Noise: A Flaw in Human Judgment

This section examines the psychology of noise. It draws upon Daniel Kahneman’s findings about fast and slow thinking in his 2011 book Thinking, Fast and Slow. The authors argue that fast, intuitive System 1 thinking is behind multiple judgment errors. The section also looks at “why noise, despite its ubiquity” is “rarely considered an important problem” (187).

This chapter draws upon the research for Thinking, Fast and Slow, which analyzed the benefits and pitfalls of intuitive thinking. This so-called “System 1” thinking relies extensively on heuristics, which are simplified forms of problem-solving that use short cuts. While System 1 thinking can be efficient in some circumstances, in more complex situations it can lead to judgment errors. Such psychological biases create system noise which leads to error.

Researchers define psychological biases by “observing that a factor that should not affect judgment does have a statistical effect on it, or that a factor that should affect judgment does not” (190). All psychological biases contribute to statistical bias and noise.

One reason for psychological bias is that people confuse similarity with probability and often use heuristics to answer complex questions about predicting future outcomes by replacing them with a simpler related question.