Archive for the ‘Fundamentals’ Category

The Uncertainty Principle

August 6, 2012

Heisenberg famously calculated the limits to our ability to measure the position and momentum of sub-atomic particles at the same time.  Perhaps that is why it is hard to pinpoint the exact level of collusion between business leaders asserting that uncertainty is holding them back from investment and hiring.  Obeisance to the great god, uncertainty, became a cliché of business rhetoric two years ago after the worst of the depression had passed.  Today’s New York Times’ piece by Nelson Schwartz takes the lamentations to a new level.  “We’d love to hire more people, but we’re saying no,” Schwartz quotes Legrand’s CEO as saying.  Timothy Powers, Hubbell, Inc.’s chief executive told Schwartz that he is not filling 100 positions that are open.  The political impasse driving these concerns is the failure of opponents in Congress to find consensus on Bush-era tax cut extensions, but the sub-text in a presidential election year has a frisson to it that should give business leaders pause.  At some point, complaints about uncertainty due to partisan rancor run the risk of looking like the American business community is sitting on its hands because a brisker recovery might aid an Obama victory in November.  There is no evidence of this, but if this narrative takes hold it could generate an anti-business momentum that will be damaging for everyone.  This is a Pandora’s Box that it is in no one’s best interests to kick open accidentally.

Cognitive Fluency

February 15, 2010

New research by Adam Alter at New York University’s Stern School confirms what we have long known about the power of simplicity: if something is difficult to think about, we reject it more often than when something is presented simply.  His study shows that the stocks of companies with names that are simple to pronounce out-perform those of companies whose names are harder to pronounce.  This is a concept called “cognitive fluency.”  It also appears to apply to visual stimuli.  Information presented in familiar fonts is rated as easier than information presented in unfamiliar fonts, whether that information describes recipes or exercise regimens.  Bizarrely, the study, which is described by Drake Bennett in the January 31, 2010 Boston Globe and sourced on Arts and Letters Daily also shows that people answer a personal questionnaire less honestly when the questionnaire is written in a less legible font.

At the same time, there is also a mirror effect called (wait for it) “cognitive disfluency” which has some positive potential.  People seem to pay more careful attention to instructions written in a less legible font and  make fewer mistakes as a result.  Finally, Bennett describes the effect of asking people to make short and long lists.  Students who are asked to make a short list of why they would succeed in a test felt more confident than students asked to make a long list.  Even though they listed more reasons, the difficulty of the task made them less confident.

It’s nice to have a scientific construct for what good communicators have practiced for decades — keep it simple, describe the subject in familiar terms, frequency promotes familiarity promotes favorability.  If you’re trying to scare people, make it sound complicated.  The terms also have a nice ring to them.  I can almost hear the public affairs executive shouting “Where’s the god**m cognitive disfluency in this campaign!