Daniel Kahneman discusses his new book - NOISE

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Post Reply
User avatar
Topic Author
bobcat2
Posts: 5565
Joined: Tue Feb 20, 2007 3:27 pm
Location: just barely Outside the Beltway

Daniel Kahneman discusses his new book - NOISE

Post by bobcat2 »

Daniel Kahneman discusses his soon to be published book, NOISE, with Tim Harford of the Financial Times. The book’s co-authors are Olivier Sibony, a business school professor and former McKinsey partner, and law professor Cass Sunstein. An excerpt from the article.
Kahneman has spent much of his life studying bias in decision-making, but noise is the other source of error. If you imagine firing arrows at a paper target, bias would be a systematic tendency for the arrows to land (say) below the bullseye. Noise would be a tendency for the arrows to err in any direction, purely at random. In some ways, noise is easier to detect. You can measure it from the back of the target, without knowing where the bullseye is. And yet noise is often overlooked.

From the viewpoint of a social scientist, this oversight is understandable. Bias feels like the thing to observe, while noise is the fog obscuring the view. Experimental methods are designed to remove noise to allow bias to be measured more clearly. But noise is not merely an obstacle to scientific inquiry: it has real-world effects too. Kahneman and his colleagues point to insurance underwriters, judges, child-custody case managers, recruiters, patent examiners and forensic scientists, all of whom act in a way that varies from one professional to another, and between different situations, effectively at random. It is not a problem to be assumed away. So why do we pay so little attention to noise and so much attention to bias? The problem, says Kahneman, is that we think causally, about individual cases. You can observe bias in an individual case, but to observe noise one must measure — or at least imagine — multiple cases playing out in different ways.
Link to article - https://www.ft.com/content/7cf78f4f-d40 ... 8eccb3da57

BobK
In finance risk is defined as uncertainty that is consequential (nontrivial). | The two main methods of dealing with financial risk are the matching of assets to goals & diversifying.
User avatar
VictoriaF
Posts: 19623
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Daniel Kahneman discusses his new book - NOISE

Post by VictoriaF »

bobcat2 wrote: Fri May 07, 2021 10:38 am Daniel Kahneman discusses his soon to be published book, NOISE, with Tim Harford of the Financial Times. The book’s co-authors are Olivier Sibony, a business school professor and former McKinsey partner, and law professor Cass Sunstein.
...
Link to article - https://www.ft.com/content/7cf78f4f-d40 ... 8eccb3da57

BobK
Thank you, Bob,

The FT article is behind a paywall. I found a free version on the web, but it seemed to be written by someone other than Tim Harford. "Noise" is scheduled to be available on Amazon on May 18. I've pre-ordered it several weeks ago, but the price have not been dipping down, at least not yet. Perhaps, there will be a surge in orders (and a drop in price) next week.

Once the book is out, I expect Kahneman will be interviewed by several other bloggers.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
qwertyjazz
Posts: 1952
Joined: Tue Feb 23, 2016 4:24 am

Re: Daniel Kahneman discusses his new book - NOISE

Post by qwertyjazz »

VictoriaF wrote: Sat May 08, 2021 10:35 am
bobcat2 wrote: Fri May 07, 2021 10:38 am Daniel Kahneman discusses his soon to be published book, NOISE, with Tim Harford of the Financial Times. The book’s co-authors are Olivier Sibony, a business school professor and former McKinsey partner, and law professor Cass Sunstein.
...
Link to article - https://www.ft.com/content/7cf78f4f-d40 ... 8eccb3da57

BobK
Thank you, Bob,

The FT article is behind a paywall. I found a free version on the web, but it seemed to be written by someone other than Tim Harford. "Noise" is scheduled to be available on Amazon on May 18. I've pre-ordered it several weeks ago, but the price have not been dipping down, at least not yet. Perhaps, there will be a surge in orders (and a drop in price) next week.

Once the book is out, I expect Kahneman will be interviewed by several other bloggers.

Victoria
If you are willing to wait, Hartford usually pushes out his FT articles on his website or via email list about a month after publication. He did a conversation with Kahnemann he mentions - so that will likely show up in a month or so

https://timharford.com/author/undercovereconomist/
G.E. Box "All models are wrong, but some are useful."
angelescrest
Posts: 1371
Joined: Tue May 27, 2008 10:48 am
Location: MCOL, no state income tax

Re: Daniel Kahneman discusses his new book - NOISE

Post by angelescrest »

I’m a huge fan of his, thank you for sharing the news about his new book. But that excerpt didn’t quite grab my interest.
User avatar
gatorking
Posts: 1160
Joined: Tue Feb 20, 2007 6:15 pm
Location: MA

Re: Daniel Kahneman discusses his new book - NOISE

Post by gatorking »

This seems to be the original Tim Harford article: https://afegames.com/daniel-kahneman-ev ... aborative/
User avatar
Topic Author
bobcat2
Posts: 5565
Joined: Tue Feb 20, 2007 3:27 pm
Location: just barely Outside the Beltway

Re: Daniel Kahneman discusses his new book - NOISE

Post by bobcat2 »

gatorking wrote: Sat May 08, 2021 2:16 pm This seems to be the original Tim Harford article: https://afegames.com/daniel-kahneman-ev ... aborative/
Yes. This is the same article I read at the Financial Times. It even has the same graphics caricature of Kahneman. :happy

BobK
In finance risk is defined as uncertainty that is consequential (nontrivial). | The two main methods of dealing with financial risk are the matching of assets to goals & diversifying.
Fallible
Posts: 7783
Joined: Fri Nov 27, 2009 4:44 pm

Re: Daniel Kahneman discusses his new book - NOISE

Post by Fallible »

Also look forward to reading the book, even more so (or maybe a bit less so?) after reading this from the article:
You know, the book Noise is premature,” offers Kahneman. “If I had been 20 years earlier, that’s not what I would have done. Having identified the problem of noise I would have started the research programme on noise, and given talks about it, and thought about it and written articles about it. But I started this thing very late. I started it in my eighties and you just don’t have time. This, in a serious sense, is a book that came too early. And it shows.”
Thanks for posting.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
User avatar
VictoriaF
Posts: 19623
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Daniel Kahneman discusses his new book - NOISE

Post by VictoriaF »

bobcat2 wrote: Sat May 08, 2021 2:51 pm
gatorking wrote: Sat May 08, 2021 2:16 pm This seems to be the original Tim Harford article: https://afegames.com/daniel-kahneman-ev ... aborative/
Yes. This is the same article I read at the Financial Times. It even has the same graphics caricature of Kahneman. :happy

BobK
Thank you, Bob,

I'll be getting the book next week. But from reading the interview, I wonder how productive it was for Kahneman to work with co-authors. Kahneman says that he did not have as much time to work on Noise as he had working on Thinking, Fast and Slow. But I suspect that Kahneman and Sunstein's styles could have clashed. Kahneman could be dissatisfied with the end result but not want to blame it on others.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
SGM
Posts: 3112
Joined: Wed Mar 23, 2011 4:46 am

Re: Daniel Kahneman discusses his new book - NOISE

Post by SGM »

Thanks Bob. I have just ordered Noise. I liked his first book. I have used psychotherapy in two of my three careers with geriatric patients and much earlier with autistic children. I will be reading Noise for the fun of it. It will be a change of pace from detective novels.

I remember Victoria on stage taking part in an experiment associated with Kahneman's work at a national Boglehead meeting.

.
User avatar
Topic Author
bobcat2
Posts: 5565
Joined: Tue Feb 20, 2007 3:27 pm
Location: just barely Outside the Beltway

Bias Is a Big Problem. But So Is ‘Noise.’

Post by bobcat2 »

Bias Is a Big Problem. But So Is ‘Noise.’ op-ed by Daniel Kahneman, Olivier Sibony and Cass R. Sunstein in the NYTimes

Excerpt -
To see the difference between bias and noise, consider your bathroom scale. If on average the readings it gives are too high (or too low), the scale is biased. If it shows different readings when you step on it several times in quick succession, the scale is noisy. (Cheap scales are likely to be both biased and noisy.) While bias is the average of errors, noise is their variability.

Although it is often ignored, noise is a large source of malfunction in society. In a 1981 study, for example, 208 federal judges were asked to determine the appropriate sentences for the same 16 cases. The cases were described by the characteristics of the offense (robbery or fraud, violent or not) and of the defendant (young or old, repeat or first-time offender, accomplice or principal). You might have expected judges to agree closely about such vignettes, which were stripped of distracting details and contained only relevant information.

But the judges did not agree. The average difference between the sentences that two randomly chosen judges gave for the same crime was more than 3.5 years. Considering that the mean sentence was seven years, that was a disconcerting amount of noise.
Link to article - https://www.nytimes.com/2021/05/15/opin ... neman.html

BobK
In finance risk is defined as uncertainty that is consequential (nontrivial). | The two main methods of dealing with financial risk are the matching of assets to goals & diversifying.
User avatar
nedsaid
Posts: 14731
Joined: Fri Nov 23, 2012 12:33 pm

Re: Daniel Kahneman discusses his new book - NOISE

Post by nedsaid »

This is a genuine critique of the weaknesses of Academic Research. It isn't easy to be 100% objective and it isn't always easy to distinguish between patterns and random noise. We tend to see what we want to see and believe what we want to believe. The brain likes to see patterns where in fact there might not be any. This is why ideas need to be debated.
A fool and his money are good for business.
User avatar
LatentStoic
Posts: 21
Joined: Sun Jul 29, 2018 10:28 am
Location: Midwest USA

Re: Daniel Kahneman discusses his new book - NOISE

Post by LatentStoic »

Noting one commentator's perhaps provocative take: "One of my favorite chapters was where Kahneman noted that people, particularly professionals, have very high opinions of their own opinions."
"Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient." - Warren Buffett 1991 shareholder letter.
ScubaHogg
Posts: 815
Joined: Sun Nov 06, 2011 3:02 pm

Re: Daniel Kahneman discusses his new book - NOISE

Post by ScubaHogg »

nedsaid wrote: Sun May 16, 2021 12:57 am It isn't easy to be 100% objective
I'd go further and say it's impossible
“Unexpected Returns dominate the Expected Returns” - Ken French
User avatar
arcticpineapplecorp.
Posts: 8009
Joined: Tue Mar 06, 2012 9:22 pm

Re: Daniel Kahneman discusses his new book - NOISE

Post by arcticpineapplecorp. »

you can hear Kahneman interviewed by Steven Levitt's (Freakonomics) podcast "People I Mostly Admire"
"Daniel Kahneman on Why Our Judgment is Flawed — and What to Do About It (People I (Mostly) Admire Ep. 27)":

https://freakonomics.com/podcast/pima-daniel-kahneman/
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events.
SGM
Posts: 3112
Joined: Wed Mar 23, 2011 4:46 am

Re: Daniel Kahneman discusses his new book - NOISE

Post by SGM »

I read where Kahneman thinks institutions do a better job of eliminating noise than individuals. The honor system at a local boarding school does not allow drinking or smoking on campus and cheating will all get you expelled. This punishment is administered whether you are a legacy, your parent is a teacher living on campus, if your parent is on the board or is a wealthy contributor to the school, or you are a good athlete. I have seen several students expelled. One student whose father was a teacher had to go to a local public school while living on campus until her father resigned. She could not play in the band, could not eat in the cafeteria and was isolated from the friends she had made in the prior two years.

"So Much Unfairness of Things" written in 1962 refers to the same boarding school.
User avatar
VictoriaF
Posts: 19623
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Daniel Kahneman discusses his new book - NOISE

Post by VictoriaF »

Here are two more podcasts in which Kahneman discusses Noise:

https://www.youtube.com/watch?v=7yhg7NmTeVg&t=6s - Daniel Kahneman and Yuval Noah Harari in: 'Global Trends Shaping Humankind', a conversation moderated by Kara Swisher [1h 30m]

https://www.youtube.com/watch?v=PbxrkVlXmB4&t=4s - Daniel Kahneman talks with Scott Barry Kaufman [1h 58m]

Off-topic but probably does not deserve a separate thread: Robert Cialdini has significantly updated his ground breaking book Influence. He has added the sixth principle of influence and made other revisions that added 200 pages.

Victoria
Last edited by VictoriaF on Mon May 17, 2021 2:17 pm, edited 1 time in total.
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
User avatar
VictoriaF
Posts: 19623
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Daniel Kahneman discusses his new book - NOISE

Post by VictoriaF »

SGM wrote: Sat May 15, 2021 9:59 am I remember Victoria on stage taking part in an experiment associated with Kahneman's work at a national Boglehead meeting.
I also used Kahneman's metaphor about cockroaches and cherries in my last standup routine just before the pandemic.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
User avatar
arcticpineapplecorp.
Posts: 8009
Joined: Tue Mar 06, 2012 9:22 pm

Re: Daniel Kahneman discusses his new book - NOISE

Post by arcticpineapplecorp. »

here's two more interviews with Professor Kahneman:

hidden brain:
https://hiddenbrain.org/podcast/our-noisy-minds/

and masters in business (Barry Ritholtz):
https://www.bloomberg.com/news/audio/20 ... cs-podcast
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events.
User avatar
VictoriaF
Posts: 19623
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Daniel Kahneman discusses his new book - NOISE

Post by VictoriaF »

Behavioral Scientist's Editor-in-Chief Evan Nesterak speaks with Nobel Prize-winning psychologist Daniel Kahneman about his new book, Noise, exploring the concept and why we ought to pay more attention to it, https://behavioralscientist.org/a-conve ... out-noise/ . Note that this is an article, not a podcast.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
Post Reply