Daniel Kahneman is one of the most influential behavioural economists, having won the noble prize. He distinguishes human behaviour by two processing systems in the brain. The first system is intuitive thought and the second, calculating thought. Here is one of Daniel’s experiments to highlight the difference.
Complete this simple puzzle?
– The Bat and Ball cost £1.10
– The Bat costs one pound more than the ball
– How much does the Ball cost?
50% of respondents at Harvard Business School allowed the intuitive part of the brain to suggest the number 10, 10p. If you stopped to think, the calculating part of the brain will take over, providing the correct answer of 5p.
There is another concept at work within this experiment that Kahneman called Data Markers. This concept describes the very powerful effect of placing numbers next to each other that influences the intuitive part of the brain. In 75% of cases the intuition is more likely to surface numbers it has already seen, in this case 10 and 1.
One of the biggest challenges for data professional is to understand how these thought processes reflect on the culture of a business and the individuals making decisions. One of the biggest impacts of increasing data is to recognise how people consume and act upon data.
As with everything within the emerging data field, the answer is a balance of competing forces. Choose less data and KPIs to present, providing the space in the reader’s brain to interpret and conclude in more detail. Secondly, the relationship between data points and the KPIs that bring different numbers together is critically important to frame the intuitive interpretation.
Recognising these two concepts allows Cambridge Data to understand how individual businesses make decisions and ensure that any strategy and reporting reflects both the intuitive and calculating processes within every senior management team.
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