Epistemology and Decision Making

In a recent post, http://wp.me/pYrkk-d3, I outlined what information should be used in a series of training sessions for administrators to make data driven decisions. I have found that many people are resistant to the benefits of using data to make decisions even though they throw around phrases like, “data driven decisions,” or “business analytics,” or “big data,”  and as such, we have to first help them to understand how do we know what we know, and how does data fit into that set of knowledge?

Epistemology is the study of how we know what we know. Though there are many ways of classifying and characterizing epistemology types, I find that there are 4 different ways that we know:

  1. Authority – We know what we know because someone tells us, and we believe it to be true. For example, everything I know about celebrating an event I learned because my mother and grandmothers told me so.
  2. Intuition – Our gut tells us what is true. For example, my gut tells me my dog loves me.
  3. Empiricism – We know through observations. This is why we collect data, to learn from it through empiricism.
  4. Rationalism – The use of logic, both inductive and deductive, will help us know the truth. This classic example characterizes rationalism well. If a tree falls in the woods and no one is there to hear it, does it make a sound? We use rationalism to know that it does make a sound.

High quality data driven decisions are, primarily, a dance between empiricism and rationalism. We make observations (enrollment is down 20% in Sports Management over the last 5 years), create a prediction or explanation as to what we think is or will be going on (maybe students in these majors are not getting jobs), collect data to test the prediction (students are struggling to find jobs), and then based on the results (Make improvements Sports Management that will provide students with the skills needed for future success). And though as a scientist this may seem like a natural and obvious way to go about seeking information, this is not the standard protocol of seeking knowledge in many administrative ranks.

Decisions from intuition reign supreme in many administrative circles. And, it is true that during the past two years in the administrative role I made many gut level decisions. However, given all of our cognitive biases, which will be discussed in a future posting, this often leads us to less than optimal decisions. In a Harvard Business Review article on how good leaders make bad decisions, http://hbr.org/2009/02/why-good-leaders-make-bad-decisions/ar/ you can find examples of leaders who ignored data and relied upon their intuition to discern what was the optimal decision.

In administration, you can also see many sets of truths to be proclaimed simply because the person in authority told someone it was true. I was in a meeting, and asked a question about the justification for an expense. I was expecting some data to support the expense. Instead I was told, “The President says so.” That is authority, in its purest form. And yet, organizations are chock full of people who permitted authority to push a group decision in the wrong direction. Follow this link http://dssresources.com/cases/spaceshuttlechallenger/ for information on the Space Shuttle Challenge disaster, where the organizational culture and its reliance upon authority driven “truths” cost the lives of 7 astronauts in January of 1986.

I have found that before I can help administrators learn about techniques in data analysis to help answer important organizational questions, I have to first get them to think about what they know, how they know it, and recognize that it is through creating a prediction or explanation, then collecting data to evaluate that predication or explanation, and most importantly, letting the data speak as to what is going on, that we can unveil our eyes from our cognitive biases, and get to the bits of information we truly seek that will lead us to great decisions.

Epistemology and Cognitive biases go hand in hand in helping keep us from truly using data accurately for organizational decisions. As a result, after sharing with administrators the ways of knowing, we must also outline standard cognitive biases that keep us from seeing the truth. Common cognitive biases facing an organization will be discussed in a future post.

If you are interested in learning more about epistemology, these sites have detailed information.    http://pantheon.yale.edu/~kd47/e-page.htm or http://plato.stanford.edu/entries/epistemology/

 

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Filed under Applied Statistics, Curriculum, Data Driven Decisions

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