Algorithms and the future of divorce

In Chapter 21 of Thinking, Fast and Slow Dan Kahneman discusses the frequent superiority of algorithms over intuition. He documents a wide range of studies showing that algorithms tend to beat expert intuition in areas such as medicine, business, career satisfaction and more. In general, the value of algorithms tends to be in “low-validity environments” which are characterized by “a significant degree of uncertainty and unpredictability.”*

Further, says Kahneman, the algorithms in question need not be complex:

…it is possible to develop useful algorithms without any prior statistical research. Smple equally weighted formulas based on existing statistics or on common sense are often very good predctors of significant outcomes. In a memorable example, Daws showed that marital stability is well predicted by a formula:

frequency of lovemaking minus frequency of quarrels

You con’t want your result to be a negative number.

Kahneman concludes the chapter with an example of how this might be used practically: hiring someone at work.

A vast amount of research offers a promise: you are much more likely to find the best candidate if you use this procedure than if you do what people normally do in such situations, which is to go into the interview unprepared and to make choices by an overall intuitive judgment such as “I looked into his eyes and liked what I saw.”

All of this makes me think of online dating. This is an area where we are transitioning from almost entirely intuition to a mixture of algorithms and intuition. Though algorithms aren’t making any final decisions, they are increasingly playing a major role in shaping peoples’ dating activity. If Kahneman is right, and if finding a significant other is a “low-validity environment”, will our increased use of algorithms lead to more optimal outcomes? What truly excites me about this is that we should be able to measure it. Of course, doing so will require very careful attention to the various confounding variables, but I can’t help but wonder: will couples that meet online have a lower divorce rate in 20 years than couples that didn’t? Will individuals who spent significant time dating online be less likely to have been divorced than those that never tried it?

*One might reasonably object that this definition stacks the deck against intuition, and I think this aspect of the debate deserved a mention in the chapter. The focus on “low-validity environments” is the focus on areas where intuition is lousy. So how shocking is it that these are cases where other methods do better? And yet, the conclusions here are extremely valuable. Even though we know that these “low-validity” scenarios are tough to predict, we still generally tend to overrate our ability to predict via intuition and underrate the value of simple algorithms. So in the end this caveat – while worth making – doesn’t really take away from Kahneman’s point.


Framing your friendships

Two things are indisputably true of Tyler Cowen: he has an interesting mind, and he has an economist’s mind.

This struck me as I was reading Chapter 4 of Create Your Own Economy, titled ‘IM, Cell Phones, and Facebook’.  It’s a quirky (and occasionally funny) chapter about how our choice of communication platform impacts our communications.

On one level it’s the “medium is the message” thesis.  But, since he’s a behavioral economist, Cowen frames his argument as competition between competing frames of reference.

We choose to send or receive messages in particular ways, in part, to determine which kinds of framing effects will influence our thoughts and emotions.  The greater the number of media we have to choose from, the more likely this process will suit our tastes.

Though economists often discuss framing effects in the context of bias or irrationality, Cowen focuses on the potential benefits of competition between mediums.  “Facebook,” he writes, “has made me friendlier… It is a framing effect that I have chosen to keep, and to my advantage.”

Framing effects may not be the simplest lense through which to view his basic point: greater choice in our communications is a good thing.  But it’s an interesting lense.  And an economist’s lense.


Tyler Cowen on cultural literacy

I’m reading Tyler Cowen’s book Create Your Own Economy and I’ll be posting thoughts and snippets as I go.  Here’s Cowen on the new cultural literacy:

What cultural literacy means today is not whether you can “read” all the symbols in a Rubens painting but whether you can operate an iPhone and other web-related technologies.  The iPhone, if used properly, can get you to website on Rubens as well.  The question is not whether you know the classics but whether you are capable of assembling your own blend of cultural bits.  When viewed in this light, today’s young people are very culturally literate and in fact they are very often the cultural leaders and creators. (pg. 59)

I’m only a few chapters in, but I’m greatly enjoying the book.  And, of course, I can’t recommend Cowen’s blog, Marginal Revolution, highly enough.