The Fallacy of Composition

Last block, I took ‘managerial economics’, which was my last core class.  Even though I was an econ major for my undergrad, it was still pretty challenging.  One of the topics my professor briefly mentioned was called ‘the fallacy of composition’, which means that a solution for one individual does not necessarily work for a whole group.  Though he didn’t go into a lot of detail, I found this idea really interesting.

This logical fallacy applies to a lot of things.  For example, some might claim that we need to pay down the national debt at the same time, while others might worry that this effort would depress the economy and cause inflation.  Others might say that Obama’s proposal to provide free community college education to all Americans might increase opportunities in some areas, but create a higher unemployment rate due to a lack of high-skill jobs in another.  In one case, it might make sense to localize control of the public school curriculum, and in another, a school could fall behind due to a lack of standards to guide a child’s development.

I am really lucky to be in a field where I am literally paid to ponder the pros and cons to every decision.  Finding solutions to problems in data is my passion, and I have always been a numbers person.  But the kind of mental processing to which most people are accustomed is merely linear thinking.  By this, I mean assuming a direct connection between one thing and another.  When we are faced with a problem we don’t understand, we tend to take a mechanistic view to identifying a solution, breaking the problem down to its individual parts and assuming that every effect has a single cause.  I think this type of rationale is valid, but not complete.

In order to truly facilitate a better world, I think it will be necessary for more people to adopt a synthetic, non-linear way of thinking.  Before any course of action, more considerations need to be made about external effects.  This is bigger than conventional game theory.  It’s definitely not easy to understand that affecting one part could actually affect the system as a whole.  This goes against everything that dictates how I do my work: you must think hard about the potential effects that can come out of a decision, even when you don’t have the data to support it.  This capacity to predict effects beyond what you are directly affecting is difficult to master, but I think will likely be the key to addressing challenges over time.  Unilateral decisions are not going to fix global warming, poverty, income disparity, or public health issues.

Systemic change is not going to happen overnight, but I hope I live to see some kind of progress in my lifetime.  Relying on numbers and statistics is important, but not as important as deeply considering the chain of events that can occur from making one choice compared to another.  When making a decision about the best remedy for the most pressing social ills, be sure to take a step back and effectively consider how others will be affected.  We need to come up with structures for thought instead of building thoughtless structures.  We need to let go of our experiences that turned us into conditioned humans instead of letting ourselves represent the human condition we once were as children.  When we were small, we found joy in bringing others happiness, and as we ‘matured’ and were burned a few times, we became more selfish and defensive.  The more people who come to master this difficult way of thinking, the better off this world will be.  We have become less alive.

I am not at all saying that I have never taken stances on issues that were self-serving.  I know I have hurt people and made mistakes.  But I think that creating a better future starts with me, hopefully inspiring others to share the same attitude.  The more we look out for each other, and the less afraid we become about making changes in our lives in order to benefit others, the more better off we all will become.  Individuals can make a difference everyday by letting go of judgment, hatred, and anger – things that all prevent us from living a full life.  Don’t get caught up in the fallacy of composition or in the numbers.  They’re a great place to start, but what’s truly important will be justified by something more.

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