This is an interesting book that expands the debate regarding IQ tests. The supporters of IQ tests such as Charles Murray in
Bell Curve: Intelligence and Class Structure in American Life (A Free Press Paperbacks Book)
and Arthur Jensen in
The g Factor: The Science of Mental Ability (Human Evolution, Behavior, and Intelligence)
state they fully capture cognitive capabilities and predict social outcome. But, the detractors such as Howard Gardner in
Multiple Intelligences: New Horizons in Theory and Practice
and David Coleman in
Emotional Intelligence: 10th Anniversary Edition; Why It Can Matter More Than IQ
state IQ is too narrow a concept and IQ tests are inaccurate. Stanovich agrees with the supporters that IQ can be measured and it captures specific cognitive skills. And, that it has causal social outcome implications. He disagrees with detractors that we need to expand the concept of intelligence and that IQ tests are irrelevant. However, he advances that IQ tests do not measure rational decision making ability.
Stanovich refers to IQ as the Algorithmic Mind and rationality as the Reflective Mind. He indicates that the correlation between the two is low. Many people have the equivalent of a powerful computer inside their brain. But, they are surprisingly poor "computer user" of that brain power. He mentions Georges Bush, Jr. who was very intelligent as measured by IQ tests. But, he was not a proficient thinker as he was dogmatic, ill informed, impatient, and prone to rash decisions sometimes associated with devastating outcomes. Stanovich describes Bush condition as Dysrationalia or someone who is less rational than his IQ would suggest.
Stanovich advances that our thinking flaws have an evolutionary source. Evolution is concerned with maximizing survival through procreation. This is associated with quick thinking processes instead of the slower cogitating necessary for complex rational decisions.
Stanovich explores the thinking flaws that prevents us from thinking rationally. They include framing, anchoring, biases, extracting erroneous patterns, discounting future benefits excessively. Here, his references include Scott Plous excellent
The Psychology of Judgment and Decision Making
and Dan Ariely
Predictably Irrational: The Hidden Forces That Shape Our Decisions
.
Stanovich suggests we make mental mistakes for several different reasons. First, we are mentally lazy looking for the most immediate solution withouth engaging our higher level thinking processes (algorithmic and reflective thinking). Second, we lack the knowledge to interpret the data rationally (mindware gaps). Third, our rationality falls victim to irrational beliefs: creationism, astrology, Ponzi schemes, etc... (contaminated mindware).
Our lack of adequate rational thinking can have devastating results. This is true in personal finance. Overconfidence in one's knowledge and skills, fitting patterns where none exist, and loss aversion cause the majority of investors to loose money in the stock market. This is even true of investors who invest in mutual funds yet whose returns are far worse than the mutual funds they invest in. This is because they invest in and cash out at exactly the wrong time (buy high and sell low). Here, the author does support the Efficient Market Hypothesis and states that most investors are better off buying and holding an index fund than trading. For more on this subject, I recommend Malkiel's
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing
. Besides personal finance, lack of rational thinking has dire consequences in foreign policy, and medicine (check out "How Doctors Think" to study this issue further).
In chapter 10, he covers the main mindware gaps, or the quantitative knowledge we often lack to make rational decision. These tools include the scientific method, probability theory, and Bayesian statistics (his section on this topic is arduous for an easier explanation read instead
Calculated Risks: How to Know When Numbers Deceive You
. Within this chapter he also covers the thinking temperaments that make us good rational thinkers. This includes the ability to accept uncertainty, being open-minded, intellectually investigative, and humble. Such a temperament will allow one to practice sound critical thinking.
Contaminated mindware includes Ponzi schemes, recovered memory theory, conspiracy theories, tax-evasion schemes, win-the-lottery scams, fraudulent investment schemes, Holocaust denying, UFO abductions, Intelligent Design and creationism, religious fundamentalism among others. He indicates that believers in such contaminated mindware have often high IQs. He refers to many studies confirming that terrorists are among the best educated individuals within their religious communities. See Alan Krueger's
What Makes a Terrorist: Economics and the Roots of Terrorism (New Edition)
.
In the last chapter, he recommends we teach rational thinking mindware in high school and college. Charles Murray in
Real Education: Four Simple Truths for Bringing America's Schools Back to Reality
agreed. College curriculum should include mandatory classes in statistics, logic, and philosophy so that we all become better decision makers.
He also recommends that social policies guide us to make the better choice so that society as a whole benefit from rationality despite our being irrational. This entails making the optimal choice the default selection when we are to choose to be an organ donor or participate in our company's 401K. By doing so, our society would save hundred of thousands of lives (more available organs) and improve the financial welfare of millions of retirees. This is called libertarian paternalism by Richard Thaler who wrote an entire book on the subject: Nudge: Improving Decisions About Health, Wealth, and Happiness.
This book will make you a better decision maker by making you aware of your own blind spots whether they are due to mindware gaps or contaminated mindware.
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Top reviews from other countries
D. E. Huggins
A Valuable Primer for Intellectual Growth.
Reviewed in Canada on March 26, 2018
