Book review: Gut Feelings

The ideal of a perfectly rational decision-maker, making their decisions based on all of the available information, is an impossible ideal. No decision-maker would ever be able to make a decision, as there would always be more information to collect, more aspects of the decision to weigh up, and new alternatives that become available. The reason that people can make decisions at all is because we are not perfectly rational decision-makers. A whole field of behavioural economics has risen around showing the various ways that heuristics (rules of thumb) and biases affect real-world decision-makers. These heuristics and biases are ways that real-world decision-makers unconsciously deal with excess information in decision-making.

In a 2007 book I just finished reading, entitled Gut Feelings, Gerd Gigerenzer focuses on a class of heuristics that he labels intuitions, or gut feelings. In the book, Gigerenzer invites us:

...on a journey into a largely unknown land of rationality, populated by people just like us, who are partially ignorant, whose time is limited and whose future is uncertain.

Gigerenzer positions the book as an antidote of sorts to a general perception in economics (and other social sciences) that decision-makers make decisions in a conscious and thoughtful way. Gigerenzer prefers that we consider decision-making to be a complex and adaptive process, affected by context and the environment, and where unconscious decision-making, which can only be rationalised after the fact, comes to the fore. He notes that:

Generations of students in the social sciences have been exposed to entertaining lectures that point out how dumb everyone else is, constantly wandering off the path of logic and getting lost in the fog of intuition. Yet logical norms are blind to content and culture, ignoring evolved capacities and environmental structure. Often what looks like a reasoning error from a purely logical perspective turns out to be a highly intelligent social judgment in the real world. Good intuitions must go beyond the information given, and therefore, beyond logic.

Gigerenzer presents a large number of examples of decision-making where intuitive answers prove to be better, or at least as good as, the outcome of more considered logical decisions. He collects these together as different heuristics like the 'gaze heuristic' (we reveal our preferences by things we look at for longer), or 'fast and frugal trees' (which collapse complex decision-making trees to a sequential decision based on a hierarchy of aspects of the alternatives). It is a compelling story. However, it falls into the same trap that a lot of behavioural economics does. Although Gigerenzer is able to provide a large number of specific (and to some extent idiosyncratic) examples of cases where intuition proves to be effective, he is unable to provide guidance on when our intuition should be followed, and when it might steer us astray. Gigerenzer seems to steer the reader away from even considering that intuition might be wrong, writing in the concluding section that:

The quality of intuition lies in the intelligence of the unconscious: the ability to know without thinking which rule to rely on in which situation.

I like to think that I have good intuition, in some situations. Certainly not in all situations, and that is what I worry about. When is my intuition causing errors in decision making. In saying this, I am drawing on the next book I am reading, Noise by Kahneman, Sibony, and Sunstein (and which I will post a review on soon). My early takeaway from the latter book is just how 'noisy' and error-prone decision-making is, and it seems to me that understanding the circumstances under which intuition is prone to error would be helpful in deciding whether to stick with the intuitive answer, or consider our decisions a little more fully.

The latter sections of Gigerenzer's book show how the ideas apply to moral behaviour and social instincts. These sections were interesting, but I felt like they were someone distant from the overall narrative. However, the book overall is interesting, even if it was not as closely aligned with behavioural economics as I expected it to be. And even though it is now somewhat dated, it still provides a prompt for some thoughtful reflection on how we make decisions.