I am a smart and educated, award-winning appraiser. It is not possible for me to be irrational. Of course not. You can see that. I can see that.
A high IQ and education won’t necessarily protect you from highly irrational behavior—and it may sometimes amplify your errors. David Robson, in an Excerpt from The Intelligence Trap
Oh No! Who is this guy!? Doesn’t he know how smart I am? Why, even my peers have said I am smart. I pride myself on my critical thinking. Even my kids say that! What more proof do you need? Let’s get this straight: I am rational, smart, of high IQ and extremely educated, especially in my chosen field!
Recently, scientists have started to measure what things go with irrationality. There is even a name for this field of study, this measure: dysrationalia. The studies roughly parallel the studies of dyslexia and dyscalculia (difficulty in dealing with number things).
The studies of dysrationalia identify the correlation between bias and intelligence. Cognitive scientists say there are two types of thinking: 1) intuitive, automatic, fast thinking; 2) analytical, deliberative, slow thinking. On a primal level, the automatic fast thinking is what protects us quickly from danger. As a large cat-like clawed creature with long fangs appears, it is not a time to deliberate and reason out things. I jump. I jump to the conclusion to jump.
The fast thinking becomes automatic as we get older, smarter, and learn from our tribe about clawed fanged animals. We get better at jumping. And quicker.
The bias comes from when we jump, even if this particular creature is plant eater, and keeps our camp area clean of garbage leftovers. Our jump scares away the friendly pet. Bias. A wrong decision. A bad result.
Robson mentions three types of common irrational biases:
- Sunk-cost fallacy, sticking with something because of a prior decision;
- Gambler’s fallacy, “heads must come up next, after 5 tails in a row”, and;
- Anchoring, relying too much on the first piece of information offered (the “anchor”).
Results show that there is a high non-correlation between smartness (IQ, education, esteem), and bias. I.e., smarter people are just as likely to show bias as others. Darn.
In fact, intelligence can be related to a higher propensity toward bias, especially over the long run. Smart people get so used to being right and having the right answers, it becomes habit. Fast and automatic! Darn.
The real problem comes as smart people come to assume that they are less vulnerable to bias, simply because they are so educated, experienced, and intelligent.
Critical thinking competence and raw intelligence do not go together. This is why I believe any future for the appraisal profession must include this dimension. Critical thinking and awareness of our own vulnerability to such things as anchoring. Like anchoring to the known sale price prior to valuation.
Are you a critical thinker – or a very, very, critical thinker . . . ?
Think.
George Dell, GeorgeDell.com, The Analogue Blog or Valuemetrics.info is not affiliated with David Robson and did not receive any financial remuneration for linking to his Amazon page.
August 26, 2019 @ 6:12 am
I really enjoyed and got a lot out of this very good & understandable article for a delightful change. I am the fellow who offered my heart-felt advice which was to ask you to write your articles as if you are speaking to a 4th grader not a seasoned professor of Philosophy or mathematics. After all if your reader does not come away from what you are saying with a better understanding of the catch line, then you have wasted yours and your readers precious time. This article was very understandable and a good learning read. Thank you. I am just trying to help me, because I know you are highly knowledgeable and I want to learn all I can from you. One of my frustrations is when I read an article written by anyone and I come away saying. “what the heck is that person talkng about?” After all I am reading an eduactional article to take away fear of my own confusion not to add confusion to my already fears. Thank you again Sir.
August 26, 2019 @ 8:35 am
This is a great article and something all of us should consider continually. Possibly, the two most important protection mechanisms against bias are 1) to understand that you can be and attempt to counteract by considering all sources of data or information 2) continuously play “what if” scenarios, almost without regard for how incredulous they may seem at first glance. Although, I believe those are two of the most important things in the effort to be unbiased, there are many others. What comes to mind is not being pressured for time; a most difficult (and sometimes nearly impossible item) in our business for most intended uses. Another thing that comes to mind is asking lots of questions– even dumb ones– in the attempt to get the best information. And, it is important to constantly be aware that, while experience can be valuable it can also lead to bias, especially if not supported by current data.
Last, but not least, is the effort to avoid what I call mathematical bias by constantly looking for fallacies in the methodology. Just this morning, by coincidence, I read an article that said houses with pools could boost home value by 54 percent. The critical word was “could” and one of the critical flaws included mathematically calculating for a specific amenity by using median prices without regard for other factors, such as location. In my market area, a pool “could” boost value by about 5 percent in some of the best areas and “could” actually be a negative in some sub-markets.
I found this one item in the article to be particularly interesting: “Results show that there is a high non-correlation between smartness (IQ, education, esteem), and bias. I.e., smarter people are just as likely to show bias as others. Darn.” It would be particularly worthwhile to have a study that shows what factors DO show a correlation toward bias. Such a study could allow appraisers, including myself, to be more aware of what things in our own makeup to watch out for. Thank you for an article on a subject we must all constantly consider.
August 27, 2019 @ 2:52 pm
Nice!
August 30, 2019 @ 2:12 pm
George, Thanks again for furthering common sense in appraisal practice. As a Christian, your comments remind me of the first of the “Seven deadly sins”, Pride, the continual temptation to think you have “got it”, when in fact you have not. We need to be vigilant in avoiding bias and unwarranted assumptions.
September 14, 2019 @ 8:49 am
Wow, this is fascinating reading. I am glad I found this and got to read it. Great job on this content. I liked it a lot. Thanks for the great and unique info. Salem Oregon Appraiser
Salem Oregon Appraiser
May 18, 2021 @ 6:44 am
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