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Cognitive Biases and Philanthropy

May 19, 2010

Cognitive_bias1 In a short post on Monday, Barry Ritholz of Big Picture blog fame, tipped his readers to the publication of a new "field guide" to cognitive biases by something (or somebody) called the Royal Society of Account Planning.

The guide defines "cognitive bias" as a psycholgical tendency "that causes the human brain to draw incorrect conclusions. Such biases

are thought to be a form of "cognitive shortcut," often based upon rules of thumb, and include errors in statistical judgment, social attribution, and memory. These biases are a common outcome of human thought and often drastically skew the reliability of anecdotal and legal evidence....

The guide offers brief descriptions of nineteen social biases, eight memory biases, forty-two decision-making biases, and thirty-six probability/belief biases. Here are a few:

  • False consensus effect (the tendency for people to overestimate the degree to which others agree with them)
  • Projection bias (the tendency to unconsciously assume that others share the same or similar thoughts, beliefs, values, or positions)
  • Interloper effect/consultation paradox (the tendency to value third-party consultation as objective, confirming, and without motive)
  • Illusion of control (the tendency for humans to believe they can control or at least influence outcomes that they clearly cannot)
  • Framing (using an approach or description of the situation or issue that is too narrow)
  • Not invented here (the tendency to ignore that a product or solution already exists)
  • Confirmation bias (the tendency to search for or interpret information in a way that confirms one's preconceptions)
  • Overconfidence effect (excessive confidence in one's own answers to questions)
  • Selection bias (the distortion of evidence or data that arises from the way that the data are collected)
  • Availability cascade (a self-reinforcing process in which a collective belief gains more plausibility through its increasing repetition in public discourse)
  • Bias blind spot (the tendency not to compensate for one's own cognitive biases)

And my personal favorites:

  • Negativity bias (the phenomenon by which humans pay more attention to and give more weight to negative rather than positive experiences or other kinds of information)
  • Planning fallacy (the tendency to underestimate task-completion times)
  • Last illusion (the belief that someone must know what is going on)

As Ritholtz says, fascinating stuff. And it got me thinking: What are some of the cognitive biases that inform foundation work specifically and philanthropy more generally? So I asked around a bit and came up with the following:

  • Copernican effect (the tendency to believe that philanthropy in and of itself can ameliorate social problems)
  • Adam Smith effect (the tendency to believe that people are rational economic actors and always do what is in their self-interest)
  • Foundation exceptionalism bias (the belief within a foundation that its own programs are unique)
  • Perpetuity paradox (the tendency to believe that a dollar spent on social goods today is less valuable than a dollar spent on something else in the future)
  • Project support bias (the tendency of foundations to favor support for individual projects over general operating support) 

Okay, maybe not the most inspired list in the world. But I bet if I opened it up to all of you, we could generate a pretty interesting "guide" of our own. So what do you say? What are some of the cognitive biases you've encountered in the world of foundations and philanthropy? Don't be shy...

-- Mitch Nauffts

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Posted by Rick Schoff  |   May 21, 2010 at 10:11 AM

Hi Mitch -

How about the:

Beckett effect - If I utter a suggestion, then someone will implement it.

Posted by Renee Westmoreland  |   May 21, 2010 at 01:59 PM

Hey, Rick. I thought the Beckett effect was when your team stakes you to a two-run lead and you promptly give up a three-run homer. ;-)

Great to hear from you.

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