Monday, September 26, 2011

Confirmation Bias and Positive Test Strategy

Confirmation bias is a cognitive bias in which one tends to search for, interpret, favor or remember information which confirms one's preconceived beliefs, while undervaluing or ignoring information which contradicts those beliefs.

The term was originally coined by English psychologist Peter Wason. He conducted a study which he believed demonstrated confirmation bias. Later researchers would argue that Wason did not demonstrate confirmation bias but instead showed a tendency toward "positive test strategy" (See below).

The seminal confirmation bias study was conducted at Stanford University in the late 1970's. The researchers used two groups of subjects; those that supported the death penalty and those that opposed it. The two groups both then read two studies, one seemingly supporting and the other seemingly opposing capital punishment. As predicted by the researchers, the subjects rated the study which confirmed their pre-existing beliefs as superior. In actuality, both studies were fictitious.

Positive Test Strategy
Wason's original study involved asking the subjects in the experiment to discover the rule which applied to triples of numbers. From the beginning the subjects were told that 2-4-6 fit the rule. The subjects could then give their own set of three numbers and the experimenter would tell them whether or not they confirmormed to the rule. The results showed that most people tended to first form a hypothesis (often that the rule was a sequence of ascending even numbers) and then tried to positively test it by proposing additional sequences which fit the hypothesis (such as 4-6-8 or 12-14-16). Each time the experimenter would answer positively and after a number of confirmaitons the subjects felt confident and proposed their answer (a sequence of ascending even numbers). Most often the subjects were wrong for the actual rule was simply any ascending sequence. The results showed that most people only tried to test their hypothesis by asking a set of three numbers which would prove it to be true. Very few proposed a sequence of numbers which would actually disprove their hypothesis (using the example above, simply proposing the sequence 11-13-15 would have proven the ascending even number hypothesis false). Though Wason believed this was a result of confirmation bias, later reserchers such as Joshua Klayman and Young-Won Ha would argue that it was actually a tendency to use what they called Positive Test Strategy. In their view, this tendency is simply a preference to use test which seek to verify a hypothesis as opposed to disprove it. "Klayman and Ha (1987) argued that a major problem in testing hypothesis is deciding whether, on average, conducting +Htest or -Htest will be most informative. They suggested that people tend to use a simple approach: Select the strategy that is likely to have the greatest impact on your belief in the current hypothesis"(2)

I think the best way to avoid confirmation bias is to periodically perform a self diagnostic test where one introspectively questions ones attachments to a particular ideology, pattern of thinking, etc. I think that sometimes we hold onto old ways of thinking simply because we do not want to be proven wrong. Other times, the problem seems much deeper, perhaps the way we see the world rest upon a conceptual framework which if proven wrong would cause us anxiety and make us feel uncertain. Perhaps this is not just limited to how we see the world but also includes aspects of self identity. Consciously or unconsciously we no doubt want to confirm evidence that supports our sense of who we our or at least how we see ourselves and downplay contradictory information. Regardless of the reasons periodic introspective questioning is important. Also, as positive test strategy suggest, the methods we go about finding the truth should include both positive and negative hypothesis testing.

Wikipedia: Confirmation Bias
The Psychology of Bias: Understanding and Eliminating Bias in Investigations

Thursday, September 22, 2011

Conception and Reality

As we perceive the world through our sensory organs our minds form concepts about our environment. It is both amazing and startling how our conceptions influence how we view the world around us.

Tuesday, September 20, 2011

Kentucky Unemployment Tax

On June 15th, Kentucky Gov. Steve Beshear signed House Bill 5, which in 2012, will increases the taxable wage base for unemployment from $8,000 to $9,000, and then by $300 each year to 2022 (not to exceed $12,000). This is in response to the state's unemployment trust fund being exhausted in 2009 forcing the government to borrow money from the federal government.

Unemployment is an employer paid tax which is paid on the employees wages up to the maximum taxable wage base. In a nutshell, this simply means that Kentucky employers will have to fork out additional tax starting in 2012. Of course higher taxes mean that companies have less money to hire employees. Kind of ironic that employers having to pay more for unemployment may help contribute to further unemployment.

Tuesday, September 13, 2011

Benjamin Franklin's 13 Virtues

Before the days of mindless reality TV and raunchy pop music, men and women would contemplate these things they referred to as 'virtues'. Though it might cause me to miss out on an episode of Jersey Shore I thought I might take a moment to reflect on one man's list of virtues, that man being Benjamin Franklin.

Taken from his autobiography the 13 virtues are:

1. Temperance: Eat not to Dullness. Drink not to Elevation.
2. Silence: Speak not but what may benefit others or yourself. Avoid trifling Conversation.
3. Order: Let all your Things have their Places. Let each Part of your Business have its Time.
4. Resolution: Resolve to perform what you ought. Perform without fail what you resolve.
5. Frugality: Make no Expense but to do good to others or yourself; i.e. Waste nothing.
6. Industry: Lose no Time. Be always employed in something useful. Cut off all unnecessary Actions.
7. Sincerity: Use no hurtful Deceit. Think innocently and justly; and, if you speak, speak accordingly.
8. Justice: Wrong none, by doing Injuries or omitting the Benefits that are your Duty.
9. Moderation: Avoid Extremes. Forbear resenting Injuries so much as you think they deserve.
10. Cleanliness: Tolerate no Uncleanness in Body, Clothes or Habitation.
11. Tranquility: Be not disturbed at Trifles, or at Accidents common or unavoidable.
12. Chastity: Rarely use Venery but for Health or Offspring; Never to Dullness, Weakness, or the Injury of your own or another's Peace or Reputation.
13. Humility: Imitate Jesus and Socrates.

Sunday, September 11, 2011

Inflation Calculator

Inflation calculators are a nice way to get a real feel for the effects of inflation that looking at a graph with percentages just doesn't give you. This one from the Bureau of Labor Statistics lets you see how much the cash under your mattress is worth today vs the date you originally put it under there. For instance, if you put $1,000in a safe in 2000, you would need $1,311.97 today to have the same buying power that the $1,000 had. Put another way 311.97/$1,000=31.20% loss in purchasing power. Thats a pretty significant change for 11 years. Remember in 1980 when you were wearing your parachute pants and Ray-Ban sunglasses. If you put $1,000 into a safe back then you would need $2,741.77 today to have the same purchasing power. Food for thought.

Friday, September 9, 2011

Max Melvin: Orange Trust

Love the way it builds. The quality of this youtube version doesn't do it justice.

Thursday, September 1, 2011


Anchoring is a cognitive tendency to focus too much on a particular reference point when making decesions. From this initial reference point, incremental adjustments are made to reach an estimate or decision. The end decision is heavily influenced by the initial starting point, thus different starting points result in different decisions. "The initial value, or starting point, may be suggested by the formulation of the problem, or it may be the result of a partial computation".(1) Also, since many decisions are made in an area of uncertainty, the initial starting point may be an unconscious attachment to a completely irrelevant point.

Anchoring was first theorized by Amos Tversky and Daniel Kahneman. In one of their early experiments, a wheel marked with the numbers 1 to 100 was spun. Subjects were then asked if the percentage of African nations which were members of the United Nations was more or less than the number on the wheel. Then the subjects were asked to give an actual estimate. The results were that the random initial reference point from the wheel had a significant effect on the answer the subjects gave. For example, when the wheel landed on 10, subjects gave an average estimate of 25%. When the wheel landed on 65, subjects gave an average estimate of 45%.(1)

Another experiment was conducted by profesor Dan Ariely and his collegues where he had a group of MBA students participate in an auction. They were shown various items then given a sheet with each product listed. Next they were instructed to write the last two digits of their social security number next to each item and asked if they would be willing to pay that amount for the products. Finally they were asked to write the maximum amount they would be willing to pay with the top bidder winning the item. The results of the experiment showed that the impact of social security numbers significantly influenced the amount each student was willing to pay. The students with above median social security numbers bid 57 to 107 percent higher than those with below median numbers.(2)