| Honest Signals: How They Shape Our World |
| Alex (Sandy) Pentland, MIT Press, 2008, 184 pages, £14.95. |
| For most economists the traditional starting point for any discussion on signalling is the work of joint Nobel Prize winners George Akerlof, Michael Spence and Joseph Stiglitz. Their work demonstrates just how effective economics can be at explaining everyday actions, in this case markets where one party has more information than the other. |
| Such theories have obviously developed since the 1970s and encompassed other disciplines. In his book Pentland attempts to take the next step. Using digital technologies he argues that it is possible to measure 'honest signals', nuanced social signs that we unconsciously emit and process. He claims that revealing these signals challenges our view as rational and independent thinkers, but also suggests how we could build better decisions and societies. |
| Using scenarios such as pay negotiations, poker games and even speed dating, Pentland measures four key signals: influence, mimicry, activity and consistency. The results suggest that honest signals in such situations can be a better predictor of social roles and outcomes than language or even logic. In other words, our actions are not as rational as we think, and what we say may be less important than how we say it. |
| These results are interesting, if not too surprising; effective body language or sales techniques can sometimes blind logic, although possibly not on a repeated basis. Pentland cites this as evidence that we are not the enlightened beings we think, but rather than be despondent, he says we should embrace our innate abilities. |
| Monitoring of signals in groups suggests that we may have evolved effective decision-making processes which operate regardless of issue or participants. Groups tend to bring options together forming an ideas market, before selecting preferred outcomes by signalling interest. Pentland argues that we aren't very good at making decisions based on logic or rational argument, especially given the difficulty of capturing complex arguments in linguistic statements or mathematical models. Instead we could deliver better outcomes drawing on our instinctive processes and combined 'network intelligence'. |
| As signals offer a better indication of how we actually behave than rationality-based approaches, it is also argued that it may one day be possible to build social physics laws. |
| If accepted, these conclusions could have profound impacts. Better understanding of signals could improve communication and information flows, but questioning our role as rational, independent thinkers would have major consequences for how we organise education, businesses and society. |
| Pentland does present a persuasive and digestible logic on the power of unconscious reasoning, similar in some ways to Malcolm Gladwell's more populist Blink, although critically the evidence seems to thin as group sizes increase. Rather vainly I welcome the idea that our innate reasoning may be more powerful than we realise. It is possible that we have become over-reliant on analysis post-Enlightenment. However, I would still be very reluctant to abandon rational schools of thought, particularly for critical decisions. Instead I think this work highlights how rational decision making could be enhanced, and it is warming to note that this means working together. |
| Michael Hedley |