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KNOWLEDGE IS NON-TRANSFERABLE
Domain Dependence
Writing books about clear thinking brings with it many pluses. Business leaders
and investors invite me to give talks for good money. (Incidentally, this is in itself
poor judgement on their part: books are much cheaper.) At a medical conference,
the following happened to me.
I was speaking about
base-rate neglect
and
illustrated it with a medical example: in a 40-year-old patient, stabbing chest pain
may (among other things) indicate heart problems, or it may indicate stress.
Stress is much more frequent (with a higher base rate), so it is advisable to test
the patient for this first. All this is very reasonable and the doctors understood it
intuitively. But when I used an example from economics, most faltered.
The same thing happens when I speak in front of investors. If I illustrate
fallacies using financial examples, most catch on immediately. However, if I take
instances from biology, many are lost. The conclusion: insights do not pass well
from one field to another. This effect is called
domain dependence
.
In 1990, Harry Markowitz received the Nobel Prize for Economics for his theory
of ‘portfolio selection’. It describes the optimum composition of a portfolio, taking
into account both risk and return prospects. When it came to Markowitz’s own
portfolio – how he should allot his savings in stocks and bonds – he simply opted
for 50/50 distribution:
half in shares, the other half in bonds. The Nobel Prize
winner was incapable of applying his ingenious process to his own affairs. A
blatant case of
domain dependence
. He failed to transfer knowledge from the
academic world to the private sphere.
A friend of mine is a hopeless adrenaline junkie, scaling overhanging cliffs with
his bare hands and launching himself off mountains in a wingsuit. He explained
to me last week why starting a business is dangerous: bankruptcy can never be
ruled out. ‘Personally, I’d rather be bankrupt than dead,’ I replied. He didn’t
appreciate my logic.
As an author, I realise just how difficult it is to transfer skills to a new area. For
me, devising plots for my novels and creating characters are a cinch. A blank,
empty page doesn’t daunt me. It’s
quite a different story with, say, an empty
apartment. When it comes to interior decor, I can
stand in the room for hours,
hands in my pockets, devoid of one single idea.
Business is teeming with
domain dependence
. A software company recruits a
successful consumer-goods salesman. The new position blunts his talents;
transferring his sales skills from products to services is exceedingly difficult.
Similarly, a presenter who is outstanding in front of small groups may well tank
when his audience reaches 100 people. Or a talented marketing mind may be
promoted to CEO and suddenly find that he lacks any strategic creativity.
With the Markowitz example, we saw that the transfer
from the professional
realm to the private realm is particularly difficult to navigate. I know CEOs who are
charismatic leaders in the office and hopeless duds at home. Similarly, it would
be a hard task to find a more cigarette-toting profession than the prophets of
health themselves, the doctors. Police officers are
twice as violent at home as
civilians. Literary critics’ novels get the poorest reviews. And, almost proverbially,
the marriages of couples’ therapists are frequently more fragile than those of their
clients. Mathematics professor Barry Mazur tells this story: ‘Some years ago I was
trying to decide whether or not I should move from Stanford to Harvard. I had
bored my friends silly with endless discussion. Finally, one of them said, “You’re
one of our leading decision theorists. Maybe you should make a list of the costs
and benefits and try to roughly calculate your expected utility.” Without thinking, I
blurted out, “Come on, Sandy, this is serious.”’
What you master in one area is difficult to transfer to another. Especially
daunting is the transfer from academia to real life – from the theoretically sound to
the practically possible. Of course, this also counts for this book. It will be difficult
to transfer the knowledge from these pages to your daily life. Even for me as the
writer that transition proves to be a tough one. Book smarts doesn’t transfer to
street smarts easily.
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