MICHEL PIREU: Challenging our assumptions leads to better investing
‘Obvious’ thinking commonly leads to wrong judgments and conclusions
Writing in Behavioural Scientist, Evan Nesterak tells the story of Paul Lazarsfeld, who in the 1930s was tasked with reviewing the first two volumes of a book on the social science research conducted by the US army during World War 2. The book, appropriately named The American Soldier, synthesised about 600,000 interviews and 300 studies the army conducted during the war.
“Never before have so many aspects of human life been studied so systematically and comprehensively,” Lazarsfeld comments in his review. But there’s a catch, Lazarsfeld tells his readers. To fully understand and appreciate the findings in the book, one needs to know how social science research differs from that of other sciences such as chemistry or physics. That it is hard to find a form of human behaviour that has not already been observed somewhere, and consequently if a study reports a prevailing regularity, many readers respond to it by thinking “of course that is the way things are”...
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