Decision Quality Blog

I have a colleague, actually he’s the CMO of our company, who periodically sends me snips from Yankleovich on whatever it is they’re thinking about. A recent blurb about microsites included a research snip on decision making that caught my eye . . .

I always know how to get the information I need to make decisions

• 2002: 61%
• 2006: 76%

I’m overwhelmed by all the sources of information available today

• 2009: 59%
• 2006: 48%

In an ideal world, I wouldn’t have anymore information than what I need

• 2002: 50%
• 2006: 44%

Being able to process new information quickly (rate yourself highly)

• 2006: 48%

Being able to evaluate the trustworthiness of information (rate yourself highly)

• 2006: 44%

The conclusion? There’s tons of data out there but consumers feel more in control. I know as a consumer that I feel pretty confident about my ability to find things on the web and to filter out what’s not useful. I also feel like I’m a pretty good judge of what’s trustworthy . . . with a gigantic caveat or two.

One caveat is the presence of brand. Even if you know little to nothing about cameras, for example, you probably know something about Nikon and Canon, just to pick two. Brand creates a “trust” shorthand that helps us filter though tons of information to get our choices into a manageable realm.

Another caveat is time, as in how much of it you have for a particular decision. For example, over my lifetime I’ve invested a lot of energy in different hobbies. At one point, it was photography. And during those years, I considered myself extremely knowledgeable about everything photo. I feel that way about motorcycles now. Part of the fun of a hobby is spending loads of time trolling for information, reading magazines, buying books, and searching out online forums.

A third caveat is the level of consequences associated with the decision. For example, if I buy a book I hate, I’m not out much money. If I buy a product I don’t like, I can usually return it. You get the idea.

I make all these distinctions in part to draw attention to what we’re trying to do here . . . and we will get it to market soon. It’s helping people with difficult decisions where the normal guideposts aren’t available . . . or as available. The kind where the consequences of getting it wrong are high. The kind where time is really an issue. The kind where brand isn’t helpful (quick, name the top brand in wheel chairs).

kah

Technorati Tags: Decision Making

There is a shadow that hangs over boomerdom . . . more than one I suspect, but the one I have in mind is the shadow of dissatisfaction that hangs over a generation that grew up with more affluence than any other generation in modernity . . . and then took it to new heights. In case you haven’t heard, American’s don’t even crack the top twenty in the industrialized world when it comes to that startling declaration . . .

We hold these truths to be self-evident, that all men are created equal, that they are endowed, by their Creator, with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness. [Emphasis added; from the preamble of the US Declaration of Independence if you don't recall]

Well, maybe not the pursuit. We do that better than anyone. It’s the achieving part where we apparently fall short.

Harvard trained economist Bill McKibben has taken a shot at us uber-consumers in his new book called Deep Economy: The Wealth of Communities and the Durable Future. Here’s a quote (from an article in AARP Magazine . . . [read]

“The idea that more is better, which has been orthodoxy for the past 50 years, no longer matches reality. . . More stuff doesn’t make people happier.” In fact, once our basic needs are met, the very opposite seems to be true.

Hmmmm. I haven’t read the book but this quote from the piece in AARP Magazine feels like a bell-ringer . . . [read]

. . . the Eisenhower-era ideal of bigger cars, faster foods, and automatic everything has been nearly as devastating to our nation’s psyche as rampant consumption has been to the earth. Once measured to have the happiest citizens in the developed world, the United States is now number 23, according to research compiled at the University of Leicester. Alcoholism, suicide, and depression rates have soared, with fewer than one in three Americans claiming to be “very happy.” Even more frightening is the trickle-down effect of this malaise on our kids. Studies suggest that today’s average American child reports suffering higher levels of anxiety than the average child under psychiatric care in the 1950s.

“All that material progress” and all the billions of barrels of oil and millions of acres of trees that it took to create it “seems not to have moved the satisfaction meter an inch,” says McKibben. “It’s as if we’ve done an experiment in whether consumption produces happiness and determined that it doesn’t”

The reasons for this paradox are complex. In part, as with McKibben’s daughter, it’s because we all have more than enough stuffed animals in our lives. But McKibben sees a link between our isolated, overstuffed homes and a breakdown in community, the unseen emotional price of cheap goods and big lives. “Our global economy comes at the cost of local economy and human connection,” he says. The pursuit of mammon “has turned us ever more into individuals and ever less into members of a community, isolating us in a way that runs contrary to our most basic instincts.” We scrimp and save for the bigger house, only to find ourselves more cut off from friends and family.

Suburban sprawl has been an undeniable culprit in our widespread alienation. With population density plummeting, and houses getting bigger, the likelihood of bumping into neighbors drops enormously. “An awful lot of boomers began their adult lives doing extremely idealistic things,” he adds. “Many of these ideals fell away as we became immersed in consuming. Now we need to find our way back.”

Lots of possible personal decisions leading to lots of possible decisions come to mind. I know personally that I find myself periodically looking around and thinking, “where did all this stuff come from?” As a small example, I decided to remove from my book shelves books that I was certain I wouldn’t look at again (don’t ask how I came to make those choices). I wound up taking four very large bags of books to the library the next day . . . and could barely notice given how many books were left over.

Not long ago I went through my closet and took out all the pants, shoes, and shirts I hadn’t worn in a year. That added up to two large hefty bags which I donated to a good cause. I look in the closet and still can’t find anything (suggesting more pruning or hacking is in order).

Two small examples, which I offer for no better reason than to tell stories on myself . . . don’t ask about the “junk” we bought this weekend just because it felt fun at the time. One of the opportunities of becoming “empty nestors” (hate that term) is the chance to do a life edit which almost certainly includes a hard look at how much stuff you want to carry around with you. I know we did this a couple of years ago and I’m thinking it’s time again. How about you?

kah

Technorati Tags: Baby Boomers, New Aging, Bill McKibben

One of the things that many of us grew up believing is that we had a good strong independent streak born of our upbringing, our superior intellect, and our high levels of education. Or something like that.

Our parents certainly got after us about it. I distinctly recall hearing something like, “So if Johnny decided to jump of the bridge . . ;”

Based on our presumed superior discipline and thought processes, we rate ourselves highly on our research ability (see my post on this), our ability to find good information, and our ability to tell what’s credible and useful from what is not. It may be that we should re-think those assumptions. Here’s a teaser from a piece in the New York Times as to why . . . [read]

Conventional marketing wisdom holds that predicting success in cultural markets is mostly a matter of anticipating the preferences of the millions of individual people who participate in them. From this common-sense observation, it follows that if the experts could only figure out what it was about, say, the music, songwriting and packaging of Norah Jones that appealed to so many fans, they ought to be able to replicate it at will. And indeed that’s pretty much what they try to do. That they fail so frequently implies either that they aren’t studying their own successes carefully enough or that they are not paying sufficiently close attention to the changing preferences of their audience.

The common-sense view, however, makes a big assumption: that when people make decisions about what they like, they do so independently of one another [emphasis added]. But people almost never make decisions independently — in part because the world abounds with so many choices that we have little hope of ever finding what we want on our own; in part because we are never really sure what we want anyway; and in part because what we often want is not so much to experience the “best” of everything as it is to experience the same things as other people and thereby also experience the benefits of sharing.

What’s that? We don’t make decisions independently? Nope. It turns out there’s a phenomena at work in many decision situations called “cumulative advantage” which is a fancy way of saying . . .

• The rich get richer
• The popular get more popular

Here’s more . . .

The reason is that when people tend to like what other people like, differences in popularity are subject to what is called “cumulative advantage,” or the “rich get richer” effect. This means that if one object happens to be slightly more popular than another at just the right point, it will tend to become more popular still.

How does this show up in practice? Take a simple example. You listen to ten songs. Which do you pick? The answer is the ones you’ like best of course. Well, errr, maybe. What happens if you see next to each song you see a number that indicates how many other people liked that song. Now which do you pick? Ten points if you say the ones that everyone else liked best. In fact, the author of the article ran just such a test and says this about that . . .

. . . social influence played as large a role in determining the market share of successful songs as differences in quality. It’s a simple result to state, but it has a surprisingly deep consequence. Because the long-run success of a song depends so sensitively on the decisions of a few early-arriving individuals, whose choices are subsequently amplified and eventually locked in by the cumulative-advantage process, and because the particular individuals who play this important role are chosen randomly and may
make different decisions from one moment to the next, the resulting unpredictability is inherent to the nature of the market. It cannot be eliminated either by accumulating more information “about people or songs” or by developing fancier prediction algorithms, any more than you can repeatedly roll sixes no matter how carefully you try to throw the die.

Believe it or don’t . . . it’s up to you. The thing you should not lose sight of is that we have a strong need to order our universe. To make what goes on around us make sense. So we attribute certain effects to certain causes, when more often than not, they two are only vaguely linked. We also attribute to ourselves much more independence of thought and action than is in fact the case. We tell ourselves stories about our capabilities to master our universe based more on our desires than on any demonstrable facts.

None of this makes us bad, by the way. It’s how we cope and how we get by. The learning here is that if you’re in the hits predicting business . . . and that would include records, books, stocks, or American Idol contestants, you might want to factor in the idea that the market can run away or not based on factors you simply cannot predict. If you’re interested in making better decisions, you should be equally mindful of the effect of something people refer to as the “wisdom of crowds”. Just because a lot of
people choose something doesn’t mean anything . . . other than a lot of people chose it.

kah

Technorati Tags: Baby Boomers, Decision Making, cumulative advantage

Tax cuts. I hesitate to even get into this discussion, but given that we are at our core a business committed to helping people make decisions, I just can’t resist what seems to me like an object lesson in how the information we pick changes the nature of the decision. The burr under my saddle comes courtesy of an editorial in the Wall Street Journal called "The Coming Tax Increase".

Already you can tell what the WSJ thinks by how they framed what’s gong on. Not . . .

• Return to pay as you go
• Return to fiscal sanity
• Democrats step up to balancing the budget

. . . but the coming tax increase. But hey, it’s their editorial, and they can from it any way they want. So here’s what they have to say . . . [read]

The new House and Senate majorities have now passed budget resolutions — five-year budget outlines — that include the repeal of the Bush tax cuts of 2001 and 2003. Republicans are overstating things when they imply this means a tax increase this year. The Bush tax cuts don’t expire until the end of 2010, and Democrats aren’t about to tip their tax hand before the 2008 election. But under the cover of zero media attention, Democrats are constructing a budget process that will make a tax increase all but inevitable.

The ploy here is "pay-as-you-go" budget rules that Democrats are implementing in the name of "restoring fiscal responsibility." A few journalists even quote that phrase with a straight face. But everyone in Washington knows that "paygo" is all about making tax cuts more difficult, and not about slowing the growth of spending.

Under "paygo," extending the Bush tax cuts is itself a tax cut that must be offset either with cuts in entitlement spending or with other tax increases. And paygo merely constrains the growth of "new" entitlements. Entitlement rules already in place don’t count under paygo rules, so Medicare, Medicaid and the new "children’s" health-care program (SCHIP) will keep growing on autopilot. So-called discretionary spending — defense, education, highways, etc. — isn’t affected at all.

No surprise here. A little pissy but accurate. Where it gets dodgy is the next party.

But the lower rates also provided a spur to incentives that led to a rebound in investment, stock prices and ultimately in economic growth, individual incomes and corporate profits. This produced, in turn, a very sharp rebound in federal tax receipts — to 17.6% of GDP in fiscal 2005 and 18.4% in 2006. The Congressional Budget Office — now run by Democrats — predicts it will reach 18.6% in fiscal 2007.

This is slightly above the 40-year historical average of 18.3%, and CBO says it will climb again in each of the next two years before dipping in 2010. Despite the Bush tax cuts — or we should say because of them — federal revenues are above where they’ve been for most of the last half century. The government is far from starved for cash. [emphasis added]

Lets’ stipulate for a moment that the Bush tax cut did spur growth, and that the tax take as a percentage of GNP is approaching historical highs (and will go higher still if the tax cuts aren’t renewed). What’s up with the bit about ". . . the government is far from starved from cash"?

Without putting too fine a point on it, starving occurs when something gets fewer calories than it needs to sustain existence. Unless I missed something, the government has been running deep in the red for the last six years. So while it is true that the federal tax receipts amount to a very, very large number, federal expenditures are much larger. In other words, the beast needs more calories than it’s getting. Sounds like at least malnutrition to me.

I get that there are lots of reasons why we spend more than we take in. Whether or not you or I like those reasons isn’t the point here. Personally, I think that editorials like this are disingenuous at best. Language matters if you care about making quality decisions. The writer of this opinion piece has an axe to grind, which is, after all, the whole point of the opinion page in a newspaper. But an example of promoting clear thinking through clear use of language it is not.

kah

Technorati Tags: Decision Making, Taxes

There is an article in the Sunday New York Times called “For Girls, It’s Be Yourself, and Be Perfect, Too” that tugs hard at my parental heart strings. I’ll cut right to it, a quote deep in the article that speaks to my fatherly and middle-aged sensibility . . . [read]

Amid all the competitiveness and consumerism, and the obsession with achievement in Newton, Ms. Kelley said, “You just hope your child doesn’t have anorexia of the soul.”

You’ll have to read the article to get the flavor of life, at least as it’s snapshotted, at the top of the socio/economic/educational/opportunity ladder. Over time, whatever imbalances the girls profiled in the article experience will get sorted out, hopefully without too much damage accrued along the way. But “anorexia of the soul”! That’s a bell ringer. In the incessant crush to have it all, do we run the risk of finding ourselves with nothing?

Here’s a clip from the article . . .

Esther and Colby are two of the amazing girls at Newton North High School here in this affluent suburb just outside Boston. “Amazing girls” translation: Girls by the dozen who are high achieving, ambitious and confident (if not immune to the usual adolescent insecurities and meltdowns). Girls who do everything: Varsity sports. Student government. Theater. Community service. Girls who have grown up learning they can do anything a boy can do, which is anything they want to do.

But being an amazing girl often doesn’t feel like enough these days when you’re competing with all the other amazing girls around the country who are applying to the same elite colleges that you have been encouraged to aspire to practically all your life.

An athlete, after all, is one of the few things Esther isn’t. A few of the things she is: a standout in Advanced Placement Latin and honors philosophy/literature who can expound on the beauty of the subjunctive mood in Catullus and on Kierkegaard’s existential choices. A writer whose junior thesis for Advanced Placement history won Newton North’s top prize. An actress. President of her church youth group.

To spend several months in a pressure cooker like Newton North is to see what a girl can be “what any young person can be” when encouraged by committed teachers and by engaged parents who can give them wide-ranging opportunities.

It is also to see these girls struggle to navigate the conflicting messages they have been absorbing, if not from their parents then from the culture, since elementary school. The first message: Bring home A’s. Do everything. Get into a top college — which doesn’t have to be in the Ivy League, or one of the other elites like Williams, Tufts or Bowdoin, but should be a “name” school.

The second message: Be yourself. Have fun. Don’t work too hard.

And, for all their accomplishments and ambitions, the amazing girls, as their teachers and classmates call them, are not immune to the third message: While it is now cool to be smart, it is not enough to be smart.

You still have to be pretty, thin and, as one of Esther’s classmates, Kat Jiang, a go-to stage manager for student theater who has a perfect 2400 score on her SATs, wrote in an e-mail message, “It’s out of style to admit it, but it is more important to be hot than smart.”

“Effortlessly hot,” Kat added.

How a 17 year old girl is to sort out what seem to be such wildly conflicting demands is beyond me. And no, I don’t think you can have it all.

kah

Technorati Tags: Decision Making, anorexia of the soul