The Wisdom of Crowds

It's 2009 and we've seen the economy come pretty darn close to total collapse due to, what seems to me, was a mass delusion: house prices would rise forever, we would never have to save a penny and yet we could keep borrowing ourselves into total bliss.

What a surprise to turn on my TV last night and find "The Business of Innovation," hosted by Maria Bartiromo on CNBC . What I heard was a youngish and smart seeming man describing that -- given the right conditions -- crowds can make better decisions than their smartest members. It was James Surowiecki the author of The Wisdom of Crowds - Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations (and a financial writer for the New Yorker). One might have expected a discussion with the author of Extraordinary Popular Delusions and the Madness of Crowds but no because: 1) the author, Charles Mackay, is dead and 2) we all have the memory of a pea.

In truth it was an intriguing discussion. But, as with most things, the devil is in the details. Just as rational markets require all kinds of conditions that almost never coincide, the magic only happens when the crowd is a loose/tight network of diverse and independent thinkers. Seems to me the mob mind is the more likely outcome.

The Power of Storytelling

"Why does our brain seem to be wired to enjoy stories?" asks Jeremy Hsu, the author of The Power of Storytelling in this summer's Scientific American Mind magazine. "Storytelling is one of the few human traits that are truly universal across culture and through all of known history."

Why?

The science he reports is at a fairly early stage but anything truly universal must reflect something fundamental about mankind.

The article speculates that storytelling gave communities an evolutionary edge. Stories helped members of a community model effective communal behavior, reinforce social norms, and develop empathy. If members understand and have internalized a shared narrative they are more likely to make a community that works.

We know that the enemy lies beyond that wall and logic tells us that it is safer to stay put. But when we hear “Once more, dear friends, into the breach,” the “narrative transport” of the story, its flow of history and meaning makes us more likely to risk death for the defense of our family, our friends and our country.

Over thousands of years the very structure of our brains has formed to respond to storytelling. And, as such, no data, no statistic, no mere fact can match storytelling’s ability to call us to action.