In this video I provide an introduction to behavioral economics and the work of Amos Tversky and Daniel Kahneman by describing a heuristic we use when attempting to assess the frequency of events. The availability heuristic is a shortcut that estimates frequency based on how available an event is to us, or how readily we can bring examples to mind. This can cause us to make errors in estimating frequency because ease of recalling events does not necessarily mean that they are more frequent; they may simply be more memorable (such as terrorist attacks, planes crashes, and child abductions). This can cause us to overestimate the likelihood of certain events occurring, while we underestimate the risks posed by events which are actually more frequent.
Daniel Kahneman – Thinking, Fast and Slow (Amazon)
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Video Transcript:
Hi, I’m Michael Corayer and this is Psych Exam Review. In this video and the next few videos we’re going to look at some examples of heuristics.
So heuristics are these mental shortcuts that we use when we’re solving problems and making decisions. The heuristics that we’ll look at are mostly going to come from the work of Amos Tversky and Daniel Kahneman. Tversky and Kahneman essentially provided the foundation for a new field of study known as behavioral economics.
Behavioral economics is a combination of economics and psychology and it questions this traditional economic assumption that people act rationally, right? That people make rational choices in order to optimize their output. What behavioral economics does is show actually people don’t act rationally very often. They rely on heuristics when they’re making decisions and this means that they’re going to make predictable types of errors in their decision-making.
Daniel Kahneman won the Nobel Prize for this research in shared the prize although unfortunately he had passed away in 1996 and wasn’t eligible. If you’d like to find out more about Tversky and Kahneman’s research and behavioral economics in general I highly recommend Daniel Kahneman’s book Thinking Fast and Slow.
Ok, so let’s look at an example of one of these heuristics. This first one is the availability heuristic. So the availability heuristic is something that might occur whenever we’re trying to answer the question of “how frequent is X?”. This is a hard question to answer. So here’s an example that Tversky and Kahneman used. They asked participants to estimate “do you think English has more words that start with the letter K or more words that have K as the third letter?”.
You can think about this yourself. Which do you think is more frequent? If you’re like most of the participants you probably think that there’s more words that start with the letter K than have K as the third letter. If you think this way, you’re wrong because there’s actually nearly three times as many words that have K as the third letter than words that start with the letter K. So why was this so hard to get correct?
Well it turns out this question of how frequent something is is really difficult. How frequent is X? It’s like I don’t know where to begin answering that question. How do I estimate the frequency of something?
So our minds really aren’t equipped to answer this question but rather than admitting defeat what they do is they substitute a different question. This is a question that’s a little bit easier for our mind to answer. So what’s the question that we substitute? The question that we ask instead and we don’t realize that we’ve switched them is “how easily does X come to mind?”.
There’s a question that can be answered. Just try to bring it to mind and see how easy or hard it is and the idea is we make the assumption that if something is easy to bring to mind, you know, if I can come up with a lot of examples of something, it’s probably common. So it’s probably a frequent event but if it’s really hard to bring something to mind I can’t come up with any examples then it’s probably not very frequent.
This is probably what happened with this question about the letter K. The thing is it’s easy to bring words to mind based on their first letter. It’s hard to bring them to mind based on their third letter but this actually doesn’t have anything to do with their frequency, right? It comes with how we think about words. It’s easy to bring them to mind by the first letter even if they’re not particularly frequent. So you can think about words that start with the letter K and you can come up with a list pretty easily; kitchen, kite, kick, kangaroo, but when you try to think about words with K as their third letter, it’s hard to do.
We’re not used to thinking about words this way and so it’s not a question that you normally ask and even if you see words with K as the third letter you might not acknowledge it. So it’s harder to bring words of that ilk to mind. Ok, so of course this heuristic is used more than just when we’re thinking about words and letters, right?
It’s really used whenever we have this question about frequency. How frequent is X? That’s hard to do so our mind uses a shortcut, says “well how easily can I think of examples of it? I’ll estimate frequency based on that”.
This is why people are more afraid to ride on a plane than in a car, even though they’re much more likely to be injured or killed in a car crash than in a plane crash because when people ask “How frequently do planes crash?” they can think of examples of plane crashes really easily because they’re memorable right? We see big news stories about them and so people think about plane crashes and they bring several to mind but when it comes to car crashes, there’s thousands and thousands of car crashes every year that we simply don’t hear about. So we can’t bring those examples to mind and as a result we assume that car crashes are less frequent than they actually are and that plane crashes are more frequent than they actually are.
Now we also see this when parents think about their children’s behavior. We have parents that won’t let their children walk to school because of fear of child abductions. Child abductions are incredibly rare; they almost never happen, right? But when they do happen, we hear about them. The big news stories, this means we can bring them to mind easily and that means we think that they’re more frequent than they actually are. And other behaviors that are actually real risks to children that are common, we don’t think of as being much of a problem. So I mean parents will drive their kids to school even though the risk of being injured in a car crash is much greater than the risk of being abducted by a predator.
Or, you know, we let children eat hot dogs. The risk of choking to death on a hotdog is a greater risk to a child than an abduction or a risk of drowning, but, you know, we let kids go to barbecues and pool parties without a second thought. Yet those are things that post real risks to children, whereas the risk of child abduction is nearly zero but because of how we bring things to mind and how we estimate frequency, we are likely to overestimate the risk of certain things and underestimate the risks of others.
Ok, so that’s essentially the availability heuristic; this idea that we aren’t good at estimating frequency and so we base it on how available things are to our mind. How easily do they come to mind, and we estimate frequency based on that. Ok, I hope you found this helpful, if so, please like the video and subscribe to the channel for more.
Thanks for watching!
