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Thomas Sowell

Knowledge and Decisions

Summary

Sowell argues that knowledge is man's most severe restraint but knowing the power of incentives, who the decision maker is, and a couple other key elements helps making decisions at least a little easier

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Key Takeaways
  1. Humans' most severe restraint is knowledge but still must make important decisions
  2. Examine and judge companies, people, etc. based on process / results over lofty goals
  3. Realize the importance of incentives, constraints, feedback mechanisms
  4. Sowell examines evolution of decision-making processes and how it spreads between different areas
  5. No person or group is likely to have sufficient knowledge to make a perfect decisions the first time around
  6. There is an independent reality through which each individual perceives only imperfectly, but which can be understood more fully with feedback that can validate or invalidate what was initially believed
  7. Ideas are everywhere but knowledge is rare
  8. Civilization an enormous device for economizing on knowledge. As people live closer together, ideas and their adoption spread much quicker
  9. Need to consider not only how much we know but how well we know it
  10. How decisively we act depends on how certain we are of the consequences
  11. Must understand who the primary decision maker is, with what incentives they are working with as well as constraints, feedback mechanisms
  12. Must understand the decision-making process and its costs
  13. Most basic of all decisions is who shall decide
  14. Most basic inherent restraints are time and wisdom
  15. Every item / decision has both a time price and a monetary price - this is its real cost
  16. Incentives not only affect decisions but the type of people drawn to certain decision making roles
What I got out of it
  1. A little disappointed but definitely has some good nuggets. Judge people / companies on process / results over their lofty, stated goals; power of incentives, constraints and feedback mechanisms; understanding who the decision maker is is very important; real cost include time price and money price

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