Keith Stanovich 2010 Grawemeyer Award Winner in Education
The theme of the book is that IQ tests are radically incomplete measures the nature of human cognitive function. We found that many of the classic tasks that common universities study show that where people make characteristic errors of assessing probability and making decisions are very very weakly, and in some cases independent of intelligence. You don’t get a measure of the domain of rational thinking by giving an intelligence test.
One of the major practical domains in which this work plays out is the financial domain and issues of personal finance. And we all cringe when that is brought up. People display some of the classic so-called biases. A bias is a characteristic way of responding that I should say at the outset is often good, often works. But it goes astray when it’s in a particular environment when we shouldn’t be making quickly biased responses. Like, certain types of shopping. A characteristic error that people make is they’ll spend more time picking out a pair of shoes than they’ll spend picking mutual funds in their retirement account. They’re not well calibrated, to use a bit of jargon there. Their cognitive effort is not well calibrated to the importance of the task.