Rational Bias

(Picture from here.)

We humans have a strong bias that our decisions are based on an intelligent, rational cognitive process. It’s embedded in our language– that was a “stupid decision.”

However, anybody who has lived a fairly full life must at some point slap their foreheads and say “What was I thinking?” about that boyfriend, that marriage, that job. Even when that boyfriend, marriage or job looked like the best decision at the time. We comfort ourselves thinking that we didn’t have all the facts, we were young, in love, or whatever. But in the cold light of day when no one is around, we pull out that decision and look at it and realize just how dumb that decision was.

We’re running into that in our little town here in Massachusetts. Here’s the situation.

Massachusetts has put together over the last couple of years a set of incentives for individuals and communities to put up solar power stations. These can be on the roofs of buildings, acreage that isn’t being used, etc. We put up panels on our house, for example. Several businesses and the local school has done the same.

But these incentives are coming to an end next year. A company has proposed that we lease to them a beat up old sand pit for them to build a solar farm on. In return, they would sell the electricity back to the town at a reduced rate. There’s a proposed clause in the contract that whatever the price the company would sell to the town it would be unable to sell it for more than the local power company. There is no monetary investment to the town. No outlay of effort. Just give them permission to use this land– land that has been deserted and fallow for a quarter century– for twenty years. At the end of twenty years we can buy the installation for a dollar or tell them to haul it away. The savings can be as much as $500k/year. And if fracking suddenly made electricity as free as the rain (and probably as toxic) it wouldn’t cost us a dime.

The only potential downside is that the land is out of circulation for two decades. There is some possible opportunity cost if some magic fairy came down and wanted to put up a pixie dust factory or something. Factories are sources of revenue. Homes and apartments do provide revenue but that’s more than offset by the cost of services– which has been shown by several studies.

This is like somebody handing you free money.

Now, you would think that this idea would be embraced by everyone concerned. But it’s actually been quite a battle to get this approved– we have to push it through town meeting and there is a fair amount of resistance. Why? You ask.

I have no idea.

I’ve heard a bunch of arguments that don’t hold the least bit of water. At least, they hold no scientific or financial merit. That does not change the arguments’ power to those who hold them in their heart. As I’ve read the discussion, it seems to me that there are two populations of people talking at cross purposes with one another:

  1. People who don’t mind government operation and control of resources
  2. People who believe that government should never control resources or have as little control of resources as possible.

The people in group two seem to believe that any control of resources by government is tantamount to government control of all resources.

This is all very curious to me since, as Heinlein said it, “facts do not sway them in the pursuit of a higher truth.”

It reminded me a lot of some rather interesting human research that also involved people who acted without regard to self-interest. Notably, the inequity aversion experiments.

These are fairly controversial experiments with diverse outcomes. There’s one called the ultimatum game. Two people play in this game. One proposes a split of a pot of money and the other must approve for the money to be received. Without approval neither player gets any money. The game is only played once so no future reciprocity is involved.

The researchers found, in one iteration of the experiment, that when the proposed split was too inequitable (say $100 to $1), approval was denied. In other words, the approving player was willing to part with money in order to deny money to the proposing player. There have been variations on the game that erased this inequity aversion as well as variations that enhanced it. What’s also interesting is that there is a sort of “fairness” perception in non-human primates. Capuchin monkeys will fail to cooperate when the reward discrepancy is too great.

I’m not suggesting inequity aversion is at work here in town regarding the solar array. I am pointing out that there are circumstances where an individual will sacrifice their own self-interest to deny another theirs. If altruism is defined to be when an individual sacrifices his own self-interest for another, this is its reverse.

We should not be surprised that humans are somewhat irrational in making their decisions. There’s been a lot of research in this area. While we know the frontal lobes of the brain are important in human decision making and rational cognition, we also know that the amygdala, one of the seats of emotion in the brain, is equally involved. The nature of this involvement is still in the process of being understood. For a long time there was a two system model with a rational, long term thinking system corrupted by a short term emotional system.

A 2008 paper in Cell cast doubt on this two system model. Instead, they suggested that classical conditioning  plays a large role as well.Classical conditioning takes a stimulus and associates it with a response. Ring a bell every time you serve food to your dog and after a while he’ll drool when the bell rings whether food is brought or not.

What’s interesting about classical conditioning is it is predictive. The dog is drooling as a predictive response to the receipt of food. The amygdala has been shown to be crucial in cue-outcome associations– and are likely involved in our hypothetical dog-drool experiment. This, in and of itself, is not necessarily an emotional response. Though many experiments have shown that the amygdala is involved in emotion– fear, especially– as well. Humans overly weight loss over gain in gambling scenarios. People with lesions on the amygdala lose this asymmetry. In point of fact, patients with a poorly function amygdala cannot gamble intelligently. (See here.)

The role of fear, the amygdala and decision making has also come under scientific scrutiny. It’s been shown that the ability to make “rational” decisions is dependent not only on a functioning amygdala, it is also dependent on an amygdala that’s not consumed with fear. The amygdala executes multiple duties: it helps associated cue and response, it manages the fear response and it aids in weighting outcomes in decision making. If the amygdala is busy processing fear would we expect it to execute its decision making function properly?

(I will leave here the exercise for the reader on why political fear techniques are so successful.)

The amygdala connection (among other neurological studies) tell us something we should already know: humans are not rational creatures. But we have bias to think we are so we fabulate arguments to explain the point of view we want to have and then defend them religiously.

Which brings me back to my irrational town, bless its pointy little head.

We get to fight it out in town meeting on Monday.

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Rational Bias — 3 Comments

  1. I have been mystified for some time about why people want to limit government but are willing to let big corporations run things. Yeah, governments are bureaucratic, but anyone who has dealt with an insurance company lately knows that big corporations are worse on that score. Apparently fear-mongering about government has not only taught people to act against their own self-interest, but hidden the dangers posed by control of key resources by private companies.

    I hope the forces of reason prevail in your town.

  2. I don’t have the link to hand at the moment but there have been some experiments which have found that inequity aversion is deeply cultural. There are places in the world where you take any money that is given to you gratefully without any fairness consideration. There are also places where you turn down anything that looks like a bribe (if you are offered more than the appropriate share for your relative rank and stations).
    Your point is still valid for your location though