Wednesday, March 31, 2010
Being a Storyteller
In a recent interview for McKinsey Quartely Nobel Laureate Daniel Kahneman makes a brilliant point: "Overconfidence is a powerful source of illusions, primarily determined by the quality and coherence of the story that you can construct, not by its validity." We've heard it a million times: The data doesn't lie. But it really matters who is constructing the data and why. Wall Street created well-constructed illusions with its string of alphabet soup derivatives. Now, I better understand what my mother meant when after being caught in a lie she would say, "don't tell stories." It's just that the stories Wall Street tell are detrimental to us and other countries all around the world.
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8 comments:
Wonder why people believe in the stories churned out by Wall St.
Good question, Haddock. I think as it relates to the housing crisis people wanted to believe that they could get something for nothing and believed that their loans would never balloon. Many of these people are also guilty of storytelling, to themselves--that is. But I have long said that if the banks would not have allowed such loans with such shaky credit and unsubstantiated documents, the crisis could have never occurred.
People believe what people tell them all the time about lots of things. Think about everything you "know". How much is from direct experience, and how much because a person you trust said it was so, and you didn't even think to examine further.
Adding to that, we are swimming in illusion. Money is an illusion: a totally man-made device based on the percieved value of something (sometimes tangible, sometimes not). And the "American Dream" is an illusion. Whose dream is it and why does it look like that? Why do people crave homeownership to the degree that they'll allow themselves to be led down a shaky financial path instead of listening to their inner voice? (Not trying to blame the victim here, I know there were unethical lending practices going on, some shocking. But still... you signed that 2" stack of mortgage documents without reading them?)
Gayle - I agree largely with your comment. Thank you. With regards to knowledge, I tend to take a different perspective. I consider knowledge ever increasing, even decreasing. It moves. I also believe that we do not have to experience something to know it. For example, I would not have to have been in a fire to know that it burns.
Inference from a trusted source is absolutely a way to gain knowledge. The trick is for it to be a trusted source, otherwise all you have is misperception.
As for knowing fire burns? Maybe, but we teach our kids that the stove is hot for a reason... because they want to stick their fingers in the flame. There are times when adults are just like little ones.
Have a great day!
Ah, who's doing the teaching, Gayle, and there are some lessons that we seem to "learn" endlessly. Wishing the same for you--a super day!
Think of the propaganda fueling the public in Germany at the inception of WWII. Scary to see how a weaver of tales can brainwash the populace.
Great point, Kelly.
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