Warren Buffett in Fortune
How I got here is pretty simple in my case. It’s not IQ, I’m sure you’ll be glad to hear. The big thing is rationality. I always look at IQ and talent as representing the horsepower of the motor, but that the output–the efficiency with which that motor works–depends on rationality. A lot of people start out with 400-horsepower motors but only get a hundred horsepower of output. It’s way better to have a 200-horsepower motor and get it all into output.
So why do smart people do things that interfere with getting the output they’re entitled to? It gets into the habits and character and temperament, and behaving in a rational manner. Not getting in your own way. As I said, everybody here has the ability absolutely to do anything I do and much beyond. Some of you will, and some of you won’t. For the ones who won’t, it will be because you get in your own way, not because the world doesn’t allow you.
The good news is that science backs up Buffett’s insights: recently in The New York Times, the notion of dysrationality and RQ (Rationality Quotient) was highlighted. The low correlation between IQ and RQ indicates that Buffett is right, but, more interestingly – rationality is something we can all improve upon.
The bad news is that the list of cognitive (biases) hurdles one needs to jump over to be truly rational is pretty long.
I have survived to middle age with half my wits while thousands have died with all of theirs intact, evidently quality of wits is more important than quantity.
“Silo-busting is exceptional in academia – one is expected to specialise. There is a lot of turf warfare,” he notes, explaining that when he first started studying ornithology he kept this secret from his colleagues in the medical department. “Luckily my [academic] papers about birds were published in journals which no gall bladder physiologists ever read. But when my review committee eventually found out about what I was doing, they voted against my promotion. In academia, working in multiple fields is not a benefit but a penalty.” So much so that he now advises young academics to “make sure you get tenure before you start publishing in a second field”. “In academia people talk about interdisciplinary thinking and run courses and programmes – but Lord help you if you try to make an interdisciplinary career, unless you are already so high that there is nothing they can do to you.”
‘The fox knows many things, but the hedgehog knows one big thing’ – Greek poet Archilochus
This ancient distinction used by Issiah Berlin in his essay The Hedgehog and the Fox: An Essay on Tolstoy’s View of History was extended to two cognitive styles by Philip Tetlock in his book Expert Political Judgment: How Good Is It? How Can We Know?.
The gist of the argument is that Foxes have an eclectic toolbox, one they apply without any concern for pet theories/concepts (they don’t have any) and as such can better adapt themselves to changing circumstances. Hedgehogs on the other hand, have a single big idea/theory/concept that they try to fit the empirical world into. They have a cognitive need for closure that is satisfied by bludgeoning reality into their favorite model/worldview.
Tetlock, in his book, goes on to empirically demonstrate how foxes have been better forecasters than hedgehogs in the arena of political science. Not surprisingly this distinction between foxes and hedgehogs makes intuitive sense and similar forecasting results (i.e., foxes perform better) are likely in fields which are high in complexity and uncertainty. The dynamic nature of such fields (including business, economics, technology etc.) makes “experts” with one big idea vulnerable to getting blindsided by unexpected big events, i.e. The Black Swan.
A recent post by Nassim Taleb highlighted the way people’s identities are wrapped up in their work and accomplishments. Nassim argues that this is not only different from the past (ancients) but also varies across the economic spectrum with only the minimum wage earners being able to separate their identities from the mode of earning a living. This undoubtedly ties into his earlier point about never taking advice from people wearing a tie. Those whose identities are close to their (knowledge) work tend to overlook the fallibility in their fields. A mind focused on falsification and professional pride are rarely seen in the same person. So how can one (especially if you are a ‘knowledge worker’) avoid this problem? I think Paul Graham had the best advice (closely tied to but broader than Nassim’s comment) : “The more labels you have for yourself, the dumber they m
ake you." Keep your identity small.