Steven Pinker, Author of Bill Gates's Favorite Book, Says Entrepreneurs Should Trust Stats, Not Their Intuition

The Harvard psychology professor discusses his thoughts on the roles and responsibilities of business today.

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By Lydia Belanger

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Steven Pinker is the author of several books, including Enlightenment Now, which published earlier this year and immediately became Bill Gates's "new favorite book of all time."

The thesis of Pinker's book ultimately boils down to, that while you might think that the world is doomed -- considering the news we read and see -- if you measure health, wealth, safety, knowledge and quality of life generally, humanity overall is better off than ever.

"For all the flaws in human nature," Pinker writes, "it contains the seeds of its own improvement, as long as it comes up with norms and institutions that channel parochial interests into universal benefits."

Related: Bill Gates Hopes His New Favorite Book Will Turn You Into an Optimist

In other words, humans have cooperated and worked toward the common good to survive and thrive thus far, and we must continue to keep collective best interests in mind, Pinker asserts. He explains that, given our track record, he has no reason to believe we won't.

That's despite recent political developments that suggest polarization in nations such as the U.S. and the U.K., business and environmental deregulation set in motion by the Trump Administration, a widening wealth gap and other trends that might indicate otherwise.

Pinker encourages taking a broader view: Things are better in the aggregate, he argues. Similarly, we should avoid letting our own biases cloud the best interests of everyone or even how we should proceed to further better the world. He uses the word "should" often. As with the excerpt above, his arguments are contingent on humans deciding to work together for universal improvement.

Pinker spoke with Entrepreneur at OZY Fest in New York City this past weekend about capitalism, the complementary and potentially evolving roles of businesses and governments and how entrepreneurs should approach problem-solving.

This interview has been edited for length and clarity.

How can companies reconcile the need to compete and focus on the bottom line with focusing on a common goal toward the betterment of the world?

It's not unlike what individuals face. It's always reasonable for a person to pursue his or her own interests, but not at the cost of being a sociopath and harming other people, but within a framework of laws and norms that benefit everyone, if everyone follows them.

So, in competing, which is a good thing, businesses should not throw out their consciences, which is a bad thing, and should not oppose fair rules for everyone and fair laws for everyone within a society that makes the competition work toward the good of all.

Can you describe an example?

With regulations such as environmental protections, a given company may fear that if they pollute less than their competitors, they'll be at a disadvantage, whereas, if everyone were subject to the same regulations, then no one would have a competitive advantage.

And likewise, in an environment that is ruthlessly competitive, you might be driven out of business if you don't pollute and your competitors save the money of putting in pollution-control devices. But clearly, it's an irrational country as a whole that would permit that to happen.

In sports, everyone benefits if there's a rule that you have to wear a helmet. If wearing a helmet were optional, you wouldn't want to hurt the competitive advantage of your team and might be willing to take a greater chance of brain damage or even death. So, making it voluntary in a competitive environment is not viable, but if everyone has to wear a helmet, then you can still have an exciting and competitive game without the brain damage or early death.

Businesses sometimes step up and try to take over roles that government has traditionally played. For example, Amazon is getting into the health space with Berkshire Hathaway and JPMorgan. What do you think of developments like this?

We have to be open-minded. It wasn't stated at the beginning of time by divine decree that government was the best provider of healthcare, but nor is General Motors or Google, necessarily, the best provider. We have to use our collective intelligence and be guided by evidence from experiments to see what works and what doesn't.

Whether you're on the left and therefore believe that the government should handle all functions, or the right and believe that private businesses should handle all functions, clearly there's got to be a tradeoff and a division of labor. And that division may itself change over time, with changes in technology and demographics.

What initiative lead by the private sector or entrepreneurs right now is a force for positive change in society?

There is a movement called "conscientious capitalism" to try to attain the benefits of the market economy and the creativity and entrepreneurship and distributed knowledge that comes from capitalism -- while addressing that the fact that the reputation of capitalism is in tatters, especially among younger people, it's considered a dirty word.

When you have companies that engage in certain destructive practices, like buying politicians, lobbying for changes in the law that benefit them individually, engage in deceptive practices or pollution, it tarnishes the entire concept of capitalism and poisons whole sectors of the population against it. And given the benefits that capitalism can have -- at least, capitalism with socially conscientious norms and judicious regulation -- that is a tragedy for everyone.

Some people on the left say "conscientious capitalism" is an oxymoron.

It really should not be, especially since we know the alternative, which is, economies that are controlled or commanded by governments are both less efficient and less humane.

How can entrepreneurs determine that they're solving the right problems?

Government plays a role in setting incentives so that entrepreneurs will put their creative energies into technologies and businesses that will serve us best in the future. An example being, carbon pricing. How are you going to invest in low-carbon energy, in solar, in fourth-generation nuclear, in battery technology, in carbon capture and storage? Well, economically, it may not be a good bet right now, if there's an unlimited supply of cheap petroleum. Without government pricing carbon, which only the government can do, then, economically, it may not pay to invest in low-carbon energy.

Choosing a problem to solve is not itself a technological issue, but a moral and political one -- namely, what is it that we ought to be trying to do? If the problem is simply maximizing shareholder value over the next quarter, that could lead to different decisions than if it were to provide the world with low-carbon energy or to extend human life spans or to expand education.

Entrepreneurs may try to incorporate the data and the research that's available now to guide them in deciding what problems to solve, but the world's accelerating, and misinformation is a huge issue right now. How can they be sure they're going after the right issues?

We certainly have to be conscious of our limitations as forecasters and decision-makers. There's a human tendency to overestimate our own ability to see the future, to trust charismatic authorities, to trust our intuition. Sixty years of research in psychology shows that can be outperformed in prediction by very simple mathematical formulas. We're far too confident in our own intuitions.

How do we combat that?

There are many people in business who are overly influenced by anecdotes, who are overconfident in their intuition. It's often hard to distinguish correlation and causation, but using a bit of statistical thinking that can go a long way. This suggests that there's probably a big untapped potential for people in business if they were to step back from their own intuition and to think a little bit more scientifically, a little bit more critically, a little bit more quantitatively, could take advantage of huge opportunities in escaping from their own biases.

Lydia Belanger
Lydia Belanger is a former associate editor at Entrepreneur. Follow her on Twitter: @LydiaBelanger.

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