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Facts do not cease to exist because they are ignored

Aldous Huxley, Proper Studies, 1927

Facts do not cease to exist because they are ignored.

None of those things are observable

An interesting article, The STEM Crisis Is a Myth by Robert N. Charette.

For years I have been hearing about the STEM shortage but every time I look at the employment and salary numbers, all I see is the market functioning normally. People with STEM degrees and functioning in a STEM capacity in a STEM field are always in demand and their average compensation, as the article points out, has been fairly steady.

Granted, there are emergent fields, unique circumstances, and pressing needs that will suddenly create a temporary demand for those with a very particular STEM skill set, but the market functions, more people move in or specialize in the hot area and pretty soon things are back to normal.  Also granted that the best people in any one of the STEM fields can command very high premiums over the novice.  You might not like having to pay $150,000 for an experienced ERP implementation manager and you might wish that they were cheaper but that does not necessarily mean that there is a shortage of experienced ERP implementation managers.

I think this is once again an issue arising from particular advocates wanting to use the coercive force of government to achieve individual objectives.  Engineers too expensive, issue more green cards.  Increased supply will reduce the cost.

Given all of the above, it is difficult to make a case that there has been, is, or will soon be a STEM labor shortage. “If there was really a STEM labor market crisis, you’d be seeing very different behaviors from companies,” notes Ron Hira, an associate professor of public policy at the Rochester Institute of Technology, in New York state. “You wouldn’t see companies cutting their retirement contributions, or hiring new workers and giving them worse benefits packages. Instead you would see signing bonuses, you’d see wage increases. You would see these companies really training their incumbent workers.”

“None of those things are observable,” Hira says. “In fact, they’re operating in the opposite way.”

Read the whole thing.

Disdain or with hot rage

Dialogue Concerning the Two Chief World Systems (1632) by Galileo Galilei, p. 322

In the long run my observations have convinced me that some men, reasoning preposterously, first establish some conclusion in their minds which, either because of its being their own or because of their having received it from some person who has their entire confidence, impresses them so deeply that one finds it impossible ever to get it out of their heads. Such arguments in support of their fixed idea as they hit upon themselves or hear set forth by others, no matter how simple and stupid these may be, gain their instant acceptance and applause. On the other hand whatever is brought forward against it, however ingenious and conclusive, they receive with disdain or with hot rage — if indeed it does not make them ill. Beside themselves with passion, some of them would not be backward even about scheming to suppress and silence their adversaries.

Rather bear those ills we have than fly to others that we know not of?

A classic rendition of the decision-maker’s dilemma.  From William Shakespeare’s Hamlet, Act 3 scene 1, the famous soliloquy,

To be, or not to be–that is the question:
Whether ’tis nobler in the mind to suffer
The slings and arrows of outrageous fortune
Or to take arms against a sea of troubles
And by opposing end them. To die, to sleep–
No more–and by a sleep to say we end
The heartache, and the thousand natural shocks
That flesh is heir to. ‘Tis a consummation
Devoutly to be wished. To die, to sleep–
To sleep–perchance to dream: ay, there’s the rub,
For in that sleep of death what dreams may come
When we have shuffled off this mortal coil,
Must give us pause. There’s the respect
That makes calamity of so long life.
For who would bear the whips and scorns of time,
Th’ oppressor’s wrong, the proud man’s contumely
The pangs of despised love, the law’s delay,
The insolence of office, and the spurns
That patient merit of th’ unworthy takes,
When he himself might his quietus make
With a bare bodkin? Who would fardels bear,
To grunt and sweat under a weary life,
But that the dread of something after death,
The undiscovered country, from whose bourn
No traveller returns, puzzles the will,
And makes us rather bear those ills we have
Than fly to others that we know not of?
Thus conscience does make cowards of us all,
And thus the native hue of resolution
Is sicklied o’er with the pale cast of thought,
And enterprise of great pitch and moment
With this regard their currents turn awry
And lose the name of action. — Soft you now,
The fair Ophelia! — Nymph, in thy orisons
Be all my sins remembered.

The mind is slow to unlearn what it learnt early.

The Roman Stoic Seneca left us a rich portfolio of aphorisms pertaining to decision making.

Difficulties strengthen the mind, as labor does the body.

The greater part of progress is the desire to progress.

I do not distinguish by the eye, but by the mind, which is the proper judge.

I shall never be ashamed of citing a bad author if the line is good.

If a man does not know to what port he is steering, no wind is favorable to him.

It is a great thing to know the season for speech and the season for silence.

It is a youthful failing to be unable to control one’s impulses.

It is easier to exclude harmful passions than to rule them, and to deny them admittance than to control them after they have been admitted.

It is rash to condemn where you are ignorant.

Speech is the mirror of the mind. (Imago Animi Sermo Est)

The arts are the servant; wisdom its master.

The first step towards amendment is the recognition of error.

The mind is slow to unlearn what it learnt early.

The path of precept is long, that of example short and effectual.

We most often go astray on a well trodden and much frequented road.

Where reason fails, time oft has worked a cure.

Where the speech is corrupted, the mind is also.

The best ideas are common property.

Nothing is as certain as that the vices of leisure are gotten rid of by being busy.

If you want Wal-Mart to have a labor force like Trader Joe’s and Costco, you probably want them to have a business model like Trader Joe’s and Costco

From Why Wal-Mart Will Never Pay Like Costco by Megan McArdle.

In other words, Trader Joe’s and Costco are the specialty grocer and warehouse club for an affluent, educated college demographic. They woo this crowd with a stripped-down array of high quality stock-keeping units, and high-quality customer service. The high wages produce the high levels of customer service, and the small number of products are what allow them to pay the high wages. Fewer products to handle (and restock) lowers the labor intensity of your operation. In the case of Trader Joe’s, it also dramatically decreases the amount of space you need for your supermarket … which in turn is why their revenue per square foot is so high. (Costco solves this problem by leaving the stuff on pallets, so that you can be your own stockboy).

Both these strategies work in part because very few people expect to do all their shopping at Trader Joe’s, and no one expects to do all their shopping at Costco. They don’t need to be comprehensive. Supermarkets, and Wal-Mart, have to devote a lot of shelf space, and labor, to products that don’t turn over that often.

Wal-Mart’s customers expect a very broad array of goods, because they’re a department store, not a specialty retailer; lots of people rely on Wal-Mart for their regular weekly shopping. The retailer has tried to cut the number of SKUs it carries, but ended up having to put them back, because it cost them in complaints, and sales. That means more labor, and lower profits per square foot. It also means that when you ask a clerk where something is, he’s likely to have no idea, because no person could master 108,000 SKUs. Even if Wal-Mart did pay a higher wage, you wouldn’t get the kind of easy, effortless service that you do at Trader Joe’s because the business models are just too different. If your business model inherently requires a lot of low-skill labor, efficiency wages don’t necessarily make financial sense.

That’s not the only reason that the Trader Joe’s/Costco model wouldn’t work for Wal-Mart. For one thing, it’s no accident that the high-wage favorites cited by activists tend to serve the affluent; lower income households can’t afford to pay extra for top-notch service. If it really matters to you whether you pay 50 cents a loaf less for generic bread, you’re not going to go to the specialty store where the organic produce is super-cheap and the clerk gave a cookie to your kid. Every time I write about Wal-Mart (or McDonald’s, or [insert store here]), several people will e-mail, or tweet, or come into the comments to say they’d be happy to pay 25 percent more for their Big Mac or their Wal-Mart goods if it means that the workers are well paid. I have taken to asking them how often they go to Wal-Mart or McDonald’s. So far, no one has reported going as often as once a week; the modal answer is a sudden disappearance from the conversation. If I had to guess, I’d estimate that most of the people making such statements go to Wal-Mart or McDonald’s only on road trips.

However, there are people for whom the McDonald’s Dollar Menu is a bit of a splurge, and Wal-Mart’s prices mean an extra pair of shoes for the kids. Those people might theoretically favor high wages, but they do not act on those beliefs — just witness last Thanksgiving’s union action against Wal-Mart, which featured indifferent crowds streaming past a handful of activists, most of whom did not actually work for Wal-Mart.

If you want Wal-Mart to have a labor force like Trader Joe’s and Costco, you probably want them to have a business model like Trader Joe’s and Costco — which is to say that you want them to have a customer demographic like Trader Joe’s and Costco. Obviously if you belong to that demographic — which is to say, if you’re a policy analyst, or a magazine writer — then this sounds like a splendid idea. To Wal-Mart’s actual customer base, however, it might sound like “take your business somewhere else.”

There is a correct answer to that question, but it’s unlikely we’ll ever know what it was.

From Why Do Education and Health Care Cost So Much? by Megan McArdle.  A great example of the challenges related to causal density.  We may accurately identify all the causes of an outcome but still not be able, because of poor understanding of the relationships between root causes, to predict outcomes.  Absent accurate prediction, we don’t really understand the nature of a problem at all.

So how do we explain health care and college cost inflation? Well, health care economist David Cutler once offered me the following observation: In health care, as in education, the output is very important, and impossible to measure accurately. Two 65-year-olds check into two hospitals with pneumonia; one lives, one dies. Was the difference in the medical care, or their constitutions, or the bacteria that infected them? There is a correct answer to that question, but it’s unlikely we’ll ever know what it was.

Similarly, two students go to different colleges; one flunks out, while the other gets a Rhodes Scholarship. Is one school better, or is one student? You can’t even answer these questions by aggregating data; better schools may attract better students. Even when you control for income and parental education, you’re left with what researchers call “omitted variable bias” — a better school may attract more motivated and education-oriented parents to enroll their kids there.

So on the one hand, we have two inelastic goods with a high perceived need; and on the other hand, you have no way to measure quality of output. The result is that we keep increasing the inputs: the expensive professors and doctors and research and facilities.

I would quibble with McArdle.  There are actually two problems.  It is true that it is hard to measure education and health outcomes and that is a challenge.  But even if we were able to measure with great precision and accuracy, that is still not the same as forecasting.  Measuring is a predicate to forecasting.

If we precisely and accurately measure our initiating action X, we want to know with some level of accuracy and certainty that X will lead to Y, the outcome we desire.  If we cannot predict the outcome, it means we don’t understand the relationship between and among the various causes.

Life is short, and Art long; the crisis fleeting; experience perilous, and decision difficult.

Aphorisms by Hippocrates, the very first aphorism:

Life is short, and Art long; the crisis fleeting; experience perilous, and decision difficult. The physician must not only be prepared to do what is right himself, but also to make the patient, the attendants, and externals cooperate.

A neat summation that remains true in virtually all fields today.  It takes a long time to develop skills (Art long) compared to the allotted time we have to develop those skills (life is short), the pace of change is fast and we only have one chance to get it right (the crisis fleeting), the consequences are great (experience perilous) and as always the “decision difficult.”  The second sentence is not perhaps as crisp but is just as consequential.  A good decision without support from all parties in the context (the patient, the attendants, and externals) is like as not to fail.  The challenge is that in the modern era, rarely can we “make” others cooperate, rather we have to convince, motivate, or incent them to cooperate, an endeavor fraught with variable outcomes.  A variability that is less and less desirable, the greater the consequences arising from the decision.

The Latin original is Vita brevis, ars longa, occasio praeceps, experimentum periculosum, iudicium difficile.

Most frequent errors, fallacies, and biases when decision-making

Looking for something that might tell me how often logical fallacies and cognitive biases occur in discussions, I could find nothing at all.  Not willing to let go, I resorted to using N-grams.  It has the drawback that some fallacies and biases are terms commonly used in other contexts (ex: false memory) or returned no results (ex: normalcy bias).  I lost about hundred biases and fallacies from this weakness, though generally more obscure or nuanced biases and fallacies.  This was about half the population.  Of the remaining hundred or so, I was able to obtain an N-gram number and then rank from largest to smallest.

All this tells us is the degree to which specific biases, errors and fallacies are being discussed in books.  I am making the bold inference that specific biases and fallacies which are discussed frequently are correspondingly more common or more problematic (i.e. perhaps they don’t occur that often but are more consequential when they do).  So having caveated the corpus to death, I present the top most commonly discussed biases and fallacies in a whispering ghost of a list.

These would seem to be the errors, fallacies, and biases you are most likely to encounter when working with a group to reach an empirical, logical, and evidence based decision.

Anecdotal Evidence
False assumptions
Cognitive Dissonance
Fallacy of composition
Unstated Assumptions
Slippery Slope
Selective perception
Halo effect
Argumentum Ad hominem
Illusory correlation
Source Credibility
Forer effect (aka Barnum effect)
Sunk cost bias
Begging the Question
Fundamental attribution error
Generalizing personalities
Hindsight bias

Not quite the list or order I would have expected, but not completely out of the realm of probability.  The top ten in particular are broadly consistent with my experience in terms of mistakes teams make when trying to arrive at decisions.

Solution to low public transportation utilization

From Mobility for the Poor: Car-Sharing, Car Loans, and the Limits of Public Transit by Jeff Khau.  An example of the importance of establishing the difference between correlation and causation; of the importance of directionality of causation; of context; of root cause analysis; and goal definition.

Theoretically, one can look at this graph and legitimately make the argument that in order to increase public utilization of public transportation, one ought to increase the average commute time.  It is a good exercise in critical thinking to spot the fallacy of such an interpretation.

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