Do you have MOTOR Insurance? Are you a hedgehog or fox with your insurance decisions?
When making predictions, most people will say to you “go with your intuition” or “lean on the advice of experts.” However, in business, both tactics are usually no better than random chance.
In his 2012 book, The Signal and the Noise: Why Most Predictions Fail – but Some Don’t, Nate Silver details the art of using probability and statistics as applied to real-world circumstances. In one of the book’s better passages is when Silver highlights the work of Phillip Tetlock, a professor of psychology and political science at Berkeley.
Tetlock found that there were some experts who consistently fared better than average. Why? Because they approached predictions like a “fox” and not a “hedgehog,” descriptions borrowed from a Isaiah Berlin essay. Below are some of the characteristics noted by Silver and Tetlock that can define our prediction style.
Hedgehogs tended to fare worse at predictions and have a few common characteristics:
- Hedgehogs construct “stories” that attempt to organize the real world. Stories like this often willingly ignore information and confirm biases while making smaller events indicative of a larger narrative.
- Hedgehogs believe in what Silver calls the “Big Idea”: an all-consuming manifesto that the hedgehog filters all new information through.
- Hedgehogs use new information to advance a bias or partisan theory instead of shining light on a truth.
- Hedgehogs often boldly proclaim that predictions will “definitely” or “100 percent” happen. This approach may get more attention but is much more likely to lead to false predictions.
Foxes, on the other hand, take a more pluralistic approach by separating ego from the outcome and tended to have more accurate predictions about the future.
- Foxes are willing to be self-critical and rarely believe that failures are the result of “bad luck” or other external forces.
- Foxes adopt ideas across disciplines. Even seemingly useless knowledge can help spark new information and ideas that can lead to better predictions.
- Foxes accept that the universe can be complicated and sometimes unpredictable and recognize that predictions can never be truly “100 percent.”
- A Fox’s prediction gets better with new information.
The next time you find yourself guessing at the future, stop and take a minute to analyze your thought process. Do you find yourself “rooting” for a certain outcome? Are you willfully ignoring any information? If so, it may be time to compel your hedgehog brain to think like a fox.
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