“No lesson seems to be so deeply inculcated by the experience of life as that you never should trust experts,” complained Lord Salisbury more than a century ago. His lordship didn’t know the half of it. Being prime minister of imperial Great Britain was no cakewalk, and Salisbury surely got plenty of advice from the well-meaning; but he was in his grave long before the explosion of mass media, the 24-hour news cycle, and its attendant horde of talking heads. He never stood in an airport bookstore and wondered which of its seemingly interchangeable business titles would truly revolutionize his company and unlock the secret to happiness, and he never tried to make sense of the bizarre spectacle of a Jim Cramer rant.
As we become ever more immersed in information, we’re ever more saturated with the opinions of experts, whether “mass” experts like celebrity CEOs, high-profile scientists, health professionals and consultants, or “local” experts – your doctor, stockbroker or auto mechanic. What’s more, their opinions often seem to contradict each other: Don’t have meetings! Have lots of meetings! Eat tons of protein! Strictly limit your protein! Buy! Sell! It’s no wonder we’re inclined to ignore the lot of them, especially when they so frequently and spectacularly turn out to be wrong. (How many economic experts scoffed at the very idea of a recession?)
“We live in a time of acute frustration with experts, even as many of us remain dependent on them and continue to heed their advice,” writes journalist David H. Freeman in Wrong: Why Experts Keep Failing Us – and How to Know When Not to Trust Them (Little, Brown). And while there’s certainly an argument that slow progress and mistake-making is the nature of expert knowledge, Freeman provides a guide to deciphering which expert advice is worth heeding.
To begin, he knocks our most respected experts off their pedestals, dismissing the notion that peer-reviewed studies by scientists and academics are beyond reproach. An emerging body of research (and Freeman’s own reliance on experts is a paradox he tackles in an appendix) suggests that something like two-thirds of the articles published in top scientific and medical journals turn out to be misguided, despite their supposed rigour.
Even experts are prone to a host of biases, shortcuts and outright mistakes. They mismeasure, they discard inconvenient data, they assign correlation on the flimsiest of grounds. These experts are driven to publish in order to secure tenure and keep their careers moving, and journals are rarely interested in publishing work that doesn’t break new ground. “If a researcher proves that eating blueberries improves eyesight – that’s exciting,” Freeman writes. “Proving that they don’t – who cares?” Publication bias of this kind creates a situation where researchers don’t even bother trying to publish studies with negative results. “Researchers are essentially highly incentivized to test exciting ideas that are likely to be wrong,” because on the off-chance of a positive result, publication is much more achievable. And while the pressure motivates some experts to fudge their results, many more produce positives by some oversight that the peer review system doesn’t catch. The effects are astounding: one study found virtually all published economic papers are wrong.
These research problems are compounded by the way in which most of us get our information. “We want our expert advice boiled down to ABC’s, essentials, executive summaries, and guides for idiots and dummies,” Freeman writes. “To be sure, if we could handle all the complications, we wouldn’t need experts. But if there’s a happy medium, most of us don’t appear interested in it.” We’d rather receive advice that’s simple, doubt-free, universal, palatable and actionable. So while there are “as many as three thousand different factors that can come into play when trying to understand the causes and consequences of obesity…individual experts tend to focus on just one or two of them, with different experts zeroing in on different factors.”
The media, of course, are complicit in this. Too often we’ll uncritically embrace a study that promises a great headline, rather than looking hard at the claims of the tall foreheads who authored it. But media outlets sell best when they promise magic bullets: seven secrets to great sex or five ways to boost your profits. We’re both guilty, reader: we both want it to be that easy.
It’s not hard to see why we have a plethora of one-size-fits-all business advice dispensed by management gurus and bestselling authors, either extracting so-called universal principles from a few case studies, or claiming to dissect a new trend that winning companies are already exploiting. Jerker Denrell, a Stanford professor, tells Freeman that the notion of this sort of advice transforming a company is “as unlikely a proposition as that of a swimming coach who claims that any swimmer taking her suggestions will win swim meets.”
Experts, Salisbury remarked, “require their strong wine diluted by a very large admixture of insipid common sense.” His take isn’t far from Freeman’s: use common sense to separate the gold from the dross. Be skeptical of advice that’s simplistic, universal and definitive, the sort that “promises broad benefits and can be described in a sound bite or headline. The research is likely off-base to begin with, or oversimplified through its digestion by journals and mass media.
Be especially wary of the “groundbreaking,” because, Freeman says, “most expert insights that seem novel and surprising are based on a small number of less-rigorous studies … because big, rigorous studies are almost never undertaken until several smaller ones pave the way.” Despite our desire for simplicity, good expert advice is usually heavy with qualifying statements, candid about evidence to the contrary, and not as simple as we’d like it to be. That sounds like advice worth taking: “Unless,” Freeman writes, “this book is itself mostly wrong and has misled you.”
Crisis Economics: A Crash Course in the Future of Finance (Penguin)
Nouriel Roubini and Stephen Mihm
“Crises cannot be abolished,” the authors warn. “Like hurricanes, they can only be managed and mitigated.” The most recent such crisis, and the continued volatility of the markets, means stock in the views of NYU professor Nouriel (Dr. Doom) Roubini has never been higher. But his partnership with Mihm, himself an esteemed economic historian and popular journalist, isn’t just a victory lap. Crisis Economics is probably the most lucid and accessible attempt yet to place recent events into a global and historical context, exploring the deep structural roots that make it of a kind with other crises dating as far back as the 17th century.
But at its heart, the book offers Roubini and Mihm’s vision for a future financial system. They want strict regulation of commercial banks and investment banks, insurance companies, and hedge funds. They want tighter controls on securitization and derivatives, ratings agencies, and compensation plans. They want to unbundle a financial system grown “too interconnected to fail,” and they prescribe solutions for the global good in a world where the G20 outstrips the G8 (including an IMF reorganization to reflect that shift in the balance of power). As usual with Roubini, it’s scary reading; but that makes it no less thoughtful, or thought-provoking.
Why We Hate the Oil Companies: Straight Talk from an Energy Insider (Palgrave Macmillan)
Nobody who has noticed the millions of gallons of oil pouring into the Gulf of Mexico courtesy of BP will be stumped by the question implied in the title of this book. A former president of the Shell Oil Co. and founder of the non-profit Citizens for Affordable Energy, Hofmeister is frustrated by the irresponsibility and parochialism of the industry he was part of, and by the attitudes and incompetence of the politicians who regulate it. North America’s lack of a coherent and pragmatic energy policy will prove a disaster “that will bring blackouts, brownouts, and lines at the pumps within the next decade,” he writes.
His proposed solution is to have the U.S. government create an independent Federal Energy Resources System, modelled after the Federal Reserve Bank system and empowered to make real-time (not “political time”) regulatory decisions about the energy supply, technology and infrastructure choices, and environmental protection. Failing this sort of bold action, Hofmeister sees North America entering an “energy abyss” by the end of the next decade, the result of land (mis)management, an irrational aversion to nuclear power, and 50 years of ignoring serious questions about our resource base and the infrastructure that powers society.
The MBA Oath: Setting a Higher Standard for Business Leaders (Portfolio)
Max Anderson and Peter Escher
A graduation-day tradition at Harvard sees degree candidates gather before dawn in their caps and gowns and march into the university’s great common carrying symbols of their schools. Law students carry gavels, medical students carry stethoscopes, forestry students wear twigs in their caps, and divinity students wear golden halos made of pipe cleaners.
Until last year, business students marched waving $100 bills, booed by the watching crowd. No wonder MBAs have grown to be seen as “the Darth Vaders of the business world.” But the authors, members of the Class of ’09, recognized a need to address their profession’s severe reputational problem, and in collaboration with professors Rakesh Khurana and Nitin Nohria, they drafted a pledge modelled on the Hippocratic and other professional oaths.
Their book explores questions of ethics and professionalism in the business world, and is aimed not just at business students but at anybody interested in a conversation on the subject. If the project seems a bit Pollyannaish, it’s at least a conversation worth having. After all, write Anderson and Escher, “if two years of full-time professional training does not mean that MBAs will be held to higher standards of ethics and performance, what is the public value of the degree?”