Let's Commit to Eliminating Noise
When NFL games are on national television, with worldwide coverage and fans’ thumbs at the ready to post on social media, there will be plenty of judgments
|The Daily Coach||Sep 10|| 9|
Tonight’s matchup between the defending Super Bowl Champion Kansas City Chiefs and the Houston Texans kicks off the NFL season. It will be fun to watch football again, to listen to the analysis of the games, but it will also be interesting to see how the noise affects the leaders of the teams.
They might gain some wisdom from an unlikely source: Daniel Kahneman. Who, do you say? Daniel Kahneman, the Israeli psychologist and economist renowned for his work in judgment and decision making. Kahneman was awarded the Nobel Memorial Prize in Economic Sciences and has spent most of his life studying decision making — especially why we make so many bad ones.
He believes one major factor that disrupts our decision making is “noise.” “Whenever there is judgment, there is noise and probably a lot more than you think,” Kahneman said.
When NFL games are on national television, with worldwide coverage and fans’ thumbs at the ready to post on social media, there will be plenty of judgments — mostly from un-informed people. It affects our analysis. Kahneman also believes, “We use the word bias too often.”
While Kahneman has spent much of his career studying bias, he is now focused on “noise.” Bias, he believes, may be over-diagnosed, and he recommends assuming noise is the culprit in most decision-making errors. “We should think about noise as a possible explanation because noise and bias lead you to different remedies,” he said.
However, when we make mistakes, they tend to skew in two opposing directions.
“People are very loss averse and very optimistic. They work against each other,” Kahneman said. “People, because they are optimistic, they don’t realize how bad the odds are.”
As his research on loss aversion has shown, we feel losses more acutely than gains. “Our estimate in many situations is 2 to 1,” he said. Yet we tend to overestimate our chances of success, especially during the planning phase. And then whatever the outcome, hindsight is 20/20: Why things did or didn’t work out is always obvious after the fact.
“When something happens, you immediately understand how it happens. You immediately have a story and an explanation,” Kahneman said. “You have that sense that you learned something and that you won’t make that mistake again.”
Unfortunately, these conclusions are usually wrong. The takeaway should not be a clear easy solution, which is often affected from the surrounding noise. “What you should learn is that you were surprised again,” Kahneman said. “You should learn that the problem and solutions were more uncertain than you think.”
So, pledge before the season starts not to listen to the noise. In fact, eliminate all outside noise in your life. Become deaf to an analysis by others, and only trust a few for their unique perspective. We will make better decisions if we do.
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