I bought a book.”The Art of Thinking Clearly”, by Rolf Dobelli. It’s a good book. It’s filled with 99 chapters, each describing a certain psychological phenomenon that negatively affects us all. I will be randomly picking a chapter, explain how it works, and use an example from my own experience in every blog. Have you got a good example? Leave a comment!
Chapter 14: Hindsight Bias
“In 2007, economic experts painted a rosy picture for the coming years. However, just twelve months later, the financial markets imploded. Asked about the crisis, the same experts enumerated its causes: monetary expansion under [Alan] Greenspan, lax validation of mortgages, corrupt rating agencies, low capital requirements, and so forth. In hindsight, the reasons for the crash seem painfully obvious.” (p.45)
It is to look back at something and question a course of action. One of the biggest examples of this is Chamberlain’s ‘appeasement politics’ towards Hitler. It is easy to criticize him for his naïve belief that peace could be retained throughout Europe. However, if you look at the situation in its context, trying to keep the peace was the most reasonable of actions. Chamberlain didn’t know Hitler was going to wage an all out war. Or he did, but thought he could contain him by making arrangements profitable to the heimat. People still remembered the first World War, and Chamberlain didn’t want this to happen again. He was wrong, but you can’t blame him for trying to believe in peace just because in the end, it wasn’t possible. No one could predict the now inevitable outcome beforehand.
Look at it this way: a teacher asks you a question. You think you know the answer, so you put up your hand. Your answer turns out to be wrong. Someone else gives the right answer. You think by yourself, “I knew that!” But you didn’t. If you would have, you would have given that answer. BLAM. Hindsight bias.
The biggest form of hindsight bias I can think of that happened in my life, is from about five years ago. At the age of 17, I enrolled for university. I was going to do Political Science in Leiden. The university had an introduction week, the EL-CID, in which I registered with a certain student association. It had quite an extensive greening period, and afterwards I got offered a place to live in a home associated with the association. At 17, I was (in hindsight) too young to live without parental supervision, and I should have waited a year or so with all that. However, it was a choice I made then consciously, fully knowing the risks involved. One of those risks (failing Uni) came true. I had to switch universities.
It’s very much hindsight bias thinking I’d be better off waiting a year to sign up for the association. Basically, I can’t know, since I don’t have the counterfactual.