Strategy. Innovation. Brand.
You Become What You Believe
You are what you believe.
We’ve all heard the phrase, you are what you eat. Now there’s also increasing evidence that you become what you believe.
Two recent studies suggest that what you believe shapes your biology as well as your attitude. Or perhaps, your beliefs shape your attitude, which in turn, shapes your biology.
The first study, from Yale’s School of Public Health, relates attitudes towards aging to the development of dementia. The primary finding is that “…individuals who hold negative beliefs about aging are more likely to have brain changes associated with Alzheimer’s disease.”
In other words, if you believe that you’ll become decrepit and demented in old age … well, you’re more likely to become decrepit and demented. Why would that be? According to the study’s lead author, Becca Levy, it’s probably stress. More specifically, “…the stress generated by the negative beliefs about aging … can result in pathological brain changes.”
Besides underscoring the benefits of a positive attitude, the study could help us better understand factors that appear to be biological. For instance, the Alzheimer’s rate in the United States is five times higher than that of India. Why? We’ve traditionally assumed that the critical factor was differences in diet. But it may instead result from cultural attitudes toward older people. In India, the aged are revered. In the United States, not so much.
The second study correlates a belief in free will to academic performance. Bottom line: students who believe they have free will – the ability to make their own choices and guide their own destiny – do better academically than those who don’t. The study found that the correlation held “…across age, gender, and cultural grouping”.
The study found a correlation and, as we know, correlation does not prove causality. But there is some intuitive logic to this. It seems logical that people who believe they control their own destiny will learn more from their experiences (and mistakes) than people who believe their fate is determined by external forces.
I think it was St. Francis who said, “Beware thy prayers; they may be answered.” Perhaps we can now add a corollary, “Beware thy beliefs; they may be causal.”
Disrupting the Bankers
Typical banker.
When I need a ride, I no longer call a dispatcher. Rather, I call a driver directly, using a service like Lyft or Uber. When I want to watch a TV show, I no longer tune in to a local TV station and wait for them to show it. Instead, I just stream it to my computer.
In short, I’ve eliminated the middleman. The process is called disintermediation – I’ve eliminated the intermediary. We see it happening in publishing, lodging, ride sharing, television, even in adultery.
So what about banking?
Traditionally, banks are trusted intermediaries that allow us to conduct business with strangers. You buy something from me and I want to be paid. You give me some token of value. Can I trust you? Maybe not. So I turn to the banking system. Your bank can verify that you have the necessary funds on deposit. My bank can verify that your bank will actually transfer those funds to my account. It’s a valuable service and banks charge a significant fee for it.
As intermediaries, banks are subject to disintermediation. If we can eliminate them, we can create a simpler, cheaper, more efficient system. That’s the promise of Bitcoin, which uses an encrypted blockchain to enforce trust through software.
To date, Bitcoin’s fans include hipsters, drug dealers, terrorists, and libertarians — people who prefer anonymity and cash rather than credit. The fan club has given Bitcoin a seedy reputation. Mainstream financial institutions might well ask, With friends like those, who needs Bitcoin?
The short answer is: Anyone who can’t access a trustworthy banking system. As Jeremy Millar points out, that includes much of the third world. If you’re trying to run a business in, say, Greece or Argentina, you’ll encounter an array of financial obstacles, including currency controls and cross-border payment limitations. Your suppliers can’t trust that you will pay them promptly. Nor can you trust that your customers will. Since the banking system can’t supply a trusted intermediary, you turn to Bitcoin. According to Millar, Bitcoin will find a niche in the third world and expand from there. (If so, Bitcoin will closely follow Clayton Christensen’s model of disruptive innovation: 1) find a niche; 2) mature; 3) disrupt).
And who else might need Bitcoin? Well, the banks themselves. Bankers realize that they are likely to be disrupted. So why not disrupt themselves rather than waiting for someone else to do it for them?
That appears to be exactly what a Wall Street startup named R3 is planning to do. R3 doesn’t use Bitcoin per se but rather the cryptographic technology that underpins Bitcoin. In addition to the blockchain that identifies transactions, R3’s system uses distributed ledgers in a peer-to-peer (P2P) network. The system consists of many nodes that replicate information. (It’s similar to Napster). Since information is distributed across many nodes, there is no single point of failure. Since the nodes can be scattered around the world, no single government can control it. Since transactions are copied to multiple nodes, it’s also very hard to cook the books. The system builds trust through replication and encryption.
According to its latest press release, R3 has now signed up 42 major financial institutions. The list includes some very heavy hitters, including Banco Santander, Deutsche Bank, J.P. Morgan, Goldman Sachs, HSBC, Royal Bank of Canada, and SEB. The consortium is now building a technology platform that will allow members (and presumably non-members) to build global applications.
In essence, R3 plans to bring us a version of Bitcoin run by professional financiers rather than wild-eyed technology radicals. That’s not such a bad idea. But there’s also a darker side. If R3-like platforms succeed, the world’s financial system will be controlled by bankers rather than by governments. So we come back to a question of trust. Whom do you trust to run the global financial system: bankers or governments?
New York, The NORC
Share my NORC with me.
A lot of our friends are downsizing. The kids have moved out, they don’t need the big house anymore, and they’d rather live in a smaller place and free up some of their funds for travel … or maybe for the grandkids.
Some of our friends are moving into naturally occurring retirement communities or NORCs. These communities were not designed for older people but, over time, have evolved into place where seniors like to congregate.
One of the communities is not far from us. It’s one of the first gated communities in Denver (and still one of the very few). Designed in the 70s, it consists mainly of semi-detached, single story homes. It’s close to a main street but not on it. There’s very little traffic. It’s also a level area, so it’s easy to walk around. There’s a small community center, with a pool. Maintenance workers will help you maintain your place.
The development wasn’t designed as a retirement community. But all the features and amenities make it congenial to older people. There’s also a network effect. As older people move in, they attract other older people (and, perhaps, make it less attractive to younger people).
Some cities have become NORCs in their own right. Tucson and Phoenix come to mind in the west. Miami probably serves a similar function in the east. A number of our friends have homes in Tucson. Some live there year round; others just escape cold northern winters for six months or so. When we visit our friends, we mainly see an older demographic.
Michael Hunt, a professor at the University of Wisconsin, coined the term NORC back in the 80s. According to Wikipedia, there are now three types of NORCS:
- Classic NORC – mainly this is a building, or cluster of buildings, filled mainly with older residents. By and large, they’ve aged in place. Also known as a vertical NORC.
- Neighborhood NORC – known as a horizontal NORC, this is a small community of single and multi-family homes.
- Rural NORC – a rural community, perhaps where the kids have left and older people tend to congregate.
Most of our friends who live in NORCs live in the second type – neighborhoods and gated communities whose amenities — and/or weather — appeal to older people. The gated community near us is definitely a Type 2 NORC.
However, I would argue New York City — which is more of a Type 1 NORC — is the best NORCtown in America. For one thing, you don’t need to drive. For older people who can no longer drive (or no longer want to), New York is a natural. Then there’s the food. Don’t want to cook anymore? No need to go to the retirement home’s dining hall (where the food is typically awful). You can get almost any food you want delivered to your door.
We might think of New York as a vertical NORC but there’s also a horizontal dimension. Most apartments are on one level – there are no stairs to negotiate. Plus, you have the doormen and supervisors to help you with everything from simple chores to complex maintenance work.
If you want to get a dog to keep you company, you can hire a dog walker to keep it properly exercised. Medical care is widely available and easy to get to. Some docs will even come to your home. And, of course, there’s plenty to do. Everything from Broadway plays to great people watching. Don’t worry – you won’t get bored.
Why isn’t the Big Apple known as the world’s largest NORC? Probably a lack of marketing. But just wait. It won’t belong before Frank Sinatra’s classic voice is remixed to sing New York, The NORC.
Business School And The Swimmer’s Body Fallacy
He’s tall because he plays basketball.
Michael Phelps is a swimmer. He has a great body. Ian Thorpe is a swimmer. He has a great body. Missy Franklin is a swimmer. She has a great body.
If you look at enough swimmers, you might conclude that swimming produces great bodies. If you want to develop a great body, you might decide to take up swimming. After all, great swimmers develop great bodies.
Swimming might help you tone up and trim down. But you would also be committing a logical fallacy. Known as the swimmer’s body fallacy, it confuses selection criteria with results.
We may think that swimming produces great bodies. But, in fact, it’s more likely that great bodies produce top swimmers. People with great bodies for swimming – like Ian Thorpe’s size 17 feet – are selected for competitive swimming programs. Once again, we’re confusing cause and effect. (Click here for a good background article on swimmer’s body fallacy).
Here’s another way to look at it. We all know that basketball players are tall. But would you accept the proposition that playing basketball makes you tall? Probably not. Height is not malleable. People grow to a given height because of genetics and diet, not because of the sports they play.
When we discuss height and basketball, the relationship is obvious. Tallness is a selection criterion for entering basketball. It’s not the result of playing basketball. But in other areas, it’s more difficult to disentangle selection factors from results. Take business school, for instance.
In fact, let’s take Harvard Business School or HBS. We know that graduates of HBS are often highly successful in the worlds of business, commerce, and politics. Is that success due to selection criteria or to the added value of HBS’s educational program?
HBS is well known for pioneering the case study method of business education. Students look at successful (and unsuccessful) businesses and try to ferret out the causes. Yet we know that, in evidence-based medicine, case studies are considered to be very weak evidence.
According to medical researchers, a case study is Level 3 evidence on a scale of 1 to 4, where 4 is the weakest. Why is it so weak? Partially because it’s a sample of one.
It’s also because of the survivorship bias. Let’s say that Company A has implemented processes X, Y, and Z and been wildly successful. We might infer that practices X, Y, and Z caused the success. Yet there are probably dozens of other companies that also implemented processes X, Y, and Z and weren’t so successful. Those companies, however, didn’t “survive” the process of being selected for a B-school case study. We don’t account for them in our reasoning.
(The survivorship bias is sometimes known as the LeBron James fallacy. Just because you train like LeBron James doesn’t mean that you’ll play like him).
So we have some reasons to suspect the logical underpinnings of a case-base education method. So, let’s revisit the question: Is the success of HBS graduates due to selection criteria or to the results of the HBS educational program? HBS is filled with brilliant professors who conduct great research and write insightful papers and books. They should have some impact on students, even if they use weak evidence in their curriculum. Shouldn’t they? Being a teacher, I certainly hope so. If so, then the success of HBS graduates is at least partially a result of the educational program, not just the selection criteria.
But I wonder …
Reminiscence Bumps and Helicopter Parents
It’s the reminiscence bump.
If you ask someone over the age of thirty to tell you their life story, they’ll over-emphasize some portions and under-emphasize others. Most likely they’ll recall incidents in their late teens and early twenties much more vividly than other periods of their lives. What happens in our thirties stays in our thirties. What happens in our formative years stays with us forever.
It’s known as the reminiscence bump and social scientists have been researching it since the early 1980s. Activities and events that occur in late adolescence and early adulthood leave an indelible mark on our memories. As Katy Waldman puts it, …”there is something deeply, weirdly meaningful about this period.”
Nobody knows quite why the reminiscence bump occurs. Dan McAdams, writing in the Review of General Psychology, associates it with the formation of identity. As we enter adolescence, many different identities are available to us. We could become nerds. Or athletes. Or scholars. Or criminals (especially those with low heart rates). As McAdams points out, William James called this the “one-in-many-selves paradox”.
Yet we generally emerge from adolescence with one more-or-less integrated identity. We want that identity to be coherent. Indeed, there are multiple types of coherent, including biographical coherence, causal coherence, thematic coherence, and temporal coherence. McAdams surmises that integrating multiple potential stories into one coherent identity is a formative life experience that creates long lasting memories.
The articles I’ve read focus on what causes the reminiscence bump. I’m also interested in what the reminiscence bump causes. We believe that the bump is universal; we all have it. Does the fact that we remember our formative years better than other years affect our behavior in later life?
I’ve written previously about the availability bias. As Daniel Kahneman has pointed out, humans are not naturally good at statistics. We have difficulty answering questions dealing with probability. So we substitute a simpler question and answer it.
For instance, let’s say someone asks us, “How likely is it that someone will burglarize your house while you’re away for the weekend?” We have no idea what the probabilities are or even how to calculate them. So we answer a simpler question: “How easy is it for me to remember stories of friends’ houses being burglarized?” If it’s easy to remember such stories, we estimate that the probability is high. If it’s difficult, we estimate that the probability is low. (This is sometimes known as the vividness bias – vivid events are easy to recall from memory).
What events are easy for us to recall from our life histories? Compared to all other events, the reminiscence bump suggests that events from adolescence and early adulthood are easiest to recall. The availability bias suggests that we will overestimate the probability that similar events will happen in the future. We can recall them easily. Therefore, we assume they’re highly probable to recur.
Now, consider the adolescent brain. According to the National Institute of Mental Health, it’s “…still under construction.” We tend to engage in riskier behaviors in our teenage years because our executive function is not fully developed. As most of us can well remember, we do stupid things.
What do we disproportionately remember about our lives? The risky and thoughtless behaviors of our formative years. If the availability bias is correct, we will overestimate the probability that these same behaviors will occur again, perhaps in our children. Could this be the root cause of the helicopter parenting that we seem so worried about today? It’s a complicated question but it’s certainly worth a good research project.
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