My advisor and I are starting to build a rhythm to our conversations. We talk about the advisor-student stuff, then future stuff, then personal stuff, and finally always end the conversation with me asking “anything else you need from me?” and him recapping the conversation, and mirroring the question back to me- “do you need anything from me?”. Today, I said, I didn’t think so, but could I get back to him later. See, I’ve just spent the last couple of weeks entirely mentally engaged in finishing a really complicated thesis chapter. (And by finishing I mean writing a complete first draft. Yet to be commented on by my supervisors. So not finished at all.) I am only just now coming back up for air and starting to think about my final PhD study. My supervisor said, yeah, it’s a funny thing about research, you’re always in the past or in the future. You’re never right now. I laughed, but that really struck me as a profound statement. You’re either writing up what you’ve already done, trying to defend it, or thinking about what you’re going to do next, trying to avoid the pitfalls that will inevitably be there.
I think this observation, about always living in the past or future might be inherent in the way that society works today. Society and culture don’t lend themselves to being in the moment. You need to meticulously plan and be very deliberate in your actions to be successful. Forget ‘to be successful’. Just to have enough money to eat! A heavy societal premium is placed on those that can anticipate possible problems and account for them before they happen. Simultaneously, we are anchored (a psychological principle) in our past. We are who we are because of what’s happened to us. The way humans perceive the world is based on their point of reference. This isn’t just a philosophical argument, either. It’s how the brain works- short term memories are the most easily accessible, therefore are used when making decisions. Long term memories are deeply ingrained in our neuronal patterns (long term potentiation). Plus, because humans are cognitive misers (not using more resources than required) we seek out patterns that are familiar or confirm our hypotheses about the world around us. So truly, we are physiologically and psychologically stuck in either the past or the future.
Yesterday evening I got the opportunity to go to an advanced yoga class. I haven’t done real yoga in a while (the crap they do at the gym- fitness yoga- doesn’t cut it. Not to sound like a yoga snob… wow. I am a yoga snob…) and it felt amazing. The teacher said something that I remember my first yoga teacher always saying at the beginning of class- “let your mat be your island. This is just you and your practice. Let everything else go and focus on where you are right now.” I tried to breathe, and focus only on the now, how my feet felt on the floor, how my back expanded with each breath, how my arms were positioned… eventually I was able to pay attention only to my practice, but it took a little while. I kept inhaling and thinking “breathe innnn (oh my god did you send Tim that email about the simulation on Thursday), breathe outttt (shit, no. it’s ok, just do it when you get home. Oh crap you didn’t look up the bus) breathe innnn (schedule, oh well you can drop by tesco on the way home and grab milk) breathe outttt(and maybe some chocolate. you are doing yoga right now, so eating chocolate is totally ok)” and so on… It’s almost like the devil in The Screwtape Letters by CS Lewis. The book is beautifully conceived as a collection of letters from a senior demon to one of his demons in training, who is also his nephew. The henchman is always asking questions about how to bring his human over to the devil’s side and away from holiness. Screwtape, the demon, tells Wormwood (henchman in training) to distract his Patient (the human), to interrupt his prayers with mundane thoughts, to undermine the Patient’s faith using the treasured tools Doubt and Loneliness. Sitting there, trying to breathe and be in the moment, I kept getting distracted by my own Wormwood, who had built a little nest on corner of my mat.
It’s really counter-intuitive to live in the now! How do you pay attention to now without judging it, comparing it to previous experience, thinking about what could happen next, planning the next position, the next class, the next the next thenextthenext… Eventually, through the class, I was able to focus only on my world on the mat, and gradually Wormwood moved and sat right outside the door waiting for me. After the last pose, corpse pose, I felt renewed. Like there was fire in my muscles and I’d been wakened.
As I left class, my advisor’s earlier quote came back to me. Initially, my brain greeted this statement with an automatic anxiety response, tensing my shoulders and frantically scrambling around in the dusty mind grapes trying to remember what I have to do when I get home tonight to be ready for tomorrow. I took a deep breath. The breath reminded my body of where I had just been. Not frantic, not anxious, just patiently existing on my own mat. I tried to reframe my thinking about tomorrow and instead of anxiety, think about the opportunity.
It’s just interesting the juxtaposition between past, now, and future. It’s essential to attend to all three, but impossible to do so. Or at least, I haven’t figured it out yet.
Showing posts with label philosophy. Show all posts
Showing posts with label philosophy. Show all posts
Wednesday, November 24, 2010
Tuesday, November 16, 2010
A bit out of my league...
Ok, so today I want to talk about something entirely different than I usually do.
Basically, I want to write about the psychology of the subprime mortgage crisis in the states. I want to do this, not because I think I am the first person to have thought that this would be a good idea. I am sure somebody has written a book on it and probably been on Oprah or at least the Freakonomics podcast. I think that there’s such a huge human psychological element to all this and I don’t think it’s been explored adequately. I think people have focused on the psychology of the outcome of the financial meltdown (people losing houses and jobs, fear, greed, anxiety) and have focused on individual stories (for example: Planet Money, a free podcast from NPR does a great job of asking real people about what has happened to them as a result of the meltdown.) But I haven’t read a book yet that specifically discusses the psychology that got us to the point of meltdown. The closest thing I’ve read is Michael Lewis’ FANTASTIC book The Big Short (which if you haven’t read it, STOP READING THIS, and get in your car or go to Amazon and buy it. It’s fascinating.) In this book he articulately details the story of those that saw the meltdown coming, how they were able to predict it, and exactly what they did about it. He hits on some of the psychological details of how people were able to see a pattern in the chaos, but doesn’t really focus on it.
Disclaimer time: I am (as will become increasingly obvious) not an economics expert. I am a person who reads a lot, and because we’ve been overseas for most of this disaster, I’ve been able to watch it from afar. I care very much about my country, and about what’s happened and will happen to small businesses, retirement, and future funding for health care and education in America, so I think I have a vested interest in doing my best to understand what’s going on.
I have found that to discuss anything about this financial meltdown, (which I would’ve called The Big Clusterf&*%k (TBC) had I been Michael Lewis, but to each his own) you have to understand a little bit about why it happened. I think this is an imperative step, and I also think it’s one that most Americans have thus far successfully avoided. Which is very unfortunate. Because that leads to discussions not based on fact, not even on theory, but based entirely on emotion. And while I will discuss that later, I don’t think that emotion serves us well when we are trying to understand something like this.
Again, I am not a financial expert, so I am going to explain this how I understand it. Go and ask your broker/lawyer for the real story.
First things first. TBC happened because of subprime mortgages, we all know that. A subprime mortgage is a mortgage that is given to a borrower that is ‘below ideal’. Now this doesn’t mean that they are a farmer with a 14K income asking for a 2Million loan (although that did happen). This is anyone that has a lower credit rating, therefore has a higher chance of defaulting (not paying) their mortgage a) on time or b) at all. Just because subprime mortgages were a centerpiece to TBC, that doesn’t mean they’re always bad. Initially, they were designed to help people “get a small piece of the American dream”. Help those with poor credit get into a home, which could build equity and eventually help them to improve their credit. This is point of interest for psychology 1 (POI for PSY 1).
Subprime mortgages were given out by mortgage lenders, not always banks. These mortgage lenders make their money off the top by setting up the mortgage. Therefore, they have no vested financial or personal interest in the loan actually getting paid off, rather they get paid when the loan is made. This is POI for PSY 2. These lenders then sell the mortgages to banks. Again, taking a little off the top for expenses and whatnot.
The second problem is that all these mortgage loans were made with ‘variable interest rates’ which is exactly what it says it is. The interest rate is one thing at one time and could go up or down (probably not down, but could) depending on a variable interest rate index, which I think is set by the Fed. I can’t find it online from a credible source, so don’t quote me on that. So the interest rate would be 6% when you bought the house, but would skyrocket to 18% 3 years in. This is why there was a housing bubble, which seemed to suddenly burst, but it could’ve probably been predicted had anyone put the pieces together. Everyone started defaulting on their loans when their 3 year grace period was over. Suddenly, they weren’t paying for their houses, but just for the interest. This is POI for PSY 3.
Ok, so now you’ve got a bunch of subprime mortgages that aren’t owned by the mortgage lenders, but rather by various banks. The banks then, in order to have liquidity (cash), sell the mortgages to investors. Here’s where things get kinda messy. The mortgages are packaged. Normally when this happens, mortgages are packaged with a lot of other loans that the bank makes, like car loans or college loans. These are not debt from a single person, but from a variety of sources. Not even always just from the one bank. This is done because it diversifies the package (my new favorite euphemism), which means that, as a whole, the package of loans is safer. It’s safer because there is heterogeneity in the package so people won’t be as likely to suddenly default on a school loan, a car and a house all at the same time. I believe this is the point in the process where the package is renamed ‘Mortgage Backed Security’. I am not sure about that though.The problem started because now, for whatever reason, these packages of loans were mostly mortgages- and above that, mostly sub-prime mortgages.
So the bank sells the MBS to an investment facility. The investor can be other banks, individuals, groups, venture capital firms, etc. Really, anyone wanting to invest, but usually a large company. Now, again, this is where I get a little fuzzy. I think what happens is the MBS’s are split into Tranches based on risk. Tranches (French for slice) is a ‘grouping’ of the MBS’s. so it goes:
Mortgage backed securities (MBS) are rated by national rating agencies such as Moody’s and Standard & Poor’s (of S&P 500 fame). Rating is just like grading, only it’s based on risk of default. The agencies look at what’s in the MBS and say, ‘what is the risk that this won’t be paid off?’ and then grade it. The grading scale is from AAA (the best) to AA to A to BBB to BB to B (worst). AAA means that there is virtually no chance of default. B means, ‘yeah, this is crap. Sorry.’ So these groups of loans are rated and then assigned to a tranche based on risk.
As I said, the ratings are based on risk of default. However, as you can see with all these crappy mortgages all in the same package, the rate of default should be pretty high, right? Well, here’s where things become very fishy.
What started happening is whoever puts together the MBS’s started packaging them in such a way that they looked better than they actually were. This was easy to do because when rating the mortgages, only the AVERAGE risk score for the entire group was examined. AVERAGE. NOT THE MODE. NOT THE MEDIAN. THE AVERAGE. This is important because there could be a few really low risk mortgages in the MBS, and they would bring the whole score up. This is POI for PSY 4.
There is more to this part of the story, but I don’t completely understand it, so I don’t want to discuss it too much here. Suffice to say, there was also a ‘redefining’ of what AAA meant. Basically, things that were formally A grade or even BBB, were now being considered AAA. I don’t understand how this happened, so further research on my part is needed. I think I don’t understand this because it seems so completely backhanded and wrong I can’t wrap my mind around how it happened legally.
We’re almost there! Don’t go to sleep on me now!
So creators of the tranches (the original investors) then have people invest in the tranches. Within these there is a hierarchy. So there are people who are at the top of the tranche down to those at the bottom of the tranche. However, those at the bottom are still better than those at the top of the next tier lower tranche. The people that have invested at the top of the tranche get paid off first, so when the poor subprime mortgage borrower sends his/her monthly check, a percent goes to the investor at top of the highest (AAA) tranche first, then whatever’s left trickles down the tranche. If anything is left after it’s gone through the AAA tranche, then it goes to the AA tranche and so on…
Phew! Wowsa. OK.
So there are many places where this house of cards could get caught in a slight breeze. Or tornado. Basically, it’s people buying risk. They are making a bet that someone they don’t know will pay off their mortgage on time, and in the prescribed increments.
This would work, except that it doesn’t. It worked for a long time, but people got cocky. And even more appalling then the rampant cockiness and blatant greed is that people didn’t take the time or make the effort to understand what it was they were buying or selling. I mean, I know hindsight is always 20/20, but when you have someone walk you through the story of how things got the way they are, I don’t understand how you can’t see the problem from a million miles away. Maybe it’s like that Monty Python and the Search for the Holy Grail bit where the guy is running toward the castle and every time the guards look at him he’s still far away and then all the sudden he’s at the gate and clotheslines them both. Or maybe people didn’t understand the meaning of the word ‘variable’.
POI for PSY 1: I think it’s fascinating that ‘The American Dream” (capitals intended) includes owning a house. Americans in the 80’s and 90’s and 00’s believed that it essential to own a house. The government encouraged it, by offering tax incentives to own a house. News and magazines encouraged home ownership, offering great deals on various appliances NEEDED for YOUR NEW HOME. Commercials showed the typical American family outside of a home with a white picket fence. The commitment to home ownership is quite an emotional one. Its branded into the psyche of most American children. The goal is to own a house, once you own a house, you’ve made it. Psychologically, renters are people who can’t put down roots. Home-owners are people who are serious about their neighborhoods, who value their community, even attend PTA meetings and take care of their yards. This brings perceived stability to neighborhoods and families that “make sense” to the rest of the neighborhood. The psychological pressure to own a home is tremendous in the US. It’s just what people do.
POI for PSY 2: The point of interest here is how important personal relationships are. As I said, I was listening to Planet Money and the hosts had bought a $1000 toxic asset, so a lower tranche group of MBS’s. They went to meet a guy whose mortgage they had invested in. As it happened, the guy was a 80 year old retiree who had made a ‘strategic default’ meaning that because his perfect credit rating is no longer of the utmost importance at age 80, he defaulted on a $300,000 mortgage. But when the two people who owned his MBS went to meet him, they asked why he stopped paying. He said he couldn’t afford it, and it wasn’t worth it to him. But what I thought was most interesting was what he said next: he said, if I’d know it was you guys that owned the loan I would write you a check right now. How fascinating. He liked the people who’d invested in his mortgage, and felt personally liable to pay the mortgage. But when the investor was a faceless entity, he was able to change is moral creed and allow himself to not follow through on his loan.
In the past, mortgages were made by local banks and the person who gave you your mortgage probably knew you, did a thorough credit check, checked out the property you were wanting to buy and it’s value and probably checked your references. Now, mortgages are these impersonal things, a transaction, not an interaction. I am not saying that the old way was the best. It was slow and sometimes too personal (I don’t like this guy so won’t give him a loan), but there was an element of human decency in it. People had to interact with each other. You know who had your mortgage and you knew who was loaning you the money to buy your house. There’s an element of responsibility on the borrower’s side this way. The borrower actually understands and cares where they are putting the loan, because they’re paying back a real person. Not a faceless entity.
POI for PSY 3: The idea of a variable interest rate is such an American creation. The reason why everyone votes for lower taxes for the rich is because most people believe that some day they will be that rich person. Again, the American dream. I think this belief is akin to the reason why people took out variable interest rate loans. They always want to believe the best- have the most positive possible outlook. We will be making more money in 3 years, or interest rates could go down in 3 years. In psychology, this is also called confirmation bias. Confirmation bias is when people favor information that confirms what they already think. They don’t seek out disconfirming information, rather find all the confirming stuff.
I also think that this idea of actually taking advantage of a 3 year variable interest rate could be cognitive dissonance. Cognitive dissonance is when two conflicting ideas are held simultaneously. People think their choices are correct despite evidence to the contrary. For example: I believe that I will get paid more in 3 years and I just got told that there would be massive layoffs at work. Cognitive dissonance causes emotional turmoil, and results in self-bargaining and convincing ones self that the evidence is wrong or at least that the possible results of the behaviour probably won’t happen to me. Smoking is the oft used example. I smoke because I like it even though I know that it causes lung cancer, heart disease, obesity, general smelliness, etc.
The cognitive biasing and dissonance in the housing market, I think, had a huge impact in the months and years leading up to the crash. People were convinced they were invincible despite massive evidence to the contrary.
POI for PSY 4: The last point I want to make is about measurement. My friend Cakil always says that statistics is the only weapon that we psychologists have. I think this is true. Using the average instead of the mode or median is ridiculous. There is potential influence of outliers, the mean never tells the whole story, doesn’t give you any information about what’s actually in this group of mortgages… I am sure that someone much much smarter than I has pointed this out. I don’t want to labor the point more than to say SERIOUSLY??
I think there’s a lot more to big disasters like this than just what’s on the surface. There was a long lead up to this. If you have spoken to me in the past, you probably know about the ‘Swiss Cheese Model’ of error. Basically, what it says is that errors are lying dormant in a system. The system has layers of defense, but they have holes in them, much like slices of swiss cheese. Infrequently, these slices or layers are arranged in such a way that an error has a free path through all the layers of defense and takes everyone by surprise. This shouldn’t be the case, because it’s been sitting their laying in wait, but it does. Every time. I think, in the financial meltdown there is something far more fundamental wrong with our system than financial regulations can fix. There’s a psychological issue, a relationship issue, a person to person issue.
Basically, I want to write about the psychology of the subprime mortgage crisis in the states. I want to do this, not because I think I am the first person to have thought that this would be a good idea. I am sure somebody has written a book on it and probably been on Oprah or at least the Freakonomics podcast. I think that there’s such a huge human psychological element to all this and I don’t think it’s been explored adequately. I think people have focused on the psychology of the outcome of the financial meltdown (people losing houses and jobs, fear, greed, anxiety) and have focused on individual stories (for example: Planet Money, a free podcast from NPR does a great job of asking real people about what has happened to them as a result of the meltdown.) But I haven’t read a book yet that specifically discusses the psychology that got us to the point of meltdown. The closest thing I’ve read is Michael Lewis’ FANTASTIC book The Big Short (which if you haven’t read it, STOP READING THIS, and get in your car or go to Amazon and buy it. It’s fascinating.) In this book he articulately details the story of those that saw the meltdown coming, how they were able to predict it, and exactly what they did about it. He hits on some of the psychological details of how people were able to see a pattern in the chaos, but doesn’t really focus on it.
Disclaimer time: I am (as will become increasingly obvious) not an economics expert. I am a person who reads a lot, and because we’ve been overseas for most of this disaster, I’ve been able to watch it from afar. I care very much about my country, and about what’s happened and will happen to small businesses, retirement, and future funding for health care and education in America, so I think I have a vested interest in doing my best to understand what’s going on.
I have found that to discuss anything about this financial meltdown, (which I would’ve called The Big Clusterf&*%k (TBC) had I been Michael Lewis, but to each his own) you have to understand a little bit about why it happened. I think this is an imperative step, and I also think it’s one that most Americans have thus far successfully avoided. Which is very unfortunate. Because that leads to discussions not based on fact, not even on theory, but based entirely on emotion. And while I will discuss that later, I don’t think that emotion serves us well when we are trying to understand something like this.
Again, I am not a financial expert, so I am going to explain this how I understand it. Go and ask your broker/lawyer for the real story.
First things first. TBC happened because of subprime mortgages, we all know that. A subprime mortgage is a mortgage that is given to a borrower that is ‘below ideal’. Now this doesn’t mean that they are a farmer with a 14K income asking for a 2Million loan (although that did happen). This is anyone that has a lower credit rating, therefore has a higher chance of defaulting (not paying) their mortgage a) on time or b) at all. Just because subprime mortgages were a centerpiece to TBC, that doesn’t mean they’re always bad. Initially, they were designed to help people “get a small piece of the American dream”. Help those with poor credit get into a home, which could build equity and eventually help them to improve their credit. This is point of interest for psychology 1 (POI for PSY 1).
Subprime mortgages were given out by mortgage lenders, not always banks. These mortgage lenders make their money off the top by setting up the mortgage. Therefore, they have no vested financial or personal interest in the loan actually getting paid off, rather they get paid when the loan is made. This is POI for PSY 2. These lenders then sell the mortgages to banks. Again, taking a little off the top for expenses and whatnot.
The second problem is that all these mortgage loans were made with ‘variable interest rates’ which is exactly what it says it is. The interest rate is one thing at one time and could go up or down (probably not down, but could) depending on a variable interest rate index, which I think is set by the Fed. I can’t find it online from a credible source, so don’t quote me on that. So the interest rate would be 6% when you bought the house, but would skyrocket to 18% 3 years in. This is why there was a housing bubble, which seemed to suddenly burst, but it could’ve probably been predicted had anyone put the pieces together. Everyone started defaulting on their loans when their 3 year grace period was over. Suddenly, they weren’t paying for their houses, but just for the interest. This is POI for PSY 3.
Ok, so now you’ve got a bunch of subprime mortgages that aren’t owned by the mortgage lenders, but rather by various banks. The banks then, in order to have liquidity (cash), sell the mortgages to investors. Here’s where things get kinda messy. The mortgages are packaged. Normally when this happens, mortgages are packaged with a lot of other loans that the bank makes, like car loans or college loans. These are not debt from a single person, but from a variety of sources. Not even always just from the one bank. This is done because it diversifies the package (my new favorite euphemism), which means that, as a whole, the package of loans is safer. It’s safer because there is heterogeneity in the package so people won’t be as likely to suddenly default on a school loan, a car and a house all at the same time. I believe this is the point in the process where the package is renamed ‘Mortgage Backed Security’. I am not sure about that though.The problem started because now, for whatever reason, these packages of loans were mostly mortgages- and above that, mostly sub-prime mortgages.
So the bank sells the MBS to an investment facility. The investor can be other banks, individuals, groups, venture capital firms, etc. Really, anyone wanting to invest, but usually a large company. Now, again, this is where I get a little fuzzy. I think what happens is the MBS’s are split into Tranches based on risk. Tranches (French for slice) is a ‘grouping’ of the MBS’s. so it goes:
Mortgage backed securities (MBS) are rated by national rating agencies such as Moody’s and Standard & Poor’s (of S&P 500 fame). Rating is just like grading, only it’s based on risk of default. The agencies look at what’s in the MBS and say, ‘what is the risk that this won’t be paid off?’ and then grade it. The grading scale is from AAA (the best) to AA to A to BBB to BB to B (worst). AAA means that there is virtually no chance of default. B means, ‘yeah, this is crap. Sorry.’ So these groups of loans are rated and then assigned to a tranche based on risk.
As I said, the ratings are based on risk of default. However, as you can see with all these crappy mortgages all in the same package, the rate of default should be pretty high, right? Well, here’s where things become very fishy.
What started happening is whoever puts together the MBS’s started packaging them in such a way that they looked better than they actually were. This was easy to do because when rating the mortgages, only the AVERAGE risk score for the entire group was examined. AVERAGE. NOT THE MODE. NOT THE MEDIAN. THE AVERAGE. This is important because there could be a few really low risk mortgages in the MBS, and they would bring the whole score up. This is POI for PSY 4.
There is more to this part of the story, but I don’t completely understand it, so I don’t want to discuss it too much here. Suffice to say, there was also a ‘redefining’ of what AAA meant. Basically, things that were formally A grade or even BBB, were now being considered AAA. I don’t understand how this happened, so further research on my part is needed. I think I don’t understand this because it seems so completely backhanded and wrong I can’t wrap my mind around how it happened legally.
We’re almost there! Don’t go to sleep on me now!
So creators of the tranches (the original investors) then have people invest in the tranches. Within these there is a hierarchy. So there are people who are at the top of the tranche down to those at the bottom of the tranche. However, those at the bottom are still better than those at the top of the next tier lower tranche. The people that have invested at the top of the tranche get paid off first, so when the poor subprime mortgage borrower sends his/her monthly check, a percent goes to the investor at top of the highest (AAA) tranche first, then whatever’s left trickles down the tranche. If anything is left after it’s gone through the AAA tranche, then it goes to the AA tranche and so on…
Phew! Wowsa. OK.
So there are many places where this house of cards could get caught in a slight breeze. Or tornado. Basically, it’s people buying risk. They are making a bet that someone they don’t know will pay off their mortgage on time, and in the prescribed increments.
This would work, except that it doesn’t. It worked for a long time, but people got cocky. And even more appalling then the rampant cockiness and blatant greed is that people didn’t take the time or make the effort to understand what it was they were buying or selling. I mean, I know hindsight is always 20/20, but when you have someone walk you through the story of how things got the way they are, I don’t understand how you can’t see the problem from a million miles away. Maybe it’s like that Monty Python and the Search for the Holy Grail bit where the guy is running toward the castle and every time the guards look at him he’s still far away and then all the sudden he’s at the gate and clotheslines them both. Or maybe people didn’t understand the meaning of the word ‘variable’.
POI for PSY 1: I think it’s fascinating that ‘The American Dream” (capitals intended) includes owning a house. Americans in the 80’s and 90’s and 00’s believed that it essential to own a house. The government encouraged it, by offering tax incentives to own a house. News and magazines encouraged home ownership, offering great deals on various appliances NEEDED for YOUR NEW HOME. Commercials showed the typical American family outside of a home with a white picket fence. The commitment to home ownership is quite an emotional one. Its branded into the psyche of most American children. The goal is to own a house, once you own a house, you’ve made it. Psychologically, renters are people who can’t put down roots. Home-owners are people who are serious about their neighborhoods, who value their community, even attend PTA meetings and take care of their yards. This brings perceived stability to neighborhoods and families that “make sense” to the rest of the neighborhood. The psychological pressure to own a home is tremendous in the US. It’s just what people do.
POI for PSY 2: The point of interest here is how important personal relationships are. As I said, I was listening to Planet Money and the hosts had bought a $1000 toxic asset, so a lower tranche group of MBS’s. They went to meet a guy whose mortgage they had invested in. As it happened, the guy was a 80 year old retiree who had made a ‘strategic default’ meaning that because his perfect credit rating is no longer of the utmost importance at age 80, he defaulted on a $300,000 mortgage. But when the two people who owned his MBS went to meet him, they asked why he stopped paying. He said he couldn’t afford it, and it wasn’t worth it to him. But what I thought was most interesting was what he said next: he said, if I’d know it was you guys that owned the loan I would write you a check right now. How fascinating. He liked the people who’d invested in his mortgage, and felt personally liable to pay the mortgage. But when the investor was a faceless entity, he was able to change is moral creed and allow himself to not follow through on his loan.
In the past, mortgages were made by local banks and the person who gave you your mortgage probably knew you, did a thorough credit check, checked out the property you were wanting to buy and it’s value and probably checked your references. Now, mortgages are these impersonal things, a transaction, not an interaction. I am not saying that the old way was the best. It was slow and sometimes too personal (I don’t like this guy so won’t give him a loan), but there was an element of human decency in it. People had to interact with each other. You know who had your mortgage and you knew who was loaning you the money to buy your house. There’s an element of responsibility on the borrower’s side this way. The borrower actually understands and cares where they are putting the loan, because they’re paying back a real person. Not a faceless entity.
POI for PSY 3: The idea of a variable interest rate is such an American creation. The reason why everyone votes for lower taxes for the rich is because most people believe that some day they will be that rich person. Again, the American dream. I think this belief is akin to the reason why people took out variable interest rate loans. They always want to believe the best- have the most positive possible outlook. We will be making more money in 3 years, or interest rates could go down in 3 years. In psychology, this is also called confirmation bias. Confirmation bias is when people favor information that confirms what they already think. They don’t seek out disconfirming information, rather find all the confirming stuff.
I also think that this idea of actually taking advantage of a 3 year variable interest rate could be cognitive dissonance. Cognitive dissonance is when two conflicting ideas are held simultaneously. People think their choices are correct despite evidence to the contrary. For example: I believe that I will get paid more in 3 years and I just got told that there would be massive layoffs at work. Cognitive dissonance causes emotional turmoil, and results in self-bargaining and convincing ones self that the evidence is wrong or at least that the possible results of the behaviour probably won’t happen to me. Smoking is the oft used example. I smoke because I like it even though I know that it causes lung cancer, heart disease, obesity, general smelliness, etc.
The cognitive biasing and dissonance in the housing market, I think, had a huge impact in the months and years leading up to the crash. People were convinced they were invincible despite massive evidence to the contrary.
POI for PSY 4: The last point I want to make is about measurement. My friend Cakil always says that statistics is the only weapon that we psychologists have. I think this is true. Using the average instead of the mode or median is ridiculous. There is potential influence of outliers, the mean never tells the whole story, doesn’t give you any information about what’s actually in this group of mortgages… I am sure that someone much much smarter than I has pointed this out. I don’t want to labor the point more than to say SERIOUSLY??
I think there’s a lot more to big disasters like this than just what’s on the surface. There was a long lead up to this. If you have spoken to me in the past, you probably know about the ‘Swiss Cheese Model’ of error. Basically, what it says is that errors are lying dormant in a system. The system has layers of defense, but they have holes in them, much like slices of swiss cheese. Infrequently, these slices or layers are arranged in such a way that an error has a free path through all the layers of defense and takes everyone by surprise. This shouldn’t be the case, because it’s been sitting their laying in wait, but it does. Every time. I think, in the financial meltdown there is something far more fundamental wrong with our system than financial regulations can fix. There’s a psychological issue, a relationship issue, a person to person issue.
Thursday, July 8, 2010
Practice makes perfect?
Lately, I have become a bit obsessed with the idea of ‘practice’. Practice is a repetition or rehearsal of something, an action, activity, work, and so on, in order to become skilled at it. It is both a noun (‘standards and practises’- spelled with an ‘s’ if it’s a noun) and a verb (‘I am practicing violin’- spelled with a ‘c’ if it’s a verb. My mom will laugh at sentence, I hated practicing violin and probably never used this phrase in my life, except when lying to my violin teacher about my upcoming week’s activities). The definition hinges on ‘ACTIVITY’. The DOING of SOMETHING over and OVER in order to become better at it. Sometimes, when you’re really good at your specific activity, you move from the verb to the noun (medical practise or law practise).
I really like this idea that you aren’t ever really done- even if you’re an expert, you still have to practice. In fact, it’s what you do every day. You go to your job to keep getting better at your job. It’s one of the things that I love about yoga- you’re never perfect at it, you’ve just got to keep working on it. Even the people that do it every day still strive to attend to their practice and make it stronger.
In his book, Outliers, Malcolm Gladwell argues (and has the science to back it up) that there’s a magic number of hours that people need to do something to transition from good to great. When people cross the threashold of 10,000 hours, they somehow move from good at something to very very very good. He uses examples from sports, music, medicine, even art. After working on a certain activity for 10K hours, people reach a state of expertise.
Ok, after reading this part of the book, I think to myself- “SWEET!!! That’s all I have to do!! Get to 10,000 and I’m home free! I will be Good. At. Something. Important. I wonder how many hours I’ve done so far, probably like 5,000. I feel that I am at about 5,000 hours of expertise.” So of course, I calculate it. I started as a research assistant when I was a junior in college at the Wright Patterson Air Force Base (3 months, avg 40 hours a week= 480 hrs) then stayed on through my senior year (8 months, avg 20 hours a week=640 hrs), then started my master’s program with about a 3 month break between, for 2 years (21 months- vacation and times when I was goofing off, avg 40 hours a week = 3360), then Mayo for 2.5 years (25 months- wasn’t always doing research and was on vacation, avg 40 hours a week= 4000 hrs), then PhD (22 months- lots of goofing off, avg 40 hrs a week= 3520 hrs).
HOLD UP A SECOND.
Now I am no statistics genius, but I think that adds up to more than 10,000. Crap. Where’s the magic? I am in fact at a surplus of 2,000 hours! Damn. Damn damn damn.
Perhaps it’s because it’s just not that simple. Maybe it’s more than an endurance sport. If it were only endurance, this would be a lot simpler. There must be something else to this (please, let there be something else to this). I went back to the book and continued to read. As it turns out, experts are made because an expert works not just on the stuff they’re good at, but also the stuff that they aren’t good at. It’s not just the PRACTICE that’s important. It’s also that you have want to become BETTER at what you’re not good at already. That is significantly trickier.
How do I take this next step? How do I move from endurance to confident, passionate, thoughtful? And significantly for me, how do I do it in the way that I want to? To achieve the things I want to? To find what’s best not just for me, but for my family? What are the things that I am not good at that I have to practice?
I’ve realized over the last 6 months or so that I struggle with the ‘philosophy’ part of getting a PhD. Seems silly, like I should’ve realized that was part of it before I started… Well, I don’t always read the directions before I attempt to put together the swing set, just ask Mike. I thought this would be a place where I could hone my skills, I could become better at solving practical problems, I could explore new health care and teamwork innovations and apply them within a new domain. As it turns out, yeah, that’s part of it, but it’s not the entire thing.
Philosophy: phi·los·o·phy (n.)
1. Love and pursuit of wisdom by intellectual means and moral self-discipline.
2. Investigation of the nature, causes, or principles of reality, knowledge, or values, based on logical reasoning rather than empirical methods.
3. A system of thought based on or involving such inquiry: the philosophy of Hume.
4. The critical analysis of fundamental assumptions or beliefs.
5. The disciplines presented in university curriculums of science and the liberal arts, except medicine, law, and theology.
6. The discipline comprising logic, ethics, aesthetics, metaphysics, and epistemology.
7. A set of ideas or beliefs relating to a particular field or activity; an underlying theory: an original philosophy of advertising.
8. A system of values by which one lives: has an unusual philosophy of life.
Fascinating. The definition of this word is absolutely fascinating. I almost can’t believe it. The problem lies right there in the definition. I mean I love pursuing wisdom by intellectual means and self-discipline. I 100% believe in that. But, one of my biggest problems with getting a PhD is all the thinking about thinking. The lack of actual DOING- ‘rather than empirical methods’ and ‘underlying theory’. I had a fight with my advisor on my first week here because I want to focus on the front line, and how my research will impact what people DO, ie: will impact PRACTISE!!! He said to me, ‘well, Sarah. We’ve also got to think about how you’re going to contribute to the theoretical study of leadership.’ I must’ve made a face or something, because he said ‘what?’ and I almost said, well, I really don’t care about that so much. Mercifully, my frontal lobe kicked in and I just shrugged.
As I approach my final year of the PhD, I am getting deeper and deeper into the philosophy bit, and I feel that I am losing my touch with reality. I still go back to the OR from time to time to remember why I am doing what I do, but it’s a struggle. Mike says that this is a good thing because now I know more about what I should and shouldn’t do with my life, and he’s absolutely right. But for now, this is the part of practice where I have to work on the stuff that I’m not good at, and don’t really enjoy. Because maybe I’ve miscalculated, and my 10K is just around the corner.
I really like this idea that you aren’t ever really done- even if you’re an expert, you still have to practice. In fact, it’s what you do every day. You go to your job to keep getting better at your job. It’s one of the things that I love about yoga- you’re never perfect at it, you’ve just got to keep working on it. Even the people that do it every day still strive to attend to their practice and make it stronger.
In his book, Outliers, Malcolm Gladwell argues (and has the science to back it up) that there’s a magic number of hours that people need to do something to transition from good to great. When people cross the threashold of 10,000 hours, they somehow move from good at something to very very very good. He uses examples from sports, music, medicine, even art. After working on a certain activity for 10K hours, people reach a state of expertise.
Ok, after reading this part of the book, I think to myself- “SWEET!!! That’s all I have to do!! Get to 10,000 and I’m home free! I will be Good. At. Something. Important. I wonder how many hours I’ve done so far, probably like 5,000. I feel that I am at about 5,000 hours of expertise.” So of course, I calculate it. I started as a research assistant when I was a junior in college at the Wright Patterson Air Force Base (3 months, avg 40 hours a week= 480 hrs) then stayed on through my senior year (8 months, avg 20 hours a week=640 hrs), then started my master’s program with about a 3 month break between, for 2 years (21 months- vacation and times when I was goofing off, avg 40 hours a week = 3360), then Mayo for 2.5 years (25 months- wasn’t always doing research and was on vacation, avg 40 hours a week= 4000 hrs), then PhD (22 months- lots of goofing off, avg 40 hrs a week= 3520 hrs).
HOLD UP A SECOND.
Now I am no statistics genius, but I think that adds up to more than 10,000. Crap. Where’s the magic? I am in fact at a surplus of 2,000 hours! Damn. Damn damn damn.
Perhaps it’s because it’s just not that simple. Maybe it’s more than an endurance sport. If it were only endurance, this would be a lot simpler. There must be something else to this (please, let there be something else to this). I went back to the book and continued to read. As it turns out, experts are made because an expert works not just on the stuff they’re good at, but also the stuff that they aren’t good at. It’s not just the PRACTICE that’s important. It’s also that you have want to become BETTER at what you’re not good at already. That is significantly trickier.
How do I take this next step? How do I move from endurance to confident, passionate, thoughtful? And significantly for me, how do I do it in the way that I want to? To achieve the things I want to? To find what’s best not just for me, but for my family? What are the things that I am not good at that I have to practice?
I’ve realized over the last 6 months or so that I struggle with the ‘philosophy’ part of getting a PhD. Seems silly, like I should’ve realized that was part of it before I started… Well, I don’t always read the directions before I attempt to put together the swing set, just ask Mike. I thought this would be a place where I could hone my skills, I could become better at solving practical problems, I could explore new health care and teamwork innovations and apply them within a new domain. As it turns out, yeah, that’s part of it, but it’s not the entire thing.
Philosophy: phi·los·o·phy (n.)
1. Love and pursuit of wisdom by intellectual means and moral self-discipline.
2. Investigation of the nature, causes, or principles of reality, knowledge, or values, based on logical reasoning rather than empirical methods.
3. A system of thought based on or involving such inquiry: the philosophy of Hume.
4. The critical analysis of fundamental assumptions or beliefs.
5. The disciplines presented in university curriculums of science and the liberal arts, except medicine, law, and theology.
6. The discipline comprising logic, ethics, aesthetics, metaphysics, and epistemology.
7. A set of ideas or beliefs relating to a particular field or activity; an underlying theory: an original philosophy of advertising.
8. A system of values by which one lives: has an unusual philosophy of life.
Fascinating. The definition of this word is absolutely fascinating. I almost can’t believe it. The problem lies right there in the definition. I mean I love pursuing wisdom by intellectual means and self-discipline. I 100% believe in that. But, one of my biggest problems with getting a PhD is all the thinking about thinking. The lack of actual DOING- ‘rather than empirical methods’ and ‘underlying theory’. I had a fight with my advisor on my first week here because I want to focus on the front line, and how my research will impact what people DO, ie: will impact PRACTISE!!! He said to me, ‘well, Sarah. We’ve also got to think about how you’re going to contribute to the theoretical study of leadership.’ I must’ve made a face or something, because he said ‘what?’ and I almost said, well, I really don’t care about that so much. Mercifully, my frontal lobe kicked in and I just shrugged.
As I approach my final year of the PhD, I am getting deeper and deeper into the philosophy bit, and I feel that I am losing my touch with reality. I still go back to the OR from time to time to remember why I am doing what I do, but it’s a struggle. Mike says that this is a good thing because now I know more about what I should and shouldn’t do with my life, and he’s absolutely right. But for now, this is the part of practice where I have to work on the stuff that I’m not good at, and don’t really enjoy. Because maybe I’ve miscalculated, and my 10K is just around the corner.
Sunday, July 4, 2010
Hope again
I just finished my first triathalon. I am absolutely shattered now. Good shattered (I think), and was actually contemplating doing another, but that was directly after this one finished, so I think I'll blame it on the adrenaline. I was not first, in fact I was absolutely nowhere near even the middle. I wasn't last but was DEFINITELY near the end. But I finished and I am pleased with that.
As I was cycling (which might get a blog post on its own because of the mental struggle I had with it), there was one point where I was on a downhill, finally able to rest my legs for a second. I started to think about the fact that today is the 4th of July, a great celebration back home. I remembered all the times I was with my family on the 4th, at the local YMCA watching the fireworks from the Salem Fair, or the couple of times we watched the fireworks in DC (once on the top of a building, overlooking the mall. Unbeatable.), and the shows we saw in Minnesota... it was a really nice, brief respite from thinking about how I could no longer feel my legs, and at what point should that become a reason for concern. In my mind, I started doing a little baseball announcer-esque pep talk: "aaaanddd here's Parker! she's coming around the bend! she looks exhausted!! but! look at that!! she Just. Keeps. Pedaling!!! wow! she's not stopping, folks! she's going to finish!!!" Had I not been certain that I would've fallen off my bike, I would've given my adoring fans a little wave.
I realised that little glimmer of hope was something akin to what I feel when we watch the World Cup. Not the same exactly, becuase I don't play in the World Cup (yet.), but that feeling of... wait a sec... this could happen! this could actually happen!
We've watched most of the games, and have thoroughly enjoyed them. It's been a great cup to watch, lots of unexpected results (France and Italy out in the first round!??) with the big stars not really making an impact (Rooney, Ronaldo, Messi, etc). When we watched the USA games, I absolutely chewed my fingernails till there was nothing left. I turned into a crazed screaming fan, yelling at the refs, unreasonably criticizing professional players, seeking out my own vuvuzela...
What has struck me, and what I LOVE about the world cup, is how much it brings people together. Sure teams win and teams lose, which is heartbreaking... but this beautiful game is so inspirational to people across the world. I saw this youtube video of Landon Donovan's 92nd minute goal, and it made me so happy, I got teary. It's like in the 91st minute, all these people are just normal people watching the same game at the same time. BUT at 91:45, they are all instant best friends. Hugging, kissing, jumping around like maniacs, comparing USA jerseys and singing the same songs. And it was happening all across the world. Mike and I screamed so loud that our neighbors came to check on us. Of course, it's not just USA fans. The Spain fans were having a coronary last night when David Villa scored his late goal. People screaming and hugging, proudly waving their flags as high as their arms can reach. All of a sudden with just a touch of a little ball into a net, people have a reason to hope and believe that something that they really want, something that the entire world recognizes as a symbol of the highest standard of sporting excellence, is in their grasp. And they cheer, because they believe that THEY can do it.
Hope is such a strong emotion. Just that little bit of hope is... it's addictive... it's like crack. Hope crack. Once you have a little bit of it, you just want, nay NEED, more. You go looking for it, if you can't get your fix.
So, on this 4th of July, I am thankful for hope, finite distances, the World Cup, and the USA. Now, off to bed.
As I was cycling (which might get a blog post on its own because of the mental struggle I had with it), there was one point where I was on a downhill, finally able to rest my legs for a second. I started to think about the fact that today is the 4th of July, a great celebration back home. I remembered all the times I was with my family on the 4th, at the local YMCA watching the fireworks from the Salem Fair, or the couple of times we watched the fireworks in DC (once on the top of a building, overlooking the mall. Unbeatable.), and the shows we saw in Minnesota... it was a really nice, brief respite from thinking about how I could no longer feel my legs, and at what point should that become a reason for concern. In my mind, I started doing a little baseball announcer-esque pep talk: "aaaanddd here's Parker! she's coming around the bend! she looks exhausted!! but! look at that!! she Just. Keeps. Pedaling!!! wow! she's not stopping, folks! she's going to finish!!!" Had I not been certain that I would've fallen off my bike, I would've given my adoring fans a little wave.
I realised that little glimmer of hope was something akin to what I feel when we watch the World Cup. Not the same exactly, becuase I don't play in the World Cup (yet.), but that feeling of... wait a sec... this could happen! this could actually happen!
We've watched most of the games, and have thoroughly enjoyed them. It's been a great cup to watch, lots of unexpected results (France and Italy out in the first round!??) with the big stars not really making an impact (Rooney, Ronaldo, Messi, etc). When we watched the USA games, I absolutely chewed my fingernails till there was nothing left. I turned into a crazed screaming fan, yelling at the refs, unreasonably criticizing professional players, seeking out my own vuvuzela...
What has struck me, and what I LOVE about the world cup, is how much it brings people together. Sure teams win and teams lose, which is heartbreaking... but this beautiful game is so inspirational to people across the world. I saw this youtube video of Landon Donovan's 92nd minute goal, and it made me so happy, I got teary. It's like in the 91st minute, all these people are just normal people watching the same game at the same time. BUT at 91:45, they are all instant best friends. Hugging, kissing, jumping around like maniacs, comparing USA jerseys and singing the same songs. And it was happening all across the world. Mike and I screamed so loud that our neighbors came to check on us. Of course, it's not just USA fans. The Spain fans were having a coronary last night when David Villa scored his late goal. People screaming and hugging, proudly waving their flags as high as their arms can reach. All of a sudden with just a touch of a little ball into a net, people have a reason to hope and believe that something that they really want, something that the entire world recognizes as a symbol of the highest standard of sporting excellence, is in their grasp. And they cheer, because they believe that THEY can do it.
Hope is such a strong emotion. Just that little bit of hope is... it's addictive... it's like crack. Hope crack. Once you have a little bit of it, you just want, nay NEED, more. You go looking for it, if you can't get your fix.
So, on this 4th of July, I am thankful for hope, finite distances, the World Cup, and the USA. Now, off to bed.
Sunday, May 30, 2010
The Strength of Culture
This American Life, a podcast I listen to religiously, did a piece a couple of weeks ago on Haiti called 'Island Time'. The show examines life post-earthquake for people on the ground, the people who've lost everything, and how these people, along with NGOs, volunteers, physicians, economic experts, are using their different areas of expertise to try to rebuild or more effectively build a stable Haiti. During the first act (that's what they call segments of the show. I think it's a throw back to the old days of radio as a storytelling medium, rather than an archaic method to get news that only Grandparents and Liberals use) they focus on the story of one woman and her mango trees (not a euphemism). This woman has a couple of mango trees on her farm, which would be extremely profitable, if she could water them regularly, harvest them and get a good crop going.
Mangos are the top export for Haiti. This tiny country grows enough mangos to satify all the American demand, but they're not grown on large farms, rather by individual farmers, like the woman, with only a few trees. Therefore, the exporters have to figure out a way to gather all the mangos together before they can be shipped. Americans like their mangos beautiful, pinky and green on the outside and firm to the touch. Haitians don't care if the mangos are bruised, nor what they look like on the outside, just that they're edible. So once each individual farmer picks the mangos, he or she stores them under their beds or in piles outside their homes, because they're so valuable. As you can imagine, this leads to quite a bit of bruising and marking on the skin and overexposure to the sun. Then a middle man comes, buys the mangos, and brings them to a city via donkey and cart for export. This process, developed over centuries, ultimately leaves many mangos unsuitable for export.
Exporters and NGOs have tried to work with people, give them plastic crates to store the mangos in, keep them safe, but people don't understand that this is what the crates are for. The process of picking the mangos, putting them directly into crates, and setting the crates out for exporters to pick up is so non-sensical to the farmers, that they don't do it. They end up using the crates as seats or as shelves, because using them as a vessel for mangos is ridiculous. This seems like an easily solvable problem. Just tell the farmers to use the crates. Tell them that if you do, you'll make more money. Easy.
As the story goes along, you find out that the crates were brought to the woman farming the mangos by some guy she'd never met. He was white, articulate, drove a car, and just handed out the crates. He made no explanation other than, do this, it'll decrease the bruises. But to this woman, who cares about bruises? The mangos taste good. This woman hasn't ever been away from her small village. She can't even imagine an American, much less an American grocery store where young mothers carefully examine every mango, to find the best ones to feed their children (I am not criticizing, I do this. I am extremely picky in terms of how my food looks). It just doesn't make any sense to her. In her culture, having a good mango is good enough. Because she doesn't value these things, she has a hard time conceptualizing why another person would.
I heard a similar story not too long ago at a talk I went to about using science and innovation for development. During this talk, the speaker told a story about how scientists had engineered a new type of sweet potato which had been infused with beta-carotene for consumption in areas of sub-Saharan Africa. He said that when they first introduced the new potato, it was extremely difficult to get the people in the villages to eat it. The scientists were frustrated. They'd spent all this time and all this money to develop this new, healthier, vitamin fortified sweet potato and now the people won't eat it, even though it's good for them, and will improve their health. As it turned out, finally (FINALLY) the researchers realized that people weren't eating the potatoes because they were a different color than the traditionally grown white potato. People thought there was something wrong with them because they were a different color and tasted funny.
Another story, not quite as dire, but with a similar theme: When Pele first came to the US to play with the New York Cosmos, after a game he looked at his feet and saw that they were green. He immediately told the manager that he quit, citing green foot fungus that he'd contracted since coming to America. He was in a panic because he said his feet were his livelihood, and since coming to America they'd gotten sick. What had actually happened was, in an effort to make the field look better, the grounds staff had painted the dirt field green, and the paint had come off on the players' feet.
The point I am trying to make, sloppily, is the importance of culture in the evolution of improvement and innovation. Not just culture, the individuals that are part of that culture. In the first example, the woman needed to be trained on how to use the crates, taught that there are people who value the look of the mangos, not just the taste. The exporters needed to translate the desires of the customer back to the woman in a way that she would understand. She's not stupid, she just doesn't know, or have the capacity to figure it out on her own. In the second example, the scientists didn't take the culture of the villagers eating the potatoes into account. They thought that because the innovation was good, was healthier, that people would automatically be on board. But this isn't the case. People need to understand the WHY, not just that it's better. In the Pele example, again, it's a classic clash of cultures. At one point in his career, Pele played on dirt fields. Lush, green, grassy fields aren't always the norm. But in American sports, the spectacle is really important. Sometimes, it's half the fun (see: Dallas Cowboy Cheerleaders).
There are also more subtle examples of culture within culture in the world around us. In the work that I do in the hospital, culture is extremely important. There's a surgery culture, a nursing culture, an ICU culture, an ER culture, etc. Some sort of patient safety innovation that works in the OR, might not work in the ER. Not just because the work that they do is different, but because the people, the culture of these areas, is different. What we're talking about here is the idea that another culture might value a particular quality that you, in your culture, find to be ridiculous, or superfluous, etc. The point is that if you want to innovate, make change, and hopefully improve life for someone else, culture is extremely important. If you want to make a lasting change, it's imperative to work with the system that people have established, not criticize it, and to innovate both from a bottom-up and top-down approach.
People are extremely important. In almost every circumstance I've encountered, the people have built a culture for a reason. They do things in a certain way for a reason. To ignore the history and context leads to instability and usually only temporary improvement.
There are two quotes that keep running through my head as I write this.
1) 90% of success is just showing up.
2) People don't care what you know until they know that you care.
Mangos are the top export for Haiti. This tiny country grows enough mangos to satify all the American demand, but they're not grown on large farms, rather by individual farmers, like the woman, with only a few trees. Therefore, the exporters have to figure out a way to gather all the mangos together before they can be shipped. Americans like their mangos beautiful, pinky and green on the outside and firm to the touch. Haitians don't care if the mangos are bruised, nor what they look like on the outside, just that they're edible. So once each individual farmer picks the mangos, he or she stores them under their beds or in piles outside their homes, because they're so valuable. As you can imagine, this leads to quite a bit of bruising and marking on the skin and overexposure to the sun. Then a middle man comes, buys the mangos, and brings them to a city via donkey and cart for export. This process, developed over centuries, ultimately leaves many mangos unsuitable for export.
Exporters and NGOs have tried to work with people, give them plastic crates to store the mangos in, keep them safe, but people don't understand that this is what the crates are for. The process of picking the mangos, putting them directly into crates, and setting the crates out for exporters to pick up is so non-sensical to the farmers, that they don't do it. They end up using the crates as seats or as shelves, because using them as a vessel for mangos is ridiculous. This seems like an easily solvable problem. Just tell the farmers to use the crates. Tell them that if you do, you'll make more money. Easy.
As the story goes along, you find out that the crates were brought to the woman farming the mangos by some guy she'd never met. He was white, articulate, drove a car, and just handed out the crates. He made no explanation other than, do this, it'll decrease the bruises. But to this woman, who cares about bruises? The mangos taste good. This woman hasn't ever been away from her small village. She can't even imagine an American, much less an American grocery store where young mothers carefully examine every mango, to find the best ones to feed their children (I am not criticizing, I do this. I am extremely picky in terms of how my food looks). It just doesn't make any sense to her. In her culture, having a good mango is good enough. Because she doesn't value these things, she has a hard time conceptualizing why another person would.
I heard a similar story not too long ago at a talk I went to about using science and innovation for development. During this talk, the speaker told a story about how scientists had engineered a new type of sweet potato which had been infused with beta-carotene for consumption in areas of sub-Saharan Africa. He said that when they first introduced the new potato, it was extremely difficult to get the people in the villages to eat it. The scientists were frustrated. They'd spent all this time and all this money to develop this new, healthier, vitamin fortified sweet potato and now the people won't eat it, even though it's good for them, and will improve their health. As it turned out, finally (FINALLY) the researchers realized that people weren't eating the potatoes because they were a different color than the traditionally grown white potato. People thought there was something wrong with them because they were a different color and tasted funny.
Another story, not quite as dire, but with a similar theme: When Pele first came to the US to play with the New York Cosmos, after a game he looked at his feet and saw that they were green. He immediately told the manager that he quit, citing green foot fungus that he'd contracted since coming to America. He was in a panic because he said his feet were his livelihood, and since coming to America they'd gotten sick. What had actually happened was, in an effort to make the field look better, the grounds staff had painted the dirt field green, and the paint had come off on the players' feet.
The point I am trying to make, sloppily, is the importance of culture in the evolution of improvement and innovation. Not just culture, the individuals that are part of that culture. In the first example, the woman needed to be trained on how to use the crates, taught that there are people who value the look of the mangos, not just the taste. The exporters needed to translate the desires of the customer back to the woman in a way that she would understand. She's not stupid, she just doesn't know, or have the capacity to figure it out on her own. In the second example, the scientists didn't take the culture of the villagers eating the potatoes into account. They thought that because the innovation was good, was healthier, that people would automatically be on board. But this isn't the case. People need to understand the WHY, not just that it's better. In the Pele example, again, it's a classic clash of cultures. At one point in his career, Pele played on dirt fields. Lush, green, grassy fields aren't always the norm. But in American sports, the spectacle is really important. Sometimes, it's half the fun (see: Dallas Cowboy Cheerleaders).
There are also more subtle examples of culture within culture in the world around us. In the work that I do in the hospital, culture is extremely important. There's a surgery culture, a nursing culture, an ICU culture, an ER culture, etc. Some sort of patient safety innovation that works in the OR, might not work in the ER. Not just because the work that they do is different, but because the people, the culture of these areas, is different. What we're talking about here is the idea that another culture might value a particular quality that you, in your culture, find to be ridiculous, or superfluous, etc. The point is that if you want to innovate, make change, and hopefully improve life for someone else, culture is extremely important. If you want to make a lasting change, it's imperative to work with the system that people have established, not criticize it, and to innovate both from a bottom-up and top-down approach.
People are extremely important. In almost every circumstance I've encountered, the people have built a culture for a reason. They do things in a certain way for a reason. To ignore the history and context leads to instability and usually only temporary improvement.
There are two quotes that keep running through my head as I write this.
1) 90% of success is just showing up.
2) People don't care what you know until they know that you care.
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