Valley of the Normal (Hindsight Bias)

The Valley of the Normal

We now turn to a broader question: how do we achieve comfort in a world in which many problems are easy but many others are dominated by objective ignorance? After all, where objective ignorance is severe, we should, after a while, become aware of the futility of crystal balls in human affairs. But that is not our usual experience of the world. Instead, as the previous chapter suggested, we maintain an unchastened willingness to make bold predictions about the future from little useful information. In this chapter, we address the prevalent and misguided sense that events that could not have been predicted can nevertheless be understood.

Predicting Life Trajectories

In 2020, a group of 112 researchers, led by Sara McLanahan and Matthew Salganik, both professors of sociology at Princeton University, published an unusual article in the Proceedings of the National Academy of Sciences. The researchers aimed to figure out how much social scientists actually understand about what will happen in the life trajectories of socially fragile families. The massive database from the Fragile Families and Child Wellbeing Study was used, and teams competed to predict six outcomes. The best models achieved low correlations (e.g., r = .22 for evictions), showing that even with rich data, prediction is poor.

Understanding and Prediction

In social science, understanding often implies a causal chain. Prediction accuracy (correlation) measures how much causation we can explain. Low prediction accuracy indicates limited understanding. The authors concluded: "Researchers must reconcile the idea that they understand life trajectories with the fact that none of the predictions were very accurate."

Causal Thinking

Causal thinking creates stories where specific events affect one another. For example, the eviction of the Jones family is seen as the inevitable result of a chain of events (job loss, inability to pay rent). In hindsight, alternate paths are ignored, making the outcome feel predictable.

Understanding in the Valley of the Normal

Most events are neither expected nor surprising; they lie in the valley of the normal. After an event occurs, we search memory for causes and construct a narrative. The search almost always succeeds because we can draw from unlimited facts. This creates an illusion of understanding and predictability. The continuous causal interpretation of reality is how we "understand" the world.

Inside and Outside

Causal thinking (inside view) is natural and effortful; statistical thinking (outside view) is deliberate and requires training. Causal thinking leads to predictable errors, while statistical thinking helps avoid them. But causal thinking makes us feel we understand the world more than we do.

Speaking of the Limits of Understanding

• "Correlations of about .20 (PC = 56%) are quite common in human affairs."
• "Correlation does not imply causation, but causation does imply correlation."
• "Most normal events are neither expected nor surprising, and they require no explanation."
• "In the valley of the normal, events are neither expected nor surprising—they just explain themselves."
• "We think we understand what is going on here, but could we have predicted it?"