In psychology, there is the term “Information Bias” which is the tendency to seek information when it doesn’t affect our actions.
Nevertheless, more information isn’t always better.
The instinctual shortcut that we take when we have “too much information” is to engage with it selectively—picking out the parts that we like—while ignoring the remainder. In truth, that’s dangerous!
Because we tend to focus on those parts that narrates the world as we would like it to be instead of how it really is. Thus, we ignore the risks that are the hardest to measure, even when they pose the greatest threat to our well-being.
We have an extraordinary talent in ignoring risks that threaten our livelihood, as if this willful ignorance will make them disappear.
And in the course of our “Information Bias”, we make allies with those who have made the same choices, and enemies of the rest. We like to simplify everything into either Black or White.
We shouldn’t, as this example from the investing world shows.
We know that the inefficiencies at the heart of macro investing are permanent, as they relate to the inherent uncertainty of the future, and that the vast majority of the data required for our stock choices is publicly available.
Yet, the differentiating factor is the ability to analyse and thematically organize all that information into coherent theories.
The same set of information, however, can lead people to different conclusions. Hence, people with differing conclusions from ours should be our allies as well, as they provide us with another (welcome) perspective.
The BIG Challenge: Information Overflow
The human brain is quite remarkable; it can store perhaps three terabytes of information. And yet that is only about one one-millionth of the information that IBM says is now produced in the world each day.
Even if the quantity of information is increasing by 2.5 quintillion bytes per day, the amount of useful information for the subject at hand almost certainly isn’t.
We generally have more information than we know what to do with.
Could it be that when we think we want information, we actually want knowledge?
Knowledge is the truth, and the noise of information is that which distracts us from it.
We should make do with only the bare facts, because superfluous knowledge is worthless; hence there is no need to amass all that data.
Indeed, with less knowledge, we can often make more accurate decisions. If you’re irrational to start with, having more knowledge can even hurt you.
Here’s the reality: Decisions are always based on information that is incomplete, ambiguous, and changing. Still, we make them (and we have to continue making them), because we don’t want to become immobilized.
We don’t need all the details about how to do something, we just need to decide to start it. And if it wasn’t the “right” thing, we would discover that in time, and thereafter, make the necessary corrections.
Life is all about making corrections. And there’s no way to know ahead of time, anyway.
Here’s what some knowledgeable people have to say on this matter:
“More information isn’t necessarily better information but it may falsely increase our confidence. What is not worth knowing is not worth knowing. A wise man sees as much as he ought, not as much as he can.” — Sherlock Holmes, detective
“In order to make good decisions in an uncertain world, one sometimes has to ignore information. The art is knowing what one doesn’t have to know.” — Gerd Gigerenzer, psychologist
“What information consumes is rather obvious: it consumes the attention of the recipients. Hence a wealth of information creates a poverty of attention.” — Herbert Simon, political scientist
“One good idea is better than many.” — John Galsworthy, novelist
“A little knowledge that acts is worth infinitely more than much knowledge that is idle.” –Kahlil Gibran