Newsletter: Busting Biases
(Volume 1, Issue 23)
Quote of the week
"The whole secret of life is to be interested in one thing profoundly and a thousand other things well." - Hugh Walpole
Three recent articles
1. Cognitive and organizational biases insidiously influence decisions at all levels of life and work. In Let's Bust Some Biases, McKinsey & Company compiles a collection of articles giving clues to how biases infiltrate decisions, and design choices to address it.
2. Individuals with strong convictions and long time horizons tend to outperform the crowds. Recently published research by Lawrence Cunningham' (George Washington University) Initiative on Shareholder Insights supports this notion in the field of investing. Investors with high conviction in quality companies and long investment time horizons outperformed the S&P 500 by 200% over ten years.
3. In another example of what gets measured gets managed, Zeynep Tefikci writes in The Overlooked Variable (Atlantic) that R0 -- average contagiousness -- is the wrong metric to assess containment of COVID. Because COVID appears to spread primarily due to clusters crowds in closed spaces in close contact, especially if there’s talking or singing, the right measure is k -- specific contagiousness in clusters. (Related article from World Economic Forum.)
Bonus: Why study philosophy? Ryan Holiday explains that it is not to understand the words of philosophers but the lives and decisions of philosophers themselves. That is the key to becoming a better person.
Topic of the week: Biases
An earlier newsletter (Issue 6: Biases and Pain) first presented the concept of Biases as framed by Charlie Munger in his lectures on psychology of human misjudgment. McKinsey & Co.'s recent article (above) is a book-end to the concept: What to do about biases?
Related Perspectives is embarking on a multi-month exploration of the common biases or cognitive tendencies, plus the strategies or habits we can learn to bust them. The table below will be filled out over the course of the next few months with a description and daily practice for each bias. We welcome contributions to this study from the community.