Knowledge Is Nontransferable
Writing books about clear thinking brings with it many pluses. Business leaders and investors invite me to give talks for good money. (Incidentally, this is in itself poor judgment on their part: books are much cheaper.) At a medical conference, the following happened to me. I was speaking about base-rate neglect and illustrated it with a medical example: In a forty-year-old patient, stabbing chest pain (among other things) may indicate heart problems as well as stress. Stress is much more frequent (with a higher base rate), so it is advisable to test the patient for this first. All this is very reasonable, and the doctors understood it intuitively. But when I used an example from economics, most faltered.
The same thing happens when I speak in front of investors. If I illustrate fallacies using financial examples, most catch on immediately. However, if I take instances from biology, many are lost. The conclusion: Insights do not pass well from one field to another. This effect is called domain dependence.
In 1990, Harry Markowitz received the Nobel Prize in Economics for his theory of “portfolio selection.” It describes the optimum composition of a portfolio, taking into account both risk and return prospects. When it came to Markowitz’s own portfolio—how he should allot his savings into stocks and bonds—he simply opted for fifty-fifty distribution: half in shares, the other half in bonds. The Nobel Prize winner was incapable of applying his ingenious process to his own affairs. A blatant case of domain dependence: He failed to transfer knowledge from the academic world to the private sphere.
A friend of mine is a hopeless adrenaline junkie, scaling overhanging cliffs with his bare hands, and launching himself off mountains in a wing suit. He explained to me last week why starting a business is dangerous: Bankruptcy can never be ruled out. “Personally, I’d rather be bankrupt than dead,” I replied. He didn’t appreciate my logic.
As an author, I realize just how difficult it is to transfer skills to a new area. For me, devising plots for my novels and creating characters are a cinch. A blank, empty page doesn’t daunt me. It’s quite a different story with, say, an empty apartment. When it comes to interior decor, I can stand in the room for hours, hands in my pockets, devoid of one single idea.
Business is teeming with domain dependence. A software company recruits a successful consumer-goods salesman. The new position blunts his talents; transferring his sales skills from products to services is exceedingly difficult. Similarly, a presenter who is outstanding in front of small groups may well tank when his audience reaches one hundred people. Or a talented marketing mind may be promoted to CEO and suddenly find that he lacks any strategic creativity.
With the Markowitz example, we saw that the transfer from the professional realm to the private realm is particularly difficult to navigate. I know CEOs who are charismatic leaders in the office and hopeless duds at home. Similarly, it would be a hard task to find a more cigarette-toting profession than the prophets of health themselves, the doctors. Police officers are twice as violent at home as civilians. Literary critics’ novels get the poorest reviews. And, almost proverbially, the marriages of couples’ therapists are frequently more fragile than those of their clients. Mathematics professor Barry Mazur tells this story: “Some years ago I was trying to decide whether or not I should move from Stanford to Harvard. I had bored my friends silly with endless discussion. Finally, one of them said, ’You’re one of our leading decision theorists. Maybe you should make a list of the costs and benefits and try to roughly calculate your expected utility.’ Without thinking, I blurted out, ’Come on, Sandy, this is serious.’ ”
What you master in one area is difficult to transfer to another. Especially daunting is the transfer from academia to real life—from the theoretically sound to the practically possible. Of course, this also counts for this book. It will be difficult to transfer the knowledge from these pages to your daily life. Even for me as the writer, that transition proves to be a tough one. Book smarts don’t transfer to street smarts easily.