Laughter, Smokers & Dam Breakers

Regular readers of these weekly words know my penchant for mental models drawn liberally from diverse disciplines.



Competitive edge comes from two sources: you’re either undeniably better than others at some thing or you’re undeniably skilled at combining lots of things others excel at. Like Isaiah Berlin or Phil Tetlock have noted: it’s Hedgehogs or Foxes. Willful practice or worldy-wisdom—and it’s often a combination of the two.



Combinations explain much: including (at least partially) laughter. It’s called “incongruity theory”: take two things that normally aren’t thought of together, mix them in a surprising way and voila: humor. It could be a dangerous threat that proves benign (like when your friend trips and falls but gets up safely or when your friend jumps startled at an air horn you sounded behind him). Author Jim Holt quoted Immanuel Kant as describing as “the sudden transformation of a strained expectation into nothing.”



Imagine yourself an alien witnessing an earthling human laughing for the first time: chest heaving, odd syncopated sounds and grunted breaths. Objectively viewed, laughing is actually pretty bizarre biologically. The closer you study human behavior the more you realize what curious creatures we are.



Consider an extreme case of mistaken cause and effect. We are pattern seeking animals, but consider the recently reported boy with an obsessive compulsive condition who thought himself responsible for the attacks on 9/11. Turns out the boy had a daily ritual including walking on a specific white mark on the road. When he broke habit one time, he ended up believing the disaster was the resulting consequence and his fault.



Other times, we think we know the effect we want and we think we know how to cause it. Instead all we get is unintended consequences. In a soon to be published book on risk and the science of fear, it was found that 1,595 road deaths were from people who refused to fly and chose to drive out of fear of flying after 9/11. This is more than 6x the number of people on board the 9/11 airplanes and about half of the total fatalities.



In a different example from a recent study: banning smoking resulted in drunk-driving deaths. Huh? Here’s how. Researchers found that the 120 countries with smoking bans in bars have higher drunk-driving and deadly car crashes due to alcohol--than the 2,000 countries that don’t—by over 13%. Why? One reason is that smokers drive farther to find a place they can go to drink and smoke. Sure enough accident rates were highest when residents jumped across borders to get to bars where they could smoke.



Consider another study where bees, rats and humans all responded the same way to risk and reward—an evolved and innate sense of odds—depending on whether the payoff is known. The “certainty effect” arises when animals are repeatedly faced with choice of getting a big reward infrequently or a small but more certain reward infrequently. Most choose the latter even though it can be less profitable over time. Then there’s the “reverse certainty effect” where animals don’t know the payoffs (they don’t know the underlying distribution) and they go for the bigger pay-off (swing for the fences) even though it’s far less probable. When we don’t know: we go for the bigger less certain prize. When we do: we opt for the smaller more certain prize.


As George Bernard Shaw noted, it is the unreasonable man upon which all progress depends. Sounds like a certain class of people I utterly love: entrepreneurs. Here I quote Eric Beinhocker on Joseph Schumpeter: “…for growth to occur there must be ‘a source of energy within the economic system which would of itself disrupt any equilibrium that might be attained’. For Schumpeter, that source of energy was the figure of the entrepreneur, whom he wrote about in almost heroic terms…technological progress occurred in a random stream of discoveries. The commercialization of new technologies, however, faced numerous barriers, ranging from the need for financing to the intransigence of old habits and mind-sets. Thus, like water behind a dam, the random rain of discoveries built up over time. In Schumpeter’s theory, entrepreneurs played the role of dam breakers, unleashing a flood of innovation into the marketplace. In this way, growth comes to the economy not in a steady stream, but as Schumpeter famously put it, in ‘gales of creative destruction’. The origin of wealth—lies in the heroic efforts of individual entrepreneurs. Wealth creation occurs when people like Henry Ford, Thomas Alva Edison, Steve Jobs battle the odds to turn the technologies of their time into successful commercial enterprises.” Well said.



Now to put some numbers behind all this, consider that just two years ago, tech transfer offices filed 16,000 new patent applications, licensees launched 697 products and spun out 553 companies.