Can we trust our guts?

Gut Feelings Cover

“Next time think before you act!” Who hasn’t screamed this advice to one of their children while surveying a landscape laid waste by an ill-conceived impulse. “Ill-conceived impulse”? Is that redundant? Not necessarily, according to Gerd Gigerenzer. In fact, his analysis of the evidence suggests that, in many circumstances, impulses will well-and-truly out-perform quiet reflection (except, maybe, in the case of our children).

It is accepted wisdom that considered, rational decisions will lead to better results than gut responses. But Gigerenzer demonstrates convincingly that, in particular circumstances, this is not so. What are those circumstances? Can we learn to tap into this unconscious dimension of our minds?

Less is more

In Gut Feelings Gigerenzer shows that intuition works best when we know less. Consider this question: which city has the larger population, Detroit or Milwaukee? The question divided a class of American college students, 40 percent reckoning Milwaukee, the remainder Detroit. In a class of German students, nearly all opted for Detroit. The right answer is Detroit, so how come the Germans performed better? Gigerenzer explains that they knew less than the American students. Many of the German students hadn’t even heard of Milwaukee. Most guessed that the city they had at least heard of would be bigger. On the other hand, the Amercian students knew too much: maybe Milwaukee’s brewing and other manufacturing activities made it larger than Detroit despite the latter’s car industry?

The German students had to rely on their intuition—and their intuition called upon a rule of thumb: if you recognise the name of one city and not the other, then the one you recognise will most likely be larger. It turns out this recognition rule will get you better results than any considered thinking in cases where you are short on knowledge.

Thumbs up to rules of thumb

Gut Feelings reveals around 20 rules of thumb we call upon in situations from playing baseball (catching a high ball) to social mores and instincts (why we play ball), from shopping for food to shopping for a partner, from accessing education to accessing healthcare. Several rules rely on recognition; all rely on a level of ignorance.

Knowing the rules of thumb can inject confidence when you’re short on facts. Understanding what lies beneath your gut response enhances your decision-making powers when information is scarce, arming you with reasons where none previously existed.

There’s a paradox here. While we don’t understand our gut feelings, we are inclined to follow them. However, by unpacking the unconscious rules of thumb driving those feelings, we can be more confident following those gut feelings.

Healthier decisions, no thanks to Ben Franklin

How could understanding these unconscious processes help institutions and businesses make better decisions? Gigerenzer uses the health system to illustrate how. Take the case of a patient admitted to hospital with chest pains. Should the patient go to the intensive care unit, or not? One approach is to evaluate a range of weighted factors to come up with a score. This is the same technique Benjamin Franklin advised a nephew to use when evaluating two potential marriage candidates.

Gigerenzer compares the Benjamin Franklin approach with what he calls the fast and frugal tree—a decision tree offering just three or four “go /no go” choices. He demonstrates that fast and frugal gets better results than Ben Franklin’s method: fewer unnecessary admissions to the ICU, and fewer cases of patients that should have been put in the ICU. The fast and frugal choices work just like using rules of thumb. The tree offers a hierarchy of three or four basic questions. Answer these questions and you’ll be as close as you’ll ever get to a good decision.

Moral rules okay?

But few decisions are morally neutral. Can gut feelings lead us to do bad things—or, at least, avoid doing the good? Gigerenzer examines several cases where understanding how our gut feelings work may help us make different choices: the members of the German Reserve Police Battalion 101 who, in 1942, took part in massacring Jews (rule: “don’t break ranks”); and the citizens who don’t register to be organ donors (rule: “if there’s a default, do nothing about it”).

Gigerenzer offers us no substantial solutions in the moral sphere. He believes humans have an innate moral grammar described by rules of thumb, which are neither good nor bad per se. However, rules may be applied in the wrong situations—such as the battalion members obeying orders to shoot innocent people (“don’t break ranks”). The best he can offer us is a belief that simple, widely applicable moral codes like the Ten Commandments work better than complex laws like the tax code.

Tender choices

How might Gigerenzer's insights apply in a business? First, consider a friend of Gigerenzer who applied Ben Franklin’s technique to his choice of a life partner. The scores told him to pick Girl A but he realised he really liked Girl B. He went with his gut feel (and lived happily ever after).

We can see a parallel with businesses that regularly go to tender for equipment and services, requiring potential suppliers to answer swathes of questions. Tenderers’ responses are evaluated, scored and weighted a la Benjamin Franklin. Would those businesses have been better off just to ask tenderers the three or four critical questions? Maybe the only questions needed are:

  • Have you been in business for a very long time?
  • Do you have lots of clients and a huge slice of the market?
  • Are all your clients happy?

As they used to say, no one was ever fired for buying IBM.