Seeing through cognitive traps (with Alex Edmans)

1. Analyze Correlation Beyond Causation

When observing a correlation between X and Y, consider five possibilities: X causes Y, Y causes X, a third variable causes both, cyclic causation, or it’s a statistical fluke/data mining. This helps avoid jumping to plausible but incorrect causal conclusions.

2. Practice Nuance (Gray) Thinking

Avoid black and white thinking by practicing “gray thinking,” which involves recognizing that everything has a mix of good and bad, and that something generally good might only be beneficial in specific situations or up to a certain point. This approach helps uncover complexities and avoid oversimplification.

3. Actively Counter Confirmation Bias

Be aware that confirmation bias can blind even smart people to critical thinking, leading them to dismiss contradictory evidence or seek information that confirms existing beliefs. Actively question your own “small hunches” and preferred interpretations to overcome this deep-rooted bias.

4. Beware the Narrative Fallacy

Guard against the “narrative fallacy” by recognizing that compelling stories can lead to drawing false cause-effect relationships from uncorrelated events or cherry-picked examples. Always seek large-scale, systematic data to validate claims, rather than relying solely on vivid anecdotes.

5. Challenge LLM Outputs Actively

When using large language models, be discerning and actively ask follow-up questions to challenge their initial responses, as they may be trained to align with perceived user preferences or dominant narratives. This vigilance helps avoid misinformation and filter bubbles.

6. Prioritize Intrinsic Over Instrumental

When making decisions, avoid the temptation to solely focus on easily measurable instrumental values, as this can lead to neglecting less measurable but more important intrinsic values. Understand the complex, often uncertain, link between instrumental variables and intrinsic outcomes.

7. Acknowledge Uncertainty in Models

Recognize and explicitly acknowledge the inherent uncertainty in complex models and predictions, such as those related to climate change. This approach fosters more nuanced decision-making and avoids rigid, black-and-white policy choices based on uncertain “tipping points.”

8. Evaluate Policy Trade-offs Thoroughly

When making policy decisions, particularly on complex issues like climate action, actively consider and evaluate all potential trade-offs, including the certain costs of rapid changes (e.g., job loss, lack of electricity) against uncertain future benefits. This promotes a more balanced and just outcome.

9. Implement Carbon Tax, Compensate Losers

Implement a carbon tax on polluting activities to internalize externalities, and use the tax revenue to provide lump-sum compensation to those negatively impacted. This approach maintains incentives for reduced emissions while addressing equity concerns.

10. See Regulation as Market Synergy

Recognize that free markets and regulation are synergistic; proper regulation prevents harmful profit-seeking and fosters fair competition, enhancing the market’s ability to generate beneficial economic growth that can then fund social programs.

11. Critically Assess Market Efficiency Claims

Be critical of interpretations of market data that consistently align with the efficient market hypothesis, especially when they opportunistically explain away contradictory evidence. Instead, rigorously test assumptions to determine if higher returns are due to risk or actual outperformance.

12. Apply Rigorous Testing Consistently

Consistently apply rigorous testing standards and demand for plausible alternative explanations to all research hypotheses, regardless of whether the results align with popular or preferred narratives. This helps prevent confirmation bias from undermining scientific rigor.

13. Reform Academic Peer Review

To improve academic publishing, editors should prioritize the “intersection heuristic” for referee comments, focusing on commonly agreed-upon critical issues, and implement “up or out” rules for second rounds to prevent endless revisions and ensure timely publication of important research.

14. Value Research Quality Over Quantity

Academia should shift focus from the sheer number of publications to the quality and impact of research, including accounting for the number of authors on a paper. This combats the “publish or perish” culture’s tendency to incentivize quantity over meaningful scientific contribution.

15. Embrace Cognitive Diversity Broadly

Broaden your understanding of diversity beyond demographics to include “cognitive diversity” (diversity of thought), encompassing varied educational and professional backgrounds. While demographic diversity is important, cognitive diversity is more strongly linked to benefits like creative solutions, though its value is situation-dependent.

16. Justify Diversity Morally

Advocate for diversity based on legitimate moral and societal benefits, rather than relying solely on weak or misleading claims of direct financial performance. This approach provides a more honest and robust justification for diversity initiatives.

17. Tailor Diversity to Situations

Recognize that the benefits of diversity are situation-specific; it’s valuable for creative problem-solving and strategy but can hinder efficient execution. Tailor diversity approaches to the specific needs of the task or team for optimal outcomes.

18. Combine Stories with Data

Use compelling stories as cognitive aids to make robust, large-scale data more palatable, memorable, and clear, rather than relying on stories alone or expecting data to speak for itself. Ensure stories are faithful to the evidence, not cherry-picked.

19. Begin with the End in Mind

At an individual level, adopt the habit of “beginning with the end in mind” by clearly defining your ultimate goals and purpose before planning how to allocate your time and resources. This ensures your actions are aligned with what truly matters to you.

20. Understand Beliefs’ Multiple Purposes

Recognize that beliefs serve purposes beyond truth-seeking, such as long-term benefit and immediate emotional comfort or avoidance of pain. This understanding helps explain why people resist updating beliefs, even when faced with contradictory evidence.

21. Confront Biases Despite Discomfort

Actively confront your biases and be willing to accept being wrong, even if it’s difficult or unpleasant in the short term. Recognize that the benefits of correcting beliefs are often long-term, while the costs are immediate discomfort, requiring conscious effort to overcome.