Thinking, fast and slow, and slower…

Daniel Kahneman’s recent bestseller, Thinking, Fast and Slow, is a brilliant summary of a lifetime’s work in the psychology of decision making. Together with his colleague, Amos Tversky, Kahneman revolutionized the way psychologists think about how people reason and make choices. Before these two young Turks burst on the scene in the early 1970s, psychologists had a rather rosy view of decision making that owed more to logic and mathematics than to empirical research. People were seen as utility-maximizers, rationally weighing up the pros and cons of the options available to them before opting for the one with the highest payoff. In a series of brilliant experiments, Kahnmen and Tversky exposed this picture as overly optimistic, and showed that human decision making is riddled with biases and cognitive short-cuts that work well enough most of the time, but can also lead to some pretty dumb mistakes.

The central thesis of Kahmenan’s book is that there are fundamentally two modes of thought, which he denotes System 1 and System 2. System 1 is fast, automatic, emotional, and subconscious; System 2 is slower, more effortful, more logical, and more deliberative. The biases and cognitive short-cuts are largely features of System 1, but we can overcome these by employing System 2. It just takes more effort and more time.

This is fine as far as it goes, but it leaves a crucial third kind of thinking out of the picture. This is the meditative, creative mode of thought that the psychologist Guy Claxton calls the “undermind” in his thought-provoking book, Hare Brain, Tortoise Mind. It is much slower than Kahneman’s System 2, and works away quietly in the background, below the level of conscious awareness, helping us to register events, recognize patterns, make connections and be creative. This is the kind of thought that can bubble away beneath the surface for weeks or even months, quietly turning over a problem and looking at it from different perspectives, before suddenly thrusting a solution into consciousness in that exciting Eureka! moment.

I think Claxton is onto something in claiming that the mind possesses three different processing speeds, not two.  Think of it as a kind of “cognitive sandwich” if you like. The top half of the bun is the lightning fast System 1 identified by Kahneman, the world of snap judgments and rapid heuristics.  The bottom half of the bun is the snail-paced undermind identified by Claxton, where thoughts cook slowly in the back oven. Both of these are unconscious processes, operating below the level of conscious awareness. The hamburger in the middle is conscious thought, Kahneman’s System 2.

Where does risk intelligence come in to all this? Risk intelligence tends to be domain-specific, and those with high risk intelligence build up models of a given domain slowly, often unconsciously, as they gradually accumulate experience in their specialist field.  These models may involve many different variables.  The expert horse handicappers I describe in chapter one of my book took at least seven different variables into account, including the speed at which a horse ran in its last race, the quality of the jockey, and the current condition of the racetrack.  People with high risk intelligence manage to keep track of all the relevant variables, and perform the complex mathematical task of weighing them up and combining them.  However, they usually do this unconsciously; they need not be mathematical wizards, since most of the computation goes on below the level of awareness.

There are some basic tricks for increasing risk intelligence across the board, and I discuss some of these in the book. Simply taking a general knowledge version of the RQ test can, for example, lead to rapid gains in risk intelligence because it encourages people to make more fine-grained distinctions between different degrees of belief.  Such rapid improvements in risk intelligence may well generalize to any field, so there may be a small domain-general component of risk intelligence.  But these rapid gains are the low-hanging fruit; once you have plucked them, further increases in risk intelligence may be harder to achieve, and will require immersing yourself in a particular field of study for perhaps many years. It is then that, to borrow Claxton’s metaphor, the “hare brain” must stand aside, and let the “tortoise mind” take over.


Risk intelligence and negative capability

The term risk intelligence or RQ has only emerged in recent years. Although the phrase is new, however, the concept is prefigured in Keats’ idea of negative capability – how much mystery uncertainty or doubt a person can handle without getting an irritable reaction.

From a psychoanalytic perspective, these irritable reactions are the unleashed by the unconscious to protect the ego from emotional shock when it is too weak to deal with reality. Like anger, which blows out the light in the mind, these tremors also disrupt the flow of light in the mind.

This alternative reality presented by the ego then distorts the person’s ability to assess the extent of their knowledge and therefore to estimate probabilities.

It could be argued that selflessness or egolessness all else being equal should improve a persons risk intelligence. However, this is rather simplistic and misses the positive elements of high risk intelligence such as determination - not taking setbacks personally, but seeing how they can be overcome to reach the goal. 

Risk intelligence is not just about avoiding the negatives; it’s also about embracing the positives.  Risk intelligence is the new and natural arena for the bringing together and merging of numerous concepts. By drawing on both contemporary and historical approaches, we may not only to better understand astute risk takers, but will also become more astute risk takers ourselves.

Internet Explorer users have low Risk Intelligence (RQ)

A hoax report earlier this year claimed that people who used Internet Explorer had a lower IQ than those using other browsers. Inspired by this bit of fun, Projection Point decided to carry out a poll to compare the risk intelligence (RQ) of people using different browsers. We found that Internet Explorer users performed worse than everyone else; they had lower RQ scores and were grossly overconfident.

We define Risk Intelligence as the ability to estimate probabilities accurately. Our Basic RQ Test consists of fifty statements—some true, some false—and your task is to say how likely you think it is that each statement is true. It’s a simple process; if you are absolutely sure that a statement is true, you assign a probability of 100 percent to it. If you are convinced that a statement is false, you should assign it a probability of 0 percent. If you have no idea at all whether it is true or false, you should rate it as 50 percent probable. If you are fairly sure that it is true but you aren’t completely sure, you would give it 60 percent, 70 percent, 80 percent, or 90 percent, depending on how sure you are. Conversely, if you are reasonably confident that it is false but you aren’t completely sure, you would give it 40 percent, 30 percent, 20 percent, or 10 percent.

When you have estimated the likelihood of all fifty statements in the test, the website will calculate your risk intelligence quotient, or RQ, a number between 0 and 100. Although our small sample size of 351 participants does not permit strong conclusions, they do suggest an interesting possibility; users of monopoly software (that historically has been responsible for many of the most severe software vulnerabilities) are not as good at estimating probabilities as their more adventurous counterparts. Perhaps the use of Microsoft Internet Explorer should be considered an indicator of poor risk intelligence. This would be consistent with studies showing that the computers of Internet Explorer users contain more malicious software than the machines of those using other browsers, that about 7% of downloads by Internet Explorer users are malicious and that the browser is amongst the most popular means of infecting Windows machines (this holds especially true for older versions). Although Microsoft’s efforts are slowly changing vulnerability trends for the better, these findings should come as no surprise given the company’s attention to security in the past: “Many of the products we designed [...] have been less secure than they could have been because we were designing with features in mind rather than security. [...] In the past we sold new applications on the strength of new features, most of which people didn’t use.” – Chief Research and Strategy Officer at Microsoft, Craig Mundie (2002).

Right now it looks like Apple users are the best when it comes to dealing with risk, a skill that should come in quite handy considering that Mac OS X was the first system to go down during the Pwn2Own hacking contest of 2011. But only time, a larger sample size and careful scrutiny may validate our observations.


The test can be found at:
A mobile version of the test for Android and iPhones can be found here.