In this podcast, Daniel Kahneman, Cass R. Sunstein, and Olivier Sibony discuss the detrimental effects of noise in human judgment in various fields such as medicine, law, and economic forecasting. They highlight the importance of reducing bias and noise for better decision-making. They explore the challenges of noise in evaluating CEO candidates and the complexity of human judgment in group decision-making processes. The hosts also discuss a study on noise in group rankings and provide principles for minimizing noise in decision-making.
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Quick takeaways
Noise in judgments can lead to inconsistent decisions in various fields such as medicine, law, and hiring.
Noise is more prevalent and problematic than bias in professional judgments, contributing to overall error calculations and damaging credibility and trust in systems.
Deep dives
The Impact of Noise on Judgments
Noise in judgments is often overlooked but can cause significant problems. It can lead to inconsistent decisions in various fields such as medicine, law, and hiring. Noise can be both wanted and unwanted, but the unwanted noise is more prevalent and costly. For example, judges giving different sentences for the same crime is an example of unwanted noise. To reduce noise, organizations can perform noise audits and follow six principles of decision hygiene.
The Challenging Nature of Noise
Noise is often more difficult to address than bias. Bias refers to consistent errors in judgment, while noise involves variability in judgments that should be the same. Noise can go unnoticed, leading to an illusion of agreement while actually disagreeing in judgments. In professional judgments, bias and noise contribute to overall error calculations, with noise being the more frequent and problematic contributor. Inconsistency caused by noise can damage the credibility and trust in systems, such as inconsistent promotions in the workplace.
Addressing and Managing Noise
Organizations and individuals can take several steps to minimize noise. One approach is to conduct noise audits, where individuals are presented with realistic problems to assess their variability in judgments. Applying the six principles of decision hygiene can also help reduce noise. These principles include focusing on accuracy rather than individual expression, thinking statistically and taking an outside view, structuring judgments independently, resisting premature intuitions, considering multiple independent judgments, and favoring relative judgments over absolute ones.
Imagine that two doctors in the same city give different diagnoses to identical patients—or that two judges in the same courthouse give markedly different sentences to people who have committed the same crime. Suppose that different interviewers at the same firm make different decisions about indistinguishable job applicants—or that when a company is handling customer complaints, the resolution depends on who happens to answer the phone. Now imagine that the same doctor, the same judge, the same interviewer, or the same customer service agent makes different decisions depending on whether it is morning or afternoon, or Monday rather than Wednesday. These are examples of noise: variability in judgments that should be identical.
In Noise, Daniel Kahneman, Olivier Sibony, and Cass R. Sunstein show the detrimental effects of noise in many fields, including medicine, law, economic forecasting, forensic science, bail, child protection, strategy, performance reviews, and personnel selection. Wherever there is judgment, there is noise. Yet, most of the time, individuals and organizations alike are unaware of it. They neglect noise. With a few simple remedies, people can reduce both noise and bias, and so make far better decisions.
Packed with original ideas, and offering the same kinds of research-based insights that made Thinking, Fast and Slow and Nudge groundbreaking New York Times bestsellers, Noise explains how and why humans are so susceptible to noise in judgment—and what we can do about it.