This meltdown is not just a financial event, but also a cultural one. It’s a big, whopping reminder that the human mind is continually trying to perceive things that aren’t true, and not perceiving them takes enormous effort….

But the second thing you realize is that government officials are probably going to be even worse perceivers of reality than private business types. Their information feedback mechanism is more limited, and, being deeply politicized, they’re even more likely to filter inconvenient facts.

The Behavioral Revolution
By DAVID BROOKS
Published: October 28, 2008
The financial crisis may be a coming-out party for behavioral economists to the realm of public policy.

…………………Response…………………

David Brooks suggests that corporations don’t face an information-volume problem, but a problem with perception. “The human mind is continually trying to perceive things that aren’t true,” he says. Nonetheless, he claims they are better positioned than government to perceive the information. It may be a claim he woudl like to make, but it is not logically obvious.

Brooks lays two advantages with corporates. They have more information and the information is less politicized. We would draw from this that the volume and the framing of the information is somehow superior. By framing, one can understand it as how the information is presented, inasmuch as how presentation affects how it is perceived.

It is clear that the volume and framing of the information is different, but does that make it better or worse? Politicizing the data may change how people attend to it. Government doesn’t have access to all of the detail that corporates do, just as corporates don’t have access to some government data. If we agree with Brooks that corporate view is flawed, a change in the perception could actually be an improvement. Notwithstanding, his argument does not confirm that either view is better or worse.

Considering the track-record, however, it’s clear that the corporate view is not and should not be the final view on the information. Indeed, just changing how the information is framed, as we have learned from Kahneman, Sunstein, Thaler and even those such as Tufte, can powerfully alter our perception. More important, the difference in perspective will yield different insights about the data and perhaps challenge the corporate perspective in ways that can encourage a meaningful response.