Michael Lewis

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“People Don’t Want The Right Answers. They Want A Story.”

December 9, 2016 in Excerpts, Politics, Science/Tech | Permalink

 

The media was flawed, Facebook irresponsible, the FBI reckless and Russia devious, but it’s still the American people mostly to blame for electing as President an unqualified, bigoted sociopath, thereby creating the single biggest threat in more than half a century to our liberty (an admittedly unevenly distributed good throughout our history). It was an unforced error, a self-lacerating act, and we will pay for it dearly, not just for four years but for decades.

Unburdened by shame and unhampered by facts, Donald Trump is at best a robber baron and at worst an American Mussolini. If the former unfolds, we’ll be dining on little more than bread and Kardashians. Should the latter become reality, we’ll have retroactively lost World War II and the Cold War.

Wondering how nearly 63 million citizens could have behaved boneheaded enough to make Brexit seem a bad hair day, Gary Silverman of the Financial Times interviewed Michael Lewis about his new book, The Undoing Project, which analyzes the work of Israeli psychologists Daniel Kahneman and Amos Tversky and may help explain our Election Day massacre.

Lewis believes the human desire for exaggerated stories over cool statistics is in part responsible for the political ascent of the Simon Cowell-ish strongman, though the author, an admittedly wonderful writer, has sometimes himself been known to err on the side of narrative.

An excerpt:

The two psychologists are known for their work on “heuristics”, mental shortcuts that enable people to process all the information coming our way but can cause us to make mistakes. They are the cognitive equivalents of optical illusions — tricks played by the mind rather than by the eye.

A classic case involves what the psychologists dubbed “anchoring”. People given five seconds to estimate the product of 8x7x6x5x4x3x2x1 will provide far higher numbers than those asked to multiply 1x2x3x4x5x6x7x8 in the same time period. Seeing the bigger numbers first skews their thinking. A similar result is obtained if subjects are asked whether Mahatma Gandhi was more than 114 years old when he died or 35. People in the first group will provide a higher estimate of his age at death.

To Lewis, Trump has been dropping anchors like a battleship commander. After the election, for instance, Trump not only alleged that his opponent Hillary Clinton had received illegal votes, but that she had received “millions” of them. He offered no proof, but he used a big number. Putting all those zeroes in people’s heads can pay off later on, Lewis says, in much the same way as a lawyer seeking astronomical damages in a lawsuit can expect a larger pay-off than a litigant taking a more measured approach at the outset. “Trump anchors everything in this crazy number. He will always say the crazy number because the negotiation happens around the crazy number.”

Trump’s frequent use of violent imagery takes advantage of what is known as the “availability” heuristic. People make decisions based on memories. But more vivid information — the name of a celebrity, for example, as opposed to that of another person — is easier to recall, giving it greater weight in decision-making. When Trump speaks of gruesome Isis executions or murders committed by undocumented immigrants, he is providing voters with more memorable information than dry facts and figures. 

“A vivid story about something an illegal immigrant did is going to have much more of an effect than statistics about illegal immigrants and crime,” Lewis says. “People don’t want the right answers. They want a story. They don’t think in statistical terms.”•

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“To An Economist, These Findings Are Somewhere Between Puzzling And Preposterous”

May 29, 2015 in Books, Excerpts, Science/Tech | Permalink

When Thomas Friedman devised his Golden Arches Theory of war, he somehow forgot that humans aren’t rational creatures. Our decisions are often perplexing, and the few among us who make sober, clear-headed calculations are frequently viewed as something other than human. What’s wrong with them?

In a Bloomberg View piece about Richard Thaler’s professional memoir, Misbehaving, Michael Lewis writes of an economist who had a simple-yet-significant epiphany: We make screwy choices, often to our own detriment.

An excerpt:

At any rate, in addition to calculating the market’s price for a human life, Thaler got distracted by how much fun he might have if he asked actual human beings how much they needed to be paid to run the risk of dying. He began with his own students, telling them to imagine that by attending his lecture, they had exposed themselves to a rare fatal disease. There was a 1 in 1,000 chance they had caught it. There was a single dose of the antidote: How much would they be willing to pay for it?

Then he asked them the same question, in a different way: How much would they demand to be paid to attend a lecture in which there is a 1 in 1,000 chance of contracting a rare fatal disease, for which there was no antidote?

The questions were practically identical, but the answers people gave to them were — and are — wildly different. People would say they would pay two grand for the antidote, for instance, but would need to be paid half a million dollars to expose themselves to the virus. “Economic theory is not alone in saying that the answers should be identical,” writes Thaler. “Logical consistency demands it. … To an economist, these findings are somewhere between puzzling and preposterous. I showed them to (his thesis adviser) and he told me to stop wasting my time and get back to work on my thesis.”

Instead, Thaler began to keep a list of things that people did that made a mockery of economic models of rational choice. There was the guy who planned to go to the football game, changed his mind when he saw it was snowing, and then, when he realized he had already bought the ticket, changed his mind again. There was the other guy who refused to pay $10 to have someone mow his lawn but wouldn’t accept $20 to mow his neighbor’s. There was the woman who drove 10 minutes to a store in order to save $10 on a $45 clock radio but wouldn’t drive the same amount of time to save $10 on a $495 television. There were the people Thaler invited over to dinner, to whom he offered, before dinner, a giant bowl of nuts. They ate so many nuts they had no appetite for the far more appealing meal. The next time they came to dinner Thaler didn’t offer nuts — and his guests were happier.•

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“It Was Our Wealthy Participants Who Were Far More Likely To Lie For The Chance Of Winning Fifty Bucks”

November 18, 2014 in Books, Excerpts, Politics, Science/Tech, Urban Studies | Permalink

Michael Lewis has a different kind of take on wealth disparity in the U.S. In a New Republic review of Darrell M. West’s book Billionaires, Lewis remains circumspect that ridiculously prosperous Americans can win elections or influence issues, even in a nation defined by Citizens United and growing income inequality. (I don’t know that we’ve yet arrived at the endgame on that issue.) But he still thinks superwealth may make people assholes, or at the very least, uncaring and unhappy–that apart from money, they aren’t very rich. It’s a generalization, sure, though it’s difficult to imagine that being cosseted by a fortune wouldn’t alter a person’s worldview, wouldn’t allow them to arrange their reality as they wish, minus that helpful friction the rest of us encounter when we want our own way regardless of how it effects others. At any rate, Lewis comes armed with a trove of research by social scientists, psychologists and neuroscientists. An excerpt:

“What is clear about rich people and their money—and becoming ever clearer—is how it changes them. A body of quirky but persuasive research has sought to understand the effects of wealth and privilege on human behavior—and any future book about the nature of billionaires would do well to consult it. One especially fertile source is the University of California, Berkeley, psychology department lab overseen by a professor named Dacher Keltner. In one study, Keltner and his colleague Paul Piff installed note-takers and cameras at city street intersections with four-way stop signs. The people driving expensive cars were four times more likely to cut in front of other drivers than drivers of cheap cars. The researchers then followed the drivers to the city’s cross walks and positioned themselves as pedestrians, waiting to cross the street. The drivers in the cheap cars all respected the pedestrians’ right of way. The drivers in the expensive cars ignored the pedestrians 46.2 percent of the time—a finding that was replicated in spirit by another team of researchers in Manhattan, who found drivers of expensive cars were far more likely to double park. In yet another study, the Berkeley researchers invited a cross section of the population into their lab and marched them through a series of tasks. Upon leaving the laboratory testing room the subjects passed a big jar of candy. The richer the person, the more likely he was to reach in and take candy from the jar—and ignore the big sign on the jar that said the candy was for the children who passed through the department.

Maybe my favorite study done by the Berkeley team rigged a game with cash prizes in favor of one of the players, and then showed how that person, as he grows richer, becomes more likely to cheat. In his forthcoming book on power, Keltner contemplates his findings: 

If I have $100,000 in my bank account, winning $50 alters my personal wealth in trivial fashion. It just isn’t that big of a deal. If I have $84 in my bank account, winning $50 not only changes my personal wealth significantly, it matters in terms of the quality of my life—the extra $50 changes what bill I might be able to pay, what I might put in my refrigerator at the end of the month, the kind of date I would go out on, or whether or not I could buy a beer for a friend. The value of winning $50 is greater for the poor, and, by implication, the incentive for lying in our study greater. Yet it was our wealthy participants who were far more likely to lie for the chance of winning fifty bucks.

There is plenty more like this to be found, if you look for it. A team of researchers at the New York State Psychiatric Institute surveyed 43,000 Americans and found that, by some wide margin, the rich were more likely to shoplift than the poor. Another study, by a coalition of nonprofits called the Independent Sector, revealed that people with incomes below twenty-five grand give away, on average, 4.2 percent of their income, while those earning more than 150 grand a year give away only 2.7 percent. A UCLA neuroscientist named Keely Muscatell has published an interesting paper showing that wealth quiets the nerves in the brain associated with empathy: if you show rich people and poor people pictures of kids with cancer, the poor people’s brains exhibit a great deal more activity than the rich people’s.”

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“Offensive Assistant: Tarzan”

May 22, 2014 in Excerpts, Sports | Permalink

Mike Leach wasn’t only a radically innovative offensive mind while coach at Texas Tech but also an eccentric who made for great copy. Unfortunately, his obsessions with history and his myriad oddities were so alluring to journalists (Michael Lewis among them) in search of a salable narrative that most of them never dug deep enough. Leach was ultimately fired from his post for serious misconduct in his treatment of his players. He’s now the head coach for Washington State University. His fixation on certain historical periods and his new book about Geronimo and leadership, which seems ready-made for the corporate-lecture circuit, were central to an Ask Me Anything he just did at Reddit. A few exchanges follow.

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Question:

I know you are big history buff, if you had to fill your coaching staff with historical figures who would you choose? For the sake of discussion you can’t pick a sports figure.

Mike Leach:

Head Coach: George Washington. Offensive Coordinator: Geronimo. Offensive Assistant: Tarzan. Defensive Coordinator: Winston Churchill. Defensive Assistant: Daniel Boone.

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Question:

The team is down by 15 with four minutes left when it punches in the ball on the outside zone read that hasn’t worked all day but finally beats the WILL who’s starting to dog it late in the game. Geronimo is the head coach. Does he go for 2 now, or kick the PAT and wait for the second opportunity?

Mike Leach:

Geronimo’s speed and tenacity in adverse conditions is going to allow him and his band of Chiricahua Apaches to score swiftly with that much time left. Illustrated in my book, “Geronimo: Leadership Strategies of an American Warrior,” they prepared for situations like this and were raised to respond to them starting as children. They would never flinch in a situation like this. Going for 1 or 2 would be based on their evaluation of the opponent, the terrain, and the resources they had to work with.

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Question:

What characteristic of Geronimo’s do you most look up to and how has he influenced your coaching?

Mike Leach:

I have read about and studied Geronimo for a long time since I was a child. In writing the book with Buddy Levy, and articulating a lot of these things, I discovered that I have been sharing a lot of these philosophies and stories with my teams for years. Among many others, Geronimo’s life story illustrates that a lot of impossible things are possible, everybody can work harder than they think they can, everybody is tougher than they think they are, but it is starts with the proper preparation, attitude, and philosophy. One of the most exciting parts of writing the book was the opportunity to discover a lot of interesting specifics on what made the Apaches what they were.

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Question:

Who is your favorite pirate?

Mike Leach:

The most exciting pirate is Edward Teach (Blackbeard). Probably the most productive one, and someone I would be fascinated to study more closely, would be Bartholomew Roberts.•

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“Mastery Of These Technologies Confers Enormous Power On Those Who Have It”

April 6, 2014 in Books, Excerpts, Politics, Science/Tech, Urban Studies | Permalink

From John Naughton’s Guardian article about Michael Lewis’ new book which reveals computerized Wall Street chicanery, a passage about how technology, that supposed equalizer, can in fact tip the balance of the digital scales:

“This is a good illustration of one of the central problems that society will have to address in the coming decades: the collision between analogue mindsets and digital realities.

Software is pure ‘thought-stuff.’ The only resource needed to produce it is human intelligence and expertise. This has two implications. The first is that attempting to regulate the things that it creates is like trying to catch quicksilver using a butterfly net.

The Edward Snowden disclosures about the US National Security Agency have revealed how difficult it is to bring this stuff under effective democratic control. Lewis’s account of how high-frequency trader geeks have run rings around the regulators suggests that much the same holds true in civilian life. This technology can easily run out of control.

The second implication is that what one might call the politics of expertise will become much more important. Mastery of these technologies confers enormous power on those who have it. Sed quis custodiet ipsos custodes and all that. So in addition to wondering who will guard the guardians, we may have to start thinking about who is going to guard the geeks.”

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“Bass Thinks That The Only Reliable Investments Are Guns And Gold, And Has Just Bought Twenty Million Nickels”

November 22, 2011 in Excerpts, Politics, Urban Studies | Permalink

In the New York Review of Books, John Lanchester takes on Michael Lewis’ new volume about the global economic meltdown, Boomerang. A passage about the apocalyptic view of fund manager Kyle Bass:

“His first interlocutor, Kyle Bass, is a classic example. Bass is a fund manager who made a fortune ‘shorting’ toxic mortgage assets, and then became preoccupied by the subject of global debt levels. Bass is, to put it very mildly, a pessimist on the subject of sovereign debt:

Spain and France had accumulated debts of more than ten times their annual revenues. Historically, such levels of government indebtedness had led to government default. ‘Here’s the only way I think things can work out for these countries,’ Bass said. ‘If they start running real budget surpluses. Yeah, and that will happen right after monkeys fly out of your ass.’

The prognostications that ensue from Bass’s analysis are gloomy, and form the basis of Boomerang‘s big-picture overview. ‘The financial crisis of 2008 was suspended only because investors believed that governments could borrow whatever they needed to rescue their banks. What happened when the governments themselves ceased to be credible?’

Bass thinks that the only reliable investments are guns and gold, and has just bought twenty million nickels, because the metal in a five-cent nickel is worth 6.8 cents, and they are going to be a stable source of value when things go wrong.”

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“I’m Not Sure They Could Capture The Complete Horror”

November 14, 2011 in Excerpts, Science/Tech, Sports, Urban Studies, Videos | Permalink

To the avid baseball fan, it would seem Billy Beane has ceased being an elite GM, the architect of Moneyball who could outsmart his peers, mostly because his interests are too broad. Among other things, he’s involved professionally with major-league soccer, computer software and finance. Beane’s restless mind stems in part from being a working-class kid who grudgingly passed on a Stanford scholarship he dearly wanted to accept in order to pocket a signing bonus from the Mets. Simon Kuper of the Financial Times was on hand recently when Beane caught up with author Michael Lewis, the two forever linked by baseball statistics, market inefficiencies and Brad Pitt. An excerpt:

“And so Moneyball became in large part the drama of Billy Beane: the autodidact who gave himself an education. When Beane was 18 years old, Stanford University had offered him a football and baseball scholarship. He and his parents – bright people without much money who had married young and joined the military middle class – were ecstatic. A good college was everything they wanted. But then the New York Mets offered Beane $125,000 to play baseball instead, and he felt he ought to do it. The movie shows the teenager, around the kitchen table with his parents in the simple family home, making the fateful decision. The filmmakers catch the scene well, but, as Beane says, ‘I’m not sure they could capture the complete horror.’

‘Listen,’ he adds, ‘I’m trying not to talk about myself here. I don’t look at life as a bunch of hindsight reviews of your decisions. But that’s exactly what I wanted to do, to attend Stanford University.’

Billy Beane was 18 when Stanford University offered him a football and baseball scholarship, but he went to play or the New York Mets instead

Beane’s life since – his compulsive reading, his discovery of the Moneyball system, his later discovery of soccer – is a long attempt to give himself the university education he never had. Just as Sergey Brin and Larry Page created Google partly because they went to Stanford, Beane created Moneyball partly because he didn’t.”

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“While I Was Busy Writing My Book About Baseball, Kahneman Had Apparently Been Busy Receiving The Nobel Prize In Economics”

November 9, 2011 in Excerpts, Science/Tech, Urban Studies, Videos | Permalink

In “The King of Human Error” in Vanity Fair, Michael Lewis has an excellent profile of psychologist Daniel Kahneman, who inspired the Moneyball revolution–even though Lewis realized Kahneman’s influence only in retrospect. An excerpt in which the journalist explains the surprising reach of Kahneman and his late professional partner, Amos Tversky:

“Kahneman and Tversky were psychologists, without a single minor-league plate appearance between them, but they had found that people, including experts, unwittingly use all sorts of irrelevant criteria in decision-making. I’d never heard of them, though I soon realized that Tversky’s son had been a student in a seminar I’d taught in the late 1990s at the University of California, Berkeley, and while I was busy writing my book about baseball, Kahneman had apparently been busy receiving the Nobel Prize in Economics. And he wasn’t even an economist. (Tversky had died in 1996, making him ineligible to share the prize, which is not awarded posthumously.) I also soon understood how embarrassed I should be by what I had not known.

Between 1971 and 1984, Kahneman and Tversky had published a series of quirky papers exploring the ways human judgment may be distorted when we are making decisions in conditions of uncertainty. When we are trying to guess which 18-year-old baseball prospect would become a big-league all-star, for example. To a reader who is neither psychologist nor economist (i.e., me), these papers are not easy going, though I am told that compared with other academic papers in their field they are high literature. Still, they are not so much written as constructed, block by block. The moment the psychologists uncover some new kink in the human mind, they bestow a strange and forbidding name on it (‘the availability heuristic’). In their most cited paper, cryptically titled ‘Prospect Theory,’ they convinced a lot of people that human beings are best understood as being risk-averse when making a decision that offers hope of a gain but risk-seeking when making a decision that will lead to a certain loss. In a stroke they provided a framework to understand all sorts of human behavior that economists, athletic coaches, and other ‘experts’ have trouble explaining: why people who play the lottery also buy insurance; why people are less likely to sell their houses and their stock portfolios in falling markets; why, most sensationally, professional golfers become better putters when they’re trying to save par (avoid losing a stroke) than when they’re trying to make a birdie (and gain a stroke).

When you wander into the work of Kahneman and Tversky far enough, you come to find their fingerprints in places you never imagined even existed.”

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Daniel Kahneman at TED, 2010:

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