Invisible Failures: With Guests Emily Oster, Sendhil Mullainathan & Linda Rodriguez McRobbie

November 4, 2019
Concentrating only on successes—the things that survive some selection process—often leads to faulty conclusions.

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Suppose you're evaluating a group of mutual funds that target a particular sector or region, but you don't consider similar funds that have failed altogether. Well, then you may be overestimating the potential returns—and underestimating the risk—in that space.

Suppose you're evaluating a group of mutual funds that target a particular sector or region, but you don't consider similar funds that have failed altogether. Well, then you may be overestimating the potential returns—and underestimating the risk—in that space.

If you've toured through any old world cities, you've probably marveled at ancient buildings that have stood the test of time. You might think to yourself, "They sure made things to last back in those days." And while the Notre Dame Cathedral or the Parthenon or the Tower of London may seem like proof of the superior workmanship of a bygone era, what you don't see are all the other buildings erected during the same period that have since crumbled or been torn down.

 In this episode of Choiceology with Katy Milkman, we look at a bias that often clouds the way we evaluate success and failure. 

  • We begin with the scientific awakening of Joseph Banks Rhine in the 1920s, during the peak of the spiritualist movement. Rhine was trained in science and wanted to apply the scientific method to his research into paranormal phenomena. Science taught him to be skeptical, so when Rhine's research results seemed to demonstrate the existence of extra-sensory perception, or ESP, he believed he had found proof of a new aspect of human nature. The findings led to academic accolades and substantial financial support, until others tried to replicate his results.
  • Next, we present a survey on musical acts and college drop-outs to demonstrate how easy it is to discount important information—when that information is not readily apparent. 

To look at the science behind this bias, Katy has enlisted two scholars to help explain it in different contexts.

If you enjoy the show, please leave a rating or review on Apple Podcasts.

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