Noise is a hidden enemy — we don’t notice it like we can notice many biases in people’s judgement. However, it is still there. Noise is loosely defined as a variation in judgements that shouldn’t have any variation. Biases play a role in it, but they aren’t the whole story. To see the difference between bias and Noise, consider your bathroom scale. If on average the readings it gives are too high or low, the scale is biased. If it shows different readings when you step on it several times in quick succession, the scale is Noisy. While bias is the average of errors, Noise is the variability.
In Nobel Prize Winner Daniel Kahneman’s new book ‘Noise’, co-authored by Olivier Sibony and Cass Sunstein, the phenomenon of Noise is categorised into separate components. Predominately, this distinction is between System Noise, Level Noise, Pattern Noise and Occasion Noise.
System Noise is the variation of judgements on the same case between various different individuals — eg. Different judges making different decisions based on the same case. Level Noise is the variability in the average level or severity of judgement by different judges — eg. Some adjudicators being much tougher on college admissions than others. Pattern Noise is patterns of severity in response to particular cases - eg. A judge being much more lenient towards young women. Occasion Noise is noise based on the random error in certain circumstances - transient component of pattern noise — eg. A judge being harsher when his/her favourite sports team loses or when the weather is rainy.
The thing about Noise is that it can lead to a very unfair world, with decisions being based not on pure logic and objectivity, but rather subconscious forces pushing our decision making in directions it shouldn’t be going. In the book, there is a discussion of its implications in many fields of society — particularly law, medicine and job hiring, amongst many others. If the difference between you getting a 5 year prison sentence or probation depends on whether you got lucky or not, or whether it was raining outside or not, there needs to be some pensive reforms to limit the extent Noise affects our society for the worse.
Once you become aware of Noise, you can look for ways to reduce it. For instance, independent judgments from a number of people can be averaged. Using the ‘Wisdom of Crowds’ phenomena, next time you have to guess the number of jellybeans in a jar, make sure you ask as many people as you can muster, and average their answers. If you are a bit introverted, you can always rely on ‘The Crowd Within’ by asking your self to predict the number of jelly beans in a jar, make an educated decision, then ask yourself whether it could be higher or lower and ‘why’, then average those two estimates. It won’t be as accurate as the ‘Wisdom of Crowds’ but it’s much better than just estimating alone. These little tricks are enough to improve people’s predictions and forecasting. Guidelines, such as those often used in medicine, can help professionals reach better and more uniform decisions. As studies of hiring practices have consistently shown, imposing structure and discipline in interviews and other forms of assessment tends to improve judgments of job candidates as well. However, no improvements can be made regarding Noise in society, unless we first recognise that it exists at all. Everyone will make better decisions if they start to take Noise seriously.