Vividness and Recency

Vividness and Recency

The attention which we lend to an experience is proportional to its vivid or interesting character; and it is a notorious fact that what interests us most vividly at the time is, other things equal, what we remember best.

William James (American psychologist and philosopher, 1842-1910)

John invests in a company based on a beautifully written quarterly earnings report and an entertaining presentation.

The more dramatic, salient, personal, entertaining, or emotional some information, event or experience is, the more influenced we are. For example, the easier it is to imagine an event, the more likely we are to think that it will happen.

We are easily influenced when we are told stories because we relate to stories better than to logic or fact. We love to be entertained. Information we receive directly, through our eyes or ears has more impact than information that may have more evidential value. A vivid description from a friend or family member is more believable than true evidence. Statistical data is often overlooked. Studies show that jurors are influenced by vivid descriptions. Lawyers try to present dramatic and memorable testimony.

"Seeing the face of a 9-year old girl who is suffering feels awful."

Joseph Stalin said: ''A single death is a tragedy; a million deaths is a statistic." Information that moves us emotionally makes us pay greater attention to the event itself than to its magnitude. Statistics rarely spark our emotions. An individual face and name will.

A Chinese proverb says: "Kill one, frighten ten thousand." We often overestimate events that are unlikely to happen merely because they receive attention in the news. Drama and danger sell. The media capitalizes on fear because there is money in it. Major accidents, such as airplane crashes or shark attacks, grab people's attention and make headlines regardless of their probability. This causes us to believe a problem is larger than it really is. Sometimes we believe an event has increased in frequency because we see it more. But the media may only cover it more.

John sold every stock he owned since the media reported bad economic news.

We give too much weight to information we've seen, heard, read or experienced most recently. For example, when judging performance, we overweigh what happened most recently and underweigh or ignore the long term evidence or what on average happens (assuming those are representative of reality).

We make predictions by extrapolating recent trends and conditions. The stock market falls into nose bleed territory and we assume the world is going under. After a bad event happens, we tend to overestimate the likelihood of it happening again. For example, studies cited by the author report a sharp rise in earthquake insurance after an earthquake. Increased buying shows greater attention to the risk, though it does not by itself establish that the new risk estimate is too high.

Keep in mind

• The media has its weaknesses, biases and vulnerability to manipulation and deception. Consider what is relevant and the normal outcome in similar situations.
• Accurate information is better than dramatic information. Back up vivid stories with facts and numbers.
• Separate noise and chance events from what is important. Ask: Is it relevant? Does it make sense? Is it representative evidence? Was it a random event?
• Trends may be wrong. Ask: Is it a permanent or temporary effect?