When Feedback Fails – The Individual

“One must be prepared to be enlightened about oneself…and be prepared to act upon this enlightenment”

-Nevin Thesis, 135

It is illegal to race a denerved horse. In fact, a prominent English trainer – Howard Johnson – was banned for 4 years for doing this in 2011.¹⁾See Chris Cook. “Howard Johnson quits after ban for putting horse and riders in danger,” The Guardian, Friday, August 12, 2011. Accessed on October 25, 2013. Howard Johnson. Why? For the obvious reason that a denerved horse is not receiving the right feedback signals from its body, giving both horse and jockey a short-term competitive advantage that also puts the horse’s health in serious danger.

In the gym, there are people who exercise efficiently: using the right combination of exercises at the right level of intensity leading to the desired result with a minimum of time and pain (not none, mind you… no pain no gain). But there are many more gymizens doing a random collection of activities that do not lead to a coherent fitness whole, who are expending too much energy and time for the results achieved. And yet this group persists in the same gym behaviours over and over again, seemingly never learning from the clear message that they are not reaching their fitness goals. Feedback fails.

The foundation of economic function (indeed, of societal function) is feedback. The price of a product rises, so producers make more of it, and new companies enter the market. Demand for plumbers and carpenters soars during a building boom, so workers acquire the requisite skills and arrive from elsewhere. Hypertension rates skyrocket, so pharmaceutical companies race to address a need.

But feedback is more fundamental than its role in economics. As children develop, they adapt with the help of feedback from people and from other immediate features of their environments. Employees learn how a new workplace operates from the feedback of peers, subordinates, and bosses.²⁾And B.F. Skinner’s behaviourism was a (failed) attempt to make this feedback loop highly scientific. If you get a terrible hangover from 6 bloody marys, you might be less inclined to indulge that way again. If you get mugged on 42nd Street, you will avoid the neighbourhood, avoid New York, or take other mitigating actions. If your friend stops being nice to you, you stop calling. If it is cold, you put on a sweater.

Reflecting a little, I don’t think it a stretch³⁾Others have undoubtedly said it much better, including Darwin. to say that feedback (and reacting to feedback) is the core of existence for any creature, and any creature that fails to react appropriately will have a short or diminished existence.

Given the centrality of feedback to Flourishing, it is a reasonable question to ask (per Principle 1, that Economics is an empirical discipline) how well feedback is working in our economies and societies and whether the feedback mechanisms that occur in our economies actually work. Of course, the orthodox economics answer is that the price mechanism is an efficient feedback device that provides the right information for all actors in the economy to make excellent allocation decisions. And if feedback is failing, it is because the state meddles in the feedback mechanism, with subsidies for farmers, or restrictions on imports, or excessive regulation. ‘Let the price mechanism work and the Free Market Fairy will take care of the rest.’

There is truth in this, and the price mechanism is one of humankind’s greatest achievements. But, as you can surmise from the title of this article, Nevinomics does not believe it is the whole story.⁴⁾Of course if the price mechanism embodied the totality of feedback that a company needed to make decisions, there would be no need for strategy consultants. The last time I looked – yesterday – it seems this profession is thriving, so the empirical evidence tells us the economic orthodoxy is wrong. As Nevinomics’ 1st Principle states, Economics is an empirical discipline, and the extent to which and under which circumstances the price mechanism does what is needed is an empirical question, and thinking more precisely about feedback mechanisms in our economy is overdue.

This focus on feedback is addressed in 2 articles. In this article, we consider feedback from the individual’s perspective. In the 2nd article on feedback, we consider the efficacy of feedback at the level of the overall economic system.

I think that both these feedback failure types are important and have critical public policy implications; however, as problematic as the failure of the feedback mechanism is at the individual level, at the economic system level it becomes a crisis. If you want to skip straight to the system-level discussion, click here.

But for now let’s go back to feedback from the individual. Why does feedback at an individual level fail? What are the causes of these individual feedback failures? Part of the answer lies with the well-known factors of limited rationality, satisficing, and cognitive biases such as anchoring, etcetera.⁵⁾See Amod Tversky and Daniel Kahneman, “Judgement Under Uncertainty: Heuristics and Biases,” Science 185: 1124-1131 (1974) Abstract here:  Tversky and Kahneman I also discussed this extensively in my thesis. But these are well understood and only scratch the surface of what is going on.

Nevinomics believes there are at least 4 deeper reasons feedback fails:

• For many important life issues, time frames are long and the link between any individual action and outcomes is tenuous⁶⁾There has been an interesting attempt to make this more immediate with the concept of micro. – one cigarette can feel good; a lifetime addiction to smoking is a disaster. A slight gap in being able to respond appropriately to colleagues⁷⁾Of course, we have a medical term for not being able accurately to process clues from the environment, particularly people. This term is the former ‘Asperger’s syndrome,’ now referred to as high functioning autism, although there is some controversy about aligning the two. But arguably a number of other personality quirks and disorders can also affect one’s ability to process feedback. means missing that promotion that is expected in several years. It also applies to the gym example in an oblique way – because time frames are long, people don’t know when results are not being attained or when to intervene.

• By its nature, feedback concerns only the possibilities that are in view. Going to concerts makes me happy, so I do more of it. Washing the dishes regularly results in a more harmonious relationship. My job is unsatisfactory, so I look for something else to do. But these actions are all limited by what I can envisage. I enjoy golfing, but taking pleasure in golf will not help me understand that my Flourishing would increase if I used the same resources to improve my chess. As Donald Rumsfeld put it – ‘it is the unknown unknowns’ that we should be more concerned with. The normal life feedback mechanism cannot cope with the unknown unknown issue.

• Learning how to process feedback is a skill that varies between people. This applies in the gym, in learning a language, in the workplace, and in every facet of life. Some people are better at absorbing the lessons all around them and turning them into useful behaviours. But, like all skills, this presumably can be learnt and improved upon – and this fact should be a concern of the education system and consistent with Nevinomics’ Principle 4, that Our economic system needs to take account of realities about people. Here, the Reality is that better processing of the feedback around you makes your life better. So making you better at this processing is a legitimate goal of the education system in a world where Flourishing is the objective.

• In some cases, humans are physiologically constructed in way that does not allow them to process feedback in ways that are useful for modern life. Food is the obvious example. About 36% of the US population is obese,⁸⁾Centers for Disease Control and Prevention website, Obesity in the US. and the rates of hypertension and diabetes are skyrocketing. I believe that virtually none of these people desire to be obese. In any given year, 14% of the population is dieting.⁹⁾Livestrong.com website. Accessed October 25, 2013: Livestrong. Recent research has shown pretty convincingly that the construction of the human body under conditions of scarcity make it not fit-for-purpose in developed world economies where an essentially unlimited number of calories are available at very low cost.

So, feedback fails – or at least does not work as well as it could for us. What should we do about it to improve Flourishing?

All 4 factors deserve scrutiny but, in this article, but let me focus on failings 2 and 3 with a few random thoughts (this topic deserves – and will receive – a more comprehensive Nevinomics analysis in the future).

The first observation is that if people are going to respond to feedback better in order to increase Flourishing, they need to be able to react. This means that they need to have the financial flexibility to react, to follow new paths, to try new things. The implication of this is that we want public policies that discourage locking in irreversible financial commitments that reduce flexibility: student loans that restrict later decisions, large mortgages encouraged by an industry that tells us that housing prices go only one way. A key part of Flourishing is resiliency, and other articles in Nevinomics discuss how we can increase individual financial resiliency to help maximize Flourishing.

But this is only a necessary condition, not a sufficient condition. The only real way for individual feedback mechanisms to improve in support of Flourishing to get better at 2 and 3.

For 2, the issue is to improve self-assessment of learning and development. At the end of the day, it is not helpful for an individual to rely exclusively on feedback from others to determine whether something has been achieved, since past the age of about 18, they are not going to get that feedback. They need to be able to interpret the feedback from the environment themselves and relate it to their own behaviours and decisions. Then they must, of course, relate these to their objectives. In other words, in the end we all need to figure out for ourselves how the world works. But a better education system could help.

Here is one suggestion: from the ages of 13-16 (a 4-year stretch), stop teaching math, English, history and all other subjects during January and February. Instead, students will spend 6 weeks learning two different skills. It could be chess, crochet, trap shooting, spear fishing, or Orissi.¹⁰⁾A form of dance from the Indian State of Orissa. One subject will be chosen by the student, one by the school; what is essential is that there be a specific plan (strategy) for the student regarding how they will learn the subject: what their objectives will be and by what mode they will learn (tactile, theoretical, visual, aural, watching experts, etcetera). On a daily basis, the student will sit with one of the leaders and assess what happened: what was learned, what was not learned, how the learning process has worked, how the student has incorporated feedback, how all of the above change the learning plan for the next day. At the end of the 6-week period, the students and faculty will do a thorough debriefing on what happened and how the feedback during the process was incorporated to improve learning.

What will this accomplish? I am pretty sure that after 4 cycles of this, the student will be much better equipped to assimilate feedback into their life to improve Flourishing. And since most people in the class will live to 90 or beyond, this will be a pretty useful skill to have.¹¹⁾Of course, they may live forever. My generation may have the (mis-)fortune to be the last generation not to live forever given rapid advances in medical technology.

But how does this address issue 3? Well, 1 of the 2 subjects each year should be chosen by the school. It will be a new skill for the student – ab initio. So the student not only experiences something new, but does so in an environment where he or she is explicitly conscious of the learning process. Again, after 4 cycles of this, I am guessing that the student will be much more willing and capable of expanding their choice range – tackling unknown unknowns.

The skeptical reader might note, at this point, that we have taken 6 weeks from the core curriculum for each of 4 years. This will put the student behind. They will never catch up, and this is a tough, competitive world.

I don’t believe this. I think the student will find that their ability to tackle the core subjects will be significantly enhanced, as students have their own strategies to cope with typical academic demands and this increase in capacity will more than compensate for loss of time on the core subjects.

Of course, this is an empirical claim, and so my suggestion is that we give it a go and see what happens. The worst possible outcome might be along the lines of having a lot of people in our society who can knit or understand Sanskrit.

These are obviously specific and practical steps – and perhaps the suggestions seem trivial to some readers. But they illustrate what I hope is a profound truth that is at the core of Nevinomics, which is that Flourishing will be significantly enhanced if more people are able to:

1. Understand better – and consciously – how to incorporate feedback from the environment

2. Understand better – and consciously – how to learn

3. Stretch the limits of experience to help construct – again consciously – what matters to them: in economic terms, better understanding and shaping their preferences

And given that maximizing Flourishing is the objective function, the implication is that the education system (and by “education system,” here, I mean the lifelong learning system, not just up to age 18) needs to think more carefully about how to build these capabilities. And the urgency of these capabilities for a Flourishing society is increasing with the faster pace of change and increasing human longevity. Both of these mean that the vast majority of people change their role in society many times (and hence require continuous learning, which is feasible only if individuals really understand how they learn) and longevity, specifically, makes it increasingly difficult to sustain Flourishing unless one can consciously shape preferences.¹²⁾This is a bold statement. A subsequent sequence of Nevinomics articles is going to explore Principle 4 –  To arrive at the best rules we can to achieve society’s objectives, we need to take account of Realities about people. One key aspect of this exploration is the need for people to have change and variety to continue Flourishing, which is a manifestation of the need – again in economics’ terms – for preferences to change over time and for the individual to shape these preferences. I will give a more spirited defence of the the statement in the text.

I will also assert that enhancing these capabilities will have another important impact on maximizing Flourishing – by decreasing the emphasis on money in developed societies. That is not to say money is not important – see the article on Flourishing and the Velocity of Money – but in a Flourishing society, it is not the only important thing and will be less important than it is in developed societies now.

And these capabilities need to be supported by a financial system (i.e., flexible schemes to allow transitions from work to education and back) throughout one’s lifetime, as discussed above.

I do not think this is terribly difficult (or at least more difficult than changing the course of any large organization with vested interests). And it is necessary.

A final word. The ability to assimilate feedback from the outside world accurately is a sign of mental health. As I have developed the concepts of Nevinomics over the past 30 years, I have been struck again and again by the centrality of mental health to individual Flourishing and a successful society.

There is no doubt in my mind that a public focus on mental health will pay enormous dividends for the society that wants to Flourish. In fact, I am going to say something I never imagined possible: I agree with Wayne LaPierre, the head of the National Rifle Association in the US. What I agree on is that it is very possible that a larger reduction in gun deaths in US society would come from a public policy focus more on mental health than on gun control laws.¹³⁾Adam Edelman, “NRA Chief Wants ‘Broken’ Mental Health System Fixed But Rejects Calls for More Gun Control Legislation,” New York Daily News, September 22, 2013. Accessed on October 27, 2013, Gun Control. But again, this is an empirical question.

Photo: El Neill