Deauville - OECD - 25 October 2012
Last night, at the end of the NAEC conference, we had an entertaining and thoughtful presentation by Professor Kahneman, who demonstrated admirably how psychological insights can be of use to economists. His contention was that we are conditioned by evolution to be optimists. This is because it is a survival trait that works. Unfortunately, according to Professor Kahneman, it also exposes us to certain dangers. Not least, a bias towards optimism often gives us a false confidence about our capacity to forecast the future. Indeed, he noted that, even after forecasts (and the associated punditry) are proved false by events, humans tend to continue to rely on them regardless. Worse, forecasters often tend to simplify their basic story in an attempt to enhance its coherence and thus reinforce confidence. It appears that it is part of our human nature to want to believe that someone, somewhere, really understands what is going on.
Event or Meeting:
Luncheon -Ambassadors to OECD