Reader survey results: probabilities, halos, and leaders

What a relief to talk about something other than my distinguished colleague Prof. Sachs.... over to you, Dambisa Moyo! Now back to real work: the reader survey generated a great response – thank you readers! It confirmed a well known psychology experiment, but also contained surprises I did not expect.

The question was which was more probable, (A) or (B)?

(A) a country succeeds at economic development, or

(B) a country succeeds at economic development with a wise and capable leadership.

60 percent of you readers voted A, and 40 percent chose B. (Interestingly, a small sample on my Facebook page voted in the same percentages on the same question.)

On one level, A is the right answer, because B is a subset of A. A contains all successes, both (1) those achieved with wise leadership, and (2) those achieved with any other means. B only contains (1), and so is less likely than A. Well known psychology experiments find the same thing -- that many people have what is called the “conjunction fallacy” (again from my continuing Mlodinow and Kahneman obsession) that would cause them to choose (B). A set of outcomes that fits a plausible story is thought to be larger than one unrestricted by ANY story, even though ANY restriction on the set of possible outcomes always makes that set less likely than an unrestricted set. An explanation usually trumps no explanation, even if it gets the probabilities wrong!

But on another level, the reaction of many readers made me aware of how I had phrased the alternatives too sloppily, which taught me something about how the language we commonly use is often fuzzy on exactly what probabilities we are talking about. I think many of those who voted B were interpreting the question differently: when is development success more likely? With good leadership (B)? Or when the quality of the leadership is unspecified, and so could be either good or bad (A)? Obviously (B). Neither our brain wiring nor our education is good enough to give us linguistic precision about probability and randomness. So my sloppy language created a coalition in favor of (B) between an incorrect answer and a correct answer! How many such coalitions exist on development issues?

There is another related bias that is, called the “halo effect,” often discussed in recruiting job candidates (and also the subject of a great business book). An interviewer who quantifies one positive trait in a candidate excessively assumes that the candidate also performs well on other traits. Later quantitative evaluation finds the traits are not as correlated as the interviewer (or any of the rest of us) assume. So, for example, a beauty queen is not as likely to be a nice person as you think (could this be an excuse to mention the hilarious Miss California parody by Lisa Nova?).

What does this have to do with development? Well, a country that performs well on GDP per capita is also assumed to perform well on having wise and capable leadership. The latter is hard to quantify, so in many cases, our halo effect bias never gets corrected.

So sloppy language about probability, the conjunction fallacy, and the halo effect all make us assume that if the country has a good economic outcome, there is also a good political outcome (wise and capable leadership), even if we have no independent evidence that the leadership is wise. We do this in all countries (and assume bad leaders in unsuccessful countries), and then we notice a strong association between quality of leaders and development success! Therefore (adding the correlation=causation fallacy for good measure, which has its own cartoon) good leaders cause success! This amounts to the most elementary fallacy of them all – circular reasoning – which is still amazingly common in development debates.

Now would anybody like to go back and reread the “Asian success mythology” discussion, and think from yet another angle about whether East Asian successes were due to wise and capable leaders? And maybe if the leaders were not so perfectly wise in East Asia, we don't necessarily want to imitate everything they did?

I guess the lesson in the end is to be precise about probabilities, and demand independent evidence on the whole "wise and capable leadership" thing, rather than just assuming it when things turn out well.

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