[Link] The emotional system (aka Type 1 thinking) might excel at complex decisions
For thousands of years, human beings have looked down on their emotions. We’ve seen them as primitive passions, the unfortunate legacy of our animal past. When we do stupid things – say, eating too much cake, or sleeping with the wrong person, or taking out a subprime mortgage – we usually blame our short-sighted feelings. People commit crimes of passion. There are no crimes of rationality.
This bias against feeling has led people to assume that reason is always best. When faced with a difficult dilemma, most of us believe that it’s best to carefully assess our options and spend a few moments consciously deliberating the information. Then, we should choose the alternative that best fits our preferences. This is how we maximize utility; rationality is our Promethean gift.
[...] it’s only in the last few years that researchers have demonstrated that the emotional system (aka Type 1 thinking) might excel at complex decisions, or those involving lots of variables.
The latest demonstration of this effect comes from the lab of Michael Pham at Columbia Business School. The study involved asking undergraduates to make predictions about eight different outcomes, from the Democratic presidential primary of 2008 to the finalists of American Idol. They forecast the Dow Jones and picked the winner of the BCS championship game. They even made predictions about the weather.
Here’s the strange part: although these predictions concerned a vast range of events, the results were consistent across every trial: people who were more likely to trust their feelings were also more likely to accurately predict the outcome. [...]
Consider the results from the American Idol quiz: while high-trust-in-feelings subjects correctly predicted the winner 41 percent of the time, those who distrusted their emotions were only right 24 percent of the time. The same lesson applied to the stock market, that classic example of a random walk: those emotional souls made predictions that were 25 percent more accurate than those who aspired to Spock-like cognition.
[...] the unconscious brain is able to process vast amounts of information in parallel, thus allowing it to analyze large data sets without getting overwhelmed. (Human reason, in contrast, has a very strict bottleneck and can only process about four bits of data at any given moment.)
[...] how do we gain access to all this analysis [...]
[...] emotions come in handy. Every feeling is like a summary of data, a quick encapsulation of all the information processing that we don’t have access to. (As Pham puts it, emotions are like a “privileged window” into the subterranean mind.) When it comes to making predictions about complex events, this extra information is often essential. It represents the difference between an informed guess and random chance.
[...] for example, that you’re given lots of information about how twenty different stocks have performed over a period of time.
[...] if you’re asked which stocks trigger the best feelings [...] you will suddenly be able to identify the best stocks [...] your feelings will “reveal a remarkable degree of sensitivity” to the actual performance of all of the different securities.
But this doesn’t meant we can simply rely on every fleeting whim [...] only benefit from the emotional oracle effect when they had some knowledge of the subject. If they weren’t following [...] then their feelings weren’t helpful predictors [...]
[...] our emotions [...] are imperfect oracles [...] a strong emotion is a reminder that, even when we think we know nothing, our brain knows something.