Jussi Ahola

Curious humanist

The Ministry of Experimentation

Standard economics assumes that we humans are rational by nature. This means that in a world of perfect information, the homo economicus would always make decisions that are the most beneficial to ourselves, maximising wealth, health, and well-being.

I think that we are slowly coming to realize that this notion of our rationality is not that well founded. Our thinking and decision-making is influenced by many irrationalities and cognitive biases that can go unnoticed even if we pay close attention to them.

We are susceptible to priming: if I’ll show you a funny cat video before asking you to make a decision, the change in your mood caused by the cat video is likely to have an effect on your decision.

We are loss averse, meaning that it hurts more to lose something than it feels good to get the same thing. According to standard economics, a rose is a rose is a rose, so this difference shouldn’t exist.

Have you ever wondered how two people with opposing views can use the same piece of information to back up their conflicting views? That’s confirmation bias in action: we have a tendency to select and remember information that is in favour of our own view, or interpret information in a way that backs up our standpoint.

These irrationalities, and many others, are studied in the field of behavioural economics. Behavioural economics is concerned with how people actually make decisions, as opposed to how they should rationally be making them.

Like any visitor to the AA will tell you, the first step in the process of overcoming a problem is admitting that we are plagued by it. We should admit that our intuitions might not always be right and learn to question ourselves. Am I making this decision under the influence of a funny cat video or, conversely, of a bad mood caused by some other event? Am I holding on to my current situation because I overvalue it? Did I select this source of information because it supports my current stance?

The second step is to try to find the best course of action through other means. In science and increasingly also in business this is achieved through experimentation. Scientists test their hypotheses through experiments and companies run studies to find out how to make better products. Politics, however, seems to be an area where experimentation is still largely undervalued.

The country needs and, unless I mistake its temper, the country demands, bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.
Franklin D. Roosevelt

I agree that we would definitely benefit from experimentation with different public policies, but I’m not that sure that people demand it. Confidence, no matter how unfounded, seems to get the votes in elections. People vote not for the experimentalist, but for the confident populist who says: I know what to do. This is the best policy and if you’ll vote for me I'll make it happen. Unfortunately the intuitions of a politician are just as untrustworthy as those of the rest of us.

It is not common sense to experiment with public policies; it is uncommon sense. People look for someone who supposedly knows what to do, not for someone who is willing to experiment to find the best solutions.

The experimentalist politician would say: I’m not sure about which policy is the best one, but I think we should experiment with different options, see which one works out the best, and choose that one.

That’s the politician I would vote for.