22 February 2013

Is it a Bird? Is it a Plane? No! It’s Representativeness

Soon after the end of communism in Romania, I watched some old cartoons with Superman. They were old, but for me as a young child they seemed like the best thing possible and I played them on the VCR for hundreds of times. This is how the phrase “Is it a bird? Is it a plane? No! It’s Superman” got into my memory and very likely will be there as long as I will have memory.

But enough with my childhood story! The phrase “Is it a bird? Is it a plane? No! It’s Superman” is highly illustrative for what in psychology is called the “representativeness heuristic”. If something flies then very likely it is either a bird or a plane, because when we think of things that fly, the aforementioned two are pretty much what flies.  

Remaining in the area of birds, let’s see what a “bird” is. What is it? In your own words… fill in the blanks:

A Bird is __________________

If you did not cheat by searching for a formal definition, most likely you answered something like this: “It’s something that flies, has wings and lays eggs”. Quite close to the formal definition which is: “a warm-blooded egg-laying vertebrate animal distinguished by the possession of feathers, wings, a beak, and typically by being able to fly” according to oxforddictionaries.com (source http://oxforddictionaries.com/definition/english/bird).

The informal definition of “something that flies, has wings and lays eggs”, however is incomplete and inaccurate. Something that “flies, has wings and lays eggs” is also typical for most insects (well all insects have wings but not all fly … and no! Spiders are not insects). As we know, birds are not insects.  In addition, something that “flies, has wings and lays eggs” does not accommodate some actual birds such as the ostrich, emu and penguin.

Now, let’s see why and how the simplistic definition of a bird came to be. First of all, we as (normal) humans are not necessarily good at giving clear, accurate and exhaustive definitions… after all why would there be dictionaries if we were? What we are good at is identifying and remembering prototypes.

When I asked you to come up with a definition for “bird”, very likely you did not have in your memory the formal one. This is unless you are an ornithologist … So, without a formal definition stored in memory, you retrieved from memory “a bird” or to be more exactly “the prototype of a bird” and then described it and came up with a definition.

To put it a bit differently, you defined a bird as being the description of what a prototypical bird is for you.

Since birds such as penguins and ostriches are quite rare in most of the world and especially in cities (where I assume most of you live in), the prototypical bird in your mind is something like a mixture of a pigeon, crow and sparrow or seagull. All these birds fly and have wings…

Before ending with the “bird business”, let’s summarize: we humans think in prototypes and not formal definitions. What a prototypical “something” is is heavily influenced by our experiences and subsequently what is stored in memory.

Not giving an accurate, complete and exhaustive definition of a bird is not an important issue. However, we use prototypes to make judgments in considerably more important areas such as voting, romantic life, job choosing (if one has to choose), purchasing decision etc.

One very nice example of using prototypes to make (political) decisions is given by Malcolm Gladwell in his book “Blink” (chapter 3). Gladwell tells the story of Warren Harding who ended up being President of the USA. His rapid ascension in political life was mainly due to his good looks. As Gladwell says, this guy “looked like a president”. Unfortunately, his 2 years mandate is remembered as one of the worst in USA history.

The essential aspect of understanding the representativeness heuristic is how it works. It essence, when we make judgments we very often ask ourselves one question, but we answer another one. The first question is difficult, while the second is easy to answer.

Let’s illustrate this. Imagine yourself as a voter in the elections won by Warren Harding. You want to make a good decision and you ask yourself the following question: “Is Warren Harding a competent, hardworking, visionary, patriotic leader?” or putting things a bit more simpler, “Is Warren Harding going to be a good president?”. By all means this is a difficult question. Honestly, even in the XXI-st century with virtually unlimited information about politicians it is really hard to answer the question.

At the same time, another question pops into your mind. This time it is a rather easy one: “Does Warren Harding look like a good president?”. In other words, “Does he fit the prototype of “good president”?”.

Now, this question is easy to answer because you can simply compare the candidate with your mental image (prototype) of a “good president”. The answer is simple and comes immediately into mind. “YES”. Or at least that is what the majority of voters in those elections answered.     

The power of representativeness goes beyond fuzzy complicated questions about politicians’ qualities. What if in aforementioned example of you being a voter, you would have some statistical background information? What if you knew that there is a one out of three chance that Warren Harding will be a good president? Would you still consider him to be a good potential president? Research tells us that you would still think that he will be a good leader and that you will simply ignore the statistical information which tells you that it is twice more likely for him to be a bad president than a good one.

The fact that people ignore statistical information and make judgments based mostly on representativeness has been proven in a legendary study by Kahneman and Tversky from 1973. Participants in the study were presented with the following description of a student:

“Tom W. is of high intelligence, although lacking in true creativity. He has a need for order and clarity, and for neat and tidy systems in which every detail finds its appropriate place. His writing is rather dull and mechanical, occasionally enlivened by somewhat corny puns and by flashes of imagination of the sci-fi type. He has a strong drive for competence. He seems to have little feel and little sympathy for other people and does not enjoy interacting with others. Self-centered, he nonetheless has a deep moral sense.” (source: Kahneman and Tversky (1973) as cited by Kahneman and Frederick (2002)).

Some participants in the study were asked to rank the nine fields of specialization within the university (such as computer science or humanities) by the degree to which Tom W. “resembles a typical graduate student.”

Other participants were informed on the proportions of students enrolled in each of the nine specializations (for example “3% of students are enrolled in Library science”). Next they were asked to rank the specializations according to the likelihood of Tom W.’s specializing in each.

To make things a bit simpler, some participants were asked to evaluate (rank) field of study based on how prototypical was “Tom W” to each of them. Other participants were provided with statistical information on the number of students in each field of study and next were asked to evaluate (rank) these fields of study based on the probability that “Tom W” is enrolled in each of them.

The two groups ranked the fields of study virtually identically (correlation coefficient of 0.97). In other words, people judged the probability by means of representativeness. Most interestingly, the statistical information provided was virtually ignored completely.

If you read the description of Tom W. you see that somehow he fits the prototype of a “computer science” geeky student. At the same time, there is not one single hard fact that would be causally linked to him being a “computer science” student. There is no single bit of information that would make us say beyond any doubt that he is in “computer science” and not in “history”. The description doesn’t say that he is good with numbers, likes to write software or knows how to take a computer apart to the smallest piece and put it back together.  

Despite this lack of hard causal information we tend to see Tom W. as a “computer science guy” and not as a “Literature student”. Moreover, we tend to ignore basic information. If in the description there is not hard fact to tie Tom W. to a particular field of science, then it means that the base-rates for each field apply. This means that in absence of any additional information, the likelihood of Tom W. being a literature student is equal to the proportion of literature students in the overall population. If 15% of all students are in “Literature”, then it means that Tom W. (regardless of his description) has a 15% chance of being a literature student.

Let’s go a bit back to the birds… Go and ask a colleague (who has not read this post yet) the following question:

“Something that has wings, flies and lays eggs is more likely to be:
A. a bird or
B. an insect?”

I guess most of your colleagues will answer quickly that it is more likely to be a bird, despite the fact that on Earth there are far more insects than birds. This is because in our minds “something that has wings, flies and lays eggs” fits better the prototype of a bird than it fits the prototype of an insect.

But, apart from office fun with birds and insects and from fictional students with poor social skills, representativeness based judgment has very serious influences in our lives, even beyond voting good looking politicians.

Consider the following example. You have some money to invest (or at least let’s pretend you do) and you want to invest in a small technology company. The following two options are available:

Option A: is a small company in the technology business that has 50 employees. The main office is located in a class A office building in the business center of the city. The CEO of the company is a 34 years old man with a funky hairstyle that has a very active presence in social media.

Option B: is a very small company in the technology business that has 20 employees. The company has a small office located in an old factory building at the outskirts of the city. The CEO of the company is a 36 years old guy who gives little attention to his physical appearance. He has neither a facebook nor a twitter account; he uses the same e-mail address he has been using for the past 15 years.

In which company would you put your money into?

If you answered “in the first one” (option A), then you are a “victim” of representativeness. Both descriptions tell you virtually nothing relevant for your decision.

Let’s take a step back and identify the right question to answer if you want to invest in a company. This question is “which company will achieve market success and have profits (hopefully)?”. In the two descriptions of the companies I gave you absolutely nothing about income flows, profit margins, growth potential etc.

What I gave you is perfectly irrelevant information on things that seem to be related to success or better yet, information on what we believe to be a successful company.

So what if the first company has 50 employees and the second only 20? If you watch the news you will hear about companies cutting jobs to increase profitability, which is what you should care about as an investor.

So what if the guy running the second company doesn’t care about his physical appearance? Have you never seen a picture of Donald Trump?

Thinking in prototypes and making judgments based on representativeness is simply natural for people. Usually this goes quite ok.

Before ending, I would like to make a brief observation about marketing research and the fact that people use representativeness for a lot of judgments.   

Typically, a marketer’s job is, among others, to achieve brand awareness. Now, this brand awareness comes in more forms and one of them is “top of mind” in the sense of a certain brand being the first thing that pops into consumer’s minds when a product category is mentioned. Other types of awareness focus on recognition of a brand.

A typical example of a question that investigates top of mind awareness is “What is the first brand that comes to your mind when you think of hamburgers?”.

I have nothing against top of mind awareness, but I ask, is it as important as most marketers think it is? After all, if people make judgments by assessing representativeness, isn’t it more important to make sure that we are recognized by our customers and not necessarily take that “top of mind” spot?
Note: This post is documented from:
Kahneman, D. and S. Frederick (2002).”Representativeness Revisited: Attribute Substitution in Intuitive Judgment,” in Heuristics and Biases: The Psychology of Intuitive Judgment. T. Gilovich, D. W. Griffin, and D. Kahneman (Eds.). New York: Cambridge University Press, 49-81.

Gladwell, M. (2005). “Blink: The Power of Thinking Without Thinking” New York: Little Brown and Co

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