Spiritual Insurrection

Cognitive Illusions

Only a collective epiphany can save us now.

Charles Peterson

The human eye has a blind spot – a small portion of the visual field, about the size of a pencil eraser – where the optic disk is located. We aren’t normally aware of this blind spot, but with one eye closed, any object passing through this small area will disappear momentarily. Our visual field appears seamless because of an optical illusion: Our mind conspires to fill in the blank area with the colors of what surrounds it. We have other blind spots too – a whole series of what psychologist Daniel Kahneman calls “cognitive illusions” – that our minds and our culture work to obscure.

In Thinking, Fast and Slow, Kahneman, a Nobel laureate for his work in behavioral economics, uncovers several mental blind spots. There is, for example, the “focusing illusion”: When we focus on a single factor like how much money we make, we inevitably overestimate its importance to our overall well-being. This explains why surveys consistently report that people think they would be happier if they were wealthier while also proving on the contrary that rich people are no more happy than the less wealthy. The same distortion of reality happens when we focus on any single factor, from whether we live in California to whether we own the latest gadget.

Some cognitive illusions are more pernicious than others. Kahneman has identified one cognitive illusion in particular that overturns the core assumptions of capitalism. He calls it the “endowment effect”: we exaggerate the value of objects that we possess. In one experiment, Kahneman collected a random group of students. Half the students were given a coffee mug and the other half were asked to buy those very same mugs from their classmates with their own money. Typical economic theory would say that the two sides would haggle and eventually come to a mutually agreeable price – that the market would self-regulate. In a review of Thinking, Fast and Slow, Freeman Dyson explains what actually happened: “The average prices offered in a typical experiment were: sellers $7.12, buyers $2.87. Because the price gap was so large few mugs actually sold.” Sellers ground the market to a halt, overvaluing their mug simply because they possessed it. “The experiment convincingly demolished the central dogma of classical economics,” Dyson writes.

Kahneman’s “illusion of validity” describes the tendency of experts to trust their own judgment. Dyson refers to the example of the “Apgar score” (a statistical formula that uses heart rate, breathing, reflexes, muscle tone and color to judge the health of newborn babies) to illustrate this illusion. Turns out that the Apgar score “does better than the average doctor in deciding whether the baby needs immediate help.” In other words, a basic formula anyone can do consistently outperforms the opinion of a trained medical professional.

Applying the illusion of validity undermines experts across all disciplines, including economics. After studying the “investment outcomes of some twenty-five anonymous wealth advisers” over the course of eight consecutive years, Kahneman discovered that they performed just about as well as random chance. Their management of financial flows, Kahneman concluded, is a “dice-rolling contest, not a game of skill.” And yet, Kahneman also found that these same experts will persist in believing their intuitive judgments are correct, forcing them on us all, even in the face of tremendous counter-evidence. As Dyson puts it, “the illusion of validity does not disappear just because facts prove it to be false.” Breaking through this barrier is the essential crux and challenge of cultural jammers.

We live in a world where a constellation of cognitive illusions – that infinite growth can be sustained on a finite planet, that consumerism can make us happy, that corporations are persons – are dragging us into an ecological apocalypse. These cognitive illusions won’t disappear because they’ve been proven false – they must be overcome at a deeper level. We need something other than rationality, statistics, scientific thought … we need something more, even, than what has passed for activism thus far. We must spark an epiphany, a worldwide flash of insight that renders our blind spots visible once and for all. This collective awakening begins the moment we look inward and ask ourselves: Am I caught inside a grand cognitive illusion?

Micah White

82 comments on the article “Cognitive Illusions”

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Anonymous

“The average prices offered in a typical experiment were: sellers $7.12, buyers $2.87. Because the price gap was so large few mugs actually sold.” Sellers ground the market to a halt, overvaluing their mug simply because they possessed it. “The experiment convincingly demolished the central dogma of classical economics,” Dyson writes.

Hmmm. Actually I don't see how he comes to this conclusion. The sellers are not overvaluing their mugs precisely because they continue to hold on to the mugs without lowering the item price based on the fact that there were no buyers. If the mugs were overvalued, they would simply lower their price, the fact that none of the sellers lowered their price even out of a sense of competitiveness with other sellers shows the item was indeed not overvalued. The buyers are not proving that the mugs are overvalued either, they can simply be motivated by lack of funds to invest in such an item or lack of need or desire. But need or the lack thereof does not always regulate price, this is how an artist (Damien Hirst) can sell a diamond skull for 50 million pounds. The person who acquires the piece isn't in need of a skull or the diamonds and yet the skull with diamonds can command 50 million pounds. Is it overvalued? No. The artist wasn't about to lower his price based on the lack of need or desire, not if in his mind its value is not much less than 50 million pounds. Same in the mind of the buyer who's desire to acquire the item meets his ability to see the price. You can have hundreds of thousands of people in need of water or food, both of which are too expensive for the consumer who is in need. The need for food and water does not alter the price of either necessity even if the availability is ubiquitous among sellers, if the consumer had the money they would meet the price out of need or desire, the fact that they don't purchase said item or meet its price is not an indication that the item is "overvalued". I mean why is it farmer's don't give away their extra corn? I would say the experiment is an interesting indication of how classical capitalism works in real time when a variety of incalculable forces come into play. I recently saw a news report of how trafficked cigarettes were infiltrating Africa. When they first arrived the cost was dirt cheap, once the consumer was hooked the price rose to its "real" value. Did the buyer stop buying because the item price had tripled beyond reasonable market prices? Did the buyer stop buying because the item was a desired but not an essential need? No. The buyers it seems would forego food and other necessities just to purchase the item even though there was such a huge gap between what they could afford and the price of the cigarettes. The experiment he provides oversimplifies how capitalism functions within a complex system in real time.

Anonymous

It will take a 200,000 person rotating force of Americans to reduce the U.S. Military's 3.5 million nazi troops' strength to nothingness. It will be further needed afterwards to keep America's sociopathic population from staging their inevitable attempts to take back the machinery which will be beaten into plowshares. This could go on for generations, but without U.S. Military personnel lumbering around killing everybody they do, life will be better.

Anonymous

Everyone on the planet except we who've kept our humanity and we are not liars minus the U.S. Military's 3.5 million global and .7 million domestic security forces are prisoners and trusties.

Anonymous

It gets worse. Current research on the brain is revealing just how unreliable our perceptions really are. It appears that our brain creates a 'Coles Notes' version of events on the fly and kinda - well fills in the blanks later. It would be funny if we weren't capable of so much damage. http://goo.gl/LDVmr

Anonymous

How to defeat an illusion that doesn't disappear even when shown to be false? 1. Admit you may be duping yourself. 2. Design a program whereby you might empirically learn something the runs against your belief system. For example: give away that which you value the most while observing what that gifting does for the person gifted to and what it does for yourself; then, do it again and again. As you do, you might begin to FEEL differently about others and your obligations to them and them to you, thereby providing you with the "reason" for your having taken the risk in the place. First action, then the result, at lastly the reason--not the other way around!

Anonymous

The process you are describing reminds me of the 12 Steps of Alcoholics Anonymous. A process designed to transform the hopeless,self justifying. truth denying addict. It might just work!

http://www.aacanada.com/12s.html

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