Manage By Walking Around http://jonathanbecher.com Aligning Execution With Strategy Mon, 09 Jul 2018 18:19:40 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.7 https://i2.wp.com/jonathanbecher.com/wp-content/uploads/2017/06/cropped-jb-logo.jpg?fit=32%2C32 Manage By Walking Around http://jonathanbecher.com 32 32 56894116 The Curious Case of Clever Hans http://jonathanbecher.com/2018/07/08/the-curious-case-of-clever-hans/ http://jonathanbecher.com/2018/07/08/the-curious-case-of-clever-hans/#respond Mon, 09 Jul 2018 03:38:46 +0000 http://jonathanbecher.com/?p=7078 Long before Mr. Ed, the talking horse, Clever Hans was a horse who apparently could understand human language and answer mathematical questions. In the late 1800s, a German high school mathematics instructor named Wilhelm Von Osten believed humans had underestimated animal intelligence and that animals could learn to read or count. Von Osten’s initial attempts...

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Long before Mr. Ed, the talking horse, Clever Hans was a horse who apparently could understand human language and answer mathematical questions.

In the late 1800s, a German high school mathematics instructor named Wilhelm Von Osten believed humans had underestimated animal intelligence and that animals could learn to read or count. Von Osten’s initial attempts were unsuccessful but a horse named Klude Hans learned a wide variety of skills. Hans could add, subtract, multiply, and divide; if Von Osten asked for the sum of 3 plus 2, the horse would tap his hoof five times.

Von Osten started showing off Hans’ mathematical abilities all over Germany. For example, Von Osten would ask Hans: “If the first day of the month is a Wednesday, what is the date of the following Monday?” Hans would respond with six taps of his hooves. The horse was soon known as Clever Hans and could answer questions with nearly 90% accuracy.

As Clever Hans’ fame grew, many claimed Von Osten was cheating and demanded an inquiry. The German board of education assembled the Hans Commission – two zoologists, a psychologist, a horse trainer, school teachers, and a circus manager – to conduct an investigation. The commission concluded the Clever Hans was legit; the horse could answer questions asked by anyone, even if Von Osten wasn’t there.

Eventually psychologist Oskar Pfungst figured out what was happening. During a series of experiments, Pfungst noticed that Clever Hans often didn’t know the correct answer when the questioner didn’t know it either. Furthermore, if the horse couldn’t see anyone who did know the answer, Hans didn’t respond correctly.

It turned out Clever Hans had learned to detect subtle nonverbal cues. After someone asked a question, Hans would begin tapping his hoof. When the horse reached the correct answer, the questioner would provide an involuntary clue such as tilting their head or tensing their muscles. Clever Hans would recognize this behavior and stop tapping. When Hans couldn’t see the cues, he couldn’t answer the question.

After the curious case of Clever Hans, scientists began to study nonverbal clues and discovered people can unconsciously communicate information to others through subtle movements. Even if you’re not aware you’re providing these clues, someone can be trained to pick up on your “tells.”

Expert poker players owe a debt to a horse named Clever Hans.

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The Parable of the Kid and the Barber http://jonathanbecher.com/2018/07/01/the-parable-of-the-kid-and-the-barber/ http://jonathanbecher.com/2018/07/01/the-parable-of-the-kid-and-the-barber/#respond Sun, 01 Jul 2018 23:54:40 +0000 http://jonathanbecher.com/?p=7072 A few years ago I read psychologist Walter Mischel’s book, “The Marshmallow Test: Mastering Self-Control,” which provides recommendations on how to substantially increase your ability to control your impulses, including: Create good habits Visualize long-term consequences Disassociate from situations so they are less personal This strategy even managed to teach self-control to Sesame Street’s Cookie...

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A few years ago I read psychologist Walter Mischel’s book, “The Marshmallow Test: Mastering Self-Control,” which provides recommendations on how to substantially increase your ability to control your impulses, including:

  • Create good habits
  • Visualize long-term consequences
  • Disassociate from situations so they are less personal

This strategy even managed to teach self-control to Sesame Street’s Cookie Monster.

Mischel is the creator of the marshmallow test, one of the most famous experiments in psychology. The marshmallow test found that children who were able to resist temptation early in their lives went on to have better life outcomes: they were healthier, performed better in school, and made more money. Delayed short term gratification seems to lead to better long-term results.

Recently I stumbled upon a parable which makes this point in an amusing way:

A barber is talking to one of his customers. “See that kid?” he says as he points to a twelve-year-old standing outside the barbershop. “He is the dumbest kid in world. Watch. I’ll prove it to you.”

The barber takes out a one-dollar bill and a five-dollar bill, and then calls the boy inside. He holds out both bills, and asks, “Which one do you want, son?”

The kid takes the one-dollar bill and leaves the shop.

“See?” laughs the barber. “The dumbest kid in the world.”

A few minutes after the customer leaves the barbershop, he happens to see the boy coming out of an ice cream store. He goes over and asks, “If you don’t mind me asking, son, why didn’t you take the five-dollar bill?”

The boy takes a lick of his ice cream cone and replies, “Because the day I choose the five-dollar bill, the game’s over.”

Apparently, Steve Miller Band’s encouragement to Take The Money And Run might not be the best advice.

Just sayin…

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We Are All Purple Squirrels http://jonathanbecher.com/2018/06/10/we-are-all-purple-squirrels/ http://jonathanbecher.com/2018/06/10/we-are-all-purple-squirrels/#comments Mon, 11 Jun 2018 03:17:22 +0000 http://jonathanbecher.com/?p=7057 “I need your help finding a Purple Squirrel.” I was catching up over coffee with a semi-retired friend who sources engineers for startups. Thomas (not his real name) smiled when he realized I had no idea what he was talking about. I had heard of a purple frog, but not a squirrel. As you might...

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“I need your help finding a Purple Squirrel.”

I was catching up over coffee with a semi-retired friend who sources engineers for startups. Thomas (not his real name) smiled when he realized I had no idea what he was talking about. I had heard of a purple frog, but not a squirrel.

As you might have guessed, there isn’t a purple squirrel. It’s a metaphor  recruiters use to describe the unrealistic expectations of a client company to try to find an elusive candidate. In Thomas’ case, the client wanted a full-stack developer with at least 5 years of experience who had an advanced degree in biology and was willing to take minimal salary but lots of stock options. Oh yeah, the job was based in Kansas City.

I guess purple squirrels really do have to work for peanuts.

Companies often create a detailed job description of the ideal candidate, with exactly the right qualifications and the perfect experience. However, that candidate rarely materializes. And certainly not in the expected time frame. Chasing a purple squirrel is mostly a waste of everyone’s time and money.

I say ‘mostly’ because, in my opinion, there is one redeeming quality: the hunt itself. It wasn’t that long ago that recruiters and sourcers were called headhunters. I realize that it’s an unfortunate sounding name but it emphasizes that the key is actively searching – posting jobs to job boards or social media sites is not enough.

A few years ago, I wrote an article called Spotting Exceptional Talent in which I argued against looking for the same candidates that everyone else is. Instead, I recommended hiring ‘talent that whispers’:

These are rare candidates overlooked by most recruiting systems because they have so-called jagged résumés; unusual, almost erratic backgrounds, littered with both successes and failures. In the right settings, these candidates can do spectacular work.

Maybe that’s the secret of the purple squirrel conundrum. Rather than trying to find a hypothetical candidate to fit an overly-specific job description, flip the equation on its head. Find the purple squirrel in every person and figure out how you can leverage their unique skills. Hire based on attitude and aptitude, not a piece of paper.

And one more thing: the Indian Giant Squirrel does look sort of purple in the right light…

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Are You Really Open Minded? http://jonathanbecher.com/2018/04/29/really-open-minded/ http://jonathanbecher.com/2018/04/29/really-open-minded/#comments Sun, 29 Apr 2018 21:33:07 +0000 http://jonathanbecher.com/?p=7043 If you asked 1000 people if they were open or closed-minded, my guess is that more than 90% would claim to be open minded. But are they really open-minded? Nobody wants to admit they are closed-minded. In fact, it likely doesn’t even occur to a closed-minded person that they are closed-minded. This blind spot makes...

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If you asked 1000 people if they were open or closed-minded, my guess is that more than 90% would claim to be open minded. But are they really open-minded?

Nobody wants to admit they are closed-minded. In fact, it likely doesn’t even occur to a closed-minded person that they are closed-minded. This blind spot makes the situation even worse.

How do you tell the difference between open and closed-mindedness? Ray Dalio, founder of investment firm Bridgewater Associates, one of the world’s largest hedge funds, suggests some simple ways in his book Principles.

Protect vs Challenge Beliefs

Closed-minded people hold onto their beliefs strongly and ignore any contrary evidence. They are more interested in being right than getting to the right answer. They don’t want others to ask questions that might challenge their beliefs.

Open-minded people actively look for opinions and information that challenge their beliefs. When a disagreement happens, they are curious about the underlying reasons. In Dalio’s words,

Rather than thinking, ‘I’m right.’ I started to ask myself, ‘How do I know I’m right?’”

Statements vs Questions

Closed-minded people prefer statements rather than questions. They frequently offer opinions (often disguised as facts). They rarely ask others to explain their ideas but focus on information that refutes others.

Open-minded people actively seek out opinions from others by asking open-ended questions. When making decisions, they seek out others with diverse backgrounds who might have contrary point of views. As my first boss taught me,

Decide what information might change your mind and then try to find someone who has that information.

Understanding vs Empathy

Closed-minded people spend their time trying to be understood by others. When someone disagrees with them, they are quick to rephrase – or even repeat – their point of view. They use phrases like “you might not have understood me” or “I might not have explained myself well.”

Open-minded people are empathetic and want to hear others’ points of view. If you disagree with an open-minded person, they focus on understanding you rather than explaining themselves.

Dalio urges us to practice Radical Open-Mindedness. Here are two ideas:

  • Remember that you’re looking for the best answer, not simply the best answer that you can come up with yourself.
  • Be clear on whether you are arguing or seeking to understand, and think about which is most appropriate based on your and others’ believability.

I’m intrigued by radical open-mindedness and think it could support a goal of lifetime learning. Just remember: it’s important to keep an open mind but not so open that your brain falls out.

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Just Say No To Goals http://jonathanbecher.com/2018/04/08/just-say-no-goals/ http://jonathanbecher.com/2018/04/08/just-say-no-goals/#comments Sun, 08 Apr 2018 20:37:28 +0000 http://jonathanbecher.com/?p=7030 People are obsessed with goals. You could fill a large library with books describing how to create and accomplish goals. But they don’t seem to be effective: Only 1/3 of people who make New Year’s resolutions keep them for longer than a few days. More than 70% of the people who set goals for themselves...

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People are obsessed with goals. You could fill a large library with books describing how to create and accomplish goals. But they don’t seem to be effective:

Even the highly-touted SMART goals can be stupid.

So, what’s the problem with goals?

Goals have a specific ending time. Once you accomplish a goal, it’s no longer there to motivate you and you might fall back to your previous behavior. If you set a goal to run a marathon, you likely will train hard until the day of the race. If you finish the marathon, you may not keep training afterwards. After accomplishing one goal, you’re forced to create another.

Goals rely on uncontrollable factors. While goals may seem achievable when they are set, circumstances change over time and Murphy’s Law strikes without warning. An injury might interrupt your marathon training, or an unexpected expense might keep you from reaching a financial goal.

Goals focus on the future instead of the current. A goal can seem unattainable, especially when it is in the distant future. When you compare where you are against where you want to be, you might get demotivated. If you want to save $5000 in a year, you probably will be discouraged if you’ve only saved $500 after 3 months. One recommendation is to set multiple targets along the way.

In The Power of Habit, New York Times business reporter Charles Duhigg argues that habits are more powerful and more reliable than goals. Habits make difficult tasks easier to accomplish by converting them from conscious decisions to background, almost automatic, processes. Here are two examples:

  • The challenge of saving $5000 forces you to exert self-discipline every time you want to purchase something. These daily challenges add up and can wear down your resolve over time. An alternative approach would be automatically deposit $200 into a savings account every pay period. Once set up, there is no effort and it becomes a habit – one that extends beyond the initial $5000.
  • Many years ago, I decided to read more books. One benefit would be more ideas for this blog. Rather than setting a goal of reading 25 books per year or even two books per month, I decided to make sure I always have books around me. I kept a pile on both my home and work desks, and always brought one with me on trips. Pretty soon it became a habit to read on planes.

Duhigg generalizes the benefits as follows:

  • Habits are easier to complete than goals since they are smaller and repetitive.
  • Habits allow us to overshoot our goals rather than focusing on a fixed objective.
  • Habits, once established, are perpetual and can last our whole lives.

According to Duhigg, we are truly creatures of habit; habits make up more than 40% of our lives. Some of these – those Duhigg calls keystone habits – have compounding effects on our lives. When people start exercising, they often end up eating better or drinking less alcohol. One good habit creates others. In a similar vein, breaking a bad habit often leads to a good one as a replacement.

So, the next time you want to accomplish something, don’t set yourself a goal. Instead, create a habit.

Even Dilbert agrees.

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How Bad Is Double-Dipping? http://jonathanbecher.com/2018/03/18/how-bad-is-double-dipping/ http://jonathanbecher.com/2018/03/18/how-bad-is-double-dipping/#comments Mon, 19 Mar 2018 04:39:35 +0000 http://jonathanbecher.com/?p=7024 With a little more couch time than normal this flu season, I binge-watched some new TV series and rewatched some classics. After seeing George Costanza double-dip a chip during a wake, I started to wonder – is it really “like putting your whole mouth right in the dip!” Here’s the scene from a 1993 episode...

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With a little more couch time than normal this flu season, I binge-watched some new TV series and rewatched some classics. After seeing George Costanza double-dip a chip during a wake, I started to wonder – is it really “like putting your whole mouth right in the dip!” Here’s the scene from a 1993 episode of Seinfeld for those who may not be familiar with it:

Turns out I’m not the only one who wondered whether bacteria in your mouth can make it onto the chip then into the dip. Clemson Professor Paul Dawson is a food scientist who researches how common food habits can increase the spread of bacteria and was inspired by watching that episode. His undergraduate research team designed a series of experiments to find out how bad double-dipping really is.

The first experiments compared how much bacteria were transferred from a cracker to a cup of water when it was either bitten or unbitten. Not surprisingly, the researchers found bitten crackers transferred “about 1,000 more bacteria per milliliter.” Then they varied the pH level of the water to be increasingly acidic, measuring the bacteria levels right after dipping and again two hours later. The more acidic water initially tested with high levels of bacteria but they dropped over time. Most bacteria can’t survive in acidic solutions.

But would the results stand up to real life? The second experiments replaced the water with three kinds of dip: chunky salsa, chocolate syrup, and cheese dips. These dips vary in pH and viscosity (thickness).

As expected, without double-dipping, the foods had no detectable levels of bacteria. After double-dipping, the salsa had five times more bacteria than the chocolate or cheese dips. However, about two hours later the bacterial levels in the salsa dropped to the same levels as the chocolate and cheese.

The researchers explained that salsa has lower viscosity than chocolate or cheese but is more acidic. Since salsa is less thick, more of the dip touching the bitten cracker fell back into the bowl increasing the bacteria level. And the higher acidity killed off most of the bacteria after the two hours.

So, what should we do about all of this? If you’re at a party, please don’t double-dip – especially if you’re sick. If you see someone else double-dipping, avoid their dip of choice. The researchers also provided a useful observation to party hosts: “cheese dip will run out faster than salsa since more of the cheese sticks to the cracker or chip on each dip.” You’ll have to refill the bowl more often but you’ll reduce the chance that people double-dip.

Isn’t science useful?

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Critical Thinking Via 5 Whys and First Principles http://jonathanbecher.com/2018/03/13/critical-thinking-via-5-whys-first-principles/ http://jonathanbecher.com/2018/03/13/critical-thinking-via-5-whys-first-principles/#respond Wed, 14 Mar 2018 03:19:58 +0000 http://jonathanbecher.com/?p=7017 Early in my career, my departmental VP hired a well-known management consulting firm to diagnose why an important project had failed. The management consultants used a technique called “5 Whys” to get past discussions of the failed outcomes and try to unearth the root causes. As the name implies, the technique is based on asking...

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Early in my career, my departmental VP hired a well-known management consulting firm to diagnose why an important project had failed. The management consultants used a technique called “5 Whys” to get past discussions of the failed outcomes and try to unearth the root causes. As the name implies, the technique is based on asking Why five times in a row – with the assumption that by the last Why you’ll reach the true cause of a problem.

This technique can work well (here’s a real-world example from a kitchen range manufacturer) but has its limitations. In a complex situation, you can suffer from tunnel vision which might lead to an incorrect conclusion. To counteract this, there are variants of the 5 Whys technique which intentionally create branches (alternative theories) and therefore explore new ground. In mathematics this is called avoiding a local maximum to search for a global maximum. For those interested in learning more, here’s a good article on variants of the 5 Whys technique.

The recent Elon Musk-fueled craze around first principle thinking reminded me that everything old is new again. First principle thinking, for those who haven’t seen the endless articles trumpeting this breakthrough, is a mode of thinking “designed to relentlessly pursue the foundations of any given problem from fundamental truths.” In science, theoretical work is considered to be from first principles if it starts directly with established science and doesn’t rely on assumptions. This approach isn’t really new: A case can be made it originated more than 2000 years ago with Aristotle.

Confused? Here’s a frequently-referenced video of Elon describing how first principles thinking challenged the traditional economics of making batteries:

5 Whys and First Principles are both examples of critical thinking but differ in how they approach the problem. 5 Whys is top down; starting with the observed result and trying to discover the underlying cause. On the other hand, the First Principles approach builds from basic truths to discover new solutions. Each has merit and is appropriate in different circumstances. When in doubt, try them both.

Regardless of which approach you use, the key to critical thinking is to be sensitive to your built-in biases and learn to challenge surface explanations. Be sure to ask more questions; just remember it’s hard to ask good questions.

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The 90-Minute Rule http://jonathanbecher.com/2018/02/11/90-minute-rule/ http://jonathanbecher.com/2018/02/11/90-minute-rule/#respond Mon, 12 Feb 2018 04:26:31 +0000 http://jonathanbecher.com/?p=6984 “Human beings aren’t designed to expend energy continuously. Rather, we’re meant to pulse between spending and recovering energy.” – Tony Schwartz (source) In the late 1950’s, researchers William Dement and Nathaniel Kleitman documented that humans sleep in 90-minute cycles – from light to deep sleep and back to light sleep again. Professor Kleitman later discovered...

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“Human beings aren’t designed to expend energy continuously. Rather, we’re meant to pulse between spending and recovering energy.”
– Tony Schwartz (source)

In the late 1950’s, researchers William Dement and Nathaniel Kleitman documented that humans sleep in 90-minute cycles – from light to deep sleep and back to light sleep again. Professor Kleitman later discovered that a similar pattern happens when we are awake – from a state of alertness to physiological fatigue. After 90 minutes of work, we start to feel tired and less productive. Essentially, this is our bodies telling us that we need to slow down and take a break.

Unfortunately, we often ignore these biological signals and try to mask the impact with stimulants like caffeine and sugar. When we’re on a tight deadline or under lots of pressure, we might also summon up the stress hormones adrenaline and cortisol. These stimulants work in the short term but they usually lead to an inevitable feeling of crashing.

Research by Professor K. Anders Ericsson on elite performers reinforced the 90-minute cycle. Professor Ericsson found the best violinists daily practice usually consisted of three sessions of 90 minutes each with breaks for recuperating between each session. These elite musicians rarely worked for more than 4.5 hours per day and they slept almost an hour more than average musicians. A similar pattern emerged in studies of athletes, actors, and chess players.

More from Professor Ericsson:

To maximize gains from long-term practice, individuals must avoid exhaustion and must limit practice to an amount from which they can completely recover on a daily or weekly basis.

I call this effect the 90-minute rule and recommend applying it to your daily routine, regardless of your profession. You should schedule your day in 90-minute periods of intense, uninterrupted work with 20-30 minutes of renewal breaks between them. You should also make sure business meeting don’t last longer than 90 minutes. When you plan an offsite or a conference agenda, no session or presentation should be longer than 90 minutes or else you risk losing the audience.

Adhering to the 90-minute rule takes discipline, especially since we live in an always-on society. But the science tells us we can be better performers if we give ourselves enough time to recuperate. Take a walk, eat a healthy snack, or even chit-chat with co-workers.

And the next time your boss asks if you’re goofing off at work, refer to the 90-minute rule and say you’re taking a science-mandated break.

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When Promoting People, Beware the False Record Effect http://jonathanbecher.com/2018/02/04/when-promoting-people-beware-the-false-record-effect/ http://jonathanbecher.com/2018/02/04/when-promoting-people-beware-the-false-record-effect/#respond Sun, 04 Feb 2018 21:13:56 +0000 http://jonathanbecher.com/?p=6950 After writing about several examples of bias from insensitivity to sample size, a former colleague asked whether I thought performance in the workplace was subject to the same bias. She observed that people were sometimes rewarded or even promoted for high performance, even if that performance was sporadic rather than sustained. She asked: Shouldn’t the...

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After writing about several examples of bias from insensitivity to sample size, a former colleague asked whether I thought performance in the workplace was subject to the same bias. She observed that people were sometimes rewarded or even promoted for high performance, even if that performance was sporadic rather than sustained. She asked:

Shouldn’t the promotion of an employee be tied to a larger sample size (i.e. more time)?

The answer is heavily nuanced. In my own experience, performance at work is not solely based on your own skills. A variety of external factors come into play, including the difficulty of your tasks, the quality of your team, and even some luck. The more time you have to observe an employee, the more you can tell how much impact these external factors had.

James G. March, Professor Emeritus at Stanford University, describes this as the False Record Effect:

A group of managers of identical (moderate) ability will show considerable variation in their performance records in the short run. Some will be found at one end of the distribution and will be viewed as outstanding; others will be at the other end and will be viewed as ineffective. The longer a manager stays in a job, the less the probable difference between the observed record of performance and actual ability.

This doesn’t necessarily mean that seniority is a better way to determine promotions. Organizations that favor “time in seat” over short-term success lose the benefit of fresh perspectives and can become stale.

We are more susceptible to the False Record Effect early on in an employee’s career when there is less performance data available to make decisions. As Professor March cautions:

Within a group of managers of varying abilities, the faster the rate of promotion, the less likely it is to be justified.

In other words, the fast start might be an anomaly and the employee could have a regression toward the mean.

So, what should an organization do? The key is balance. In business as in sports, recognize that we likely will be biased by the hot hand fallacy. When deciding on a promotion, don’t just consider an employee’s performance but take into account the difficulty of his/her assignments.

When in doubt, my recommendation is to promote those who have a history of making others better, not just themselves.

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4 out of 5 People Can Be Wrong http://jonathanbecher.com/2018/01/28/4-5-people-can-wrong/ http://jonathanbecher.com/2018/01/28/4-5-people-can-wrong/#comments Mon, 29 Jan 2018 00:27:45 +0000 http://jonathanbecher.com/?p=6933 The law of small numbers (or hasty generalization) is the tendency to jump to a conclusion without enough evidence. In statistics, it’s called bias from insensitivity to sample size – generalizing from a limited number of events (a sample) selected from a much larger number of events (the population). For example, if a mutual fund...

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The law of small numbers (or hasty generalization) is the tendency to jump to a conclusion without enough evidence. In statistics, it’s called bias from insensitivity to sample size – generalizing from a limited number of events (a sample) selected from a much larger number of events (the population). For example, if a mutual fund manager has three above-average years in a row, you might conclude that the fund manager is better than average and will have a fourth above-average year. While it may be true, you cannot come to this conclusion from such a small amount of data.

This bias shows up frequently in the media. Imagine the headline summarizing a telephone survey of 500 rural inhabitants, in which 70% responded they didn’t have enough money for retirement. It would likely be something like this: People living in the country can’t comfortably retire. Most readers would ignore the details of the survey, including whether 500 people is sufficient to warrant the conclusion.

This is the challenge with small sample sizes. If the survey had only included 50 people, you’d be suspicious. And if it included 50,000 people, you probably wouldn’t be worried. But what about 500? Our intuition is good at the extremes but not in the middle. Without more information, it’s hard to know if the 500-person sample size is sufficient.

In the book Thinking, Fast and Slow, Daniel Kahneman elaborates:

The exaggerated faith in small samples is only one example of a more general illusion – we pay more attention to the content of messages than to information about their reliability, and as a result end up with a view of the world around us that is simpler and more coherent than the data justify. Jumping to conclusions is a safer sport in the world of our imagination than it is in reality.

Here’s a test of your sensitivity to sample size, courtesy of Max Bazerman in Judgment in Managerial Decision Making: A town has two hospitals; 45 babies are born each day in the larger one and 15 are born in the smaller one. Overall about 51% of babies are boys but of course the exact percentage varies day to day. During one year, both hospitals tracked the number of days in which more than 60% of the babies born were boys. Which hospital had more of these days?

A. The larger hospital
B. The smaller hospital
C. About the same (within 5% of each other)

Did you guess C? Most people incorrectly choose C when the right answer is B. Having 60% boys in one day is a rare event and statistics tell us that we’re more likely to observe a rare event in a small sample than in a large one.

You can also see this effect in sports. In a sport with a long season like basketball, hockey or baseball, the standings 20 games into the season may not be representative of the final standings. But at the end of the season, the best team usually has the best record. This effect is why sports fans are often optimistic; on any given day, anything can happen – especially in the playoffs. As Michael Lewis writes in Moneyball: “In a five-game series, the worst team in baseball will beat the best about 15% of the time.”

Which brings us to advertising. The classic commercial which claims “4 out of 5 dentists recommend…” has been mimicked many times over the years. The law of small numbers teaches us this claim is meaningless unless we know the sample size.

My guess is that there were only 5 dentists. Which means they could be wrong.

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