Skip navigation.

Take the Blue Pill... Unless You Love Italian Soccer

A Wired Magazine piece on placebos has gained a fair amount of attention for tracing the inexplicable increase in the size of the placebo effect in recent years--as the writer Steve Silberman notes, one estimate suggests the size of the placebo effect has doubled since the 1980s.

Can Money Buy Happiness?

The Boston Globe ran a fascinating article earlier in the week pulling together some of the newest research into a very old question: Can money buy happiness? And the answer seems to be that, well, it depends. Or as social psychology professor Elizabeth Dunn puts it, "Just because money doesn’t buy happiness doesn’t mean money cannot buy happiness.”

On conversation and extremism

It's conventional wisdom that groups generate ideas and plans more moderate than those of individuals. Groups and discussion encourage compromise, smooth out extremes, and guarantee moderation. It is also one of the unspoken assumptions of facilitation and group-oriented scenario work. Facilitation and scenario-building, the thinking goes, builds a sense of collective spirit by helping groups develop a shared vision of the future.

Richard Posner on preconceptions and anticipating disasters

Richard Posner writes in this week's Chronicle of Higher Education about the current financial crisis, and why experts didn't take early warnings about it seriously.

The financial crisis, when it finally struck the nation full-blown in September 2008, caught the government, the financial community, and the economics profession unawares.

We can get help in understanding the blindness of experts to warning signs from the literature on surprise attacks. Before the Japanese attack on Pearl Harbor, there were many warnings that Japan planned to attack Western possessions in Southeast Asia, and an attack on the U.S. fleet in Hawaii, known to be within range of Japan's large carrier fleet, was a logical measure, on Japan's part, for protecting the eastern flank of its attack on the Dutch East Indies, Burma, and Malaya. The warnings were disregarded because of preconceptions (including the belief that Japan would not attack the United States because it was too weak to have a reasonable chance of prevailing), the cost and difficulty of taking effective defensive measures against an uncertain danger, and the absence of a mechanism for aggregating, sifting, and analyzing warning information flowing in from many sources and for pushing it up to the decision-making level of government.

Similar factors made it difficult to heed the warning signs of the 2008 financial crisis. Preconceptions played an especially large role. It is tempting, indeed irresistible under conditions of uncertainty, to base policy to a degree on theoretical preconceptions, on a worldview, an ideology. But shaped as they are by past experiences, preconceptions can impede reactions to novel challenges. Most economists, and the kind of officials who tend to be appointed by Republican presidents, are heavily invested in the ideology of free markets, which teaches that competitive markets are, on the whole, self-correcting. Those officials and the economists to whom they turn for advice don't like to think of the economy as a kind of epileptic, subject to unpredictable, strange seizures.

Syndicate content