Everything Is Obvious

In science, we accept that if we want to learn how the world works, we need to test our theories with careful observations and experiments, and then trust the data no matter what our intuition says

The paradox of common sense, therefore, is that even as it helps us make sense of the world, it can actively undermine our ability to understand it.

Criticizing common sense, it must be said, is a tricky business, if only because it’s almost universally regarded as a good thing—when was the last time you were told not to use it? Well, I’m going to tell you that a lot. As we’ll see, common sense is indeed exquisitely adapted to handling the kind of complexity that arises in everyday situations. And for those situations, it’s every bit as good as advertised. But “situations” involving corporations, cultures, markets, nation-states, and global institutions exhibit a very different kind of complexity from everyday situations. An

ut friends, whether close or not, also consistently believe themselves to be more similar than they actually are. In particular, our respondents were very bad at guessing when one of their friends—even a close friend with whom they discussed politics—disagreed with them. Here, the numbers were borne out by a series of anecdotal reports we received from people who had participated in Friend Sense, and who were frequently dismayed by how their friends and loved ones perceived them: “How could they think that I thought that?” was a frequent refrain. Many of our participants also reported having the experience of being asked a question about someone they thought they knew well, only to realize that they didn’t know the answer—even though it seemed like a subject that educated, politically engaged friends ought to be talking about.22

the “theory of relative deprivation” states that people feel distressed by circumstances only inasmuch as their hardship exceeds that of the people around them. Thus if your house burns down in a freak fire, you’re devastated, but if your whole city is wiped out in an earthquake and hundreds of your neighbors die, you feel lucky to be alive.

It was Spencer, in fact, not Darwin, who coined the phrase “survival of the fittest.”

Nozick found Rawls’s argument deeply disturbing, in large part because it attributed at least part of what an individual accomplishes to society rather than to his or her own efforts. If an individual cannot keep the output of his talent and hard work, Nozick’s reasoning went, he is effectively being forced to work for someone else against his free will, and therefore does not fully “own” himself. Taxation, it follows, along with all other attempts to redistribute wealth, is the moral equivalent of slavery, and therefore unacceptable no matter what benefits it might confer on others. Nozick’s argument was appealing to many people, and not only because it provided a philosophical rationale for low taxes. By reasoning about what would be considered fair in a hypothetical “state of nature,” Nozick’s arguments also played well to commonsense notions of individual success and failure. In a state of nature, that is, if one man invests the time and effort to build, say, a canoe for fishing, no one else is entitled to take it from him, even if it means that the man lacking the canoe will suffer or perish. Individual outcomes, in other words, are solely the product of individual efforts and skill.

he Halo Effect, in other words, turns conventional wisdom about performance on its head. Rather than the evaluation of the outcome being determined by the quality of the process that led to it, it is the observed nature of the outcome that determines how we evaluate the process.6

one early experiment, for example, groups of participants were told to perform a financial analysis of a fictitious firm, after which they were rated on their performance and asked to evaluate how well their team had functioned on a variety of metrics like group cohesion, communication, and motivation. Sure enough, groups that received high performance scores consistently rated themselves as more cohesive, motivated, and so on than groups that received low scores. The only problem with these assessments was that the performance scores were assigned at random by the experimenter—there was no difference in performance between the high and low scorers. Rather than highly functioning teams delivering superior results, in other words, the appearance of superior results drove the illusion of high functionality.

irms that are successful are consistently rated as having visionary strategies, strong leadership, and sound execution, while firms that are performing badly are described as suffering from some combination of misguided strategy, poor leadership, or shoddy execution. But as Rosenzweig shows, firms that exhibit large swings in performance over time attract equally divergent ratings, even when they have pursued exactly the same strategy, executed the same way, under the same leadership all along. Remember that Cisco Systems went from the poster child of the Internet era to a cautionary tale in a matter of a few years