The Thought Refuse

A Virtual Repository for the Mind

Study Supports Expert Bias

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ne of the more common logical mistakes we make is to turn to the expert bias, also known as the logical fallacy arguing from authority.  The logical error is committed by espousing expert credentials for sound logic, in order to make a logical argument.  A logical argument is founded on logic alone.  No amount of degrees or experience can supplant concrete logic.

Recently, a study was done on how expert advice affects the decision making part of the human brain, and lends physiological evidence that we are predisposed to experts over logic.  This has long been the contention of logical proponents, the most well known being Nicholas Nassim Taleb, who detailed in his New York Times best selling book, The Black Swan, just how detrimental and pervasive the expert bias can be.

While the study was small in it’s total number of participants, it was sufficiently controlled as to deserve further testing.  Taleb would assuredly chuckle at the fact that the study utilized financial experts.  In the study, subjects were presented with two possible financial decisions – one high risk(uncertain) and one low risk(certain).  They were then asked to make a decision as to the two possible presented investments.  In one control, subjects were given advice from an expert economist, and in another control, subjects were given no advice and asked to make the decision themselves.  In both controls, subjects underwent MRI scans during the entire process.

Not surprisingly, least of all to Taleb, researchers found that there was a noticable decrease in the mid cingulate cortex and posterior insula – the areas of the brain known to control decision making – brain activity when test subjects were presented with the expert advice.  Conversely, increased activity occurred in these areas when the advice was not given.

While excellent logical arguments have been presented detailing our over-reliance on experts, there is no hard scientific evidence to support the claim.  We, essentially, shut down when we are given advice from a source considered “expert”.  The decisions we make in our financial advisers office aren’t really ours.  They are the experts.  We’re just paying the man to completely and unequivocally map out our future retirement – or destitution if you happen upon a not so expert “expert”.

The real problem is, with painful acuteness, in dividing the non-expert “experts” from the expert “experts”.  Or, put in another way, how do we know the advice your getting is good advice?  That often depends on the particular area of advice sought.  The advice of a plumber is quite different then that from a market analyst, in terms of accuracy.

What delineates good advice from bad advice, as the study alludes to, is the level of uncertainty within the realm of the expert.  The higher level of randomness found within a field respectively increases the chance any advice given from an expert in said field will be wrong.  This all boils down to the number of variables the expert must account for.  Just compare what a plumber has to account for and what a market analyst has to.  Quite often we feel adequately capable of tackling that leaking faucet in the kitchen, but when trying to plan our retirement investments feel vastly inferior to it’s daunting complexity.

With justification, we approach the expert economist for investment advice without hesitation.  We simply don’t know much about that sort of thing.  But how much does the expert really know?  Considerably more then you do, but the massive degree of randomness in financial markets cannot mean that expert economist can know everything there is to know.  His advice has to be approached with a level of skepticism.

The expert bias problem becomes exceedingly dangerous when we remove that layer of skepticism and take the advice as ad hoc certainty.  The expert is hardly beyond fallibility, and those decisions you blindly had over to the expert can and do result in disaster.  Case in point, the current financial meltdown fueled by poor housing market predictions and the creation of a little understood mortgage-backed security market.

This study is a good starting point as physiological evidence as to our expert bias, and it would be interesting to see further research done.  Specifically, into how the brain of the expert operates when giving advice.  I have no doubt that it would be shown experts display increased activity in the orbitofrontal cortex – the area of the brain associated with confidence.  There could then be a link between the expert bias and, the other parent problem – the hubris of the expert and his knowledge.

Written by huxbux

April 15, 2009 at 1:12 am

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