Wishful thinking and the data trap

I've been reading an excellent book recently, which I thoroughly recommend for anyone who's fascinated by the spaces where science and storytelling meet. How to Make the World Add Up, by the economist and BBC presenter Tim Harford, is all about understanding numbers and data - especially how they're reported in the media, by businesses or by politicians.

The book is full of good rules of thumb for how to unpick statistical claims and the points they are used to make. I want to focus on one of the first lessons, and one of the most easily forgotten. Whenever you hear a piece of information, and before you do anything with it, ask yourself: what do I want this piece of information to prove?

We find it easy to be skeptical when the data shows us something we don't want to believe, whether that's because of our political or cultural background, or something that goes against our preconceptions of how the world works. The other side of this coin is that we tend to lose our healthy skepticism when the data seems to confirm our beliefs. Think of the worst side of the social media culture wars - how many times have you seen a dubious piece of research on a topic you feel strongly about shared far and wide, and felt your blood pressure rise? Now think - how many times have you uncritically shared a statistical claim that appears to support your own view?

Harford writes about a study by the behavioural economist Guy Mayraz, who showed his experimental subjects a graph marking the rise and fall in the price of wheat over time. Mayraz asked each person to make a forecast of where the price would move next, and offered a reward if their forecasts came true. Mayraz also divided the participants into two groups - half of them were told they were 'bakers' who would earn a bonus if wheat was cheap. The other half were 'farmers' who would be paid extra if wheat prices were high. He found that the prospect of this extra windfall influenced the forecast itself. The farmers hoped that prices would rise, and they also predicted they would rise. The bakers hoped for, and predicted, the opposite.

Psychologists call this 'motivated reasoning', a form of wishful thinking. Put simply, our biases make us more likely to notice the trends that we want to notice. Many of us have been guilty of motivated reasoning over the past 18 months, amplifying any good news that we hear about the world soon returning to normal, hoping that any negative predictions may prove to have been overly cautious.

There's not a lot we can do to guard against wishful thinking - after all, it's only human nature. The important takeaway here is to seek second opinions whenever you can, especially when it comes to what's most important to you. In business and in life, there's nothing more valuable than sharing your insights with a critical friend, someone who's not afraid to tell you the news you don't want to hear.