February 2013Strategy

Are You Too Smart to be Taken In? Don’t Count on It.

too-smart-to-be-taken-in

While the United States Congress was busy avoiding the fiscal cliff through the New Year, negotiating their way through possible tax hikes and spending cuts, Wharton professor Jack Hershey saw something beyond the budget disputes. “It’s fascinating to watch how various policy options are framed in different ways to convince the public to support one view or another. And as with many types of manipulation, the more you tune in to what’s going on the less likely you are to be convinced by those frames.”

In this case, says Hershey, the Republicans framed the tax debate — whether to allow Bush-era tax cuts to expire for the wealthy — as a potential tax increase. Allowing the cuts to expire, they argued, would raise taxes from the current rate, defined as the status quo. The Democrats argued that the status quo was really the pre tax-cut rates, since the Bush tax cuts were “temporary.” Allowing the cuts to expire would simply return rates to the status quo.

Says Hershey, “These two very different arguments were well scripted, and everyone knew their lines. Any time a reporter asked a question that didn’t presuppose the interviewee’s favorite frame, he or she would establish it. How you defined ‘status quo’ became an essential talking point. At times, the debate wasn’t so much about which policy you agreed with but whose frame you accepted. It wasn’t about how much the highest-income Americans should pay, but whether the status quo (however you define it) should be preserved.”

Hershey’s advice on crafting a compromise doesn’t seem to have been taken by Congressional leaders, though. His prescription — which is highly effective in almost any negotiation — involved each side explaining concessions to their base by adopting the other side’s frame. “A compromise in that kind of language says ‘it’s not as bad as it could have been. There’s the extreme view, and our deal improves on that.’ It is interesting to see that, now that something of a compromise has been struck, each side is adopting the other side’s previous frame in explaining how much worse the deal could have been.”

Being able to identify and evaluate problem framing, says Hershey, can be difficult. “We put the executives who attend Critical Thinking: Real-World, Real-Time Decisions to the test.” Hershey, who serves as faculty director of the program, notes, “We help them confront the kinds of decision-making limitations they often unknowingly place on themselves. It can be humbling, but once you understand what these traps look like and how you can fall prey to them, it becomes much easier to avoid them. The program includes a number of hands-on cases and exercises designed to reveal critical thinking weaknesses and challenge your ability to move beyond them. Your skills are strengthened by knowledge and practice.” 

The program also presents many examples where a little data can lead to big errors in judgment. As one example, Hershey says, “Look what happened before and even after the U.S. presidential election. When discussing Obama’s chances for reelection, many pundits stated, ‘No president since Franklin Roosevelt won reelection with the unemployment rate higher than 7.2 percent.’ And after the election, the discussion became, ‘How did Obama win with unemployment so high?’”

What’s wrong with this line of thinking, one that was widely accepted, appearing in the New York Times, the Washington Post, The Telegraph, CNN, and numerous other news outlets? “No one questioned it,” notes Hershey. “First, no one asked how many times unemployment was over 7.2 percent when incumbents were up for re-election. Second, no one asked how many times incumbents lost when the rate was below 7.2 percent. Third, no one said, ‘Why stop at Roosevelt? Why not look at the evidence from the Great Depression and before?’”

It turns out that since FDR’s last reelection, an incumbent had faced re-election with unemployment above 7.2 percent only twice. And in two of FDR’s re-elections, he won easily with unemployment over 14 percent. Says Hershey, “Over the past 100 years, the unemployment rate argument is no better at predicting the outcome of an election than looking at hemlines or sunspots. But some seemingly sophisticated thinkers fell for it. Among other things, becoming a better critical thinker involves searching for disconfirming evidence as well as using multiple frames. It might sound simple to say, ‘Don’t believe everything you’re told.’ But sometimes you need a wake-up call to tell you that that’s exactly what you’re doing.”