“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” (Charles Mackay)
The Wisdom of Crowds by James Surowiecki is often cited for the proposition “the large crowd is smarter than the expert few”. The proposition has at least four prerequisites, however: a diverse, decentralized and independent thinking crowd and a means of measuring the collective verdict. Now that’s a tall order to get the benefit of collective wisdom. Without those stars in alignment, the exceptions overcome the rule. The author has said that the crowd can come up with “remarkably stupid decisions.” and a good chunk of his book shows how crowds can “go mad” and “succumb to delusions”. To understand more about crowds see, for starters, tulip mania, information cascade, bandwagon effect and the herding instinct. Just because the lines are long at McDonald’s does not make it the healthiest or tastiest food. Other examples: AOL & Internet Explorer.
Surowiecki was quoted as saying:
Essentially, any time most of the people in a group are biased in the same direction, it’s probably not going to make good decisions. So when diverse opinions are either frozen out or squelched when they’re voiced, groups tend to be dumb. And when people start paying too much attention to what others in the group think, that usually spells disaster, too. For instance, that’s how we get stock-market bubbles, which are a classic example of group stupidity: instead of worrying about how much a company is really worth, investors start worrying about how much other people will think the company is worth. The paradox of the wisdom of crowds is that the best group decisions come from lots of independent individual decisions. (emphasis added)
Since I will always question the wisdom of crowds, you can put me in the camp of Charles MacKay & John Kennedy Toole. I do not presuppose a wise crowd, especially if I can’t identify the individuls who make up the crowd.
Postscript: There are two Suroweicki examples I often hear to support the truth of “the large crowd is wiser than the few experts” mantra which I’d like to poke some holes in (just for fun).
1. The lost submarine. It seems the ones questioned were all “experts” in fields which had a useful relevance, i.e., engineering, physics, oceanography, ballistics. Had they asked the “man on the street” crowd (certainly a more diverse crowd), that sub would still be missing. So pick your large crowd wisely. Conversely, guessing the weight of a pig takes no real expertise. It’s more a function of being above a certain age & life experience. Ask a large crowd of grade school kids & that average pig weight won’t be close. I’ll take that wager any day. And I’ll wager a group of local real estate experts comes closer to guessing the weight value of my house than a diverse group of real estate experts from out-of-town, not to mention a crowd of statisticians with no real estate experience in my town and a software program using public tax assessment data. I would not rely on that confederacy for the wisdom I need.
2. The “Poll The Audience” lifeline on Who Wants to Be a Millionaire gives more correct answers than “Call a Friend”. For one, the poll is done for easier questions & call a friend for the really hard ones. Secondly, the friend called is not usually an expert on the question asked. But even the Poll can be wrong in finding Truth. Do a “Poll the Audience” for the question “Is the earth flat or round*?. The audience would overwhelmingly say “flat” before Columbus sailed.
So, think before following the crowd & always use experts. Just get more than one opinion. That’s just common sense. Happy Columbus Day.
* the earth is currently believed to be an oblate spheroid.
