Handpicked to satisfy your intellectual curiosity!
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Most Important Reads:
Daniel Kahneman: Master Class – The Marvels and the Flaws of Intuitive Thinking & His Book Thinking Fast Thinking Slow-via Edge.org- It turns out there is something else we’re awfully good at. We’re good at taking an agent and assigning characteristics to that agent, and remembering that this agent has these certain habits, and it does these things. If you want to learn about System 1 and System 2, or about Type 1 and Type 2 operations, really the same, think of it as System 1 and 2. it will develop a personality. There are certain things that it likes doing, that it’s able to do, and there are certain things it just cannot do, and you will get that image. It’s completely crazy.
A New Way to Think About Psychological Change – via Tim Wilson @ Brain Pickings- social psychologist Timothy Wilson reveals insights from three decades of empirical evidence indicating that what is true of culture is also true of individuals: Our experience of the world is shaped by our interpretations of it, the stories we tell ourselves, and these stories can often become so distorted and destructive that they completely hinder our ability to live balanced, purposeful, happy lives, so the key to personal transformation is story transformation.
The Responsibility of Intellectuals, Redux Using Privilege to Challenge the State - By Noam Chomsky via Boston Review- The concept of intellectuals in the modern sense gained prominence with the 1898 “Manifesto of the Intellectuals” produced by the Dreyfusards who, inspired by Emile Zola’s open letter of protest to France’s president, condemned both the framing of French artillery officer Alfred Dreyfus on charges of treason and the subsequent military cover-up. The Dreyfusards’ stance conveys the image of intellectuals as defenders of justice, confronting power with courage and integrity. But they were hardly seen that way at the time. A minority of the educated classes, the Dreyfusards were bitterly condemned in the mainstream of intellectual life, in particular by prominent figures among “the immortals of the strongly anti-Dreyfusard Académie Française,” Steven Lukes writes. To the novelist, politician, and anti-Dreyfusard leader Maurice Barrès, Dreyfusards were “anarchists of the lecture-platform.” To another of these immortals, Ferdinand Brunetière, the very word “intellectual” signified “one of the most ridiculous eccentricities of our time—I mean the pretension of raising writers, scientists, professors and philologists to the rank of supermen,” who dare to “treat our generals as idiots, our social institutions as absurd and our traditions as unhealthy.”
The Limping Middle Class – via Robert b Reich @ NYT- THE 5 percent of Americans with the highest incomes now account for 37 percent of all consumer purchases, according to the latest research from Moody’s Analytics. That should come as no surprise. Our society has become more and more unequal.
Back to School: Free Resources for Lifelong Learners Everywhere - via OpenCulture- With Labor Day behind us, it’s officially time to head back to school. That applies not just to kids, but to you. No matter what your age, no matter where you live, no matter what your prior level of education, you can continue deepening your knowledge in areas old and new. And it has never been easier. All you need is a computer or smart phone, an internet connection, some free time, and our free educational media collections. They’re available 24/7 and constantly updated:
Quantum minds: Why we think like quarks – via New Scientist- It may sound preposterous to imagine that the mathematics of quantum theory has something to say about the nature of human thinking. This is not to say there is anything quantum going on in the brain, only that “quantum” mathematics really isn’t owned by physics at all, and turns out to be better than classical mathematics in capturing the fuzzy and flexible ways that humans use ideas. “People often follow a different way of thinking than the one dictated by classical logic,” says Aerts. “The mathematics of quantum theory turns out to describe this quite well.” It’s a finding that has kicked off a burgeoning field known as “quantum interaction”, which explores how quantum theory can be useful in areas having nothing to do with physics, ranging from human language and cognition to biology and economics. And it’s already drawing researchers to major conferences.
Huge Collection of Neuro Economics Research- via Cell Press H/T Deric Bownds
Interesting Behavioral Finance Symposium: Speakers Zweig & Odean -via UTC H/T Dustin
A More Progressive Tax System Makes People Happier - via APS - On average, residents of the nations with the most progressive taxation evaluated their own lives as closer to “the best possible.” They also reported having more satisfying experiences and fewer discomfiting ones than respondents living in nations with less progressive taxes. That happiness, Oishi says, was “explained by a greater degree of satisfaction with the public goods, such as housing, education, and public transportation.”
Why We Desire But Reject Creative Ideas - via Freakonomics- People often reject creative ideas even when espousing creativity as a desired goal. To explain this paradox, we propose that people can hold a bias against creativity that is not necessarily overt, and which is activated when people experience a motivation to reduce uncertainty. In two studies, we measure and manipulate uncertainty using different methods including: discrete uncertainty feelings, and an uncertainty reduction prime. The results of both studies demonstrated a negative bias toward creativity (relative to practicality) when participants experienced uncertainty. Furthermore, the bias against creativity interfered with participants’ ability to recognize a creative idea. These results reveal a concealed barrier that creative actors may face as they attempt to gain acceptance for their novel ideas.
How the most celebrated faculty member on a prestigious journalism faculty is getting screwed- via Chicago Magazine- It wasn’t the first time David Protess and his investigative reporting class had grabbed headlines. Three years earlier, he and his students had captured national attention by helping exonerate the Ford Heights Four—four men wrongfully convicted of murder, two of whom were on death row. The Porter case, however, launched him and his program into the academic and journalistic stratosphere. George Ryan, then the governor of Illinois, cited Protess’s work as the driving force behind his imposition of a first-of-its-kind death penalty moratorium. “Innocence projects,” patterned on Protess’s own at Medill, sprang up across the country, filled with students and lawyers whose idealistic fervor was inspired by the Medill professor and what his class had accomplished.
What’s the connection between curiosity and happiness?- via Bakadesuyo- We found that on days when they are more curious, people high in trait curiosity reported more frequent growth-oriented behaviors, and greater presence of meaning, search for meaning, and life satisfaction. Greater trait curiosity and greater curiosity on a given day also predicted greater persistence of meaning in life from one day into the next. People with greater trait curiosity reported more frequent hedonistic events but they were associated with less pleasure compared to the experiences of people with less trait curiosity. The benefits of hedonistic events did not last beyond the day of their occurrence.
The Importance of Predicting Your Own Behavior- via Overcoming Bias- Consider personal prediction markets, which predict what you will do in the future, such as whether you will lose weight, get married, get an A, get promoted, etc. By allowing your associates to participate in such markets, you could let them (anonymously) tell you what they really think about what you will do. Looking often at the predictions of such markets, and asking yourself if those predictions are wrong, could help you to live up to your far ideals about what you should and will do with your life.
Your Brain on Politics: The Cognitive Neuroscience of Liberals and Conservatives- via Rogue Neuron – Does brain structure determine your beliefs, or do your beliefs change your brain structure? What about those who switch parties at some point? How do they fit in to this model? We’ll be discussing all of this. It’s a complicated issue with lots of variables in play, so we’re going to take a pretty deep look into this topic from all angles, so we can draw the most accurate conclusions.”
The Efficient Market Hypothesis is just a case of using the theory when it fits the data, and ignoring the data when it doesn’t fit the theory. – via Physics of Finance- The EMH runs into trouble in the form of many exceptions to market unpredictability, so-called “anomalies,” such as those identified by Andrew Lo of MIT. His 1990 book A Non-random Walk Down Wall St., written with Craig MacKinlay, documented a number of persisting patterns in market movements. For example, he and colleagues found in a study of price movements over a period of 25 years that the present returns of lower valued stocks were significantly correlated with the past returns of higher valued stocks. This means that by looking at what has happened recently to higher priced stocks, investors can in principle predict with some success what will happen to the future prices of cheaper stocks. This clearly contradicts the efficient market hypothesis.
The True Cost of Multi-tasking - via What Makes Them Click - Task switching, not multi-tasking – A while ago I wrote a post about multi-tasking, and the research at Stanford that shows that even younger people aren’t good at multi-tasking. But the term multi-tasking is actually a misnomer. People can’t actually do more than one task at a time. Instead we switch tasks. So the term that is used in the research is “task switching”.
Myth of the Modern Religious War- via John Tures @ Miller McCune- While religion is a popular motif for describing national or international strife, a closer look suggests that’s really just a veneer for less spiritual issues.
Dissonant Debt: Why Do Students take on so much debt – via There are Free Lunches - People like to keep their beliefs consistent with one another. In earlier posts we have shown how this preference affects gang membership, fidelity in marriage and church-going. The same applies to the student loan: if the students believe that their studies are valuable and worthwhile, it is perfectly consistent that they see an outsized student loan as acceptable. Indeed, the higher the debt, the greater value the student is likely to attach to the education. Any other conclusion would provoke uncomfortable feelings of cognitive dissonance.
Psychology’s Treacherous Trio: Confirmation Bias, Cognitive Dissonance, and Motivated Reasoning – via Why We Reason- he question is: why do humans remain so steadfast to their beliefs, sometimes even in the face of overwhelming opposing evidence?
Decision Making/ Behavioral Economics/Psychology/ Risk/ Sciences:
Are human beings are essentialists. That is our beliefs about an object change how we experience it ? - via Leadon Young- Why do we like an original painting better than a forgery? In this video, psychologist Paul Bloom argues that human beings are essentialists — that our beliefs about the history of an object change how we experience it, not simply as an illusion, but as a deep feature of what pleasure (and pain) is
Why Is Average IQ Higher in Some Places?- via Sciam - Being smart is the most expensive thing we do. Not in terms of money, but in a currency that is vital to all living things: energy. One study found that newborn humans spend close to 90 percent of their calories on building and running their brains. (Even as adults, our brains consume as much as a quarter of our energy.) If, during childhood, when the brain is being built, some unexpected energy cost comes along, the brain will suffer. Infectious disease is a factor that may rob large amounts of energy away from a developing brain. This was our hypothesis, anyway, when my colleagues, Corey Fincher and Randy Thornhill, and I published a paper on the global diversity of human intelligence.
What motivates us more than most anything else? - via Bakadesuyo- The researchers call this the ‘illusory goal progress’ effect and shows that our perception of how close we are to achieving something can be easily manipulated by shifting the goal posts.
The Effect of Language on Economic Behavior via Keith Chen- Languages differ dramatically in how much they require their speakers to mark the timing of events when speaking. In this paper I test the hypothesis that being required to speak differently about future events (what linguists call strongly grammaticalized future-time reference) leads speakers to treat the future as more distant, and to take fewer future-oriented actions. Consistent with this hypothesis I find that in every major region of the world, speakers of strong-FTR languages save less per year, holdless retirement wealth, smoke more, are more likely to be obese, and suffer from worse long-run health. This holds true even after extensive controls that compare only demographically similar individuals born and living in the same country. While not dispositive, the evidence does not seem to support the most obvious forms of common causation. Implications of these findings for theories of intertemporal choice are discussed.
The anatomy of a 1930 epidemic that wasn’t:- via Long Form.org- Was parrot fever really something to worry about? Reading the newspaper, it was hard to say. “not contagious in man,” the Times announced. “Highly contagious,” the Washington Post said. Who knew? Nobody had ever heard of it before. It lurked in American homes. It came from afar. It was invisible. It might kill you. It made a very good story. In the late hours of January 8th, editors at the Los Angeles Times decided to put it on the front page: “two women and man in Annapolis believed to have ‘parrot fever.’”
How your emotions can cost you money – via LeadonYoung- If you haven’t been feeling emotional about money lately, you must have an excellent yoga instructor. There have been the rolling freak-outs about unemployment, the debt, and European defaults; meanwhile, investors seem to be inflating a bubble in tech.
The Long-Term Implications of Attention for School Success among Low-Income Children -via Razza, Martin, & Gunn – This study examined the longitudinal associations between sustained attention in preschool and children’s school success in later elementary school within a low-income sample (N = 2,403). Specifically, two facets of sustained attention (focused attention and lack of impulsivity) at age 5 were explored as independent predictors of children’s academic and behavioral competence across eight measures at age 9. Overall, the pattern of results indicates specificity between the facets of attention and school success, such that focused attention was primarily predictive of academic outcomes while impulsivity was mainly predictive of behavioral outcomes. Both facets of attention predicted teacher ratings of children’s academic skills and approaches to learning, which suggests that they jointly influence outcomes that span both domains of school success. Patterns of association were similar for children above and below the poverty line. Implications of these findings for interventions targeting school readiness and success among at-risk children are discussed.
Tastes, Castes, and Culture:The Influence of Society on Preferences – via Fehr & Hoff – Economists have traditionally treated preferences as exogenously given. Preferences are assumed to be influenced by neither beliefs nor the constraints people face. As a consequence, changes in behaviour are explained exclusively in terms of changes in the set of feasible alternatives. Here we argue that the opposition to explaining behavioural changes in terms of preference changes is ill-founded, that the psychological properties of preferencesrender them susceptible to direct social influences, and that the impact of “society” on preferences is likely to have important economic and social consequences.
Seeing Isn’t Believing – via APS- “Attention is the way our minds connect with things in the environment, enabling us to see, remember, and interact with those things,” says Liverence. “We tend to think that attention clarifies what’s out there. But it also distorts.”
The Stability of Big-Five Personality Traits- via Clark & Shurer- We use a large, nationally-representative sample of working-age adults to demonstrate that personality (as measured by the Big Five) is stable over a four-year period. Average personality changes are small and do not vary substantially across age groups. Intraindividual personality change is generally unrelated to experiencing adverse life events and is unlikely to be economically meaningful. Like other non-cognitive traits, personality can be modeled as a stable input into many economic decisions.
Belief in Luck or in Skill: Which Locks People into Gambling? – via Kun Zhou, Hui Tang, Yue Sun, Gui-Hai Huang, Li-Lin Rao, Zhu-Yuan Liang and Shu Li -According to the social axioms framework, people’s beliefs about how the world functions (i.e., internal or external locus of control) are related to their social behaviors. Previous researchers have attempted to relate locus of control to gambling behavior, but the results have not been clear-cut. The present study speculated that the effects of perceived control (i.e., belief in luck and belief in skill) on gambling behavior are domain-specific and vary with the type of gambling. A total of 306 adult Macau residents ranging in age from 18 to 65 with casino gambling experience were recruited by going door to door. Empirical data on gambling frequency and perceived control relating to 13 types of gambling were collected. Our results demonstrated that the effects of belief in luck or skill on gambling behavior varied across different gambling categories. Specifically, for football lottery, Chinese lottery, and baccarat, it was not belief in skill but rather belief in luck that was a positive significant predictor of gambling frequency. Only for slot machines and stud poker did belief in skill significantly predict gambling frequency. For the remaining eight gambling categories, neither belief in luck nor belief in skill could predict gambling frequency. Our findings indicate that neither internal nor external locus of control can consistently explain people’s gambling behaviors. Instead, which factor plays a greater role in a person’s gambling behavior is dependent on the gambling type. Therefore, the finding that not all gambles are created equal might be a promising avenue for further research and treatment approaches.
The Nature of Risk Preferences:Evidence from Insurance Choices - via Molinari-We use data on households deductible choices in auto and home insurance to estimate a structural model of risky choice that incorporates “standard” risk aversion(concave utility over nal wealth), loss aversion, and nonlinear probability weighting. Our estimates indicate that nonlinear probability weighting plays the most important role in explaining the data. More speci cally, we nd that standard risk aversion is small, loss aversion is nonexistent, and nonlinear probability weighting is large. Whenwe estimate restricted models, we nd that nonlinear probability weighting alone can better explain the data than standard risk aversion alone, loss aversion alone, and standard risk aversion and loss aversion combined. Our main ndings are robust to a variety of modeling assumptions.
Videos of The Week:
Unintended consequences - via Ted.com- Every new invention changes the world — in ways both intentional and unexpected. Historian Edward Tenner tells stories that illustrate the under-appreciated gap between our ability to innovate and our ability to foresee the consequences.
The Archive Team: Backing up the digital era – via LongNow – One of our favorite rogue digital archivists, Jason Scott, has just posted a video of his talk at DefCon 19 about The Archive Team exploits. This is perhaps the most eloquent (and freely peppered with profanity) explanations of the problems inherent with preserving our digital cultural heritage. He also describes in a fair amount of detail what he and The Archive Team have been doing to help remedy the problem.
Debt: The First 5,000 Years- via Paul Kerdosky
How The Romans Used Laptops and Tablets – via Tomstandage
Business/ Entrepreneurship/Finance/ Investing:
Lets Face It The UK & USA are fu***d – The Non-Scenic Route to the Place We’re Going Anyway – via Longform- A decade-long slowdown would accelerate this shift in global wealth and power and would be a grim thing to live through, but from a world-historical perspective it might not be a game-changer: it might just be the non-scenic route to the place we’re going anyway.
JP Morgan explains the euro crisis with lego- via Felix Simon
Are Traders Dumber than Drooling Dogs? - via PsyFi Blog- Given the ebb and flow of investor sentiment, often for no other apparent reason than the ring of the opening and closing bells of the market, it’s terribly tempting to compare traders to the salivating dogs from Pavlov’s famous experiment. The dogs, of course, were trained to salivate at the ring of a bell in the expectation of a good meal.
Commissions, Kickbacks, and Consumers: Brokers responding to financial incentives can benefit consumers – via Kellogg- Commissions from suppliers are common in the sales world. Brokers rely on them for a substantial portion of their income, allowing them to charge clients less for their services. But these under-the-table deals between supplier and broker can also leave a sour taste in clients’ mouths. A good product, consumers might think, should be able to sell itself on its own merits without needing the supplier to grease the palm of the broker. Kickbacks hidden from clients seem even more unsavory. To the common consumer, kickbacks seem to game the system. But the reality may be quite the opposite, according to research by Marco Ottaviani, a professor of management and strategy at the Kellogg School of Management, and Roman Inderst, a professor at Frankfurt University in Germany.
A Surprising Secret to Netflix’s Runaway Success - via Kellogg - Achal Bassamboo, an associate professor of managerial economics and decision science at Kellogg School of Management, along with co-authors Sunil Kumar, a professor at the University of Chicago, and Ramandeep Randhawa, an assistant professor at the University of Southern California, uncovered one of the counterintuitive secrets to Netflix’s success by modeling the behavior of Netflix subscribers who want to rent the latest hit movie. Their core discovery is that Netflix’s unique model means that the service has to stock far fewer discs than it would if it imposed late fees on customers. In fact, they found that the longer Netflix allows customers to keep discs, the more profitable the company could be. It is hardly a coincidence that the best answer to the problem of how long a customer should keep a disc—forever—is exactly what Netflix’s model encourages.
What caused the recession of 1937-38? – via Voxeu- The swift policy response to the recent financial crisis helped the world economy avoid a replay of the Great Depression of 1929-32. But can we avoid a replay of 1937-38? With the world economy weakening once again, this column addresses the question with a renewed urgency and comes up with an oft-overlooked explanation – the Treasury Department’s decision to sterilise all gold inflows starting in December 1936.
The Eclectic Mix:
One Path to Better Jobs: More Density in Cities - via Ryan Avent @ NY Times- How great are the benefits of density? Economists studying cities routinely find that after controlling for other variables, workers in denser places earn higher wages and are more productive. Some studies suggest that doubling density raises productivity by around 6 percent while others peg the impact at up to 28 percent. Some economists have concluded that more than half the variation in output per worker across the United States can be explained by density alone; density explains more of the productivity gap across states than education levels or industry concentrations or tax policies.
Fiction vs Non Fiction or Fiction With Non Fiction - via Timesonline - If you accept this minimal commitment to the idea of learning from fiction, you ought, I reckon, to have some interest in the following questions: Is the practice of fiction one we can reasonably expect to give us the insight we hope for? Are serious fiction writers well equipped to give us that insight? Finally and most radically, is what I’m supposed to be learning consistent with or supported by the best science? These are hard questions, and my answers will be little more than provocations. But they ought to be asked by anyone who feels indebted to literature for any of their beliefs, skills or sensitivities
Civil conflict correlates with climate change. - via Deric Bownds- It has been proposed that changes in global climate have been responsible for episodes of widespread violence and even the collapse of civilizations. Yet previous studies have not shown that violence can be attributed to the global climate, only that random weather events might be correlated with conflict in some cases. Here we directly associate planetary-scale climate changes with global patterns of civil conflict by examining the dominant interannual mode of the modern climate, the El Niño/Southern Oscillation (ENSO). Historians have argued that ENSO may have driven global patterns of civil conflict in the distant past11, a hypothesis that we extend to the modern era and test quantitatively. Using data from 1950 to 2004, we show that the probability of new civil conflicts arising throughout the tropics doubles during El Niño years relative to La Niña years. This result, which indicates that ENSO may have had a role in 21% of all civil conflicts since 1950, is the first demonstration that the stability of modern societies relates strongly to the global climate.
How Small Wins Unleash Creativity – via Carmen Nobel @ HBS- “We found that of all the events that characterized the best inner work life days, by far the most prominent was making progress,” Amabile says. “And of all the events that characterized the worst days, by far the most prominent was setbacks—feeling like you’ve lost ground on a project. As a pair, progress and setbacks are the main differentiators of the best and worst days.”
Biodefence since 9/11: The price of protection - via Nature News- Since the anthrax attacks in 2001, some $60 billion has been spent on biodefence in the United States. But the money has not bought quite what was hoped.
The Institutional Revolution – via Peter Klein- In The Institutional Revolution, Douglas W. Allen offers a thought-provoking account of another, quieter revolution that took place at the end of the eighteenth century and allowed for the full exploitation of the many new technological innovations. Fundamental to this shift were dramatic changes in institutions, or the rules that govern society, which reflected significant improvements in the ability to measure performance—whether of government officials, laborers, or naval officers—thereby reducing the role of nature and the hazards of variance in daily affairs. Along the way, Allen provides readers with a fascinating explanation of the critical roles played by seemingly bizarre institutions, from dueling to the purchase of one’s rank in the British Army.
Lessons from Sherlock Holmes: Confidence Is Good; Overconfidence, Not So Much - via SciAm-Confidence in ourselves and in our skills allows us to push our limits, achieve more than we otherwise would, try even in those borderline cases where a less confident person would bow out. But is there such a thing as being too confident, a flip side to this driver of success? Absolutely. It’s called overconfidence: when confidence trumps accuracy. In other words, we become more confident of our abilities, or of our abilities as compared with others’, than would be wise given the circumstances and the reality. And this surplus of belief in ourselves can lead to some not so pleasant results.
Just How Massive Is Google Anyways - via Bayesian Heresy
Where in the World Are American Jobs – via Infographic Showcase