Cognitive Biases, Politics, & Free Markets

You strike up a conversation with somebody while standing in line at the bank or the store checkout line. Your talk about the weather, the slowness of the line, the accident outside on the street, but you--and most people--avoid talking politics. You don't because you have no idea of the other person's political viewpoint and politics is a touchy subject.

It is touchy in good part because people have their minds made up about what they believe. Depending on viewpoint, the Democrats are crazy or the Republicans are stupid. Not all opinions are that generalized but all are well entrenched as emotional furniture of the mind. Notice that: emotional furniture. Senators and Representatives--all politicians--come equipped with emotional furniture just as do voters. Cognitive psychologists have a name for what happens when people talk politics, not that the term applies only to that situation. They call it confirmation bias, or myside bias.

This bias describes the tendency to prefer information confirming one's own preconceptions or hypotheses. No matter, whether they are true or not. Put differently, people search for and select evidence that supports what they already believe. Or, if they come up against some evidence, they will pick from it what is supportive of their views, regardless of the whole picture they encounter.

Take another example of human bias. You know what something is worth when you look at it, right? Well, behavioral economist Dan Ariely found out that his students did not. In class, he had them jot down the last two digits of their social security number. Okay, that done, he then asked how much they would pay for wine, a bottle of Côtes du Rhône 1998. Would they pay, say, $79 or $12? The outcome? Not wine experts, they offered prices in relation to their social security numbers. Those with lower numbers offered lower prices, those with higher numbers, higher prices. The number also affected how much they would pay for a bottle of 1996 Hermitage Jaboulet La Chapelle. Statistically significant, the social security number affected the prices for either bottle of wine, with a correlation of 0.33.

Cognitive psychologists know this as anchoring bias. Roughly put, people see something that acts as an anchor for comparison to what they next encounter. The students' social security numbers provided anchors for wine prices. This is also regarded as arbitrary coherence, and it calls into question the entire concept of free trade and a free market. The classic concept of rational money is obsolete.

Clearly, as shown by Ariely's experiment and countless commercials, people can be manipulated to value things in arbitrary ways. Values are not simply matters of supply and demand. Human beings do not rationally evaluate what the market offers--what they want, how much they will pay.

Here is Dan Ariely's Website.

Myths of What Makes Us Happy

We think we know what will make us happy, but do we? Extensive research on happiness reveals a rather surprising conclusion. Few people know what will make them happy. Most people think they know, but really don't. This failure to understand themselves leads them into lives with unfulfilling careers and relationships.

One explanation for the failure to understand can be found in the natural tendency to cognitive bias. Cognitive bias sneaks up on us, even though we know it exists. We try to be objective in our decision making, but often don't have a clue as to how we are prejudiced in our reasoning criteria. Our brains are hard wired for cognitive biases and we often cannot see through that fact. This had an evolutionary advantage. If it moved and was as big as a boulder, it probably might eat us. Our ancestors ran. They didn't have to think about it. People tend to believe a certain way because others do. This, too, had an advantage, for those who didn't fit in were cast out into the wilderness. Then there is confirmation bias, the tendency to look for explanations that fit our preconceptions. This may have facilitated decision making when life was simple, nasty, brutish, and short, and decisions had to be made quickly.

Interestingly, many people think fame would make them happy. This is a relatively new phenomenon, one rare in communitarian societies, as well as in America and Europe as recently as the nineteenth century. I regard it as due to alienation in modern society. People want recognition that closer social connections once offered. As an example, self-esteem once came from love, concern, and warm relationships with others in close-knit communities.

The video below discusses the myths about happiness and points out what has been found to make people happy. A very brief commercial precedes it.

Michael Shermer: Why People Believe Weird Things

Michael Shermer was once a born-again Christian. Now he is a skeptic toward religion and anything that does not pass the test of empirical reason. In short, he either waits for proof or has made up his mind. His book is Why People Believe Weird Things. Here are a few notes from his book along with my own interpolations:

Sleep Paralysis. Waking up during a dream causes the dream to leak into consciousness even while you are conscious. It immobilizes your body, makes it rigid. It causes feelings of helplessness, weird visions. Long ago, I woke up and apparently a dream had entered my conscious mind, although I was unaware that was what happened. Awake, I heard a voice that said, "You have only a few weeks, maybe months, to live." Without an understanding of sleep paralysis, I was, shall we say, upset. Yet here I am all these years later.

In a recent study, feelings of loneliness were induced in people by a question which caused them to feel they would have few friends and would be isolated in middle age. After this ruse they were more likely to say they believed in ghosts, angels, the devil, God. Those told they would have friends in mid age were less likely to do so. The study was guided by Nicholas Epley, University of Chicago.

Neurons in the superior parietal lobe provide a sense of where the body ends and the world begins. Alter these neurons by drugs, meditation, or other means and one's sense of body-boundary changes.

Regions in the brain that become active when we imagine seeing or hearing something are the same regions active when we really do see or hear. This holds true for schizophrenics and normal people. The schizophrenic visual cortex becomes active when hallucinating. Normal people see or hear when intensely thinking about seeing or hearing.

Confirmation bias. The mind is better at recalling what validates that which we believe as distinct from that which refutes it. The behavior of Confirmation Bias is sometimes called Tolstoy Syndrome, after Leo Tolstoy who wrote this: "I know that most men, including those at ease with problems of the greatest complexity, can seldom accept the simplest and most obvious truth if it be such as would oblige them to admit the falsity of conclusions which they have proudly taught to others, and which they have woven, thread by thread, into the fabrics of their life."

At a British Association Festival of Science, Professor Bruce Hood of Bristol University, conducted an experiment. It is described this way: "Professor Hood asked members of the festival audience if they were prepared to try on an old fashioned blue cardigan in return for a £10 reward. After receiving no shortage of volunteers, he then told the volunteers that the cardigan used to belong to Fred West, the mass murderer. On hearing this, most of the volunteers put their hands down. Though a few did try it on, others moved away from them.

In fact, the cardigan had not belonged to Fred West. The experiment demonstrated that the belief that even the most rational of people can be made to feel uncomfortable by a physical object associated with evil.

Shermer points out that this suggests people think evil is physical. There is a spiritualist in people that thinks evil can transfer to the physical. Shermer suggests that our ancestors found it appropriate to assume a rock formation was a bear until they could prove otherwise.

Shermer states that within us is a deep dualism. We think of our essence as mental and our body as physical. Michael Shermer, Why People Believe Weird Things