenon: The act of moving an item from one set to another set to raise the averages of both (even though there aren’t any net gain in the system);
  4. Black Swan: Created by renowned thinker Nicholas Nassim Taleb, it is one where we discover unthinkable “unknown unknown” events which have massive effects on one’s life or work;
  5. Déformation professionnelle: The notion that if your only tool is a hammer, every problem looks like a nail;
  6. Paradox of choice: This occurs when the fewer choices we have actually leads to greater happiness. Popularized by Barry Schwartz in his TED Talk here;
  7. Winner’s curse: Ever encounter the situation where we overpay for an item at an auction or market in a desperate bid to win it? Yep, this is what it is;
  8. Hedonic treadmill: The tendency for us to bounce back to a stable level of happiness despite major positive or negative life events; and
  9. Hyperbolic discounting: The phenomena where we place greater value on immediate rewards relative to distant ones, even though these may be lower in value.

Cognitive Fallacies in the Financial World

As many would imagine, gamblers and investors often fall prey to cognitive fallacies.

Examples include the it’ll-get-worse-before-it-gets-better fallacy that is self explanatory, the neglect of probability fallacy where people prefer a lower chance to win a bigger jackpot that a higher chance to win a smaller booty, and the forecast illusion where they place too much trust in experts.

That’s not all, unfortunately.

Investors are also prone to committing the conjunction fallacy. This occurs when they are attracted to harmonious or plausible stories which explain how certain outcomes occur (even though they may be purely conjecture).

Beyond these, we all know about beginner’s luck and of course the infamous gambler’s fallacy where we unwittingly believe in the ‘balancing force of the Universe’ and keep trying our luck in the hope that it would turn. Even though it may not do so. Ever.

Thinking Errors in Media

The most interesting fallacies are those associated with the world of media.

Here Dobelli supplied ample examples like chauffeur knowledge where we assume that news anchors possess true knowledge (well, maybe just a little), story bias where only the elements of a good story make it to print or broadcast, personification where human stories appear superior to factual reports in convincing people. On the third point, any student of advertising or communication would know the importance of emotional storytelling (aka pathos in Artistotle’s Secret to Great Content).

Outcome bias  – the process of making a decision based on the results rather than the process of getting there – is another trait observed in media stories.

It was also fascinating to read about false causality – a phenomenon where we associate unrelated events to each other as they appear to correlate. This is most commonly used in how the media ascribes a particular development to how the stock market moves.

“Correlation does not imply causation.”

Finally, media stories are sometimes susceptible of framing – a phenomenon where messages are presented in a certain manner to achieve a desired perception (think of troll baiting or link baiting). This is especially common in an increasingly polarized society.

Avoid Cognitive Biases Via Negativa

In the book’s epilogue, Dobelli proposed that the only way to avoid cognitive biases was to embrace the practice of via negativa.

Hailing from the Christian apologetic tradition, via negativa is the process of thinking about what something is NOT rather than what it could be. In other words, it is a process of thinking by elimination, ie “Let us go through the possibilities objectively, and see what could possibly not be true.” By doing so, we’re encouraged to eliminate our downsides and thinking errors so that the upsides will emerge.

You can read more about via negativa or Negative Theology here.

Great Guide to Behavioural Economics

Having said, the author suggested that as anticipating and avoiding all fallacies could be costly, you should still make intuitive decisions in areas where you have in-depth knowledge and understanding (ie circle of competence).

Drawing from the collective wisdom of ancient philosophers like Aristotle as well as contemporary savants like Barry Schwartz, Nassim Nicholas Taleb, and Daniel Kahneman, The Art of Thinking Clearly capitalises on the growing popularity of behavioural economics. While it isn’t structured as a self-help guide, its 99 precepts provided a useful reference to anybody hoping to avoid the systematic errors which afflict each and every one of us.

For a more comprehensive book summary of The Art of Thinking Clearly, check out this book summary at Joosr (registration may be required).

The Art of Thinking Clearly Book

Tags: , , , , , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *