Podcast Transcript – Joe Sweeney

21/02/2022
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Authors

Juan Torres Rodriguez
Fund Manager, Equity Value
Andrew Evans
Fund Manager, Equity Value

JTR: Joe Sweeney – welcome to The Value Perspective podcast. It is a pleasure to have you here.

JS: Thanks very much, Juan. It is a pleasure to be here. I am looking forward to the conversation. Hi, Andy.

AE: Welcome to the show, Joe. It is lovely to have you here.

JTR: So, Joe, would you mind giving us a little bit of background about yourself – your journey and how you ended up feeling passionate about the topic of decision-making?

JS: Sure. I will try to do the abbreviated version for you and, then if there is something you want to ask about – feel free. But I started my first career back in the 1990s in the software industry, during the dotcom era, which was a blast. Right out of college, I started programming, project-managing, tried a few start-ups, it was great.

And then, after 9/11, I took a look at my life and all the blessings I had received from the freedoms we enjoy and from the society I had inherited and thought, I really have not done much, from my point of view, to contribute to the sustaining of that – to make sure it is here for the next generation. And I thought a lot about what to do and decided I would take off for two years and teach and it was fantastic – a great moment in my life. I am not sure it was a good decision process yet – I did not know much about that yet – but it was a wonderful experience and two big things hit me by doing that.

One was that I loved teaching – I really enjoyed watching the spark of curiosity come alive in a young person, and to see them making connections and understandings and thinking what was possible for their life. So I love that. And the second thing I learned was, it sure had not changed much since we were in school – so much of the education system is still based around an old model, with content that is focused on something unrelated, for the most part, to preparing young people for life.

That really hit me. So what I started trying to do was find ways to improve how we were teaching – sure – but also what we were teaching. So introducing the things I knew – computer science, programming, some statistics and probability. So I stayed in education – I really liked it. I stuck around for a while and, at one school I went to work at as the chair of the math department, part of their orientation for every teacher coming into the school was to train them on decision sciences.

And it struck me that, by that point, I had done an undergraduate degree in natural science and liberal arts and two masters degrees – one in math and one in economics – and in none of those had I ever formally studied decision-making. And here was an orientation and preparation programme for high-school and middle-school teachers to skill them up on decision-making so that they could be good guides and coaches to developing the decision-making of the students at that private school.

That was a big change for me because what I saw in that school were students who were empowered to think of themselves as decision-makers – to see that they had agency in their lives and that there were skills they could develop and improve on that would make them better decision-makers.

So, for example, the entire discipline system was run by the students, using reflection processes and using a structured decision-making cycle to talk about, OK, what was the frame you were using when you were making or poorly making this decision? What were the values you were considering? What were the trade-offs or the consequences? What alternatives Did you consider?

It was the same kind of conversation they had when they talked with their college counsellors about what they were going to do after high school here. It was the same kind of conversations they had with their coaches about how they were performing in their athletics programme, or what position they wanted to play, or whether they want to continue to invest in that area or focus on another area of their development. And the school made a point of trying to get parents to think this way.

JTR: What age were the students when they were taking over this programme?

JS: Good question. The school was pre-kindergarten – so four-years-old, on this side of the Atlantic – up to seniors in high school. All the teachers were trained on this and the students focused on different aspects of it all the way through elementary, middle and high school. It was really something and it turned out a couple of parents at the school had focused on decision-making in their own work – they were options traders – and they wanted this for their kids and for all the kids in the school. And so they had sponsored bringing in a group to train all the teachers on it.

Anyway, that is how I first got introduced to the idea there even was a field of decision-making and it was possible to bring those insights and findings from the last 30 or 40 years in decision sciences – behavioural economics, decision analysis, neuroscience, cognitive psychology – into ‘K-12’ education. And when one of those parents co-founded the Alliance for Decision Education, they asked me to be on the advisory council and I said, yes. That is how I got involved.

JTR: And what exactly is the Alliance for Decision Education?

JS: Well thanks, Juan! The Alliance for Decision Education is an educational non-profit that is dedicated to the understanding that better decisions lead to better lives and better society. What we are focused on doing is bringing decision education to students in the K-12 system across the country. It is a big, ambitious project and has two big sides to it. One is creating awareness and demand in society so people know about, value and think education should focus on decision-making. And the other side is solutions, discovery and scaling – how do we actually make that happen? What are the interventions that will move the needle on the things we care about? Whether it is learning how to structure decision, recognising and resisting cognitive biases, thinking probabilistically or just valuing and pursuing rationality – any of those areas – that is what the Alliance is doing.

The advisory council is substantially better than it was when Joe Sweeney joined! Now it has luminaries on it like Daniel Kahneman, Paul Slovic and Barbara Mellers. And I think, by the time this podcast comes out, we will have Richard Thaler, the author of Nudge and also a Nobel laureate, announced and up on the advisory Council. So the advisory council has substantially improved and I came in-house and started serving as the executive director a few years ago and the team has grown dramatically since. Now we are a team of about 25 – educators, communicators, fundraisers and so on – out there trying to build the community that is going to make this happen for kids across the country.

AE: That is an amazing who’s-who of decision-making. How easy is it to demonstrate the benefits of these programmes? When you take kids through them, is there any way of quantifying there is a tangible benefit at the end of it?

JS: That is a really good question. We talk a lot about how, OK, it is one thing to be able to recite back that you know these skills but how do we measure for it? I don’t know if you are familiar with Keith Stanovich and Maggie Toplak’s work on ‘rationality quotient’ – is that familiar? If not, it is a fascinating work. Keith is the author of The Robot’s Rebellion, which I highly recommend. Anyway, Maggie and Keith built an instrument called the ‘rationality quotient’, which measures a lot of the skills we are interested in – but, like most research in this area, it is for adults.

So we have been working with Maggie to develop a ‘comprehensive assessment of rational thinking for youth – or Cart-Y – and benchmark that with partner schools so that we have instruments we can use to measure some of this. Some of our programmes we collect – and have collected data – which is useful. We ran a fun programme your listeners might find interesting a few years ago called ‘GM Genius’. This was an experiment to try to go to kids directly in an area where they had intrinsic motivation towards learning these skills.

One of the important areas of becoming a good decision-maker is getting good at making predictions about what is going to happen – what are the possible ways the future could unfold? So we thought – all right, what is something where kids make predictions where we can teach them some of these skills? And we settled on fantasy football. So we built the first-ever learning platform based on fantasy football and created a college scholarship competition out of it so the kids could win money for college.

We had about 60,000 kids play the first year and got to see that, from the empirical data, they were improving in their decision-making and their predictions. Each week, they watched an animated video about some area of forecasting – a lot of it based on Phil Tetlock’s and Barbara Mellers’ work on super-forecasting and the Good Judgement Project.

They were getting better at their predictions – we could see that in the game data and the game mechanics –

but we were also hearing from them anecdotally that they were using this in other areas of their life. So that was one way we collected data about this. Every programme we support or try, we are thinking about how we gather data – and now we are building a research agenda, we are going to start issuing grants to researchers who are interested in looking at decision education.  That is both short-term – which interventions work? – and also longitudinal studies – how does this impact their life overall? There is plenty more to talk about there but I imagine you have other questions!

JTR: What has been the reception when you approach whoever is in charge of designing the curriculum for a K-12 programme?

JS: Yes – we have taken some bruises in that regard. This is not what school is currently set up – in the US, at least – to focus on. And so it is important people do not see it as competitive to things they are already teaching or requiring that we replace something – take something else out of the curriculum. It is important they see that it can be woven in and throughout the entire teaching and learning experience.

For the most part, any teacher who has gotten involved in any way with this effort, has found it to be dramatically improving of their students’ engagement. Things like classroom behaviour improve, tardiness goes down, absenteeism goes down ... we were very surprised to see reading scores went up – that was not something we were expecting. So, once they work with decision education, the teachers are incredibly receptive and excited about it.

Some of the principals and school building leaders are also similarly excited about it – but we have a pretty bad turnover rate in the US with regard to school leaders. So as each one goes out, there is this challenge that the programmes will be dropped by the next person who comes in, which is part of why we need to have this become a systemic change – for the entire K-12 system in all 50 states.

Parents love it. Obviously, that is not a big surprise. I am a parent ... I don’t know if either of you are ... but to think that your kids are going to become better decision-makers is one of the main things you want out of their maturation – so huge receptivity there.

JTR: We had Rob Gardner as a guest on the pod. He is a very senior member of a large financial services company here in the UK but he is also very passionate about financial education for children. And one of the things he said was that, when it comes to embedding some concepts into children, you need to do it at a very early age. And when it comes to financial education, he read some research that pointed out you actually need to start addressing some of these concepts when they are as young as seven. Would you agree with that statement when it comes to decision education and tools?

JS: ‘Yes, but ...’ – it is tricky. You have to approach all learning in developmentally appropriate ways. So the concepts you can bring in ... think about probabilistic thinking for a moment – we would not talk to seven-year-olds about being good Bayesians and about thinking in expected-value terms. But we could talk to them about ‘Maybe’ – not thinking always in ‘Yes’ and ‘No’ but ‘Maybe’ and ‘Grey’ and ‘What is another way that things could turn out?’

And playing simple games with them – with dice and things – to start to see that chance plays a role; and just unpacking for them the reality that there are more ways for the future to unfold than ways that it will unfold – and we have to take that into account when we are thinking about whether to bring the umbrella or not. Just bringing it does not mean it is going to rain and not bringing it does not mean it will – we have got to handle the chance part of life.

So, yes, you do need to start steeping people early in the dispositions and thinking skills. And you want to pursue something called ‘graduated autonomy’. So as a person develops, their level of agency and their authority over their own life and their decisions should match the level of responsibility they have over that – and that is very different for a seven-year-old versus a 13-year-old versus an 18-year-old.

The other problem is something called ‘proximal learning’. You do not want to introduce concepts that are not going to be used at all by the person – either in connection with other learning or in their out-of-schooltime life because then they just drop it. Think about the number of things you learned in school along the way that you have never used, never thought about again and are just gone. And so all of that is, to large degree, wasted time. We should not be focusing on things students are not going to use yet because they will largely lose it. And there is so much that is available to teach them that they can use right away – whether it is in their academic work, their co-curricular work or just in their life in general.

JTR: That is really interesting. The Alliance for Decision Education has a podcast that also tries to cater to decision-making and learning from elite individuals – how they prepare themselves to make better decisions, how the mental processes work, the different tools that they use. Our own podcast is also about decision-making under conditions of uncertainty and it pursues pretty much the same objective. It is not that surprising both podcasts are very similar, given the inception of our podcast came about after we had a session with Annie Duke more than two years ago. That was never supposed to be a podcast – it was supposed to be an interview for our blog – but then, afterwards, we thought – you know what, we have just interviewed this amazing person, with great ideas. She used to be a poker champion – so what else can we learn from other people in other walks of life outside of finance? Given that, what idea, concept or experience has had the greatest impact on you from the many people you have had as a guest on your show?

JS: OK – so that is a fun question. First, I should mention – and thank – Annie. Annie is one of the co-founders of the Alliance and is, I think, possibly the best communicator and translator around decision science – certainly that I know of. Her book, Thinking in Bets, was transformative for the whole field. I think it woke a lot of people up to the importance and tractability of learning about decision-making.

Anyway, I also made the mistake of having Annie early on my podcast and thinking – this is fantastic. You know, these guests are amazing. Annie is kind of special in that regard – it is like, that is not going to be the median experience! But, because of Annie being on the podcast and the great connection she has and followers she has, we have been hugely fortunate with who has come on our podcasts. Especially for a little non-profit, it has been ridiculous – just a wealth of insights. So I think Michael Mauboussin was also on your podcast, right?

JTR: Yes – and Maria Konnikova too.

JS: So if I did not already know Annie and if I did not already have access to her book and had not been talking with her for several years, I imagine some of those insights from the conversation with her would have been transformative ones for me. But I will tell you – the one that really hit me was a conversation with Lee Failing. Lee is a decision facilitator, consultant, strategist, scientist – working up in Canada – and she brought to the foreground the idea of participatory decision-making ... multi-stakeholder decision-making.

Up until then, I and most of the people who had been working on bringing decision-making into K-12 had really been thinking about it from individual empowerment. We were trying to give each individual decision-maker a set of skills – and Lee really challenged us on that, both from a learning outcome point of view – what are we doing this for and what is going to be the big benefit from it? – and from a pedagogy point of view. How is this going to show up inside the classrooms? What is going to be the most effective way to get buy-in from teachers and from educational leaders across the country?

And that really pushed me – that made me think a lot about how much of our programming standards and efforts should be around empowering the individual as an individual decision-maker, where they have the majority of the control over their decision process? And how much of it should be about – what do you do when you are engaging in a multi-stakeholder decision, whether that is a club at school or a civic organisation? Or as a society, how do we make big decisions about life?  Or in a dyad – in a couple – and trying to think about decisions around things like family and relationships? So, while I have learned a lot from our podcast, that was the one that knocked me sideways the most.

AE: It is interesting you say that because we were actually planning to ask you about that podcast – so maybe we will bring that forward. Because, in the same way, so much of what we have been talking about has been focused on the individual and, as you say, that Lee Failing podcast really opened up another avenue to decision-making. So maybe you could go into a bit more detail on what you have learned after exploring that avenue of joint and participatory decision-making as opposed to an individual approach focusing on, say,  probabilistic thinking or base rates?

JS: Happy to. I also think Lee does a much better job than I ever will of describing it. So either folks should check out that episode of our podcast or maybe we can get Lee to come on yours – or both. I think the story Lee shared was about water rights and about how a company, a local community and an indigenous people were all thinking about access to this body of water – how it would be used, what the impacts would be and even what it was ... what it meant to them – and the takeaways from that conversation were many for me.

One was structuring a decision process is different when you have multiple stakeholders. There is a need for active listening that is different. There is a facilitation requirement that is different. There is a conversation about trade-offs and values that is different than when you think about trade-offs for yourself. When you think about structuring a decision for yourself, of course you are thinking about, what are the different values I am trying to serve here? What are the preferences I have or the criteria? And then what are the trade-offs of each of these alternatives, relative to those?

It is quite a different thing when some of the values mean more to you, Andy, and they mean something different to Juan and something different again to Joe. It requires much more work at the beginning – about framing and thinking about what is the problem and the decision we are trying to make? And who has a voice in it? And how are we going to bring those voices forward? And who gets to have final authority over it? There were just so many pieces – you really need to reflect on and think about good facilitation and honouring the dignity of the other people who are involved.

Lee does a great job describing all that and then pulling together a story about the whole thing – part of the charm, I think, is we learn in stories so she does a really good job with that. I was thinking about this not too long ago – if you were trying to communicate this to a little kid, how might you talk about it? I was probably taking a walk so this idea of a tree hit me and I thought like – see that tree there? Different people think of that tree in different ways. They value it differently and the decisions about what to do with that tree are pretty different. A farmer might see it as shade during a hot day or a thing that holds the soil in place. A furniture maker might see it as potential lumber – as wood of a high quality they could use to make furniture. Kids might see it as a plaything ... a place to gather or a place to play. An artist might see it as a focal point for a painting or a song or a poem.

And because it means different things to different people, they are going to have very different expectations about what kind of decisions could be made about what to do with that tree? Are we are going to try to care for it and sustain it? Are we going to cut it up and use it? What is going to happen with it? And you can just imagine – it would be hard enough for one person to decide whether to cut down that tree and use it or not for lumber. But now you have a few people who have different needs out of it. And a young kid can understand that pretty well.

AE: That is really interesting – thank you. And yes, we would definitely recommend the podcast you did with Lee. Just coming back to the high school kids and decision-education programmes, one thing we find, time and again, is it is quite easy to talk about and identify your behavioural biases, but it is a lot harder to implement and overcome them. We are all aware of them but we find it very hard – whether it be that probabilistic thinking is not an easy thing to do day-to-day, or finding base rates and thinking about them at the right time. So how do you go about encoding in kids the ability not only to identify these things, but also to be able to have the tools to implement them and be able to do it at the right time?

JS: That is such a good question. My strength in teaching is really with teenagers. That is what I spend most of my time doing. So I will mention my personal experience and then I will go broader to how the Alliance is approaching it. My personal experience is – teenagers have a superpower and that is recognising the failings in someone else’s thinking! They can spot someone else falling for a bias pretty easily. They can see when it is happening – whether it is a friend of theirs or a classmate or a teacher or, better yet, a parent. So, if you begin by exposing them to the possibility that people are falling for cognitive biases – these systematic errors in the ways we process information – if you start there and then ask them just to notice them, they will notice them in media, they will notice them in the decisions school administrators are making, they will notice them in the decisions that their classmates or peers are making. And that is a good start.

So that is one. It is an easy pedagogical move – just get them to start noticing, right? From the Alliance’s broader effort, one of the things we are really focused on, as I mentioned, is discovering and scaling solutions. The question is, how do you go about doing that as an education movement? And what we settled on was building a community of educators – going to the professionals, the teachers, and saying, we know these skills are important. We know these dispositions are important. How do you imagine they might show up?

And we created a programme called the ‘Decision Education Fellows’. We got together a cohort in the first year and then we just had our second cohort join. They go through about 10 weeks of training on decision sciences and they work with our education team to think about their core subject area – English, math, social studies, science – and how might these skills show up inside of your classroom? And they work on developing a unit or a lesson that brings one or more areas of decision science into their core curriculum. And then they share out that lesson or unit to other teachers.

What we are trying to do with that is find the places where the opportunities exist for interventions – without having to replace whole sections, or add another class, to the daily schedule. So I would love to say, oh, we know – here is the list of things. But actually we are building a community of educators to help us discover the ways to bring decision education into schools. I think that is the appropriate way to go – these are the people who are responsible for preparing the next generation and they have the expertise about what works with kids at different ages and different levels of development. They should be the ones who are helping us figure this out and leading the charge.

AE: That makes a lot of sense. By the way, I don’t think it is just teenagers who are good at identifying biases in other people – we are all guilty of that. It is far easier to see them in other people than in ourselves. As a follow-on, is there one area that is particularly hard to get across? There are lots of adults who struggle with getting their head around probabilistic thinking, for example – so is there something you have found particularly hard to get through to kids?

JS: Yes – but, to your point, I don’t think it is just kids. The one that strikes me as the hardest – and you do not see it much in the literature yet. Or at least not in much of what I have read yet – is that feeling right and being right are not necessarily correlated. We can have very strong feelings about our opinions and about the rightness of our facts and our analysis and it can really feel like you are right – and you are just not. And that is just hard to get around – you have to discount the feeling of certitude. Even start to just pay attention to when it shows up. Oh, I think I am right here. Well, OK ... you don’t think you are right – you feel you are right. Set that aside for a moment and now let’s examine the actual arguments, pro and con, for your position.

That is, I think, very hard because it just feels the other way and we are largely driven by our feelings – by our emotive experience. I think that is probably the hardest – you can think about things like overconfidence, temporal discounting, present bias – those are huge and hard to resist. Overconfidence is the one Danny Kahneman would point to as the number-one hardest – and he is probably right. He is certainly a lot smarter and more knowledgeable than me about all these things. But the one I find is really hard for people is ‘But I feel right’. Yeah – that doesn’t cut it.

AE: Yes – and everyone loves being right as well. Or loves feeling like they are right! Let’s turn it around then and ask, if you had a magic wand and you could implant one or two skills in each of the kids who go through the programme, what do you think the most important ones would be?

JS: That is a fun question – and I think you would get lots of different answers from lots of really informed people on it. For me, I think it would be a couple of things. One, if I could wave a wand, I would have kids realise they have agency; that decisions are real things; that they should be seeking them out as opportunities to improve their lives, identifying when they show up and treating them as ways of pulling different futures into the present – that that exists. Know that decisions are a thing that matters and you can do something about and you should be looking for. So that is a big one.

Another one would be to value rationality. And I mean that in a [Keith] Stanovich’s and [Maggie] Toplak’s way – in two parts: epistemic and instrumental. ‘Epistemic’ is seeing the world more accurately and valuing that – so truth-seeking over being right. And ‘instrumental’ would be behaving in ways that are consistent with your goals and values. And by values, I mean, your second-order values – the ones you want to have, not necessarily how you feel in the moment.

I think those would be the biggest. Some people would argue, no – if you get them to think probabilistically, you are there. Like, that is the golden ticket, the silver bullet or whatever other metal you want to describe. But I think it really starts with – do you see yourself as the author of your life? And if you do – or at least the co-author – how are you going about that? Well, it is through the decisions you are making and through the judgments you are forming. OK, well, what approach are you going to take to making those decisions? Are you just going to go with your gut? Or are you actually going to try to be good at this?

Nobody would go and play ... I was going to say baseball but I am not sure that is good for your audience ... cricket, I guess? Nobody would go and play that for the first time and think that is the best they could get at it – they would try to practice the skills and get better. Well, if decision-making is the way that you author your life, then you would think you would want to get good at it. And if we could get that into kids heads, I think the whole game changes.

JTR: We recently listened to the Decision Education Podcast interview Annie Duke did with Mike Lombardi and, at one point, they touched on the importance of narrative in sports. As it happens, we recently had as a guest on our pod Simon Hallett, who is the owner of an English football team called Plymouth Argyle. He also used to be an investor – he was a fund manager for 20 years – so it was interesting to hear his experience of transitioning from asset management to owning a football club. He is also passionate about behavioural biases and decision-making and has been trying to bring many of the tools of decision-making and behavioural finance into running the club. The topic of bad narratives came up – we were saying narratives can be very useful in the world of investing but they are also very tricky and you need to be very careful around them. You need to put behavioural tools in place to see through them so you do not get carried away. Narratives are also hugely important in the world of sports, so how do you set about differentiate the fake from the real and not get carried away by any story behind a trend or event?

JS: That is a big topic – thanks! So first, I actually know Simon. I met Simon a little less than maybe a year ago – delighted to get to know him – and he has become a big supporter and champion of decision education. He had me up to his investment firm Harding Loevner in New Jersey to speak recently. They have a university programme where they bring all their employees in to learn about a topic – you know, cryptocurrency, investing in Asia and so on – and very generously offered an opportunity for me to come and speak to them about decision education and this movement to bring decision skills to K-12 learning.

So I am a huge fan of Simon’s. Also though, I got to see a little bit behind the curtain about what they do at Harding Loevner and how they keep track of everyone’s decisions in the organisation and score them and focus relentlessly on decision quality. It is fascinating. So if he is bringing that to his football team, good luck to the others! It is going to be a differentiator.

Anyway, to the idea of narrative ... I don’t know – I might be too ‘mathy’ a thinker or abstract thinker in this regard – but I sometimes picture in my head ... imagine you had four or five dots in a two dimensional space – just a flat, blank space and a few dots on a paper. Maybe that is the way to think of it for those who are trying to visualise this.

And to me, one question is, OK, where is the next dot going to appear, right? That is one kind of question – that is about prediction. But there is another question, which is – how do these dots connect to each other? And someone could draw a figure connecting those dots, just with straight lines – just as a perimeter and outline a shape. Another person might look at those dots and use them as points to create an intersection of lines between the dots. Another person might see those and just draw a giant smiley face with curved arcs around those dots. And, to me, those are the narratives. Those are the stories about the dots – those are the stories about the facts, using the facts.

None of those stories is particularly good at predicting where the next dot is going to show up – if you do not understand the causal relationships behind why are these dots here? Why did the ones that exist already exist? What are the constraints? You know – if you do not have a mental model for that? And I think we can sometimes get confused about which activity we are in – are we in a space where the interesting and important thing is connecting these dots and telling a good story about them? Or is the interesting and important thing making a prediction about where the next thought is going to show up?

And so, when it when you bring it over to sports, if you are a decision-maker inside of sports and you are thinking about the next play to call, it is funny, but it seems like both pieces of work show up. On the one hand, you want to make a good prediction about how the play is going to go – if you make this call versus that call, what is going to happen? What is the likelihood of each thing happening and what is the expected value? But you also have the entire narrative around sport – about people’s passion for a team, about the following of, and the identification with, that organisation. And that requires them believing in or participating in a narrative and a story.

So I think sports managers have a particularly hard roll – probably a little harder in one way than investment managers in that they have got to be telling a story to a very big public audience, all the time, about what their decisions were for, and how they related to the identity of the team that someone has become associated with. That is a tricky one. Anyway, that is how I think of it.

AE: Thanks, Joe. We are getting close to our signature questions but I did have one more. I am going to ask you to paint the most optimistic picture, if the Alliance succeeds in getting decision education on the curriculum in the US – what does that look like for a society in terms of benefits? Is it low prison rates? Is it a society that is more able to deal with misinformation and so on? Could you just paint a very optimistic picture of what good looks like, if you were to be successful?

JS: Yeah – that is a great question and it gets a little overwhelming when you start to actually appreciate the magnitude of this thing. The responsibility sometimes feels like, oh my goodness, I am really glad that not only is there a great team behind this effort, there is a growing community behind it – because it cannot be any one individual’s goal. It is just so big.

But imagine for a moment any issue you care about – whether it is homelessness, the environment, innovation, raising living standards, reducing child abuse ... I mean, you pick your topic, whatever matters to you. And it does not have to be as dire as homelessness or the next vaccine or genetic engineering or artificial intelligence and its implications for people’s ability to work and support themselves or what it could mean for future discovery. But whatever area of life you are interested in, there are decisions being made and the quality of those decisions is the thing we have control over. We do not have control over chance but we do have control over the quality of our decisions.

And if you could improve decision-making a little bit – let’s say 5% – from where it is right now, overall. If that was all we could do – imagine the impact of that. It is absolutely enormous. Everything we care about gets better. So those are the stakes. Now, how much can we improve decision-making? And how much does an improvement in decision-making affect outcomes in whatever area you are interested in? That is a huge body of research for us to investigate. That is a big thing for us to unpack.

But if you go to sports or poker or trading or any area of life, where you can see the feedback loop on decision quality and how it affects outcomes, you can see decision quality matters a lot. It matters a lot. And so if it matters a lot in the domains we already know about ... we just recently had a new board member, Jan Tighe. She is a retired vice-admiral, US Navy – the first woman ever to command a fleet in the US Navy, head of US Naval intelligence – and she joined our board saying, this is an issue of national security: that we get better at decision-making.

So whether it is national security and geopolitics, or it is poverty reduction or it is improving health outcomes – decision process, decision quality, recognising and reducing cognitive biases – we can anticipate they are going to have dramatic effects in all those areas. I do not have good measurements for it but I will paint the rosy picture of the minimal. If we just did a little, it would be a huge impact – and I do not know how big it could be.

AE: It sounds a fantastic project so all the very best to you, Joe, and rest of the Alliance, in getting that into the education system. Onto our signature questions, then, and the first is, we gave you a nice optimistic chance – now it is a pessimistic chance. Please tell us about a decision where the result was very poor – not down to chance but from a decision-making perspective.

JS: I am assuming you mean in my life – and, sadly, there have been more than one! But the one that jumps to mind – because we try to work with young people about this one – is my decision about college and my college major. I ended up being a physics major in college and the way that happened was, one day, my father was walking in the door as I was filling out my application to college. I got down to the word ‘major’ and I did not know what a major was yet – we had never had that conversation. And I said to my dad, what should I put down for my major?

And he said, well, what do you like? And I thought, well, among the subjects I am currently taking, I like physics – so he says, well put down physics. So that is how I became a physics major. When I think about that as a decision process, it was terrible. The outcome was good: physics is a fascinating area of study and it combines math and philosophy in some fun ways – for me. I found it enjoyable. But it was a terrible process. That is not how anyone should be making a decision about what to study for four years. Good grief. So there is an easy example.

AE: Very good – thank you. And I know from listening to your podcast that you are a very well-read person. Plus you mentioned Keith Stanovich’s The Robot’s Rebellion earlier in this podcast. But are there any other books you would recommend to our listeners?

JS: There is one I am on relistening to. I have started using Audible, which is a lot of fun. I mostly read books in paper form but I am relistening to Ryan Bush’s Designing the Mind: The Principles of Psychitecture. Fascinating, really fun, very practical – I think your listeners would enjoy reading it quite a bit. So that one jumps out.

I am not going to mention so many of the others that are already familiar because I have heard previous guests on your podcast announcing good books that everyone should read – like Thinking in Bets and Thinking Fast and Slow and Skill Versus Luck and The Psychology of Money ... you can just run down the list. But I have not heard people talking about Designing the Mind yet and I think it is a great book.

AE: Brilliant. Thank you very much for that recommendation – and thanks so much for joining us on the show. It has been really interesting.

JS: Thank you. It was a real treat. Thank you very much for helping us get the word out about decision education and the Alliance – I really appreciate it.

JTR: Again – very good luck. Thank you.

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Juan Torres Rodriguez
Fund Manager, Equity Value
Andrew Evans
Fund Manager, Equity Value

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