The subtitle of this book made me think it would turn out to be a happy-clappy ‘how to’ management book. But a quick flick through the pages revealed plenty of three-dimensional diagrams and probability calculations. That’s more my preference – it takes all sorts, as the author emphasises – so I was intrigued and started to read. What a good decision that turned out to be. This is a fascinating and important book.
Its theme is the nature and quality of collective choice. Chapter by chapter it carefully builds up proofs of a series of logical theorems about the benefits of diversity in solving problems, reaching allocation decisions or making predictions. As this is a work of logic, the nature of the diversity in question is carefully specified. It is cognitive diversity, both in the perspective taken on a problem and the heuristics or techniques of problem-solving adopted. The author also distinguishes instrumental and fundamental diversity, the former being disagreement about means and the latter disagreement about ends. He proves that cognitively diverse groups achieve better outcomes but there may also be costs to diversity to be netted off, and these are higher when there is fundamental diversity about values.
Still, the claim of logical proof of the benefits of diversity is a strong one. Is it convincing? The underlying intuition is that problems that look difficult from one perspective can appear straightforward from another, so a variety of perspectives increases the chances of finding a solution. Perhaps more surprisingly, under certain conditions, a random selection of problem solvers will outperform a group of the best individual problem solvers. This is the ‘wisdom of crowds’ as one recent popular book title put it: being different is as important as being good. However, if the conditions do not hold, the ‘madness of crowds’ prevails instead. Diverse preferences can lead to adverse outcomes where the differences apply to fundamental values.
The book recognises that most normal readers will need more than logic to convince them of claims about the power of diversity, and so summarises the empirical evidence too. Some of this, such as the fact that electronic information markets are more accurate in their predictions of, say, election results, than opinion polls is now quite well-known. The author notes that in the evidence there is a higher variance in performance by diverse groups than by homogeneous groups, which he argues is not surprising as we are only just learning how to manage diversity successfully.
He ends by reflecting on the links between the cognitive diversity discussed in his models with the identity diversity which we often take the word to mean – men and women, people of different races, religions and ages. As most economies are becoming steadily more diverse in exactly this way, there is an optimistic message in arguing the benefits of diversity. Page believes identity diversity does correlate with cognitive diversity, and the benefits will carry over to real-life situations: “We have no guarantees that these [different] people will help us, but our logic and the weight of evidence suggest that they can.”
Some readers will, I think, remain more pessimistic about the implications of diversity in terms of fundamental values in our globalising world. Other empirical evidence – one piece that springs to mind is the work by Alberto Alesina and Ed Glaeser of Harvard on the impact of different degrees of diversity on either side of the Atlantic on social and economic outcomes – has flagged up the dangers. But even for the pessimists, The Difference is a thought-provoking and stimulating read.
Diane Coyle
Enlightenment Economics