Why Do You Pay For Advice?

So how many people predicted the outcome of yesterday’s enthralling All-Ireland hurling final which ended in the first draw in over 50 years? Yes, probably not too many. And this, despite all manner of analysis, consideration of scenarios and predictions by hurling experts. Trying to predict the future is something that we do all the time. Economists have become celebrities by either telling us that they predicted the global recession or by forecasting how much better or worse it is going to get. And a whole industry has been built around advising you what to do with your money. But two interesting questions arise. How good is this advice and if we believe that it is not all that good, why do we continue to seek it out?

These questions have been the subject of some interesting experimental studies most notably a recent one published by Powdthavee and Riyanto. They asked a group of students to bet on the outcome of five successive random coin tosses. But taped to the desk of each participant were five envelopes predicting the outcome of the successive tosses and students could either pay to see these predictions in advance or see them for free after the coin has been flipped. When an initial prediction turned out to be correct, students were more willing to pay to see the next forecast. This tendency increased after two, three and four successful predictions and furthermore, those who paid in advance for predictions also placed bigger bets on subsequent coin tosses than those who did not.

So psychologically, our instinct is to seek out advice. We often pay handsomely for it – sometimes through the small print and sometimes through the fees charged by experts. Much of the time, this advice is not all that good. For example, research demonstrates that most actively managed investment products rarely beat the market index. The reason we still look for advice is due to a phenomenon called the ‘avoidance of regret’. If you make your own decision you only have yourself to blame but if you took the advice of an expert, the decision is not your fault. So the moral of the story is - spend less time listening to (or paying for!) advisors and pundits. Instead hope for some random good luck and also that Galway get the job done next time!

Is the Internet a Good Teacher?

With the arrival of September in the northern hemisphere comes the return of a new academic year in schools and universities. When the initial phase of excitement and fun of catching up with old friends passes, the serious business of study, assignments and test preparation quickly takes over. And for most students now, this means turning to their laptops, tablets and phones as they scan the Web for information, content and answers. But how good is the Internet as a learning tool?

Not so good it would increasingly appear. A growing array of experimental studies have tested whether information gleaned online leads to better or worse comprehension and retention compared with information obtained through the linear fashion of textbooks and lectures. In these studies, two sets of volunteers are exposed to the same content – one group to material presented in webpage format with hyperlinks and multimedia while the other group gets the content in book page fashion. The two groups are tested afterwards on the content with the latter consistently outperforming the ‘internet’ group. In a similar further study, one group of volunteers watched a presentation played through a web browser that including only a series of text pages while another watched the same material but with an embedded audio-visual presentation of related material. In a subsequent ten-question test, the former group again significantly out-performed those that viewed the more media-rich presentation. Finally, of particular interest to educators is a study by Hembrooke & Gay that examined the impact of allowing your audience to use technology while participating in class, something that is becoming commonplace. Again those students who were allowed to surf the Web during class performed significantly worse in post-class tests than those that were not.

It is not just students but professionals of all sorts, including managers, that are using the internet to help them with their work. But why is it such a poor teacher? The problem is that surfing the Web requires us to constantly make fast and immediate decisions regarding which links to follow, which pages to stay with and so on. This, according to neuro-scientists, increases our cognitive load and simultaneously inhibits the transfer of information to our long-term memory. Your brain, as it were, cannot do two things at once. So whether it is making good business decisions or getting good grades, ration your dependence on the Web!