Evidence Based Thinking

A few of us were drinking beer and discussing movies when the conversation veered round to Bollywood screen villains. Milind, a film fanatic felt that yesteryear villain Pran, was the finest bad man ever. His evidence? AFTER PRAN’S ADVENT NO PARENT IN INDIA DARED TO NAME THEIR NEW BORN ‘PRAN’! The implication was that no parent wished his child to become a bad person like Pran on screen.

While we all admired the screen villain l begged to disagree with Milind. I asked him if he ever recollected anybody being named Pran even before the villain entered Bollywood? The silence in response to my question told its own tale. ‘Pran’ was a rarest of rare names and the possible fact that few if any had that name may have nothing to do with the actor’s screen deeds. The evidence did not support Milind’s contention.

It may seem obvious but many neglect to remember this simple guideline to good thinking—the need for credible evidence. This form of thinking, called Evidence based Thinking or EBT is now being rigorously being applied in a range of subjects such as medicine, management, sociology etc.

An interesting example of EBT is available in a recent issue of The New York Times where an article sought to discuss what appears to be a curious phenomenon–the trend of reducing crime rates in the USA. The first half of 2009 has seen a sharp fall in crime rates across the country even in cities that have been the hotbeds of crime like New York and Chicago. Even cities hit hard by bank failures and the consequent loss of jobs like Charlotte, are showing reduced crime levels. What is even more surprising is that cities that are known to be traditionally crime free are showing increased crime rates.The writer’s conclusion? Astrologers and tea leaves readers may be better able to predict crime rates than scientists!

Let’s look at the inadequacy of traditional predictors and how EBT proves these to be inadequate:

THE ECONOMY: This seems fundamental but the evidence is stunning–the Depression era had lower crime rate than the Prohibition era!

MORE CONVICTIONS AND IMPRISONMENT: The incarceration rates have been increasing but EBT shows that crime rates have been zigzagging up and down seemingly unconnected to each other.

ABORTION RATES: It is suggested that legalizing abortions has helped in avoiding unwanted births. These unwanted kids go on to become criminals or so the theory suggested. But EBT shows that there are many countries that have legalized abortion but have not seen declines in crime rates.

GUN THEORY: Expanded gun ownership rights have deterred criminals who must now consider whether their victims are armed. Thus, the theory goes, with more and more people possessing guns crime rates can be expected to go down but EBT shows that while New York gun ownership is low, reduction in crime rates is the most significant in that city.

ILLEGAL DRUGS: It is suggested that illegal drug use drives up crime. EBT shows that the percentage of those arrested in New York with illegal drugs in their system has remained more or less flat.

To make a long story short almost all traditional predictors of crime have failed to stand up to careful scrutiny under the rigorous lens of EBT. Even the popular theory that poverty leads to crime, has been belied. Andrew Karmen, a criminologist at the John Lay College of Criminal Justice in New York noted, ‘There are people out there putting up with an awful lot of suffering and they are not complaining all that much’.

In medicine EBT shows that many medicines and surgical procedures including angioplasty and the removal of disk have little or no benefit to a patient and the situation can be managed simply by comparatively inexpensive drugs.

Management gurus who apply EBT say that ESOPs do more harm than good. Wall Street gives enough evidence of this with Merger and Acquisition failures almost 70%.

The summary–we need more rigorous research and must be wary of facile theories.

Two final remarks. When banks in India are the subject of discussion, critics say that government-directed lending is responsible for bad loans. EBT shows that the rate of bad loans is much higher among well-heeled borrowers. Bad loans in microfinance schemes are negligible even though the borrowers are among the poorest of he poor.

EBT also shows that the most attractive cities to live in India are NOT Mumbai, Bangalore, New Delhi. Which are the 3 best cities? Look for evidence on your own please.