Finance Professor Alex Edmans discusses the prevalence of misinformation, cognitive biases in decision-making, pitfalls of biased research, debunking popular beliefs like the 10,000 hours rule, importance of cognitive diversity, and navigating misinformation in a polarized world. He emphasizes critical thinking, statistical literacy, and ethical dilemmas in business practices.
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insights INSIGHT
Bias in Research Reception
People respond to research based on their biases, not accuracy, making rigorous work less impactful.
Data accuracy should be prioritized over personal biases to drive effective change.
question_answer ANECDOTE
Early Career Planning
Alex Edmans and his friends analyzed the Sunday Times rich list to determine career paths.
They mistakenly assumed starting a business guaranteed success, ignoring the many failures not listed.
question_answer ANECDOTE
10,000 Hour Rule Critique
Malcolm Gladwell's 10,000-hour rule is flawed because it lacks a timeframe and relies on unreliable self-reporting.
The study Gladwell cites measured perceived practice and success, not actual skill development.
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Why is misinformation so prevalent, and what can we do about it? On this episode, I’m speaking with Alex Edmans, a London Business School Finance Professor who has written a book called ‘May Contain Lies: How Stories, Statistics, and Studies Exploit Our Biases and What We Can Do About It’.
Alex’s areas of focus are purposeful business, sustainable investing, corporate governance, and behavioural finance. He’s also very prepared to use his platform to challenge people who propagate inaccuracies or misleading information.
In our discussion, we explore why he wrote his book, the impact of cognitive biases on decision-making, and practical solutions to navigate a world rife with misinformation.
You’ll hear about the pitfalls of relying on research produced with an agenda in mind and why we need to be wary when we’re told that a particular academic establishment has published a piece of research.
Alex also explains why the popular belief that if you spend 10,000 hours on a particular activity, you’ll have to be skilled at it might not be all it seems and why popular management mantras like ‘start with why’ aren’t as effective as those who propose them might like us to believe.
He talks about his own experiences and why his judgement has been just as vulnerable to biases as ours. Find out why cognitive diversity matters and why we shouldn’t listen to everyone’s views.
Timestamp Highlights: (Produced by AI)
[00:00:00] Introduction
Christian introduces Professor Alex Edmans and discusses his impact on social media and public discourse.
[00:01:00] Motivation for Writing "May Contain Lies"
Alex explains his transition from academic research to writing about misinformation and the importance of discerning data accuracy over personal biases.
[00:02:00] Cognitive Biases and Their Impact
Discussion on confirmation bias and black-and-white thinking and how they affect our perception of data and evidence.
[00:04:00] Personal Experiences with Bias
Alex shares personal anecdotes illustrating how even experts can fall prey to biases and misinformation.
[00:08:00] The 10,000 Hours Rule
A critical look at Malcolm Gladwell's popular concept and its misinterpretations.
[00:13:00] Research and Decision-Making
The importance of scrutinising academic research and the pitfalls of relying solely on endorsements and institutional affiliations.
[00:21:00] Statistical Literacy
Alex emphasises the need for statistical literacy from an early age and practical ways to teach it.
[00:23:00] Balancing Data and Anecdotes
How to effectively use stories and data to make informed decisions.
[00:25:00] Encouraging Cognitive Diversity
The value of different perspectives in decision-making processes and organisational settings.
[00:29:00] Flaws in Consultant Research
Critique of research produced by consultancies like McKinsey and the difference between advocacy and genuine scientific inquiry.
[00:36:00] Limits of Cognitive Diversity
Discussing when it might be necessary to draw the line in accepting diverse viewpoints, especially in the context of misinformation.
[00:41:00] Societal Solutions to Misinformation
Proposals for improving transparency in endorsements and the peer review process to combat misinformation.
[00:46:00] Role of Gatekeepers
The diminishing role of traditional gatekeepers in the age of social media and the importance of self-regulation and critical thinking.
[00:55:00] Ethical Presentation of Data
Encouraging ethical behaviour in the presentation of data and the potential for individuals to influence organisational culture positively.
[00:59:00] Closing Remarks
Christian wraps up the conversation, highlighting the key takeaways from the discussion and thanking Alex for his insights.
Key Quotes:
"Misinformation has always been around, but the ease with which it spreads today is unprecedented."
"The goal is not to enslave the reader to think like a statistician but to allow them to live more freely by being discerning with information."
Resources Mentioned:
Book: "May Contain Lies: How Stories, Statistics, and Studies Exploit Our Biases and What We Can Do About It" by Alex Edmans
The Human Risk Podcast