Making Hope Happen: Create the Future You Want for Yourself and Others by Shane J. Lopez

flawed. These big flaws are so hidden in plain sight that psychologist Daniel Kahneman of PrincetonUniversity won the 2002 Nobel Prize in Economics for pointing them out. In a series of brilliant experiments, he and his colleague Amos Tversky (who died before he could share the Nobel) showed just how much our thinking is guided by unconscious cues and mental processing that is lightning-fast and automatic.
    In his book Thinking, Fast and Slow , Kahneman describes how he discovered his first cognitive illusion. “Many decades ago I spent what seemed like a great deal of time under a scorching sun, watching groups of sweaty soldiers as they solved a problem,” Kahneman begins. He was doing his national service in the Israeli army, with an undergraduate degree in psychology to his credit, when he was assigned the job of evaluating candidates for officer training. In theory, the way group members responded to virtually impossible tasks would reveal leadership potential. (Think it through for yourself: Haul a log to a six-foot-high wall, then get both the log and the group to the other side. The log can’t touch the ground or the wall. The group members can’t touch the wall, either.)
    As they watched the officer candidates struggle with the challenging group tests developed by the British army in World War II, evaluators came to the same conclusion: “The soldier who took over when the group was in trouble and led the team over the wall was a leader at that moment. The obvious best guess about how he would do in training, or in combat, was that he would be as effective as he had been at the wall. Any other prediction seemed inconsistent with the evidence before our eyes.”
    Doubt crept in only when the evaluators received feedback from the officer-training school, based on assessments by the commanders in charge of the cadets. As Kahneman put it, “Our forecasts were better than blind guesses, but not by much.” But the real surprise was that the feedback had “no effect whatsoever on how we evaluated candidates and very little effect on the confidence we felt in our judgment. . . . We continued to act and feel as if each of our specific predictions was valid.”
    We are all potential victims of our overconfidence in guessing thefuture. Yes, you are, too. And even if you acknowledge your own fallibility, you’ve probably bought into the notion that some other people—“experts”—have extraordinary abilities to predict the future. Take the 50 percent of Americans who have money in the stock market. Many believe that they are entrusting their money to skilled investors, people who have the expertise to “beat the market.” Alas, based on Kahneman’s observations, these Wall Street gurus often perform no better than dart-throwing monkeys.
    The head of an investment firm whose advisers worked with very wealthy clients hired Kahneman to give a seminar about his work. Like any good teacher, he wanted to incorporate information about his audience. “I asked for some data to prepare my presentation and was granted a small treasure: a spreadsheet summarizing the investment outcomes of some 25 anonymous wealth advisers, for eight consecutive years,” he said. “The advisers’ scores for each year were the main determinant of their year-end bonuses. It was a simple matter to rank the advisers by their performance and to answer a question: Did the same advisers consistently achieve better returns for their clients year after year? Did some advisers consistently display more skill than others?”
    Kahneman correlated the rankings of each adviser year by year. He had expected each adviser’s results would vary, but he was still shocked by what he discovered: “While I was prepared to find little year-to-year consistency, I was still surprised to find that the average of the 28 correlations was .01. In other words, zero. The stability that would indicate differences in skill was not to be found.”
    Disturbing, eh? Yet