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It seems that people and orgnaizations have a tendency to make decision that will improve a measurement when the downsides of this decisions cannot be measured or (alternatively) can be measured but cannot be directly attributed to this decision.

For instance, In Israel there was a (government bakced) scrappage program for old cars. After a few years it got discontinued.

In this case, discontuining the program had a direct, visible, and positive, effect on the budget (reduced spending). On the other hand, the numerous downsides -- fuel savings, reduced emissions, fewer casualties in accidents, reduced load on hospitals, etc. -- cannot be easily measured and even if measured (e.g., one can measure the government's spending on hospitals) the change cannot be easily attributed to the decision (because from the hospitals' point of view they are just more loaded. It's hard to say which part of the load is due to accidents involving old cars).

This phenomena resonates with Surrogation but, as far as I can tell, it is not the same.

Is this a well recognized bias? Is there a name for it?

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That described is similar, albeit depersonified, to identifiable victim effect. In both cases, whether the victim is personal or abstract, a large identifiable effect has more emotional weight than an equivalent set of smaller effects. From Wikipedia:

The "identifiable victim effect" refers to the tendency of individuals to offer greater aid when a specific, identifiable person ("victim") is observed under hardship, as compared to a large, vaguely defined group with the same need. [...] Concrete images and representations are often more powerful sources of persuasion than are abstract statistics.

Two potentially significant factors biasing these decisions are emotionality and cognitive effort. An identifiable victim will naturally have more emotional salience than an abstract victim. Yet even if we seek a more logic-oriented thinking style, a tendency exists to avoid complex or algorithmically expensive decision strategies. Per this tendency, human thought is said to have bounded rationality. From Wikipedia:

Bounded rationality is the idea that rationality is limited when individuals make decisions. In other words, humans' "preferences are determined by changes in outcomes relative to a certain reference level". Limitations include the difficulty of the problem requiring a decision, the cognitive capability of the mind, and the time available to make the decision. Decision-makers, in this view, act as satisficers, seeking a satisfactory solution, rather than an optimal solution. Therefore, humans do not undertake a full cost-benefit analysis to determine the optimal decision, but rather, choose an option that fulfills their adequacy criteria.

Another tendency that may be at play here is the availability heuristic. Specifically, a simple set of obvious effects are much easier to recall or consider than a complex set of obscure or difficult to measure effects. From Wikipedia:

The availability heuristic operates on the notion that if something can be recalled, it must be important, or at least more important than alternative solutions which are not as readily recalled. [...] The availability of consequences associated with an action is positively related to perceptions of the magnitude of the consequences of that action.

While the availability heuristic seems to compare different actions and their respective consequences, presumably the same heuristic applies when comparing the various consequences of a single action. That is, consequences that come more readily to mind should appear more important. A question arises here on whether directly measurable effects are more mentally available than more tangential effects.

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