lego crowd

I finally saw the Oscar-winning film Slumdog Millionaire. While I was watching the protagonist play Who Wants To Be A Millionaire and use one of his lifelines – ask the audience – it made me think of this concept of the wisdom of crowds.

It didn’t ruin the movie moment. I didn’t dwell on it. It just came back to me as I sat down to write a post for this weekend.

James Surowiecki started developing his ideas for what would become his book called The Wisdom of Crowds in his “Financial Page” columns for The New Yorker.

I think what caught people’s imagination with his main idea was that it went against the commonly held belief that we (Americans) generally don’t trust what the masses have to say. We don’t like groupthink. We think that things that are extremely popular (books, movies..) must be somehow not that great.  Are the great novels the ones on the top of the bestseller lists?

Did you know that the TV studio audience of Who Wants to Be a Millionaire guesses correctly 91% of the time?

Surowiecki says that “under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them.”

On the TV show, one lifeline you can use when you’re stuck on a question is “Ask The Audience”  According to the show’s rules, “The Contestant asks the studio audience which answer they believe is correct. Members of the studio audience indicate their choices by pressing the key on their keypad corresponding to the correct answer. The Contestant will receive the results of the studio audience vote.”

The contestant also has “Phone-A-Friend” where you call a pre-arranged friend.  Maybe you have a friend with expertise on that question, but, if not, you definitely don’t have the wisdom of a crowd.

You might have guessed that the lifeline for “Ask The Expert” was your best chance. Compared to that 91% score from the audience, the “experts” guess correctly only 65% of the time.  Still, we generally trust experts.

So the book’s premise is counter intuitive.

The problems Surowiecki looks at involve cognition, coordination, and cooperation in real situations like driving in traffic, competing on game shows, maximizing stock market performance, voting, or designing an Internet search engine.

In general, he believes that a wise crowd’s “collective intelligence” will produce better outcomes than a small group of experts, if they can meet 4 conditions.

The crowd needs to have:

  1. diversity of opinion – to get different information
  2. independence of members from one another – so that one strong leader doesn’t dominate
  3. decentralization – so that errors are balanced by the others
  4. a good method for aggregating opinions so that all opinions are included in the decisions

Not a bad model to strive for in a working group, a classroom or a family – though it might be tough to get all those conditions in those settings.