Have you ever wondered why so few saw Donald Trump coming, or Giorgia Meloni, or the referendum on Brexit? People have an innate tendency to confuse what they want to happen with what they anticipate will happen.
Christian Morgenstern, a German poet who lived between the 19th and 20th centuries, wrote in his poem The impossible fact* about a man’s final thoughts after suffering a fatal accident: “And he comes to the conclusion: / His misfortune was an illusion, / well, he reasons with conviction, / what should not be cannot be”.
Behavioral psychologists have a name for this: confirmation bias. We separate the information that does not match our beliefs, and we are left with only what we agree with. Everybody does it. I do that too. Social networks are a place where this happens wildly. Bubbles of people form, reinforcing their own biases.
An illuminating recent example has been the response to Elon Musk’s takeover of Twitter. A British newspaper reported on the prognosis of a network engineer who had just been made redundant. His prediction was that the network would collapse in a matter of hours. Some Twitter users were also concerned that Musk was killing Twitter, so they migrated his account to Mastodon, an open source decentralized network similar to Twitter. I personally find Mastodon very good, especially for scientific communities, as it allows them to publish typesetting formulas. But it does not replace Twitter. Linux was also very good. But it did not replace Windows. It is interesting to study the example of the engineer or the outraged Twitter user from the perspective of cognitive biases. Did the engineer really fear that Twitter was going to collapse? Or was he afraid that Twitter might continue to function without him? Remember the air traffic controllers who went on strike in the United States in the early 1980s. Ronald Reagan put them all out. They also believed that they were indispensable.
The pathologies of Twitter users are especially insidious. Did they really fear that Twitter was going to collapse under Musk? Or were they rather afraid that he wouldn’t? I think most of those who panicked were outraged by Trump’s reinstatement. Of course, Twitter is not the most important example of the cognitive biases that cloud our understanding. Right now that example would be the war between Russia and Ukraine.
I have heard many armchair generals—literally, generals recently retired from active service—predict at different stages of the war that victory for the Ukraine would come in a matter of weeks. This is not the same as the rational observation that Ukraine will eventually win the war if the West maintains its arms supply. The forecast error around when cannot be attributed to stupidity, but to bias. They want Ukraine to win. We must also admit that the information we have is asymmetric. We know what the Ukrainians are doing, and we know what we are doing to help them, but we know much less about the Russians.
Western media highlight Russia’s military failures and denounce its military successes as violations of human rights. We repeat the old maxim to ourselves over and over again that military failures on the battlefield cannot be offset by attacks on civilian targets. Attacks against civilians are war crimes. They are morally repugnant. But they can be effective. The Dresden bombing raids in February 1945 were. I ask myself this question: if Putin hopes to be able to knock out power to large parts of Ukraine all winter long, won’t that affect Ukrainian troops on the battlefield? Don’t they need electricity for communications, trains and field hospitals? Our debate on economic sanctions followed a similar pattern. Do you remember the predictions that Russian GDP would contract by 30% after the sanctions imposed by the West? The Russian recession, measured in GDP, has turned out to be relatively mild. Russia is posting an unprecedented current account surplus this year of about $250 billion. We are now predicting that the $60 oil price cap will kill Putin. Really? Brent is trading at 65.
Biases are everywhere. The list is long. Economists, sociologists, and political scientists are especially prone to model bias. No macroeconomist has ever abandoned his allegiance to a school of thought—represented by a model—just because the facts intruded. They adjust the facts to fit their model. That is why we have a division in the debate on the future trajectory of inflation between those of the Conjunctural Team and those of the Persistent Team.
Why would a rational person want to be tied to a team for a prediction? Wouldn’t it make more sense to keep an open mind and analyze the data as it comes in? Hardly a minority of economists and central bankers take such an impartial perspective. Most of the economists I know communicate like followers on social media. They form cliques, retweet each other’s messages with approval, and express outrage at those with whom they disagree.
Here is my advice to anyone involved in public debate, and especially political analysis. Before making your next prediction, check if it matches what you want to happen. If so, stop right there and carry out this intellectual exercise: get on the other side of the debate and try to demolish your own arguments. See how it goes. It’s not a guarantee of success, but it may help you see your own cognitive biases in the realm of public discourse. It has worked for me.
Subscribe to continue reading
Read without limits