Wednesday, May 30, 2012

Have trouble making decisions? This book may help

When it comes to making decisions — both big ("Should I refinance?") and small ("Where to go for dinner?") — I often have trouble (...I can hear those who know me chuckling at that understatement). But I'm not alone in this type of behavior, according to a new book.

Author Dylan Evans ("Risk Intelligence: How to Live with Uncertainty," Free Press, $26, April 2012, 288 pp.) has penned a carefully researched book that provides all the statistical evidence one might need to improve her risk intelligence.

"This book is about why so many of us are so bad at estimating probabilities and how we can become better at it," writes Evans.

Evans devised a test consisting of 50 statements, the responses to which produce an overall score which comprises your Risk Quotient. You can take a basic and quick RQ test for free Evans' website, www.projectionpoint.com. I got a "low" score of 49.28 out of 100 on this test, which puts me in good company: The vast majority of us have quite low risk intelligence, according to Evans.

So how can we change that?

In his book, Evans offers simple techniques we can use to boost our RQ. These include: 

  • Train yourself not to follow your natural inclination to estimate risks either by a vague "gut feeling" or verbally, such as describing them to yourself as "highly probable." Instead, always assign a specific percentage for the probability of an event. 
  • Make yourself consider a larger number of possibilities of outcomes for events that you are naturally inclined toward. We generally consider two or three, but should consider closer to five or six.
  • Gain a better understanding of a simple set of truths about probability.
  •  Assess your "risk appetite" — your natural degree of willingess to take risks.
About the book (from the author's website:

There is a special kind of intelligence for dealing with risk and uncertainty. It doesn't correlate with IQ, and most psychologists failed to spot it because it is found in such a disparate, rag-tag group of people — American weather-forecasters, professional gamblers, and hedge-fund managers, for example. 

This book shows just how important risk intelligence is. Many people in positions which require high risk intelligence — doctors, financial regulators and bankers, for instance — seem unable to navigate what Evans calls the "darkened room," the domain of doubt and uncertainty. 

Risk Intelligence is a traveler's guide to the twilight zone of probabilities and speculation. Evans shows us how risk intelligence is vital to making good decisions, from dealing with climate change to combating terrorism. He argues that we can all learn a lot from expert gamblers, not just about money, but about how to make decisions in all aspects of our lives.

Want to win it?

I think this book will appeal to those who like STATISTICS. It's chock full of 'em. If you would like to "win" my new hardcover review copy of Dylan Evans's new novel "Risk Intelligence: How to Live with Uncertainty," courtesy of Free Press, an imprint of Simon & Schuster, simply comment on this post with your email address. If you're selected as winner (at random), I'll contact you to find out where to mail the book. If no one comments or otherwise claims the book it will be donated to the Pottstown Regional Public Library. 

About the author:

DYLAN EVANS
Dylan Evans is the founder of Projection Point, the global leader in risk intelligence solutions. He has written several science books, including "Emotion: The Science of Sentiment" (Oxford University Press, 2001) and "Placebo: The Belief Effect" (HarperCollins, 2003), and in 2001 he was voted one of the 20 best young writers in Britain by the Independent on Sunday. He received a PhD in philosophy from the London School of Economics in 2000, and has held academic appointments at King's College London, the University of Bath, the University of the West of England, and University College Cork. He recently spent a semester as Visiting Professor of Psychology at the American University of Beirut.

3 comments:

Carl said...

Hi Michelle

I can see this book being important to people who are looking to invest for their future wisely but lack the knowledge to understand the risks as well as they could.
I can also see investment advisors offering it as a tool to their clients.
I think it could be a valuable self-help book, please enter my name in the draw for the chance to win this copy. Thanks

Michelle Karas said...

Hi Carl,

Thanks for reading my blog. Please send your mailing address to me at mkaras@pottsmerc.com and the book is yours. Otherwise, I don't know how to get in touch with you.

Thanks,

Michelle

Michelle Karas said...

Better late than never. Reader Maria S. is the winner of this one!