I have a confession to make. It took me years to understand the concept of heuristics. I don’t know why. I mean, I’m a smart guy, who obviously understands this economic mumbo-jumbo far better than the ordinary person. And heuristics is/are one of the foundational ideas of behavioral economics.
Maybe it’s the name. Too Greek? A lot of behavioral economists who have written books explaining some of these ideas to the masses have done a pretty good job at explaining heuristics. I like the summary behavioraleconomics.com uses. They define a heuristic as a cognitive shortcut, a process in which a person substitutes a difficult question with an easy one (they cite Kahneman, D. (2003)). Maps of bounded rationality: Psychology for behavioral economics. The American Economic Review, 93, 1449-1475.).
We humans do this intellectually, but also athletically. Let me give you an example by way of a mind-journey.
You’re back in 7th grade playing little league softball. It’s the summer tournament and it’s the first game of the summer season. Mid-afternoon, warm sunshine, pretty grass. Your parents are in the stands, though you will of course completely ignore them all game (you’re cool).
You’ve been at a few practices before the first game and the coach has enough sense to figure out, even at this early stage, that you’re not going to make it to the majors… So out to the outfield you go. That said, you’re not the worst person on the team, so at least they don’t put you in left field (left daydream more-like), they put you in right.
So far the game has gone pretty smoothly. It’s 2-1, your team is up in the middle of the third inning. You’ve already been up to bat, and actually managed to softly dribble a ground ball into the outfield and got on base! Made it over to second but then it was three outs, and you didn’t get to score.
Every little league team has that one kid that actually is good. Just far and away better at softball than other kids. Early puberty I suppose. Good hand-eye coordination. Parents are big into sports. Well they are now up at the plate and you’re a little nervous. So far no one has hit a ball to you. It’s little league and you’re in the outfield. Most runs are scored on errors throwing to first base. But this kid… Could launch one out to you and everyone will be watching. There are already two people on base, first and second, so it’s a big moment in the game.
Nervously you wait. Ball one. Strike one. Ball two. Next pitch is crushed. Right field. A high arcing sky-high hit. Now you’ve backed up a fair way, and no one hits home runs (it’s 7th grade), so it’s going to be up to you to catch it.
If a computer programmer, an engineer, or an economist were faced with this problem of getting your glove to the same spot of where the ball is projected to land (well, right before it lands), they would do the only thing that makes sense. The moment the ball is hit you can clearly see the flight trajectory. Based on the speed of the ball and the angle it is hit off the bat there is a clear concave flight pattern. You calculate the flight path, adjust slightly for wind, and determine the exact location the ball will land. Run to that spot, wait for the ball, and catch it when it gets to your glove. Easy peasy.
But if a human attempts to do that calculation in real time they always miss the ball. Human perception will misjudge the exact velocity. The ark and weight of the ball will change how it falls, so it won’t be perfectly uniform. Wind and air humidity will influence exactly where it will land. The precision required to calculate where it will land is immense! Further, an outfielder needs to be precise to maybe 5 square inches. Maybe even 5 square centimeters.
It’s a nearly impossible problem for the human brain to solve in the 5 seconds of flight time. So humans don’t solve it. We take a short cut. We use a heuristic.
Right now (do this), put your hand up in front of you as if you were going to catch a pop fly. As long as your glove is “blocking” the ball as it’s in the air, you’re in the right place.
Imagine if you saw the ball under your glove, you’re too far back, it will fall in front of you. Conversely, imagine the ball is much higher than your glove, you’re too far forward, it’ll land over your head. And the same left or right. So long as you keep the ball at the same “spot” in your field of vision, you’re going to catch it. If it’s not at the correct height, or left/right, you need to run to get it back into position.
No humans calculate flight trajectories to figure out where the ball will land. They just use a thousand little, quick micro-adjustments to keep the ball at the right angle in air. And at the last second make a slight adjustment before it gets to the glove for the final placement. It’s a much easier calculation.
So this is what you do. Luckily you don’t have to move too far, just run a little in and towards your left. Even with the sun out you can see the ball, you track it, keeping it at a consistent angle. The “correct” angle says your brain. With your glove out, you let you reflexes take over at the last instant, moving the glove over ever so slightly, to correct the errors leftover from your heuristic. Instead of a huge error of maybe 30 meters, you’ve narrowed it down to a fraction of a meter.
You catch the ball. Overjoyed and excited you can’t help but look over to your parents who both gasp and clap and smile. You try to pretend you don’t see them because, duh, you are still being cool. The crowd claps and the other team groans that you didn’t drop it. But no one really cares except your parents, I mean, you’re in right field, it’s your job to catch balls that come to you. What sort of right fielder would you be if you missed fly balls? But you did it, another day another dollar. Your unconscious brain is trying to get your attention. Something you’re forgetting?
Oh! That’s right, we’re playing softball I need to throw it back into the infield! You do, and your throw is horribly off target and short by like 15 feet. But this is softball in 7th grade. No one is stealing bases. The second basement trots out to grab your pathetic attempt at a fastball and relays it to the pitcher who also drops the ball. Again. Softball, in 7th grade.
Play resumes and the parents continue to talk about this cool place they found out in the country that makes its own Chardonnay!
Ah yes, little league softball, those were the days…
Snap back to reality. Oh, there goes gravity (as an example). Oh, there goes Guthrie, he overwrote, you’re so mad, but he won’t give up that easy, no, just gotta lose yourself in the mind-journey, don’t you ever let it go. You only got one chance, do not, drop the ball. Use a heuristic! (The author groaned with he saw he had wrote this, but decided to keep it in because it’s so groan worthy…)
The process of catching a softball is a simple explanation of a heuristic and how it works.
Heuristics can be cognitive as well as physical. In fact, perhaps the most important heuristics you will come across are cognitive. Educated guesses, intuitive judgements, guesstimates, profiling, stereotyping, or most mental shortcuts are all examples of heuristics.
Here’s a quick example:
You are in charge of designing the new website for your small business. Your boss comes to you and asks you, “Should the main menu be horizontal or vertical? “
To truly figure out the correct answer would take modeling, and user testing, and analytics and all sorts of tough thinking. But you can simply say horizontal because you’ve seen other websites with horizontal menus and you like them. You’ve used a heuristic to save a lot of time and decide.
There is often a perception that taking a heuristic shortcut is bad, or lazy. But there is research that suggests that you can get better results if you use a heuristic.
I want to talk about the “take-the-best” and the “recognition” heuristic as described by Gigerenzer and Gaissmaier in Heuristic Decision Making in 2011 and Models of ecological rationally: The recognition heuristic by Goldstein and Gigerenzer from 2002.
They very carefully outline the model of the take-the-best heuristic.
Here’s how the (very simple) take-the-best heuristic works:
You’re forced to pick between two choices. One of the choices “feels” good. Don’t think about it, just pick it. That’s all there is to it.
The reason this works is because the alternative with the positive cue (“feels good”) has a higher value. Pick it, trust your unconscious and move on.
The recognition heuristic is basically the same as take-the-best, but with a slight difference. When faced with a choice don’t pick what “feels” the best but pick whichever answer you recognize first.
Most of the time when you use the recognition heuristic you will end up with the same result as if you use take-the-best. This is because answers that come to you quickly often feel the best, and answer you recognize will come to you more quickly.
It may seem weird that using these simple heuristics would actually lead you to a right answer more often than if you think about it. But let me tell you very briefly about the research.
In their studies the researchers asked people two questions. The first was to pick which German cities had larger populations, and the second which mammal lifespans were longer.
They then told participants to use all sorts of various tactics to make their decision. The take-the-best heuristic got the best results as you can see on the graph in Figure 1 (each line on the graph is a different model, the higher the lines the better the accuracy).
The researchers later gave a question about German city size and then American city size. They asked most participants to use the recognition heuristic (if you recognize it, choose it).
Here’s the crazy part, German participants did better on the American cities test than German cities, and Americans did better on German cities than American cities!
Sometimes when you go with your gut, it really is the best choice. By overthinking the answer using more knowledge about cities in their own country people got worse results.
From these results the researchers came up with the very short and simple “fast and frugal” rules you can use to come to better answers, quickly.
First, search for clues, or information that would be useful in making a decision.
Second, stop searching when the costs of further search exceed the benefits. That is to say, stop searching when simple searches fail to provide you with useful information. Excess information is bad; you only want the bare minimum.
And third, make an inference or decision when the search is stopped. Don’t think too hard about it; just make a decision and move on.
Even though that sounds silly and not well thought out, it can often lead to better results than a long-drawn-out process.
We’ll cover more studies later about why heuristics often can create more accurate answers even though they take less thought and effort.
The short answer is that using a heuristic stops your brain from consciously thinking too much. The more you consciously think, the more your biases get in the way. And the more you are misguided by your cognitive biases, the easier it is to come to the wrong result.
If you take the fast and easy solution you skip that whole process.
In conclusion, here are some real-world takeaways:
It’s important to know what a heuristic is and how people think. We use these all the time, but it’s okay! Shortcuts for humans sometimes work best.
Don’t overthink things, it can be less accurate and takes much longer.
Utilize “fast and frugal” heuristic rules when you need to be relatively accurate quickly and en masse.
Let me know if you have seen too much thinking get in the way of the best result.
Goldstein, D. G., & Gigerenzer, G. (2002). Models of ecological rationality: The recognition heuristic. Psychological Review, 109(1), 75-90. doi:10.1037//0033-295x.109.1.75
Gigerenzer, G., & Gaissmaier, W. (2011). Heuristic Decision Making. Annual Review of Psychology, 62(1), 451-482. doi:10.1146/annurev-psych-120709-145346