An inability to analyze

I believe one of the greatest problems most people face is having little or no capacity for analysis. This does not necessarily stem from a low IQ but, in most cases, from simple mental laziness about questioning (1) the available information, (2) what that information means, and (3) the conclusions reached about a particular subject. The consequence of this limited capacity for analysis across most of society is that it encourages misinformation, makes political manipulation easy, and leaves people with little understanding of how the world works.

I have noticed that few people question information: where it comes from, whether its sources are reliable and what makes them reliable, or even what the information actually means. Data do not exist in a vacuum; they become meaningful when compared with other data. Suppose, for example, that a government announces savings of $100 million pesos. Most people may consider that an enormous sum, but the perspective can change if we remove the figure from the vacuum in which it was presented and compare it with the total cost of the project where the savings will be made. If the project costs $2 billion pesos, then the savings amount to only 0.05%, which no longer sounds so impressive. People presenting information tend to frame it in the way that best serves their interests; in this example, the nominal figure sounds more impressive than the percentage. Yet this is only one level of analysis. Other questions also matter: How were the savings achieved? Will the project's final result remain the same? What other options were considered, and why were these particular ones chosen? What will happen to the money saved? Very few people ask or challenge any of this. There is an even deeper level of analysis because most people process information outside its context. We should examine when the savings were announced, the political circumstances surrounding the announcement, and who benefits politically or economically. After all that, we must also understand that most people interpret everything through personal experience. Just as microeconomics differs from macroeconomics, businesses—which use leverage—and governments—which deploy public spending—operate very differently from a family household. Something positive in an individual's daily life, such as saving, is not necessarily positive for a company or government if it produces an inferior result or relies on a suboptimal financial strategy. Most people never reach even the first level of analysis. They simply hear that $100 million pesos will be saved—a pittance in the context of public expenditure—and decide that this is excellent news.

Likewise, most people tend to confuse coincidence with causation. Human beings search for a narrative behind everything and therefore assume that everything has a cause. We evolved to recognize patterns, so we try to find them in events and conclude that when one thing follows another, the first must have caused the second. Most people find it inconceivable that the vast majority of things happening all the time occur randomly, and that order can emerge from chaos. Mix water and oil in a container and leave them to settle: eventually they will separate, not because someone separated them, but because their different densities do so. Order—separated water and oil—emerges from chaos—the two mixed together. Many achievements and advances claimed by a political entity may have causes entirely unrelated to that entity. Much of what happens in the world occurs randomly and without a specific cause. Understanding this is essential if we are to question information presented by someone trying to manipulate us.

Another problem is that hardly anyone considers second-order effects. Canceling a project, for example, might produce a seemingly beneficial first-order effect by redirecting its resources to another project, while causing disastrous second-order consequences. These effects are difficult—but not impossible—to understand. If we evaluate every decision by its opportunity cost, we gain a tool for determining, in the case of a canceled project, which long-term benefits a sector of the population or an entire country will lose as a result. Almost nobody asks about second-order effects or performs an opportunity-cost analysis.

I believe that if we were more skeptical and questioned the information presented to us more often, we would reach conclusions very different from the ones we currently hold—not only about the performance of our governments, but also about our businesses and personal projects.