Review of "The Wisdom of the Crowds"

I must be reading too many of these social science/business books because I'm starting to see the same stories show up over and over again. Look, here's a "prisoner dilemma" story. Hey, there's a "wisdom of the crowds" story. Oh gee, another "tipping point" story. Golly, another "Freakonomics" application of economic analysis to real-world problems. A few themes I've noticed in all of these works.


1) Social scientists have discovered (rediscovered) that human beings are not always rational actors (the classic "ultimatum" game example comes up again and again in which people refuse "small" offers as "unfair" even if rationally they should accept them). They've therefore spent a lot of time in the last few decades trying to figure out exactly how and why people act irrationally. A lot of this material is very interesting, but anyone coming from a Christian perspective (in which we assume a fallen human nature) will not be very impressed with the supposedly big "aha" moments about humanity's irrational core.

2) Having said that, there really are some "aha" moments about how the human mind functions, especially in group settings. How do we cooperate, coordinate, etc. in a world full of irrational people? The "wisdom of the crowds" concept adds some basic lessons that I actually might use in my administrative work (as opposed to much of the other reading, which is more enlightening than it is directly useful). If the group really is smarter in most situations than any particular leader or expert, then knowing how to get at that group intelligence (by meeting the four criteria of diversity of opinion, independence of thought, sufficient knowledge, and a reliable means of aggregating the data) can help provide valueable insights. We already follow some of these concepts, for instance, in our budgeting prioritization process, and I hope to run a prediction market on our enrollment number this coming year as well.

3) Good stories matter. All of these books are well written and contain lively anecdotes. I sometimes feel as if I'm being bamboozled a bit (especially reading Gladwell) in which I'm being proselytized with anecdotes to believe that data is the answer (a bit of a contradiction, eh?), but these books all carry one away with the force of their basic ideas and the charm of their stories. "Wisdom of the Crowds" certainly fits that pattern as well.