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Michael Lewis has been the gold standard author of frequent flier books since the end of the 1980s. He has a new book coming out in December about the Israeli psychologists Daniel Kahneman and Amos Tversky, The Undoing Project, who studied why people make bad decisions.
Vanity Fair has one chapter from the book. I didn’t find too much of interest in that chapter, although I did like this question devised by Kahneman:
The mean I.Q. of the population of eighth-graders in a city is known to be 100. You have selected a random sample of 50 children for a study of educational achievement. The first child tested has an I.Q. of 150. What do you expect the mean I.Q. to be for the whole sample?
I think I know what answer Kahneman wants.
But, by the way, if the first kid tested scores a 150, how sure should you be that the average IQ of the city “is known” to be 100?
Maybe you are using a 20 year old Ravens test and the average is now 106 due to the Flynn Effect. (From the 1940s onward, the Flynn Effect kept being discovered by psychologists, but then getting undiscovered because it Is Known that it should not be happening. It took James T. Flynn to make sure the Flynn Effect, like Columbus with America, stayed discovered.)
Or maybe there has been a massive misnorming screw-up, like with the military’s enlistment test from 1976-1980 that let in a whole bunch of dopes during the Stripes era. In 1978, Senator Sam Nunn started asking Pentagon officials why sergeants and chief petty officers kept complaining to him about the intelligence of new recruits. The Pentagon replied that it is known that new recruits were scoring higher than ever. Then in 1980, they admitted to Nunn that the test scores had been incorrectly inflated since 1976.
Or if the first child who takes the test scores 3.33 standard deviations above the expected mean, are you quite sure you have a random sample?
Kahneman would find all these real world quibbles of yours to be examples of bad decision making. Just as Emily is stipulated to be a bank teller who was active in feminism in college, this question stipulates certain conditions, and who are you to question their plausibility?
One of Kahneman’s standard shticks is to write all sorts of Red Flags into his questions — “Emily led a feminist commune in college that was infiltrated by the FBI on suspicion of anti-male terrorism” — and then ding you for noticing his Red Flags.
If you want to de-Red Flag this IQ question, you could make the first kid score 125, or if you want to keep the arithmetic super simple, 130 with a sample size of 30. But a 150 is a Red Flag.
One secret to scoring well on Kahneman’s questions is to take them extremely literally. He’s kind of like Hymie the Robot in Get Smart:
Ironically, I have a vague hunch that part of the Flynn Effect is that people over the last century have learned to take things more literally from having to deal ever more with machine logic, which makes them better at taking IQ tests. (But it makes them worse at understanding their new President. Hence, the rage of the more Aspergery intellects toward Trump’s vaguely stated stances.)
Interestingly, Lewis positions his new book as explaining the science behind his Moneyball rather than his The Big Short. That seems pretty reasonable, in that financial bubbles tend to be historically contingent: the big money boys at least tend to learn from the mistakes of the recent past (while forgetting older analogies). A science of bad decisions works better when people keep making the same bad decisions. Baseball is a pretty traditionalist enterprise.
On the other hand, that reminds me that one interesting project for sabermetricians might be a history of fads in baseball decision-making. While baseball doesn’t change all that much, there have been bandwagons, some of which become permanent (e.g., home run hitting), some of which don’t. For example, successful franchises like the Los Angeles Dodgers in the 1960s and 1970s can cause a chain reaction of imitations around baseball: The Dodgers of my childhood, for instance, seem to have set off fads for having your aces like Don Drysdale and Sandy Koufax pitch over 300 innings per year; putting a low on-base average base stealer like Maury Wills in as your leadoff hitter; converting outfielders to middle infielders in the high minor leagues (like Bill Russell); and teaching minor leaguers to switch hit (i.e., bat left handed against right handed pitchers and right handed against left handed pitchers). Most of these ideas are now out of fashion, but they seemed pretty cool a half century ago when the Dodgers were drawing huge crowds.
Likewise, it would be interesting to see which ideas of the early Moneyball era are now discredited. My guess is that early sabermetricians undervalued defensive skill in ballplayers because they had poorer quality data on defense than on hitting. This led to a lot of Dr. Strangeglove-type players, big clumsy oafs who could hit homers and get walks but not much else, being in demand. Nowadays, however, defensive statistics have improved so much that baseball has edged back toward the all-around athletes who look good in a uniform that the sabermetricians were making fun of fifteen years ago. My guess is that poor fielding is more psychologically destructive to teams than poor hitting, but I wouldn’t know how to measure that.