• Financial and Public Incentives to Perform: What Works

    Large bonuses and salaries are in place to attract prime talent and as an incentive to improve performance, goes conventional wisdom and the bankers’ rhetoric. However recent research by Dan Ariely (author of Predictably Irrational) and colleagues suggests that while large pay will attract the best talent, large performance-based bonuses may hinder superior performance.

    Interestingly big bonuses succeeded in increasing performance only when the tasks undertaken were mechanical in nature (e.g. tapping a key as fast as possible) but not when they were cognitive. When tasks were conducted in public (public scrutiny as a task motivator), performance did increase.

    Like money, social pressure motivates people, especially when the tasks require only effort and not skill or thinking. But at some point, too much of it overwhelms the motivating influence.

    If our tests mimic the real world, then massive bonuses clearly don’t work. They may not only cost employers more but also discourage executives from working to the best of their abilities. The financial crisis, perhaps, didn’t happen in spite of the bonuses, but because of them.

  • Optimism as Incentive

    Much has been written on the (ir)rationality of purchasing lottery tickets (Eliezer Yudkowsky’s viewpoint is particularly fine), but little has been said on applications of these biases that could improve the finances of all of those who buy a ticket.

    Now behavioural economists are attempting to boost the historically poor household savings rate by using our lottery-like optimism as an incentive to save:

    Psychologists have long known that people tend to overestimate the odds of rare events. Applying that behavioral insight, finance professor Peter Tufano of Harvard Business School has devised a clever program called “Save to Win.” Launched earlier this year for members of eight credit unions in Michigan, it is a cross between a certificate of deposit and a raffle ticket. Members who put $25 or more into a Save to Win one-year CD* are entered into a monthly “savings raffle” for prizes up to $400, plus one annual drawing for a $100,000 jackpot. […]

    In 25 weeks, the program has attracted about $3.1 million in new deposits, often from people who have never been able to set money aside.

    via Techdirt

    * CD = Certificate of Deposit (similar to a savings account).

  • De Beers and the Diamond Market

    I’ve previously mentioned, in passing, how the concept of the diamond wedding ring was manufactured. I’ve now been reminded of this upon rediscovering Edward Jay Epstein‘s comprehensive 1982 article in The Atlantic charting the story of how De Beers created the entire market for diamonds through supply/demand manipulation and PR.

    De Beers proved to be the most successful cartel arrangement in the annals of modern commerce. While other commodities, such as gold, silver, copper, rubber, and grains, fluctuated wildly in response to economic conditions, diamonds have continued, with few exceptions, to advance upward in price every year since the Depression. Indeed, the cartel seemed so superbly in control of prices — and unassailable — that, in the late 1970s, even speculators began buying diamonds as a guard against the vagaries of inflation and recession.

    The article has numerous quotes from the strategy documents of the advertising agencies involved in the PR: N. W. Ayer and J. Walter Thompson–the former classing their assignment as “a problem in mass psychology”.

    It’s a fascinating phenomenon set to become even more interesting now that the technology to mass produce flawless diamonds in a laboratory is becoming affordable: Wired looks at the rise of the manufactured diamond.

  • How to Disagree

    To aid the understanding and construction of quality arguments, Paul Graham has created a “disagreement hierarchy”: a study on how (and how not) to disagree.

    We can use this classification system to ensure that when we respond to a person’s reasoning, we respond to it in a way that is constructive for the conversation (by avoiding responses low in the hierarchy—DH0, DH1, etc.).

    • DH0 Name-calling.
    • DH1 Ad Hominem.
    • DH2 Responding to Tone.
    • DH3 Contradiction.
    • DH4 Counterargument.
    • DH5 Refutation.
    • DH6 Refuting the Central Point.

    It’s a simplification of a complex area, useful as a reference. Graham suggests the following benefit, among others:

    The most obvious advantage of classifying the forms of disagreement is that it will help people to evaluate what they read. In particular, it will help them to see through intellectually dishonest arguments.

    via @zambonini

  • How to Be Interesting

    Russell Davies offers ten activities that will lead to you being more interesting; including Start a blog, Keep a scrapbook, and Read. I believe you can sum them up into one piece of advice: Do something.

    Davies compiled the ten activities, believing they will make a person more interesting, based on two assumptions.  However I believe the two assumptions themselves are the point that needs to be made:

    The way to be interesting is to be interested. You’ve got to find what’s interesting in everything, you’ve got to be good at noticing things, you’ve got to be good at listening. If you find people (and things) interesting, they’ll find you interesting.

    Interesting people are good at sharing. You can’t be interested in someone who won’t tell you anything. Being good at sharing is not the same as talking and talking and talking. It means you share your ideas, you let people play with them and you’re good at talking about them without having to talk about yourself.

    via Ben Casnocha

  • Derren Brown’s Bertram Effect Experiment Text

    I love the Bertram effect. It’s likely the cognitive bias / psychological experiment that I think of the most. While the text from the original experiment is good, it’s from 1948.

    In the brilliant Tricks of the Mind and his 2000s TV show of the same nameDerren Brown updated the experiment, using his own text (reproduced in the book). It looks like nobody has ever made this text available online, so I’ve transcribed it below:

    You are a person prone to bouts of self-examination. This is in sharp contrast to a striking ability you have developed to appear very socially engaged, even the life and soul of the party; but in a way that only convinces others. You are all too aware of it being a façade.

    This means that you will often be at a gathering and find yourself playing a part. While on the one hand you’ll be talkative and funny, you’ll be detaching yourself to the point where you will find yourself watching everything going on around you and feeling utterly unable to engage. You’ll play conversations back to yourself in your head and wonder what that person really meant when he said such-and-such — conversations that other people wouldn’t give a second thought to.

    How have you learned to deal with this conflict? Through exercising control. You like to show a calm, self-assured fluid kind of stability (but because this is self-consciously created, it will create bouts of frustrated silliness and a delight in extremes, or at least a delight in being seen to be extreme). You most easily recognise this control in how you are with people around you. You have learned to protect yourself by keeping people at bay. Because in the past you have learned to be disappointed by people (and because there were issues with you adjusting to your sexuality), you instinctively keep people at arms’ length, until you decide they are allowed over that magic line into your group of close friends. However, once across that line, the problem is that an emotional dependency kicks in which leaves you feeling very hurt or rejected if it appears that they have betrayed that status.

    Because you are prone to self-examination, you will be aware of these traits. However, you are unusually able to examine even that self-examination, which means that you have become concerned about what the real you is. You have become all too aware of façades, of sides of yourself which you present to the world, and you wonder if you have lost touch with the real and spontaneous you.

    You are very creative, and have tried different avenues to utilize that ability. It may not be that you specifically, say, paint; it may be that your creativity shows itself in more subtle ways, but you will certainly find yourself having vivid and well-formed ideas which others will find hard to grasp. You set high standards for yourself, though, and in many ways are a bit of a perfectionist. The problem is, though, that it means you often don’t get stuff done, because you are frustrated by the idea of mediocrity and are wearied by the idea of starting something afresh. However, once your brain is engaged you’ll find yourself sailing. Very much this will likely lead to you having considered writing a novel or some such, but a fear that you won’t be able to achieve quite what you want stops you from getting on with it. But you have a real vision for things, which others fall short of. Particularly in your academic/college situation, you are currently fighting against restraints upon your desire to express yourself freely.

    Your relationship with your parents (there is a suggestion that one is no longer around, or at least emotionally absent) is under some strain. You wish to remain fond of them but recent issues are causing frustration – from your side far more than theirs. In fact they seem unaware of your thoughts on the matter. Partly this is because there are ways in which you have been made to feel isolated from certain groups in the past – something of an outsider. Now what is happening is that you are taking that outsider role and defending it to the point of consciously avoiding being part of a group. This will serve you well in your creative and career pursuits. You have an enormous cynicism towards those who prefer to be part of a group or who exhibit any cliquey behaviour, and you always feel a pang of disappointment when you see your ‘close’ friends seeming to follow that route. Deep down it feels like rejection.

    However, for all that introspection, you have developed a sensational, dry sense of humour that makes connections quickly and wittily and will leave you making jokes that go right over the heads of others. You delight in it so much that you’ll often rehearse jokes or amusing voices to yourself in order to ’spontaneously’ impress others with them. But this is a healthy desire to impress, and although you hate catching yourself at it, it’s nothing to be so worried about.

    There’s also an odd feeling that you should have been born in a different century. You might be able to make more sense of that than I can.

    There are some strong monetary shifts taking place at the moment. Both the recent past and what’s in store over the next few months represent quite a change.

    You have links at the moment with America*, which are quite interesting, and will look to yield worthwhile results. You’re naturally a little disorganized. A look around your living space would show a box of photos, unorganised into albums, out-of-date medicines, broken items not thrown out, and notes to yourself which are significantly out of date. Something related to this is that you lack motivation. Because you’re resourceful and talented enough to be pretty successful when you put your mind to things, this encourages you to procrastinate and put them off. Equally, you’ve given up dreams a little easily when your mind flitted elsewhere. There are in your home signs of an excursion into playing a musical instrument, which you have since abandoned, or are finding yourself less interested in. (This may alternatively relate to poetry and creative writing you’ve briefly tried your hand at and left behind you.) You have a real capacity for deciding that such-and-such a thing (or so-and-so a person) will be the be all and end all of everything and be with you for ever. But you’d rather try and fail, and swing from one extreme to the other, than settle for the little that you see others content with.

    Conclusion: It’s very interesting doing your reading, as you do present something of a  conundrum, which won’t surprise you. You are certainly bright, but unusually open to life’s possibilities – something not normally found among achieving people. I’d say you’d do well to be less self-absorbed, as it tends to distance you a little, and to relinquish some of the control you exercise when you present that stylized version of yourself to others. You could let people in a little more, but I am aware that there is a darkness you feel you should hide (much of this is in the personal/relationship/sexual area, and is related to a neediness which you don’t like).

    You really have an appealing personality – genuinely. Many thanks for doing this, and for offering something far more substantial than most.

    *This was changed to ‘Britain’ for US subjects. (I suggest ‘people abroad’ as a catch-all.)

    As mentioned in my earlier post, 80% of the participants in Brown’s experiment rated the profile as highly accurate. One rated it as 99% accurate, while another was so drawn in to the profile that she believed the TV crew had secretly read her diary. Two more felt so revealed by the statement that they refused to discuss their profile on film.

    The personal validation fallacy is a powerful thing!

    I’m reminded of another quote from Brown’s book:

    I suspect that the reason people prefer to think of [‘psychics’] as mere harmless quacks or genuinely having a special ‘gift’ is that the alternative is a lie so ugly and exploitative that it’s too unpleasant to think about.

  • Mistakes on Tests Crucial to Learning

    Thanks to our illusory superiority we consistently overestimate our performance on tests, and, without quality feedback, rapidly become oblivious to the gaps in our knowledge. Furthermore, many consider testing to be an ineffectual tool for assessing performance and errors to be counterproductive to learning.

    Challenging this preconception is research suggesting that making mistakes on tests–and being informed of them–is an integral part of the learning process.

    We tend to assume that the best way to consume and remember information is through the application of rigorous, extended study. What we fail to see, however, is that the process of trying to work through a problem to which we don’t know the answer focuses our attention on it in a way that simply studying it does not. The desire to get the answer right, and the frustration of failure, is partly to account.

    But there’s another element as well. When we struggle to learn something, and fail, the moment we finally get the answer it imprints itself more deeply on our mind than it would have had struggle and failure not preceded it. […]

    If I had to identify one overarching lesson from  our study it would be this: When you make mistakes, don’t just let them slip by – correct them. Create challenging learning environments, make mistakes and then learn from them.

    There is much in common here with the evidence-based approach to teaching.

  • Being a Successful Teacher

    The non-profit organisation Teach For America has, for two decades, been tracking huge amounts of data on its thousands of teachers and the results they get from their students. By mining the data, testing hypotheses and refining hiring and training practises constantly, the organisation says it is now starting to create a reliable profile of a successful teacher.

    For years, Teach for America selected for something called “constant learning.” As [Steven Farr, head of training and support,] and others had noticed, great teachers tended to reflect on their performance and adapt accordingly. So people who tend to be self-aware might be a good bet. […]

    But in 2003, the admissions staff looked at the data and discovered that reflectiveness did not seem to matter either. Or more accurately, trying to predict reflectiveness in the hiring process did not work. […]

    The results are specific and surprising. Things that you might think would help a new teacher achieve success in a poor school—like prior experience working in a low-income neighborhood—don’t seem to matter. Other things that may sound trifling—like a teacher’s extracurricular accomplishments in college—tend to predict greatness.

    Other factors that indicate whether a prospect would likely become an excellent teacher:

    • A modicum of knowledge on a subject (Bachelor’s-level study predicts better results in the classroom, whereas a Master’s in Education has no impact).
    • Constantly re-evaluation.
    • Avid recruitment of students and their families into the process.
    • Ensuring that everything contributes to student learning (maintaining focus).
    • Exhaustive, purposeful planning—for the next day or the year ahead—by working backward from the desired outcome.
    • Relentless work ethic (“refusing to surrender to the combined menaces of poverty, bureaucracy, and budgetary shortfalls”).
    • A track record, rather than just an attitude, of perseverance.
    • The best indicator: a measurable past performance of achievement (GPA and “leadership achievement” specifically).

    Update: Cedar Riener points to a short video (3m 44s) created by his colleague, Dan Willingham, on why merit pay based on test scores is a bad idea: “there is not a way to evaluate teachers fairly by using test scores”.

  • Conversational Mannerisms of Geeks

    I always put up a mental barrier when reading articles such as this as I am of the opinion that it is difficult to successfully produce generalities about a subset of people unless you are quite intimate with their idiosyncrasies.

    Philip Guo overcame this barrier in his article looking at the conversational behaviours of “geeks, nerds, and other highly-smart technical people”. These behaviours:

    • Struggling with turn-taking.
    • Obsessing over correctness and completeness.
    • Preferring exact numerical responses.
    • Using technical terms without checking for understanding.
    • Focusing on the how rather than the what or the why.
    • Favoring complexity and detail over simplicity in descriptions.
    • Rapidly enumerating long lists of items.
    • Showing a lack of interest in outward appearances.
    • Evangelizing their favorite technologies.

    The Hacker News thread discussing this article is also worthy of a casual look.

  • The Success of James Patterson

    In what is likely the most extensive profile of author James Patterson I’ve read, we are bombarded by a plethora of incredible statistics: Patterson outsells John Grisham, Stephen King and Dan Brown combined; he authored one in every 17 hardback novels bought in the U.S. since 2006; and he has written 51 New York Times bestsellers to date (35 of which went to the number one slot).

    As the most borrowed author in Britain, Patterson appears to owe his success to two things: his background as a collaboration-dependant advertising executive at J. Walter Thompson and the increasingly risk-averse publishing houses. On the former:

    Patterson and his publisher […] have an unconventional relationship. Despite [his] support staff and his prodigious output, Patterson is intimately involved in the publication of his books. […] He handles all of his own advertising and closely monitors just about every other step of the publication process, from the design of his jackets to the timing of his books’ release to their placement in stores. […]

    To maintain his frenetic pace of production, Patterson now uses co-authors for nearly all of his books. He is part executive producer, part head writer, setting out the vision for each book or series and then ensuring that his writers stay the course. This kind of collaboration is second nature to Patterson from his advertising days, and it’s certainly common in other creative industries, including television. But writing a novel is not the same thing. […] Books, at least in their traditional conception, are the product of one person’s imagination and sensibility, rendered in a singular, unreproducible style and voice.

    For the latter, you can see the large paragraphs I would excerpt by searching for “The story of the blockbuster’s explosion” and “Barnes & Noble was caught in the crossfire “.

    I also enjoyed Patterson’s thoughts on writing for an audience:

    If you want to write for yourself, get a diary. If you want to write for a few friends, get a blog. But if you want to write for a lot of people, think about them a little bit. What do they like? What are their needs? A lot of people in this country go through their days numb. They need to be entertained. They need to feel something.