This book does an excellent job of reporting important evidence showing that group decisions can be wiser than those of any one individual. He makes some good attempts to describe what conditions cause groups to be wiser than individuals, but when he goes beyond reporting academic research, the quality of the book declines. He exaggerates enough to give critics excuses to reject the valuable parts of the book.
He lists four conditions that he claims determine whether groups are wiser than their individual members. I’m uncertain whether the conditions he lists are sufficient. I would have added something explicit about the need to minimize biases. It’s unclear whether that condition follows from his independence condition, partly because he’s a bit vague about whether he uses independence in the strong sense that statisticians do or whether he’s speaking more colloquially.
Sometimes he ignores those conditions and makes unconvincing blanket statements that larger groups will produce wiser decisions.
He makes exaggerated claims for the idea that crowds are wise due to information possessed by lots of average people rather than the influence of a few wise people. For instance, he disputes a Forsythe et al. paper which argues that a small number of “marginal traders” in a market to predict the 1988 presidential vote were responsible for the price accuracy. Surowiecki’s rejection of this argument depends on a claim that “two investors with the same amount of capital have the same influence on market prices”. But that looks false. For example, if the nonmarginal traders make all their trades on the first day and then blindly hold for a year, and the marginal traders trade with each other over that year in response to new information, prices on most days will be determined by the marginal traders.
It’s not designed to be an investment advice book, but if judged solely as a book on investment, I’d say it ranks in the top ten. It does a very good job of explaining both what’s right and what’s wrong with the random walk theory of the stock market.
He does a good job of ridiculing the “cult of the CEO” whereby most of a company’s value is attributed to its CEO (at least in the U.S.). I was surprised by his report that 95% of investors said they would buy stocks based on their opinion of the CEO. They certainly didn’t get that attitude from successful investors (who seem to do that only in rare cases where they are able to talk at length with the CEO). But his claim that “Corporate profit margins did not increase over the course of the 1990s, even as executive compensation was soaring” looks false, as well as being of questionable relevance to his points about executives being overvalued. And I wish he had also applied his argument to beliefs of the form “if we could just elect a good person to lead the nation”.
Chapter 6 does a good job of combining the best ideas from Wright’s book Nonzero and Fukuyama’s Trust (oddly, he doesn’t cite Trust).
He exaggerates reports that the stock market responded accurately to the Challenger explosion before any public reports indicated the cause. He claims “within a half hour of the shuttle blowing up, the stock market knew what company was responsible.” I don’t know where he gets the “half hour” time period. The paper he cites as the source says the market “pinpointed” Thiokol as the culprit “within an hour”, but it exaggerates a bit. If the percent decline in stock price is the best criterion, then the market provided strong evidence within an hour. If the dollar value of the loss of market capitalization is the best criterion, then the evidence was weak after one hour but strong within four hours.
He also claims “Savvy insiders alone did not cause that first-day drop in Thiokol’s price.”, but shows no sign that he could know whether this is true. He seems to base on the absence of reported selling by executives whom the law requires to report such selling, but he appears to overestimate how reliably that law is obeyed, and to ignore a large number of non-executive insiders (e.g. engineers). He does pass on a nice quote which better illustrates our understanding of these issues: “While markets appear to work in practice, we are not sure how they work in theory.”
Book Reviews
Book review: An Inconvenient Truth: The Planetary Emergency of Global Warming and What We Can Do About It by Al Gore
I read An Inconvenient Truth in book form rather than watching the movie because I’m generally suspicious of attempts to convey serious arguments via film, and expected that the book version would have better references to the sources of his claims. Alas, this is merely a movie copied to paper, and his idea of a technical reference is a label such as “source: science magazine”.
This may be more scholarly than what a typical politician would produce, but it’s poor scholarship compared to what I’d expect from a typical college professor, even allowing for the goal of reaching a wide audience by keeping it simple.
The book is full of exaggerations and misleading impressions (but is usually not explicit enough to be clearly false). It is hard to say whether the book is helping by offsetting myths from the other extreme or whether it is adding to the confusion. Gore does deserve some credit for bringing more attention to a fairly serious problem.
Much of the book is pictures showing examples of climate changes, which don’t by themselves say whether we’ve experienced anything more than normal fluctuations. The movie may have reached people who thought climates were more stable than that, but I doubt the book will.
His main attempt to show evidence that CO2 emissions cause warming is a graph showing CO2 levels and temperature over the last 600,000 years. It sure looks like there’s a strong correlation. But my crude attempts at comparing the timing of the changes suggest that temperature changes precede CO2 changes more often than they follow them. I can imagine ways that the correlation could be caused by temperature changes causing changes in CO2 levels. I don’t see how a non-expert can tell what this correlation implies except by relying on authority (experts seem to think the causation works in both directions).
So that leaves him with only appeals to authority to back up his claims. He’s more credible there. His claim of a scientific consensus is approximately right. He lists the “percentage of articles in doubt as to the cause of global warming: 0%”. The paper he’s apparently referencing is responsible enough to use words such as “likely” rather than claiming an absence of doubt. Peter Norvig‘s analysis of some of those papers concludes at least 4 of those papers expressed doubt. But that difference is probably too subtle to matter to the people this book is targeting.
Gore is quick to blame big oil for the popular press’s false impressions of scientific controversy. The possibility that controversy sells stories appears to be at least as strong an explanation, but blaming the people Gore’s trying to convince would be rather inconvenient.
Pages 183 to 196 appear designed to create fears that sea levels could rise 18 to 20 feet suddenly and unpredictably. He doesn’t say anything about how fast experts think this might happen (which seems to be over many decades). The hints he gives are the mention of an ice shelf than unexpectedly broke up in 35 days, and some maps Greenland which appear to suggest the ice there could vanish in the next decade. The difference between an expected sea level rise over many decades and an unexpected rise over less than a decade makes a big difference in how well people could adapt to it. (The mass migrations in China recently demonstrate the feasibility of adapting to sea level changes in a decade or two). Gore appears to be contributing to fears of changes that are way outside the expert consensus.
Gore underestimates human ability to adapt to climate change (much as those on the other extreme underestimate human ability to invent affordable ways to reduce carbon emissions). For example, he implies that quick efforts to mitigate global warming are the only way to deal with the risks of drinking water shortages. But I see signs that cheaper desalinization is a more promising approach.
His graph on page 276 of “U.S. renewable energy future” is strange. Renewability has a weak connection to global warming solutions, but the possibility that nuclear power might be desirable seems too inconvenient to him. His forecast for biomass looks too optimistic, his forecast for solar after 2020 looks too pessimistic, and his forecast for wind shows strange fluctuations.
Gore repeats the myth that frogs won’t jump out of water that’s slowly brought to a boil, and claims that sometimes people make the same mistake. “Sometimes” is too uninformative to refute, but the most relevant research that I can think of suggests that at least political experts are biased toward sounding alarms too often.
He claims it’s “absolutely indisputable” that global warming is a “planetary emergency”. Yet nothing he says implies that stopping global warming is as urgent as reducing poverty, war, or disease.
Ph.D. economists seem fairly confident that the effects of global warming will be small.
There are substantial disputes among experts about how much of the global warming problem we should try to solve now (see Hal Varian’s comments, Tyler Cowen’s comments and Arnold Kling’s comments). But you won’t find any hint of that controversy in An Inconvenient Truth (in part because it’s hard to describe in ways that laymen can understand).
Gore recommends doing many things to slow down global warming a bit (but may leave many with the impression that his plans would do more than that – if it were an emergency as he says, wouldn’t he recommend more?).
Some of these steps are clearly good even if their effects on the climate are trivial.
For some (recycling and locally grown food) I’ve seen conflicting claims and can’t tell whether objective analyses exist.
Some are misleading. He claims a “fuel-cell vehicle (FCV) that uses pure hydrogen produces no pollutants”, which would be true if we had a convenient source of pure hydrogen. But on this planet, hydrogen requires energy to create, and only acts as a battery, so FCVs cause pollution if energy production causes pollution.
I recommend Ron Baily’s review for additional criticisms.
Disclosure: I own stocks in oil companies and in a company that serves the photovoltaic industry.
Book review: Envy: A Theory of Social Behavior by Helmut Schoeck
This book makes a moderate number of interesting claims about envy and its economic effects, interspersed with some long boring sections. The claims are mostly not backed up by strong arguments. It was written 40 years ago, and it shows – his understanding of psychology seems more Freudian than modern.
His most interesting claim is that many societies have more envy than ours, and that prevents them from escaping poverty. An extreme example are the Navaho, who reportedly have no concept of luck or of “personal achievement”, and believe that one person’s success can only come at another’s expense. This kind of attitude is pretty effective at discouraging people in such a society from adopting a better way of growing crops, etc.
Unfortunately, his evidence is clearly of the anecdotal kind that, even if I were to track down the few sources he cites for some of them and convinced myself they were reliable, his examples are too selective for me to believe that he knows whether envy and poverty are correlated. His hypothesis sounds potentially important, and I hope someone finds a way to rigorously analyze it.
He describes a few attempts to create non-envious societies, with kibbutzim being the clearest example. He gives adequate but unsurprising explanations of why they’ve had mixed success.
He claims “The victims claimed by a revolution or a civil war are incomparably more numerous among those who are more gifted and enterprising”, but shows no sign that he knows whether this is true. He might be right, but it’s easy to imagine that he’s been mislead by a bias toward reporting that kind of death more often than the death of a typical person.
He mentions that tax returns have been public in some jurisdictions. I wish he did a better job of examining the costs and benefits of this (one nice example he gives is that people sometimes overreport income in order to appear more credit-worthy than they are).
On page 82, he describes Nazis as having “an almost equally fanatical attachment to the principle of equality”. He seems there to be referring to when they were in power, but somewhere else he implies they moved away from this belief when they gained power. He was born in Austria in 1922, and studied in Munich from 1941 to 1945, which gives him a perspective that we don’t hear much these days. How much of the difference in perspectives is due to his flaws, and how much of it is due to our focus on the worst aspects of Nazism? There’s probably a hint of truth to his position, in that hatred of the Jews partly started with an egalitarian disapproval of their success.
I found a number of other strange claims. E.g. “The incest taboo alone makes possible the co-operative and stable family group.”; “Lee Harvey Oswald’s central motive was envy of those who were happy and successful”; “In 1920 President Woodrow Wilson predicted class warfare in America that would be sparked off by the envy of the many at the sight of the few in their motor cars.”.
He says “No society permits totally uninhibited promiscuity. In every culture there are definite rights of ownership in the sexual sphere, for no society could function unless it had foreseeable and predictable rules as regards selection of the sexual partner.” I’m not sure how close-minded that would have sounded in 1966, but there are cultures today which discredit it fairly well.
If you read this book, I suggest reading only these chapters: 1,3,5,8,13,17,21,22.
Update: Mike Linksvayer has a better review of the book.
Book review: Electing to Fight: Why Emerging Democracies Go to War by Edward D. Mansfield
This book makes a convincing argument that it’s misleading to assume that democracies are less likely to wage wars. That assumption is true of mature democracies, but unstable nations that are trying to make a transition to democracy are more likely than autocracies to wage war. At least part of the reasons are increased nationalism, competition among politicians to be the most nationalist, and the weakness of stabilizing institutions.
The book offers some hints about how a transition to a democracy might be managed to minimize the risks, but this part of the book is more speculative and less convincing.
In spite of the book’s relevance to current events, it devotes little attention to the present. It covers the time period from the French revolution to the present with the perspective of a historian, and says as much about Iraq in 1948 as it does about the recent experiment with democracy in Iraq. It is somewhat valuable for reminding us how many attempts at democracy failed and have largely faded from collective memories.
The dry, scholarly style of the book is a bit mind-numbing.
Book review: Social Mindscapes: An Invitation to Cognitive Sociology by Eviatar Zerubavel
This book is a refreshing and concise collection of interesting tidbits about cultural aspects of human minds. He points out many cultural quirks in our thinking that I suspect many people unconsciously assume are universal beliefs. Sometimes it’s easy to see once you’re provoked to think about it why we should consider something to be a cultural quirk (e.g. putting jam and jelly into two distinct categories rather than one). With others, such as whether the differences between male and female genitalia justify classifying the equivalent parts differently for each sex, I’m almost suspicious enough of his report that western culture had a different answer a couple of centuries ago than it does today to tempt me to check some of his copious references. And there are a few places where his cultural norms seem odd (e.g. his claim that daylight savings time seems natural).
With only 113 pages of actual text, it’s a quick read that would be worth reading for the entertainment value alone, and has the added benefit of shaking up one’s preconceptions.
Book Review: The Singing Neanderthals: The Origins of Music, Language, Mind, and Body by Steven Mithen
This book presents some interesting and refreshing speculations on how music and language evolved, emphasizing reasons for believing that music was at least as important as language during significant parts of human evolution. It stretches the limits of what we can figure out from the available evidence, so it’s likely the some of it is wrong. But his hypotheses appear more likely to help us ask the right questions than to lead us astray.
Mithen’s knowledge of archeology helps make his book different from most books about the human mind in that he emphasizes very different selective pressures at different stages in human evolution, corresponding to changes in conditions that our ancestors faced.
Here are some surprising and informative section titles that will tell you something about the flavor of the book: “The musical implications of bipedalism”, and “The sexy hand-axe hypothesis”.
I was intrigued by his description of how music helps a group cooperate by synchronizing their emotions. But he helps point out the limits of those benefits by noting that the chants at Nazi rallies that helped unite most of the German people.
Book review: Synthetic Worlds: The Business and Culture of Online Games by Edward Castronova
Castranova is one of the first intellectuals to notice the importance of new societies that are being created in cyberspace. Much of this book is devoted to (sometimes redundant) explanations of why they are more than just games.
Around the middle of the book, he switches from describing a typical world for the benefit of those who doubt the importance of virtual worlds to describing how to design good worlds. This is where I started to find the book interesting and the questions thought-provoking, but the answers often unconvincing.
His most important discussion is about the near-anarchy that prevails in most virtual societies. He attributes this partly to the “Customer Service State” of for-profit world builders who are too cheap to pay for as much government as he assumes citizens want. But he seems to believe this is too inevitable to be worth much analysis. His more interesting question is why don’t the world’s citizens organize a government of their own? His answer is that citizens don’t have enough power over each other to enforce laws they might create. But he doesn’t convince me this is true (are boycotts useless? is repeatedly killing an outlaw not punishment?), nor does he explain why the designer face little pressure to change the design of the world to make it easier to enforce laws (what would happen if the world were designed to enable one person to effectively banish a person she doesn’t like from her view of the world?). I suspect part of the answer is that there’s less demand for government than he expects. I see some hints that his desire for government in cyberspace is a simple reflection of his desire for government in the real world. Yet I’d expect the analysis of whether government is desirable to be nontrivially affected by such differences as whether poverty and death cause much harm.
He claims “A fun economy should have property, theft, and jail too”, but only gives a few cryptic hints about what theft and jail add to an economy.
He claims “there should be no goods which never depreciate”, and partly justifies that by pointing to some benefits of a continuing need to produce new goods, but leaves me wondering why the rule should be universal or even close to universal.
He hints at the desirability of creating p2p virtual societies so that control over them can be decentralized instead of being determined by a corporate owner, but I’m disappointed that he fails to analyze whether this is practical.
One insight I liked was this description of how to deal with the desire for everyone to have high status: “How do you make a world in which everyone is in the top 10 percent? The answer: AI.”
He has a disturbing idea about the military uses of virtual worlds – an aggressor need not be hampered by unfamiliarity with the land he’s invading if he has unlimited ability to practice the invasion in simulation.
He has some ideas about how virtual worlds might help deal with threats such as grey goo, but doesn’t develop them as well as I would like. His ideas on using virtual worlds to make AIs more friendly appear to anthropomorphise AI in a rather naive and dangerous manner.
Book Review: Knowledge and the Wealth Of Nations: A Story of Economic Discovery by David Warsh
This book is an entertaining (but sometimes long-winded) history of economic thought that focuses on the role of technological knowledge, showing how sporadic attempts starting with Adam Smith to incorporate it into the mainstream of economic thought kept getting marginalized until a paper by Paul Romer in 1990 finally appears to have convinced the profession to include it in their models as a nonrival, partly excludable good.
Warsh writes in a style intended to be appropriate for laymen, but I find this rather frustrating, as it leaves out a fair amount of technical detail that I would like to understand, but probably fails to satisfy laymen since the subject of the book will only seem important to readers who already have enough familiarity with economics to handle a more technical discussion.
I liked an analogy that the book reports of the history of maps of Africa, where improved standards of accuracy sometimes caused mapmakers to produce less informative maps as they removed unverified reports of features from interior parts of Africa well before they were able to replace them with something more reliable. The book shows how similar processes in economic models have resulted in similar blank spots in economic thought.
He claims that Romer’s theory amounts to an argument against free markets and in favor of some poorly specified state management of some aspects of the economy. But I saw no analysis to support that conclusion. All I see are arguments that classical economic theory is too simplistic, that we probably need to study lots of messy empirical evidence before deciding what Romer’s theory says about state action.
His analysis of the Microsoft antitrust case provides a better argument than I’d previously heard for breaking up Microsoft into an OS company and an Apps company, but still leaves me wondering why it would make much difference – most of the causes of Microsoft’s OS monopoly power would remain unchanged. His claim (apparently reporting Romer’s remarks) that Microsoft solved the double marginalization problem in a way that a breakup wouldn’t alter seems confused. He is right to point out that those pricing effects weren’t the main issue, although he doesn’t seem to understand why (see Lessig’s The Future of Ideas for a good explanation of how monopolies stifle innovation).
He has a chapter titled “How the Dismal Science Got Its Name” which says nothing about the actual origin of that term (which was coined by a racist who hated Mill’s belief that blacks could be productive without being slaves).
Book Review: Happiness: The Science behind Your Smile by Daniel Nettle
This book provides a fairly good, but not very novel, description of what does and does not influence happiness, the problems with measuring it, and some bits of evolutionary theory that hint at why it is hard to achieve lasting increases in happiness.
The claim I found most important is that “If you control for social class, there is almost no relationship between income and life satisfaction.” This seems to have important implications for what kind of social equality we ought to be encouraging. I’m disappointed that he doesn’t say enough about this for me to determine how robust this conclusion is to the way it’s measured.
I’m disappointed that he ends with some misleading arguments for an alarming trend of increased distress among the least happy. He reports that suicides have increased among the young in recent decades, but fails to note that overall suicide rates in the U.S. have declined over that period. He claims “People are as hard as they ever have”, but cites no references for that, and Robert Fogel has reported research that reached the opposite conclusion in The Escape from Hunger and Premature Death.
Book review: No Two Alike: Human Nature and Human Individuality by Judith Rich Harris
This book provides a clear theory of what causes the personality differences between people that can’t be explained by genetic differences. She focuses a fair amount on identical twins, because the evidence that their environmentally caused personality differences are the same as ordinary siblings, and the same whether they’re reared together or apart, rules out many tempting theories.
Amazon reviewer Sioran points out an inconsistency – she claims early on that random chance can’t explain all of the variation, but her explanation ends up amounts to saying the causes are ultimately random. I find her early arguments against randomness unconvincing. And her explanation’s reliance on randomness doesn’t imply that her explanation is useless – she rules out most kinds of randomness as a cause, narrowing down the class of random causes to those which affect the person’s view of her status in society (e.g. differences in who outside family the person interacts with, and physical differences such as being tall due to better nutrition).
The most surprising prediction she makes is that mindblind (i.e. most) animals won’t have persistent personality differences that can’t be explained by genetic differences. I’m unsure whether to believe this – it seems that animals should only need to remember differences in how others treat them (rather than have a theory of mind) in order to produce the results we see. She would probably predict that autistic people have no persistent environmentally caused personality differences, but she isn’t clear about that (it may depend on the degree of autism).
One interesting result that she mentions is that autistic children are unable to use the fusiform face area (which in most people is specialized to do good face recognition), and instead seem to recognize faces the same way they recognize ordinary objects. I’m wondering how much this explains about why autism impairs many parts of the mind that deal with relationships.
I’m annoyed by how many pages she spends recounting the reaction to her prior book (The Nurture Assumption, a better book than this). If you’ve read that, most of the first half of this book will be a waste of time.
One interesting piece of evidence she mentions is this paper from the Journal of Political Economy which says that one’s height as a teenager is a better predictor of wages as an adult than adult height.
One small quibble: she says being a firstborn is unimportant (often not even known) outside the home in “contemporary societies — at least those not ruled by monarchies”. Korean society appears to be a clear exception to that claim.