(Warning: this is a bit meta.)
As an economist, my job often boils down to helping people think clearly about issues. For example, the essence of good cost benefit analysis is being able to categorise stuff correctly – i.e. separating costs from benefits – and making sure that things aren’t being counted twice.
It’s surprising how often people get these things wrong. For example, it’s common to see politicians argue that megaprojects are a good idea because the government will employ people to build them. But if you think about it, government spending isn’t a benefit – it’s actually a cost that we bear in order to obtain other benefits! Unless the economy’s in a recession, those people probably would have been doing something else useful instead, like building houses.
As a result of stuff like this, I spend a fair amount of time thinking about cognitive biases, which can make it difficult for people to clearly think through issues. (Economists aren’t really any better or worse than any other group of people when it comes to cognitive bias. Training in statistical methods is a bit better, which helps in some areas but not others.) I encounter several cognitive biases on a regular basis: framing bias often affects (afflicts?) project scope; confirmation bias influences many literature reviews and data analyses; and fundamental attribution error is probably one of the largest causes of interpersonal conflict.
A project I was recently working on got me thinking about another type of cognitive bias: anchoring bias. Here’s Wikipedia’s summary:
Anchoring or focalism is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the “anchor”) when making decisions. During decision making, anchoring occurs when individuals use an initial piece of information to make subsequent judgments. Once an anchor is set, other judgments are made by adjusting away from that anchor, and there is a bias toward interpreting other information around the anchor. For example, the initial price offered for a used car sets the standard for the rest of the negotiations, so that prices lower than the initial price seem more reasonable even if they are still higher than what the car is really worth.
As this example suggests, anchoring plays an important role in negotiations. The initial proposal becomes the benchmark for subsequent suggestions. As a result, it makes sense for people to spend time and energy trying to “anchor” a discussion at a point that’s beneficial to them.
But what happens when two people are “anchored” at different points?
Rather than talk about my project – my policy is not to blog about things that I’m working directly on – I’ll use an example from Transportblog. Last month, I wrote a couple posts on publicly owned golf courses (1, 2, 3). In them, I made an argument that would be convincing to an economist: that the benefit of converting some golf courses to a mix of housing and public parks would exceed the benefit of retaining them in their current use, and hence we should consider doing so.
The posts led to a pretty lively and engaging discussion. Of course, not everyone was convinced and some people were angry about the idea. Fair enough. The interesting thing, in a way, was that different people’s “anchors” were so far apart.
As an economist looking at the topic, my “anchor” was the principle that resources are scarce and should therefore be used efficiently, taking externalities into account. (In this respect, being an economist is very congruent with being an environmentalist.) When an analysis showed that the golf course land could be used much more efficiently if it were used for something else, I was comfortable with the result.
However, others had a different anchor point: a feeling that the status quo is basically good and shouldn’t change (too much). Several people expressed the view that open space in cities was valuable and, where it exists, should be preserved in perpetuity. Here’s a representative comment from one of the posts:
Never destroy public green spaces for housing. Plain stupid. Once gone, never get back. You can play games with fancy layouts and beautification till the cows come home – but once the core foot print is gone, its gone.
These commenters were willing to contemplate some changes to publicly owned golf courses. A number of people suggested that Auckland’s golf courses could be converted into public parks or spaces for other outdoor activities, either now or in the future. Ben Ross, for example, wrote up a proposal for converting Chamberlain Park to an “urban forest”. However, actually developing some of the golf course land seemed to be too far away from the anchor point.
So what can we make of this?
First and foremost, anchors are important – people are attached to them and don’t like to be dragged too far away from them. Once anchored, it’s really easy to reject ideas that seem too far out – even if they would objectively be better.
I suspect that anchoring goes a long way towards explaining the shape of urban policies in general. For example, revisions to urban planning rules seem to happen incrementally, even in cases where very strong and comprehensive evidence for changing rules has emerged. Slow changes to bad policies can’t be explained by analysis – surely more rapid change would be better! But it starts to make sense once you account for the fact that people are anchored on the current plans and the current places.
Second, sometimes it’s really important to cut loose from the anchor of the status quo. If you’re an urbanist in a city like Auckland, you can’t be too attached to the way things currently are. That’s because you’re constantly going to be looking at places like this:
And wondering whether this is really the best we could do, or whether we could live somewhere a bit more like this:
Which leads to a third point, which is that debates between people “anchored” to the status quo and people suggesting changes are always hard. The starting points are just so very different. But these debates are necessary. They’re a key part of building a case and a constituency for change.
People tell me that one way of overcoming such divides is to give people a picture – or better yet, an experience – of an alternative anchoring point. That’s essentially what Janette Sadik-Khan did as New York City’s transportation commissioner – put down cones, paint, planter boxes, and chairs to give people a chance to play with a different vision of the city:
I’m not a very visual person, so I tend to make quantitative rather than visual appeals for change. But despite that, I suspect that our ability to change in a better direction depends upon our ability to visualise, depict, and trial a better alternative. A pretty picture is a more appealing anchor than a large number!