Monday, August 10, 2009

Interview with Michael Shermer

On skepticism and evidence based management

© 2009 Richard Puyt

Dr. Michael Shermer is an adjunct professor in economics at Claremont Graduate University, founder of the Skeptics Society, chief editor of Skeptic Magazine and (co)author of many books and articles that take on everything from the existence of Bigfoot to Intelligent Design and why people believe in such phenomena. Recent publications include The Mind of The Market. He is also contributing editor and monthly columnist for Scientific American, and is the host of the Skeptics Distinguished Lecture Series at Caltech. Last summer I've interviewed him for Managementsite.com about skepticism in general and the emergence of evidence based management in particular.

The Skeptics Society is inspired by the philosophies of great thinkers, like the 16th Century Dutch philosopher and lens grinder Baruch de Spinoza, who tried to understand human nature throughout his life and the 20th Century theoretical physicist Albert Einstein, who said all our science is child play and primitive compared to reality, but it is the most precious thing we have. Skepticism is a method, not a position. Skeptics are not cynical.

Richard: On the English Wikipedia entry about you, there is the following statement: I became a skeptic on Saturday, August 6th, 1983, on the long climbing road to Loveland Pass, Colorado….I got the impression you had an epiphany. Like you denounced everything you believed in previously and chose the scientific method. Like a conversion to science. What happened on the mountain?

Michael: I was involved in extreme biking and used legal performance enhancement techniques. No drugs, I might add. Still feeling no improvements after taking herbs, vitamins, minerals, and potions of all kinds, I actually wondered if all the claims which were made on the bottles really could stand scientific scrutiny. That’s the moment I decided to go back to my scientific roots. At the time, I held a Masters in Experimental Psychology and went back to Claremont Graduate University to do my Ph.D. That’s what I actually wanted to do all my life. Become a college professor and improve the world a little by teaching.

Richard: On the internet, we can read, see and hear many of your articles, debates and lectures. The ones which stand out for us are: Why people believe weird things and the baloney detection kit. Becoming a skeptic is one thing, founding an organization and a magazine is something else. What do you hope to achieve by promoting skeptical thinking? How will things become better if more people assume a skeptical attitude?

Michael: If things sound too good to be true, they probably are (and never abandon lying as a probable explanation). Never assume. Challenge everything. Skeptical thinking is not a religion or a way of life. It’s a way of thinking, a method. It helps you to test assertions and claims. You can detect lies and half truths. When we say we are “skeptical,” we mean that we must see compelling evidence before we believe. It prevents us from believing in illusions and spares us a lot of sorrow. The Skeptics Society organization started bottom up. We are the debunk squad of pseudo, voodoo, junk and bad science. Right from the start, it received quite a lot of attention and before you know it we were on the radio and asked to appear in tv-shows like Larry King Live and Oprah.

All over the world there are skeptics organizations, like for CSICOP/CSI, Skeptical Investigations, The James Randi Educational Foundation and I even believe there’s a chapter in the Netherlands. Here in the United States we have our hands full with school boards wanting to teach intelligent design or creationism instead of Darwinian evolution. People outside the States, like you, always ask us why we spend so much time on these guys. It is a necessity. We are caught in the middle of a cultural war.

Just as Richard Dawkins is raising our consciousness about the power of evolution to explain not only life, but religion and morality as well and that it is okay to be an atheist… I’m going to do something like that in the next book project (Mind of the Market), which is to raise the consciousness about the power of evolution to explain economics, evolutionary ethics and how markets can be moral, complexity theory to explain how markets rise, and that it is okay to be a libertarian (fiscally conservative, socially liberal). Libertarianism is based on the principle that people are free to think, believe, and act as they choose as long as they do not infringe the equal freedom of others. The part of infringement is where the rubber meets the road…
(YouTube: The Amazing Meeting 5: Michael Shermer, Evolutionary economics, part 1

Richard: On the 12th of February 2009 it was exactly 200 years ago that Charles Darwin was born. This year we celebrate his live and work. The school of evolutionary economics draws from the work of Charles Darwin on evolutionary biology. In your book Mind the Market you advocate this school. What fascinates you about evolutionary economics and how does it translate to our everyday life?

Michael: Since I was a teenager, I’ve been a libertarian. I noticed that there are not so many of us and that most people find us a bit strange. Most people have a hard time with the idea of so much freedom in the market place. Now, why is that? When I started applying evolutionary thinking to the process, thinking about folk intuitive notions of things and why people get so many areas of science wrong intuitively, it began to make sense to me. With folk astronomy we have an intuitive notion that the world is flat, celestial bodies revolve around the earth. That’s the way it feels. The planets are wondering gods that determine our future.

In folk economics, we have an intuitive notion that excessive wealth is wrong. Economic systems must be designed from the top down. We misunderstand and mistrust ‘the invisible hand” of the market place (note: Charles Darwin also read the work of Adam Smith). The reason why folk science so often gets it wrong is that we evolved in an environment radically different from the one in which we live. We still have a sweet tooth and biological inclination to eat fat, because food was always scarce. That’s why we have an obesity epidemic right now. Our senses are geared for perceiving objects of middling size, between say ants and mountains. Not bacteria, molecules and atoms on one side of the scale and stars and galaxies on the other end. We live to short to witness evolution, continental drift or long-term environmental changes. That’s why we still have an inclination to want products now, versus products later at a considerable discount. It is human nature.

According to the Austrian school of economics, if you “create” too much money, the indicators in the market go haywire. That’s why we probably should go back to the gold standard. The value of money needs to be backed up. This should prevent us from creating money from thin air. It also makes you wonder if the spectacular economical growth over the last 25 years was maybe based on nothing. Normal growth rates are between 2 to 3% per year, instead of 20%. Makes you wonder.

Richard: Nassim Nicolas Taleb is a literary essayist, epistemologist, researcher, and former practitioner of mathematical finance and calls himself skeptical empiricist. He wrote Fooled by randomness and The Black Swan. Since the crisis in 2008 he is an activist for a Black Swan robust society. On the 7th of April 2009 he wrote an article in the Financial Times, where he states; We’ll see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news. Sounds like he also advocates evolutionary economics. Taleb's contents that statisticians can be pseudo scientists when it comes to financial risks and risks of blowups, masking their incompetence with complicated equations. How does skeptical thinking prevent us from becoming epistemological arrogant?

Michael: Well, I actually know Nassim quite well. He’s even a bigger skeptic than me. A lot of people think he is arrogant, but I disagree. In his book The Black Swan, he made some valid points. For instance, you have to take all data into account. Not only count the successes, but also the failures. The same problems arise in science magazines. Reports about failures are equally important, but are much harder to get accepted by the editorial boards of scientific magazines. If the chance is 50/50, then the payoff has to be twice as high as the risk. Loss hurts us much harder. This comes all down to biology. As for statistics, how can you predict the 100 year flood, if your data set only covers the last 10 years? Be humble and very aware of the limitations of your knowledge. Risk calculations and probabilities is not the same as fact finding. There is always bounded rationality in decision making. Nassim predicted the meltdown of the economy and the black swan emerged. That’s why he has so much fun in challenging people who make claims they can’t backup. He’s very popular right now.

The only remedy I see to avert epistemological arrogance is humility. Be humble before the market. But when the market goes up again, we’ll probably forget all the previous warnings and start over again. The cycle will repeat itself. The market now hit rock bottom. If you buy right now, you’ll make a huge profit. And that will probably happen on occasion. Then we’re back on anecdotal evidence and confirmation bias. We tend to have a short term memory. It’s human nature.

Richard: In Managers Not MBAs, 2004, Professor Henry Mintzberg at McGill University challenges the validity of the perennially popular MBA program: a program that top-tier companies continue to rely on as essential to the creation of successful corporate leaders. As one of the great iconoclasts of management theory, Mintzberg emphasizes the need to reexamine and drastically change our traditional form of management education. As Mintzberg boldly asserts: MBAs do not managers make. What do you think about this assertion?

Michael: I think he’s right. Maybe I can tell you an analogy. By contract, my book publisher in New York can choose the images and the titles of my books. I can only “approve”. If I don’t agree they can still go ahead. I asked them who chooses the pictures for the books. Well, just the three of us, they replied. I proposed to ask my followers on the internet (over 50.000 skeptic readers) to give their opinion on the best book cover, by putting up 3 pictures of covers on my blog, but they opposed fiercely. I would be in breach of contract and this is not the way covers are picked out in publishing. They think that their way is the best way and are not inclined to change. I could test things for them within an hour. Heck, they can test it for themselves a local Barnes and Nobles, but they simply refuse. They have never tested their theory and don’t see any benefit in changing. I think they should. They’ll probably end up selling more books.

Richard: The emerging evidence based management movement is introduced by Jeffrey Pfeffer and Robert Sutton in 2006. It is based on the same sort of thinking and discipline that has improved the practice of medicine to work on the management of medical organizations so that the management can be held to the same standards as the doctors in terms of the rigor of thought and analysis. What are your views on the emergence of this movement?

Michael: Management is a broad spectrum. But, I like the principle. Where I think it might trip up is anecdotal evidence to support claims and confirmation bias. That’s why I like the wiki’s. You have constant interaction and improvements. This probably doesn’t work in all fields off course. For instance, in astrophysics, I doubt if anybody outside of the professional field could make a useful contribution, let alone understand the matter. But, it is not outside of the realm of possibilities. Open and peer reviewed theories are the best, because they get constantly challenged. On my site, I also invite people to help improve Wikipedia. Be skeptical! It can only improve (scientific) theory.

Richard: In science there is much debate about the level of evidence. The dominant way of conducting science is the way physicists and mathematicians gather scientific proof. Big samples (n>1000), complex formulas, impressive charts, etc. Social scientists argue that this is not the preferred way to conduct research. Especially when researching management. What is in your view the preferred way to conduct research in science from a skeptical point of view?

Michael: There are two types of scientific research: experimental and comparative. In the social sciences, especially in economics and business, we cannot run controlled experiments and manipulate variables like we can in laboratory experiments. Instead, we have to wait and see what happens in natural experiments that are run by people trying different techniques. For example, communism was a 75 year experiment on collectivization of the means of production, and we see how well that worked compared to capitalistic systems during the same period of time. We can compare, say, South Korea to North Korea, the former employs capitalism while the latter uses communism. The average annual income per person in South Korea is several tens of thousands of dollars. The average annual income per person in North Korea is less than a thousand dollars. That is a natural experiment that we can collect data from and draw our conclusions.

Richard: Thank you very much for your time and this interview.

References

Contact:
Michael Shermer can be reached by email

Acknowledgement:
Thanks to Coert Visser (www.solutionfocusedchange.com) for helping with the preparation of this interview.

About the author:
Richard Puyt is a management consultant (CMC), editor and part time lecturer. More information: Facebook / Dutch LinkedIn Innovatief Organiseren Community / Dutch blog Innovatief Organiseren / Puyt Consultancy.
Posted by at
Labels: , , , ,

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)