May Contain Lies...

Decision Nerds

If you’ve been around the block, you will likely have seen some eye-rolling use of evidence during meetings. Evidence can be used badly for many reasons; a misunderstanding of what conclusions can be drawn from it, or perhaps it has been cherry-picked to support a particular position.
In this episode, we unpick these issues with Professor Alex Edmans of London Business School. Alex recently published a book, ‘May Contain Lies’, which discusses the methodological, psychological and incentive problems surrounding evidence use.

We spend a decent amount of time on a core idea from the book, ‘The Ladder of Misinference’. If you think scientifically, there are no earth-shattering revelations here, but I really like it because it is a simple teachable framework that groups can adopt. Alex gives some great examples that everyone can understand and internalise.

The Ladder deals with the challenges of method, but that’s only half the story. We also have to beat the behavioural cards that nature has dealt us, e.g. confirmation bias.

And even if we beat the first two traps, incentives can nudge us away from saying what we really believe.

Key insights:

- How Alex tries to move beyond black-and-white thinking and engage with complexity - getting the right mix of data and stories

- Why do bad ideas stick - do you still 'Power Pose'?

- Changing minds – the power of good questions (there’s a great experiment on pianos and toilets that you can try at home).

- Trading off the short and long-term - why he chose the most critical agent to help him publish his book.

- Understanding neurological carrots and sticks - what happens when we put people in a brain scanner and give them statements they like and don’t?

- The state of debate around ESG and DEI – ideology, identity and pressures to conform.

Chapter

1. Dawkins, the truth and 'clapping his hands red' (00:00:00)

2. The problems of evidence use (00:01:19)

3. The Ladder of Misinference (00:02:42)

4. The first rung - a statement is not a fact (00:03:58)

5. Why are 'facts' sticky? (00:05:15)

6. The second rung - a fact is not data (00:07:24)

7. The third rung - data is not evidence (00:10:22)

8. Ideas taking on a life of their own - power poses (00:16:05)

9. We like it simple - how Alex gets people to engage with complexity (00:18:38)

10. Problems with 'bad' data and how we get people to recognise this. The power of questions and the toilet flush experiment (00:20:26)

11. Where does the investment industry sit in the context of misinference (00:23:40)

12. Where does the investment industry sit in the context of misinference (00:23:45)

13. How should a non-expert approach bold claims? (00:25:55)

14. Pyschology - confirmation bias + brain scans (00:28:18)

15. Getting personal - what does Alex do to get past confirmation bias (00:31:28)

16. Doing the tough stuff - how Alex thinks about the long and short-term (00:33:34)

17. Incentives - Alex's view on what drives McKinsey and BlackRock (00:35:08)

18. Should we fudge evidence if we believe the aim is laudable (00:38:48)

19. The challenges of saying difficult things inside an organisation + important thoughts on creating a culture of openness (00:40:20)

20. Has the climate changed for having more open discussions around issues such as DEI and ESG? The challenges for us all and the costs for Alex (00:42:38)