First, thank you all for your amazing support of my new book. How to Change is officially a Wall Street Journal Bestseller (!!!), and that would never have been possible without you. The book was also named one of May’s top three business books by the Financial Times and one of the top non-fiction books to read this summer by The Next Big Idea Club, and I’m over the moon.
Before I turn my attention to someone else’s book, I have one more important ask. If you’ve read How to Change but haven’t yet reviewed it on Amazon or Good Reads, I’d be tremendously grateful if you’d take a moment to post a rating or share it with a friend. Online reviews and referrals are key ways readers find books, particularly for first time authors like me!
But enough about that. Let me turn my focus to something new. Last Tuesday, a long-anticipated new book was released by Nobel laureate and best-selling author Daniel Kahneman, which he co-authored with Olivier Sibony and Cass Sunstein. The book is called Noise: A Flaw in Human Judgment. It’s not about the kind of noise you hear, but rather the kind of noise that concerns statisticians. It explores variability in judgments that objectively should be the same (like different evaluations of the same job applicant or different sentences given for the same crime). Prior to the pandemic, I sat down with Danny Kahneman in his Manhattan apartment to interview him about the (then in-progress) book for Choiceology. Today I’m sharing an excerpt from our conversation as well as a few highlights from my virtual book tour that you might enjoy.
New Highlights from My Virtual How to Change Book Tour
Need A Pandemic Reset?: The New York Times recently covered my research on fresh starts and why as more communities, businesses, and schools reopen, we have an unusual collective opportunity to reflect and change for the better. The Times even created a 10-day fresh start challenge to help you kick start healthy new habits.
How to Change Your Habits: I was thrilled to join Dan Harris on the 10% Happier Podcast to talk about my research on how to change for the better.
A Behavioral Scientist’s Advice For Changing Your Life: On NPR’s Life Kit podcast, I shared some of the most actionable lessons from How to Change, including how to beat procrastination and how to make change last.
Three Science-Backed Tips for Creating Change: CNBC recently highlighted three tips from my book in this article, which is based on an on-air interview.
How Do You Get People To Get A Vaccine?: On NPR’s The Indicator from Planet Money, I discussed how my research can be applied to encourage vaccination.
How To Build Lasting Habits: CNN interviewed me about the latest science on behavior change, including why it’s important for habits to be flexible.
Q&A: Noise
In this Q&A from Choiceology with Nobel Laureate, Eugene Higgins Professor of Psychology, and Best-Selling Author Daniel Kahneman, we cover Danny’s research on the noise that plagues our judgments.
Me: Danny, I’m curious why you got interested in writing a book on noise after so many years studying other topics.
Danny: It started with an observation when I was doing some consulting with an insurance company. I had the idea of running a study with underwriters and claims adjusters, who set estimates of how much a claim will cost the company.
Let’s focus on the underwriters for a moment. We had them construct very realistic, large, significant problems — the kinds of problems they encounter every day. We then showed these problems to about 50 other underwriters and asked them to put a dollar value on a risk. Then we asked the following question: Suppose we take two underwriters at random and we look at the premium they set, we look at the average, we look at the difference, and we divide the difference by the average. In percentages, by how much would you expect two underwriters to differ?
Everybody agrees on about 10%. That’s what people expect in a well-run firm. Ten percent looks tolerable. You know that they won’t be identical, but you don’t want them to be wildly different.
The correct answer by how much they differ is about 50%. It’s five times larger than expected. And in some sense, when the variability is that large, there’s a serious question whether you need those underwriters or if you could have an algorithm that would predict more accurately.
What was striking to me was that nobody in the firm thought they had a noise problem. So we became interested in how general that is and it seems to be fairly general. When somebody comes into the country and asks for asylum, it’s a complete lottery. Some asylum judges approve more than 90%, others approve less than 10%.
In society, we have a lot of situations where there are different functionaries that should be interchangeable, but it turns out they’re not. We call that “system noise.”
All my life, I’ve studied biases, but noise is a different kind of error. What you can do to control noise may be different from what you would do to control biases. So I became quite interested.
Me: I'm fascinated by the magnitude of how far off people are when they guess at the size of this problem. Is that what made this feel so important to you—that we think noise is a small problem, but it’s actually very large?
Danny: People, by-and-large, completely ignore noise. When you look at popular books on decision-making , you don’t find discussion of noise or reliability. There has been a real concentration of effort and thinking about biases, and there’s a good reason for that. Biases have causes, and people like to think causally and they like to think in terms of the systems you can tell stories about.
Noise doesn’t lend itself to a good story. It’s a statistical type of thinking and not a causal type of thinking. So for those reasons and many others, noise is thoroughly neglected. And that’s why we decided to write a book. It’s not that people don’t know about noise. We just want to make noise more difficult to ignore.
Me: Trying to be noisy about noise. Sorry. I like puns.
Danny: You’re allowed your puns. Yes, trying to make more noise about noise.
Me: I gather that you think the cure to this is algorithms. Is that right? Given that we vastly underestimate the noise in human decisions, does it make it even more critical than we’d already thought to get algorithms in place?
Danny: It’s very well known that when you compare people to algorithms, by and large, at least half of the time, algorithms beat people hands down and the other half it’s about a tie. But we know why people are inferior to algorithms, and noise is a big part of it. So by removing noise you could improve decisions.
To learn more about noise, check out Daniel Kahneman’s new book Noise or listen to the episode of Choiceology where we dig into the topic.
This interview has been edited for clarity and length.
That’s all for this month’s newsletter. See you in June!
Katy Milkman, PhD
Professor at Wharton, host of Choiceology, an original podcast from Charles Schwab, and author of the new Wall Street Journal bestseller How to Change: The Science of Getting from Where You Are to Where You Want to Be