Tuesday, August 28, 2007

New Blink book

Gerd Gigerenzer, a German social psychologist, has written a new book justifying making decisions by gut feeling. Here is a sample of his research:
In the 1990s, I was living in Chicago, where there are high dropout rates from the high schools. People often asked, "Is there a way to know which school has the lowest dropout rate?" There existed data measuring different cues of school performance: the pay of teachers, the number of English-speaking students in a class, things like that.

I wondered: could one feed these into a computer, analyze them and obtain a prediction on which high school produced the fewest dropouts? We did that. And we were astonished to find that computer-based versions of Franklin’s bookkeeping method -- a program that weighed 18 different cues -- proved less accurate than going with the rule of thumb of "get one good reason and ignore the rest of the information."

Q: What was the "one good reason" that got you the right answer?

A: Knowing which school had high daily attendance rates. If two schools had the same attendance levels, you needed one more cue -- good writing scores -- and then you could ignore the rest.
No, this is an example of the superiority of computer analysis. Simple regressions often show that one or two factors are dominant, but it takes a statistical analysis to prove it. Those who rely on gut feelings often get fooled into thinking things like teacher pay are more significant.

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