Creative Research and How We Think
I've always enjoyed discovering new ways of thinking in general,
and new ways to look at various subjects specifically. So I like
to read about the latest research that comes out of any of the
many subject areas in which I have an interest, to see how the
research was done. This is particularly true when there are creative
research techniques used and the results show us something about
our minds and how they work.
A good example of a creative study can be found in a study
I recently read about in Shankar Vedantams book, The
Hidden Brain. It had to do with publicly-traded companies
that were newly listed on stock exchanges. Economists, and especially
those who work in the field of behavioral economics, sometimes
study how people make decisions about which stocks to invest
in. This can be done by questionnaires which ask investors why
they bought this or that. It can also be done by grouping investors
according to the information they have, to see how having this
or that data might affect decision-making.
With established companies there is always a lot of information
available. If you want to know about Microsoft, for example,
you can spend endless hours online, and for free, reading through
financial statements and articles by analysts, or looking at
charts of prices going back many years. But what about the new
issues of stock, and especially for those companies that are
not well-known? How does the average investor think about which
of these to invest in and why?
To study this, psychologists Adam Alter and Daniel Oppenheimer
looked not at earning reports or headlines or any of the usual
things that might be considered in choosing to buy a stock. They
looked at how easily the names of the companies could be pronounced.
In his book Vedantam writes;
Alter and Oppenheimer tracked ten stocks with easy-to-pronounce
names and ten stocks with hard-to-pronounce names on the New
York Stock Exchange. They found that companies with easy-to-pronounce
names outperformed companies with hard-to-pronounce names by
11.2% on their very first day of trading. After six months the
difference was more than 33 percent. If youd put a million
dollars into the stocks with easy names and a million dollars
into the stocks with hard names, the group with easy names would
have outperformed the group with difficult names by $330,000.
It was also found that easy-to-pronounce stock ticker symbols
led to higher price appreciation.
While perhaps suggesting a new investing strategy, this research
also reminds us that we are not nearly as rational as we like
to imagine. Of course, very few investors would ever admit that
they bought a stock because of the simplicity of the name, nor
would they even think that way consciously. It is an unconscious
bias which is at work here.
This was fascinating in part because I have an interest in
stock markets. Of course Im also very interested in how
unconscious bias can affect our thinking. But there is another
element, which is the fact that these researchers were finding
new ways of thinking about a subject. It makes me wonder what
other experiments are waiting to be done, and what they might
reveal if we can just dream up the new hypotheses necessary --
if we can just think about things in new ways. It is particularly
exciting for those of us who do not have the position nor money
to do expensive experiments in a lab. After all, this research
could have been done for free using stock price quotes available
online or in a newspaper.
So with that in mind, here are two questions we might answer
using cheap or free research tools...
Are optimists or pessimists more objective?
To test this cheaply we would use the internet. We might have
participants answer a series of questions to determine their
level of optimism or pessimism. Following this we would have
them read a few articles on a subject. The articles should be
biased in subtle ways in order to elicit less-than-objective
answers to the questions that follow. The point is to see who
picks out the facts more objectively, and whether this correlates
with pessimism or optimism (or are the more realistic people
between these extremes the most objective. As with the following
question, the main problem would be selecting a truly random
group to participate, so the results do not simply reflect some
Is intelligence related to religious faith?
An IQ test online that went along with a short questionnaire
could be used to see if there is a correlation or inverse correlation
between how intelligent people are and how much faith they have
in various religious or spiritual ideas. Of course, if the test
and questionnaire was simply open to any who chose to participate,
the self-selection might skew the results (compared to the makeup
of society at large maybe more atheists would take part in the
study, or more believers, or more people of higher intelligence
or lower intelligence). You would have to find a more random
way to test people.
Thanks to the internet there are many interesting questions
we can study without too much expense and without the backing
of a university or other institution. As mentioned, the biggest
hurdle to doing good research in these ways is finding a random
selection of participants. That's a problem offline too, by the
way. For any given hypothesis tested, there might be important
differences between those people who choose to participate in
research and those who would rather not. I hang up on every pollster
who calls, for example, and I wonder if those of us who do this
think differently in various ways, and whether that self-exclusion
makes polling less accurate than it should be.
Here's your mental challenge for the day, if you want one:
Try to imagine ways to reduce the potential bias in participant
selection for research online and elsewhere, especially when
the subjects of a study are not being paid.