on July 10, 2004
Although the subtitle to THE WISDOM OF CROWDS is an awkward mouthful, it is at least accurate: the book does an exceptional job of illuminating a remarkably wide range of material from politics, everyday life, and the business world. Surowiecki's not offering a grand unified theory of everything, but in the course of investigating how and when groups and crowds are and are not intelligent, he takes you on an exhilarating ride. You can't go more than a couple of pages without coming across some interesting factual tidbit or clever anecdote. Just a short list of stuff Surowiecki writes about includes: crowds on city sidewalks, Navy men trying to find a lost submarine, the Nielsen ratings, Google, scientists trying to find the SARS virus, the stock market, game-show audiences, fashion stores, and the C.I.A. Thankfully, though, he understands that just stringing together stories isn't enough. Instead, he fits his examples into a strong argument that holds the book together. You can get a lot out of this book just by dipping into individual chapters, but reading it from beginning to end is a powerful experience.
One of the things about the book that hasn't been much remarked on is the light it sheds on the flaws in the way the U.S. intelligence community -- and, I would argue, the Bush administration -- approaches the problem of forecasting the future and making good decisions. The book's main subject is the wisdom of crowds, but Surowiecki spends a lot of time on how groups go wrong, and his discussion of how groups make bad decisions seems to me completely relevant to our current problems. When Surowiecki delves into groupthink, into the pressure that's exerted on lower-level employees to conform, and the perils of too little diversity of opinion, he's making a broader point about what good decisions require. But in the process, he clarified for me just why the current administration did such a bad job of figuring out whether Iraq had weapons of mass destruction and of planning for the postwar period. I was surprised, but it turns out this book has a lot to say about the state we're in right now.
on June 28, 2004
I wanted to read this book because I have a personal interest in Prediction Markets and have read a couple of Surowiecki's columns in the New Yorker and Wired magazines on this subject. My expectation was that he would expand on his columns and get into details on how Prediction Markets can be used in a corporate or public decision making process. Unfortunately, I'm going to have to agree with the more negative reviews already posted. While the first 50 pages do a good job of explaining these markets and setting the table for a detailed examination, that discussion never happens. Instead, the majority of the book is a collection of studies and anecdotes about the behavior of crowds - most of which I have some recollection of from Psychology classes taken long ago. The second half of the book focuses on what he calls Case Studies, but what I would call simply stories. There's a story about corruption of Italian soccer judges, Richard Grasso's compensation, a review of crowd theory in the movies, the retail fashion industry, the Columbia disaster, etc. Fairly interesting, but hardly instructive. My amateurish explanation for all this is that while Surowiecki may be a talented columnist, but when challenged when writing a full length book, he has neither the practical experience nor educational background to give any great insight on how to leverage the wisdom of crowds to tackle the issues of the day.
on June 12, 2004
Upon hearing about a book on "the wisdom of crowds", I expected it to answer three qeustions: Are crowds wise?, When are they wise?, and Why are they wise? Sadly, this book answers none of them.
Are crowds wise? Surowiecki fills his pages with unconvincing anecdotes. He has only a handful of real studies and he buries them randomly throughout the book. Worse, Surowiecki sometimes describes a study that would be easy to conduct, but instead of doing it he simply tells us what he expects the results would be. And despite the book's constant championing of dissent, Surowiecki offers no evidence that cuts against his argument. Instead, every failure of a crowd simply helps prove his thesis, since he claims it failed because it violated one of his vaugely-stated rules.
When are crowds wise? Surowiecki offers only untested speculation. He claims they need "diversity, independence, and a particular kind of decentralization" (oddly, by decentralization Surowiecki appears to mean aggregation). Surowiecki never defines any of these particularly clearly but instead gives lots of examples. This makes them useless as predictors of a crowd's intelligence which is probably why Surowiecki makes no attempt to test them.
Why are crowds wise? Surowiecki doesn't even bother to answer this one, even though it's the first half of the books subtitle. He considers the question briefly on page 10, only to spout some empty sayings (crowds are "information minus error") and wonder in amazement ("who knew ... we can collectively make so much sense") before finally concluding "You could say it's as if we've been programmed to be collectively smart."
Perhaps noticing these weaknesses, Surowiecki gets all this out of the way in the first 40% of the book. The remainder is dedicated to larger collections of anecdotes Surowiecki likens to case studies. But even they disappoint. While Surowiecki has lots of stories, few are particularly enlightening or even memorable. Surowiecki does little analysis of the stories and does not draw out larger lessons. He assumes he is right and only stops to look down upon those who disagree.
I'm especially disappointed since I expected the book to be good. I love Surowiecki's weekly column in the _New Yorker_ and I suspect he is right about a lot. But instead of making a convincing argument, Surowiecki just stirs together anecdotes from his columns. The result, not suprisingly, is an intellectual muddle.
One thing the book does teach (although not clearly) is the wisdom of _dissent_. You can ensure dissent by collecting a large group and keeping the members from talking to each other (since people are usually smart but afraid of going against the grain), by ensuring some members of the group vocally disagree (since they will force the others to better justify their positions), or by forcing them to try to justify all sides (since that will keep them from prejudging the question).
All of which makes it ironic that Surowiecki's book fails because of a lack of dissent. Nothing goes against the grain, he doesn't justify his positions, and he has clearly prejudged the question. It would seem he needs a crowd to make him wise.
on July 3, 2004
It seems naive to mention it, but one of the things I liked best about Surowiecki's take on the intelligence of groups is how optimistic it is. Most of what we hear about crowds and democracy and the potential of average people offers a dismal picture. But I came away from this book in a hopeful mood, and infused with a sense of real possibility. Surowiecki is convincing on the idea that the intelligence of Google, or bettors at the race track, or the audience in "Who Wants to Be a Millionaire?" aren't peculiar anomalies, but are actually connected by the fact that they're tapping into collective wisdom. This makes me think that if we can figure out a way how to use group intelligence in a wider way -- inside companies, governments, whatever -- the decisions society as a whole makes can be improved.
Stylistically, the book is a delight. The sentences are crisp, and the stories are well-told. Occasionally, Surowiecki makes his ideas too involved and ends up in a digression. But I forgave this because it felt like the result of someone who thinks everything is interesting and wants the reader to feel the same. Wonderful stuff.
on June 28, 2004
This is one of the most entertaining and intellectually engaging books I've come across in a long while. Surowiecki has a gift for making complex ideas accessible, and he has a wonderful eye for the telling anecdote. His thesis about the intelligence of groups made up of diverse, independent decision-makers seems initially counterintuitive, but by the end of the book it seems almost obvious, because of all the evidence Surowiecki piles up on its behalf.
The book does cover a lot of ground in not very much space, and the pace of the argument is at times too fast. But the throughline of the argument is almost always clear, and the stories Surowiecki tells are often memorable. The chapter on NASA's mismanagement of the Columbia mission and the tale of how a man named John Craven relied on collective wisdom to find a lost submarine are especially striking.
This is one of those books that I expect people will still be talking about and referring to years or even decades from now. It's also a book that I hope will have a concrete impact on the way that people make decisions, since the implications of Surowiecki's argument are radical in the best way.
on June 13, 2004
I'm a big fan of James Surowiecki's "Financial Page" column in The New Yorker. He's consistently able to come up with unusual takes on seemingly familiar topics, and he has a great knack for making business stories compelling and entertaining as well as understandable. But because it's only a page long, I sometimes come away from the column wanting more, and I always wondered how Surowiecki would do if he was able to develop his ideas and arguments more fully. Luckily, "The Wisdom of Crowds" lives up to all my expectations. It's wonderfully readable, full of terrific stories, funny, and its basic argument -- that groups, under certain conditions, can make better decisions than even the smartest individuals -- is counterintuitive without being willfully contrarian.
The roots of the argument obviously stem from the way markets work -- buyers and sellers find each other and reach efficient outcomes without anyone being in charge, while the stock market (at least some of the time) does as good a job as possible of setting prices. But what I really like is the way Surowiecki extends this argument way beyond business and markets, showing how collective wisdom can be seen (and can potentially be used) in a host of other situations, including the racetrack, on the Internet, and on city streets. He also does a good job of drawing out the possible implications of this for everything from the U.S. intelligence community to the way companies are run.
This is definitely a big-idea book, but the author is cautious in laying out his evidence, and is careful to show that groups, even if they're potentially wise, are often stupid and dangerous. The chapter on small groups in particular, which focuses on NASA's mismanagement of the Columbia mission, is powerful stuff, and useful to anyone interested in how to run a meeting well (or badly, for that matter). The least satisfying part of the book is the chapter on democracy, where Surowiecki shies away from pushing his conclusion to its logical end. But on the whole, this is just a wonderful book, elegant and enlightening.
If you're interested in this book, it's also worth checking out Paul Seabright's "The Company of Strangers" and Robert Wright's "Nonzero."
on June 13, 2004
This is a very interesting book that covers many complicated subjects related to group decisions vs. individual decisions. It touches on Game theory, behavioral economics, and Decision theory. However, it is not a treaty in any of these areas. The author keeps his observations at a 10,000 feet high level. So, the book instead of being a dry tome for mathematicians is actually a very entertaining book for laypersons.
The author touches on the many aspects where crowds provide superior judgments than individuals alone. Our civilization quietly depends on many such favorable situations, These include the capital markets in general, and the stock market in particular. But, it also includes Nielsen ratings, polls, voting records. Most of the time, in all these circumstances the many give a better assessment, valuation, or judgment than the individual. The author is quick to point out that this is not always the case. Markets experience stock market bubbles where the collective judgment becomes euphoric. However, year in year out and over decades, the stock market (representing the many) beats the majority of the investment pros hands down.
The author is fascinated by the emergence of "decision markets," including the Iowa Electronic Markets for betting on Presidential election outcome that has proven more accurate than the polls. Another such example is the tradesports website that does the same, including betting on sport events, media events, international politics events. These are perfect examples where the many gather their judgment through trading values thanks to the Internet. In general, it is uncanny how accurate these decision markets are. There is really something to the saying "put your money where your mouth is."
In a nutshell, this is a very interesting and thought provoking book. It promotes democratic and decentralized decision making within corporations and government institutions. This makes good sense. The CEO or the President just can't hold that much information in their individual brains anyway. Instead, why not rely a lot more extensively on the collective wisdom generated by the aggregated sum of our own individual brilliance. Why not!
on June 13, 2004
I decided to read this book after reading an essay that Surowiecki wrote in Wired, arguing that companies and organizations in general put too much trust in the people at the very top and don't rely enough on the collective intelligence of their employees. This is exactly how things are run at the agency where I work. Information doesn't flow the way it should, decisions are made by fiat, and people are more interested in protecting their little fiefdoms than in solving problems intelligently. I was intrigued by the article's argument, but I wanted more detail.
After reading the whole book, I'm convinced that the way we do things makes our decisions worse, not better. THE WISDOM OF CROWDS mounts a great case for the virtues of letting more people have a say in decisions, and it does so in a remarkably entertaining way. I thought there was a nice balance between anecdote and analysis here, with the stories -- including a great one about finding a lost submarine, and a detailed analysis of the Columbia disaster -- really illuminating Surowiecki's arguments. Because Surowiecki is challenging the idea that only a few select people should have influence over important decisions, it may be hard for his ideas to have an impact in the corporate and government world. But I'm convinced that this should change for good the way organizations make decisions.
on June 4, 2004
The book is interesting, well written, and covers much of the recent research on collective or group decision making, but it has glaring oversights. The author is most at home in economics where the book does the best at reporting research findings, but his references to social conformity are very limited despite that being at the core of the book. He completely overlooks research on the nonconscious dimension of decision making and implicit or automatic learning (at the basis of stereotypes and racial prejudice), and he neglects negative findings that groups may not outperform the best individuals in problem solving. From a reading of the book alone, one would never expect to see something like racial discrimination, the Holocaust, or the Taliban emerge in a society. Although the title refers to "societies and nations", the book only concerns the United States. Toward the end of the book, his accounts of the academic review process, the progress of science, and voting theories are naive at best. The book has no index.
on June 2, 2004
The Wisdom of Crowds : Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business,Economies, Societies and Nations by James Surowiecki is, essentially, a thoroughly accessible and readable tome on applied behavioral economics and game theory.
I know that doesn't sound too exciting, but this actually is a fascinating book that is something of a page turner if you have even the most vestigial interest in the topic.
The premise isn't new-those who are denizens of Wall Street and know Robert Prechter's oft cited work with Elliott Wave Theory will know something of the underlying premises of the book. However, Surowiecki takes this notion and moves well beyond the confined world if inventing (though he covers that as well) to apply the principles he delineates to life in general-behavior in traffic, tracking and responding to disease, navigating the internet and so on.
The strength of the boom is Surowiecki's ability to render the underpinnings of his theoretical paradigm in easily understandable terms and examples. Additionally, the book features an excellent opening that provides a wonderful foundation as regards applied behavioral economics and game theory in general.
On the other hand, Surowiecki tends to play both sides of the street. He uses his "expert" position on the subject to configure his arguments and analysis to tilt the weight of evidence behind his theory in many cases. In other words, his familiarity with where he wants this to go influences his choices of examples. Moreover, he relies on too few examples in too many cases. For example, the world of wall Street should have provided a wealth of examples as to the validity-and the errors-inherent in his theory. His choices seem to be crafted to provide maximum support while eliminating any element of contraindication whatsoever.
So, in the end, despite the fact that Surowiecki has written a wonderfully readable book, and posited some fascinating theoretical axioms, the book feels a bit to tilted to be thoroughly honest with the subject matter in an applied arena. Surowiecki gives us much food for thought but also leaves us with reasons to doubt somewhat his objectivity and intellectual honesty. That fact detracts frm the value of the book, and that's a shame.