Wednesday, July 07, 2004

 

THE WISDOM OF CROWDS

The wisdom of ordinary people beats the elites: "James Surowiecki is fascinated by prediction markets. In his opinion, they demonstrate that crowds are often wise. He rejects the widespread view that groups of ordinary people are usually wrong--and that we do better to ignore them and follow experts instead. Even when individuals blunder, he believes, groups can excel: "Under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them." This is so even when "most of the people within the group are not especially well-informed or rational."" Conservatives from Burke through Disraeli and Hayek to Reagan have of course always trusted the people as a whole to come up with better decisions than elites do. Burke looked to the wisdom of the people of both the past and present combined; Disraeli saw the ordinary people of England as "angels in marble" and Hayek saw the information available to the population as a whole as infinitely superior to any other information source. And trust in the wisdom and goodness of the ordinary people as a whole is something Reagan was famous for. He constantly said that the great achievements of his era were not his but those of the American people as a whole. And libertarians have of course always looked to the aggregation of individual decisions in markets as the premier fount of wisdom.

posted by JR 7:04 AM