[Excerpts taken from the article “Behavioral Economics’ Latest Bias: Seeing Bias Wherever It Looks” by Brandon Kochkodin, published at Bloomberg.com]

“Behavioral economics, it seems, might just have a bias problem of its own.”

“…for a small, but vocal group of skeptics, the field has quickly become a victim of its own astounding success. Call it the ‘bias bias.’”

“Drawing on the work of longtime critic Gerd Gigerenzer, an expert in psychology at the Max Planck Institute for Human Development, they point to the tendency of those who have embraced its ideas to see biases everywhere — even when there are none.”

“A Wikipedia entry for cognitive biases currently lists nearly 200 entries…Are they all legit? Gigerenzer, who has made himself into something of a bête noire among behavioral economists over the past couple decades, has his doubts.”

“In his 2018 paper, he concluded that most studies on cognitive biases are flawed. They either rely on small sample sizes, misinterpret individual errors for systematic biases or underestimate how people absorb information based on how a fact or question is framed.”

“Gigerenzer’s beef with behavioral economics, and its most influential proponents, like Kahneman, Amos Tversky and Richard H. Thaler, isn’t new. If you google “behavioral economics criticism,” it doesn’t take long before Gigerenzer’s name comes up, again and again.”

“Kahneman, who was awarded the Nobel Prize in 2002, and Tversky long ago took issue with what they say is Gigerenzer’s willful misinterpretation of their positions and ideas, which misleads readers. Others, like Carnegie Mellon’s Alex Imas, say the problem is that Gigerenzer often uses oversimplified arguments to dismiss theories…”

“Nevertheless, as behavioral economics becomes increasingly ubiquitous in everyday life, even proponents have started to acknowledge the potential pitfalls.”

“In a recent episode of Ted Seides’ “Capital Allocators” podcast, Albert Bridge Capital’s Drew Dickson talked about how his team integrates behavioral economics into its investing approach. After listing some of the biases they watch out for, Dickson named the “bias bias” as his new favorite.

“People are now talking about behavioral finance so much, and a lot of them are relatively new to it, they almost want to start looking as if there’s definitely going to be a bias here,” said Dickson, who declined to comment for this story. “You’re biased to find a bias.”

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