Sunday, 22 July 2012

Review: Daniel Kahnemann, Thinking Fast and Slow

There is an awful lot of Experimental Psychology in the world; some of it must be true. Over the decades, the Military has been its biggest sponsor in search of ways to ensure that missiles are launched at the right targets; sometimes they are.

This highly readable, well-paced book is both autobiographical review of Daniel Kahnemann's life work as an experimental psychologist and a survey of the state of the field in which he is a dominant figure. The book gets better as it progresses and we get to the work in what is now called "behavioural economics" and which has undermined the assumptions of orthodox economics about utility, about risk, and about rationality (in the sense of coherence). The later chapters are, in fact, more argumentative than experimental and align with work on transitivity of preference and so on done by other Nobel prize winners like Kenneth Arrow.

Back in the 1970s, I stopped reading Experimental Psychology and turned my attention to Cognitive Science, Artificial Intelligence and theoretical Linguistics.

I had a number of doubts. In relation to Social Psychology, I got tired of reading tautologies which were independent of their supposed experimental support ("Extroverts are more likely to initiate conversation with strangers") but out of which whole textbooks were constructed.

And in relation to experiments to demonstrate how the mind works, I felt it likely that we were being shown how paid but under-motivated student "Subjects" responded to weird experimental requests and not much more. The experiments would not bear the weight of interpretation placed upon them.

I still felt that working my way through Kahenmann's opening chapters Specifically, I felt that if you brought to bear Relevance Theory (as developed by Dan Sperber and Deirdre Wilson out of the ideas of H.P.Grice) then you would get a different take on at least some of the key experiments Kahnemann (often in collaboration with Amos Tversky) devised.

Consider the apparently much-discussed Linda experiment (Chapter 15 in the book under review) . The core finding is that large numbers of undergraduates and even postgraduates can be got to say that

"Linda is a bank teller and is active in the feminist movement"

is more probably true than

"Linda is a bank teller"

despite the "obvious" set-theoretic logic that the class of feminist bank tellers is wholly included in the class of bank tellers and that therefore membership in the larger class is more probable than membership of the (presumably) smaller class.

However, when you look at the experimental set up, you see that a central element is the provision of information which sets a trap. Though setting traps is very much what Experimental Psychology is about (and we should "know" this by now), innocent students take the information they are given in good faith and proceed very much as Relevance Theory suggests we proceed in all contextualised language processing: we use least effort (Kahnemann's "System 1"), assume the relevance of everything that is said to us and try to maximise the informational yield from what is said paired with the context in which it is said.

So the students are told all this stuff about Linda's biography, they assume it somehow relevant, and they compute "Linda is a bank teller and is active in the feminist movement" as the maximally informative conclusion which can be derived from the information which has been ostended to them.

The students' mistake is not a mistake of logic; it is the mistake of assuming that the Experimenters are acting in normal conversational good faith. But they aren't. They are trying to prove that students are idiots and that is about all there is to it.

In support of this, look at two different descriptions which Kahnemann gives of the Tom W experiment, the twin of the Linda experiment. At page 147, Kahnemann gives us the information about Tom W. which was ostended to the student Subjects. It is preceded by the following contextual information, also ostended:

"The following is a personality sketch of Tom W written during Tom's senior year in high school by a psychologist, on the basis of psychological tests of uncertain validity:"

Then at page 153, after showing how the Trap succeeds, Kahnemann reprimands us,

"But you were explicitly told that the description should not be trusted".

"The description should not be trusted" is not synonymous with "tests of uncertain validity". In the Trap which has been set, the Subjects are permitted to accord some validity to the information ostended to them. They were not told to completely disregard it. In that case, what would be the conversational point of ostending the information in the first place? In terms of Relevance Theory, it would be wasted effort which invited more wasted effort.

Put more generally, I want to say that this kind of Experimental Psychology exploits the Trust Bias without which neither social life (N.Luhmann) or cognitive life is possible. It's like a Three Card Trick repeated through endless minor variations.

But as the book progressed, I felt Kahnemann's experimental set-ups increasingly escaped this line of criticism and I was convinced by his arguments about how we (and not just Subjects) approach gambles, risk assessments and choices which affect our wealth and health. It was an Ah Ha! experience to see how things like Nudge Theory ( Richard Thaler and Cass Sunstein, Nudge) developed out of the kind of Experimental Psychology Kahnemann has done in the latter part of his career. And there are moments when Kahnemann rounds off an analysis with a dramatic flourish which really does make you sit up. So he concludes a discussion of preferences and preference ordering with the claim, " framing should not be viewed as an intervention which masks or distorts an underlying preference ... At least in this instance ... there is no underlying preference that is masked or distorted by the frame" (page 370)

I am not really in a position to judge whether, having neglected Experimental Psychology for forty years, I am now up to speed thanks to one book. But there is much of real interest in this book from the pen of a major theorist now at the end of his career and I don't regret the time it took me to work through its 418 pages (498 with all the add-ons).

Tuesday, 10 July 2012

Review: Owen Jones, Chavs. The Demonization of the Working Class

This is a passionate, highly readable polemic. It makes a forceful case quoting from politicians in reflective mode, from Fleet Street stories and appallingly unreflective Opinion columns, and from informal person-in-the-Ashington-High-Street interviews.

Margaret Thatcher took on trade union power and won. But at enormous cost. She solved the problem of striking workers by closing down the mines and trashing manufacturing industry. Let them eat Benefits! She dealt with the solidarity of working class communities by attacking social housing, setting those able to buy under Right to Buy against those unable or unwilling to. She encouraged Every Man for Himself.

Her successors - Tony Blair included - ended up attacking the workless as shiftless and the inhabitants of the remaining social housing as feckless and feral. Chavs the lot of them.

The rich got richer (as both Thatcher and Blair intended) and the poor got poorer. The financial sector boomed until it (quite recently) busted. In place of manufacturing jobs, casualised, part-time and low paid service sector jobs were all that was on offer. Trade unions had no purchase on this new world of crap employment.

Largely ignored by New Labour, the C2DE classes eventually stopped voting, allowing power to pass to arrogant posh boys who don't know the price of a pint of milk. Some have bought into the argument that the jobs and the houses have been taken by immigrants but few have actually voted BNP.

The solution? A new class politics arguing and fighting for better jobs, affordable housing, a greater equality of income with differentials restored to the levels which prevailed from the 1950s to the 1970s,actual representation of working class people and their interests in Parliament and the media.

It's almost convincing, especially when twinned with something like Richard Wilkinson and Kate Pickett's The Spirit Level.

One problem, it may be too late. The long-term damage has been done and cannot be reversed. And even if that is too pessimistic, things can only get better for a new generation in new places not for those still living in the old industrial and mining heartlands.

It is not enough to say that Margaret Thatcher trashed manufacturing industry and that New Labour ignored it. There is a very complicated history which involves much more than "globalisation". For example:

- for long periods, the UK maintained an overvalued currency which made exports uncompetitive and imports the opposite; it also enhanced the role of the City long before New Labour
- education policy never coalesced around any core commitment to maintaining high-quality technical and scientific education surrounding and supporting research, development and innovation in manufacturing industry; in some cases, factories failed because they had become museums of how things used to be done. Compare Germany! is the obvious thought.
- no government succeeded - though Labour in the 1960s tried - to achieve a compact between unions and employers which would ensure both a share in the profits to workers and secure production schedules to employers. Owen Jones does not go back far enough in his history to have to confront the sheer counter-productive disruptiveness of strikes, official or "wildcat". Once again, Compare Germany! is the obvious thought.

Another problem, which the market has strikingly failed to solve, is that people without jobs (Jones interviews several) live where there are no jobs and that people without affordable or decent housing live where there is not enough housing.

Between 1997 and 2010, no less than 2.12 million new jobs were created. That hardly sounds like skid row. Of those jobs, 385 000 were taken by UK-born people and 1.72 million by people born abroad. (pp 238 - 239) BNP vindicated? No.

The migrant workers who arrived in this period, largely from the EU, went to places where there were jobs and not enough people or qualified people to fill them. In practice, London and the south east, though in agriculture they would have spread more widely (Jones never writes about agriculture). The UK-born unemployed were simply living in the wrong places.

In coming to London and the south east, immigrants came to areas where housing was scarce and expensive. Meanwhile, up North, houses were being boarded up and demolished by the thousand.

But what could government had done? It could (let us suppose) have acted directively in one of two ways: it could have told unemployed people up North (where they had housing) to move South where there were jobs (but no housing). Thus Norman Tebbitt and unacceptable.

Alternatively, it could have told employers to move their jobs up North and employ unemployed people. Unfortunately, most of the jobs were not in manufacturing. They were service jobs required by London's economy. You cannot tell someone to move their posh restaurant from Mayfair to Merthyr Tydfil. There ain't going to be any customers.

So much as I admire Owen Jones' defence of people who have been wronged, I think that a new class based politics will have worse than an uphill struggle. It will be a labour of Sysyphus.

The United Kingdom is a country in long-term historical decline. Had it stayed more democratic, with high levels of intelligent popular participation, it might have avoided some of that decline. Had it had a better class of politician, ditto - but now we really are scraping the barrel. And decline is just that: in the end, you can see it all around you as Owen Jones has done.

Monday, 2 July 2012

Review: Daron Acemoglu & James A Robinson, Why Nations Fail

I am not convinced. This book comes with 14 pre-publication product endorsements, five of them from Nobel laureates, so the weight of world opinion is against me. But let me try to make my case.

In a 529 page book, Acemoglu and Robinson (A&R) survey world history - Neolithic to the present - through a score or more of small or medium-sized case studies. They leverage these cases into examples of the thesis they wish to maintain, using just a handful of not very abstruse concepts.

Some of the case studies are thumbnails and, occasionally I had reservations: for example, I think Russia was more industrialised and wealthy before 1914 than they allow, collapsing between 1917 and 1921. It then grew from a much lower base than it had achieved prior to 1914. Some of the more extended cases are well-structured and carefully argued: those of South Africa and Botswana, for instance.

The general idea is that nations can sustain economic development over the long term only if they are open both economically and politically - "inclusive" is the concept A&R use: a useful concept because more inclusive than "free market" or "democratic".

For short periods, nations which are inclusive only at one level - economic or political - can make progress but then they will hit the buffers unless the non-inclusive level opens up. A&R reckon that this will happen to China where the control of the Communist Party will sooner or later come into conflict with the relatively inclusive economy it has unleashed. This thesis is not unfamiliar - I think I read it first in Will Hutton.

A&R use "extractive" as the opposite of "inclusive" and, in effect, write about extractive elites. At the economic level, these operate through guilds and monopolies and general hostility to outsiders and innovation. At the political level, they take the form of absolute monarchies, one party states and common-or-garden dictatorships which extract whatever they can from whatever is going. The two levels inter-connect, as in cases of "resource curse" where a single political elite monopolises the revenues from production and export of a nation's only valuable resource - diamonds, coffee, oil.

Extractive elites get even richer when they find ways of (further)depressing labour costs, whether through slavery, serfdom, land apportionment or other more subtle methods of confining a labour supply to just one kind of employment possibility.

Extractive economies and polities have serious problems accepting technological innovation and the "creative destruction" that implies or accepting independent entrepreneurship. With remarkable consistency, they end up banning them and killing people involved with them. A&R give many telling examples.

Extractive states also have serious problems of control, since the rewards from being the elite are so great that others may try to take over the act. From this, civil war. And the resources being extracted may run out or go out of fashion. Whatever, extractive societies - like the DR Congo for all of its history - generally end up producing mass poverty and political instability.

Whereas inclusive societies manage to get into a virtuous circle where things can only get better, extractive societies generally end up in a vicious circle and things only get worse. Thus Spain over many centuries in the past or North Korea today.

Exactly what happens to a given society depends a lot on contingent events which produce what A&R call "critical junctures". They use the Black Death in Europe as a paradigm example. The thesis they advance here denies historical inevitability and stresses historical contingency - things could have turned out otherwise.

So far so good. Now to what I think is the big problem. A&R paint some rosy pictures of inclusive societies, old and new: England after 1688, the USA, Australia, Botswana. And they paint some terrible pictures of failed extractive nations in Africa, Asia and Latin America.

They write about colonialism, emphasising the way in which in Latin America and Africa local extractive elites simply took over at Independence the role of colonial elites, doing nothing to enhance the lives of their citizens. But they do not write about the continuing role of former Imperial powers - or the United States - in sustaining these elites.

Yet a large part of world history of the 20th century is the story of cuddly-friendly inclusive Western societies doing their utmost to sustain extractive elites in power in Latin America, Africa and Asia. They did it - and continue to do it - either by direct military intervention against forces seeking more inclusive economic and political institutions, or by selling armaments on an extraordinary scale to the world's worst regimes so that they can keep themselves in power and their people poor. In this, France has played an appalling role in Africa; the USA in Latin America and Asia; and the United Kingdom wherever there is half a chance - Saudi Arabia, for instance.

This kind of vicious interdependency is not discussed by A&R.Developed and followed through, it would greatly alter the outlines of the world history they offer us. It does not mean that their concepts are not helpful, nor does it invalidate their often valuable analyses of the dynamics of development. But societies are not closed. And the Goodies from one perspective often turn out to be Baddies when looked at in a wider perspective.