In my reviews of Gerd Gigerenzer’s Adaptive Minds, beginning with A Review of “Adaptive Minds: Part I”, I discussed Professor Gigerenzer’s analyses of the ‘discoveries’ in the latter half of the 20th century that human beings don’t think very clearly. Beginning in the 1950s or so, Economists and psychologists and others tested the common folk and supposedly discovered they don’t understand uncertainty and don’t deal well with it. If true, this would indicate that human beings don’t know how to deal with the real-world, a surprise to be sure. More recently, Professor Gigerenzer showed that human beings generally don’t deal well with uncertainty expressed as percentages but they do deal well with uncertainty expressed as rates (such as 6 out of 100). As he explains this is closer to the form in which experience would have presented itself — about half of the babies are male rather than 50% are male. Percentages, ratios in general, are a relatively recent development in human thought and haven’t yet fully found a home in the majority of human minds — if they ever do.
Now we learn that miles per gallon isn’t a good measurement for making decisions on car purchases or car use — see Gallons Per Mile Would Help Car Shoppers Make Better Decisions. The explanation is:
People presented with a series of car choices in which fuel efficiency was defined in miles per gallon were not able to easily identify the choice that would result in the greatest gains in fuel efficiency.
For example, most people ranked an improvement from 34 to 50 mpg as saving more gas over 10,000 miles than an improvement from 18 to 28 mpg, even though the latter saves twice as much gas. (Going from 34 to 50 mpg saves 94 gallons\; but from 18 to 28 mpg saves 198 gallons).
These mistaken impressions were corrected, however, when participants were presented with fuel efficiency expressed in gallons used per 100 miles rather than mpg. Viewed this way, 18 mpg becomes 5.5 gallons per 100 miles, and 28 mpg is 3.6 gallons per 100 miles — an $8 difference today.
In other words, what we aim to do in a car is to get some place, to cover a certain number of miles. Our inherent thinking processes, by nature or by nurture or by both, works well in relationship to distances — distance should be the denominator. In a similar vein, we don’t analyze our school budgets by considering number of students per $10,000 but rather dollars spent per student.
It’s interesting that some of our most important quantitative information has been presented wrong, in ways that lead to inconsistent and even irrational decision-making. Are there more possible examples out there? Are there also a lot of cases where qualitative information important to decisions is being presented in strange ways?