Author: ken

HAVING CONFIDENCE OR ACTING CONFIDENTLY?

That is the key question, the key difference: the passive state of enjoying confidence or the active state of affirming it?

Efforts to measure the confidence of consumers or the investing public easily miss the point that passive confidence means little more than ungrounded optimism, a desire, a wish. Saying that you have confidence is saying little more than that is how you prefer to see yourself and others.

To mean anything, confidence must stem from understanding and rely on a sense of control. It is a basis for action, not opinion.

Poll takers and consumer researchers tend to stay at a superficial level because there really isn’t that much difference between taking one brand off the shelf or another, or pulling down one of two levers in a booth. Real confidence has to involve something more, a commitment to put down $20,000 for a new car, or to sign a mortgage requiring substantial payments over 20 years. But the recent credit debacle has revealed that, even in those circumstances, consumers were misled by a false sense of confidence, or by false promises.

Do we really want to know what is the real confidence of consumers or investors? Or do we just want them to resume their optimism and get back into debt, whether or not they can make their payments. Put baldly like that, I doubt anyone would say the latter. And yet without any change in our measures or our habits, that is actually too likely to happen.

We all want to believe that recovery is around the corner. Encouraging a boom that leads to another bust would be one way to help it along.

A PERSONAL EXPERIENCE AT 12,000 FEET

On my vacation last week, trekking over a pass in the Himalaya mountains, I slipped and fell. No big deal. Nothing was injured, except my dignity. Still it gave me another insight about confidence, self-confidence in particular but also confidence in general.

I was exhausted from having climbed up 3,000 feet from our camp on a path that was frequently muddy. The weather that day was good — glorious, in fact, allowing us all to take in the extraordinary variety of spruce, pine, rhododendron and daphne that filled the forest, as well as the blue primroses, ferns and mosses that carpeted the ground. Exhilarated, I was none the less increasingly winded by the exertion of climbing and the effects of the altitude. And then, starting our descent on the other side of the pass, I lost my footing and fell in the mud.

Helped by the guides, I quickly got up and cleaned myself off, as best I could under the circumstances. But I soon realized that something important had changed: I had lost my confidence. Having exhausted my energy, feeling a loss of control over my body, almost as if I were drunk, I made my way down the rest of the trail unsteadily. Soon I accepted a guide’s suggestion I hand him my relatively light backpack. I welcomed the help — and fortunately I got it — as we all got down to 9,000 feet again on the other side of the pass.

As I stressed in my last post on Self Confidence, a key element is self-knowledge: you cannot have confidence in yourself without knowing what you are capable of. I still think that is true. In this case, I did not know the limits of my strength and my vulnerability to high altitudes. But this experience brought home to me that self-confidence is also about being able to have control over one’s actions. Perhaps a better way of putting it is that self-knowledge is in the service of the ability to assert control of one’s behavior as needed.

A study of the unconscious makes clear that virtually all our behavior is not under conscious control, but consciousness does usually allow us to assume control when needed. We do not need confidence when driving with cruise control, but when we encounter bad weather or a rough road, we do need to assert control — and this is where confidence comes in. But if with your awareness and skill you cannot gain control of the car, you cannot have confidence in getting to your goal, much less avoiding an accident. In Bhutan, I had lost that ability. The guides helped me to get enough of it back to get down the rest of the trail. They supported and encouraged me, but I was deeply shaken.

What I am getting at here is not so much the question of personal confidence, what we need in moments of individual stress, but the larger social and economic question of what it means that we have lost confidence in our economic institutions: that our automatic pilots no longer seem to work and we are all at risk. Economists have tended to think of it simply as a matter of our assumptions or our ability to predict the market. Consumer confidence is a measurable scale. But as I hope is becoming clearer from these reflections, it is much more than than.

In my next post, I will start to make links with these larger questions.

WHAT IS THE BASIS FOR CONFIDENCE IN OURSELVES?

There are two angles to consider here: the personal, individual one, and then the perspective of the group, the environment of the collective. The personal one is what we tend to focus on almost exclusively in our culture. We think it is up to the individual to surmount obstacles, to achieve his goals, to believe in himself.

And to the extent that this is true, the individual’s self-confidence, basically, is grounded in self knowledge. As we cannot know for sure that circumstances will enable us to accomplish any of our goals, we have to make sure we have the skills, the knowledge, the experience, and the drive to do our best to succeed. With that, we can believe in ourselves.

This is in part about having a realistic assessment of our abilities and aptitudes. Much of this is accessible to consciousness, of course. But some of it is about what we don’t know we know about ourselves, the parts we have not encountered but also the parts we don’t want to think about or recall.

In general, people tend to rank themselves more highly in intelligence, taste, attractiveness, and so on, than objective measures suggest they should. Our inbuilt narcissism inflates self-esteem. Moreover, we are carefully guarded by unconscious mechanisms against particular injuries to self esteem, dangers of embarrassment or failure. Without knowing that we do it, we avoid the risks, reframe the issues, change the subject, recall things differently.

We can’t do that, though, in areas where we want to be truly confident. Athletes review their performances over and over, replay their games and relive their disappointing moments in order to glean more insights into how they can improve. They can’t always anticipate the moves of their competitors or the sudden injuries to which they may be prone, but they can know themselves as players who can count on themselves to understand what they are able to do. Real self-confidence requires this.

But the group adds a vital perspective. It can support and reinforce what the individual believes about himself and sometimes it can virtually destroy what the individual has achieved. We seldom take this into account, but those who have been scapegoated for the sins of a group know all too well how their self-esteem crumbles and how any attempt to hold onto their sense of competence is virtually impossible in the face of that onslaught.

Even those who are laid off as a result of corporate downsizing will often be devastated, unable to hold on to their sense of self-worth, much less their confidence. We are mirrored in the minds of others and sustained in their image of us — and usually we have little conscious awareness of now powerful that is and how necessary to us it is to have that preserved. We learn of it usually when it is suddenly stripped away.

So even self-confidence, no matter how much a product of individual effort, must be reflected and sustained by others.

To be continued — and with your thoughts and experiences as well.

A CASE OF WHAT YOU DON’T KNOW YOU DON’T KNOW

The words refer to wise men and their wisdom, and derive from Sanskrit. But in our era of talking heads it has come to mean an ability to forecast the future. In a world that plans for the future, that invests in change, that seeks and prepares for growth, we want and we need to know what to expect. It is no surprise, then, that an industry has grown up around this demand to know what is going to happen, whether in financial markets, elections, consumer trends, or foreign affairs.

But do pundits actually know what they are talking about? Or would it be more accurate to say that the business of punditry exploits our fear of not knowing, our need to defend ourselves from the anxiety of ignorance in a world that bases so much importance on understanding the future?

In his new book, How We Decide, Jonah Lehrer cites the research of Philip Tetlock at the University of California at Berkeley into the actual performance of pundits. Comparing their predictions with actual outcomes, he found that “they tended to perform worse than random chance.”

This should not be a surprise to those who have come to appreciate how much desire and need shape perceptions. It is very hard to live with such intense and persistent pressures without unconsciously crafting a solution, an answer that appears to solve our problem.

But Tetlock’s research tells us more. Far from predicting the future, pundits tend to confirm the prejudices and assumptions of those to whom they speak. This is why, no doubt, their predictions are worse than randomly wrong. If they simply shot in the dark, they would do better. But by confirming what we want to believe, they tend to systematically avoid seeing what is new and significant. Confirming our prejudices, they also close our minds to the new information and thoughts we need to take into account of we are going to see what the future actually has in store for us.