Why we do what we do: Separating Fact from Fiction – The Narrative Fallacy

Stories are powerful devices that help get a point across to others. They help us close the distance between abstract thought and the way out brains operate through narrative. They help us add order to events. We can convey very complex ideas and help others understand them with our stories. Even more powerfully, this is how we are wired to understand events and information. But what happens if the story we tell is not the right one? How would you even know? Stories are often far more powerful at bypassing rational decisions then in facilitating them. The human mind is wired to support any conclusion it comes to, even in the face of mounting evidence against our supposition. Nassim Taleb describes this error in logic with what he calls the Narrative Fallacy, or the need for people to create stories, even if we do not have evidence that that story is true or even the best explanation of events.

Taleb’s description is as follows:

The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding.

Here is an all too common example of how this plays out in the real world. You run a test and discover the a variant produces a 6% lift in RPV. you also discover that the same variant produces a 5% drop in internal searches. So you tell others that people were obviously finding what they wanted easier, so they didn’t need search and so they were spending more. The data presented does not tell you that, it only tells you that the recipe had a lift for RPV and a drop in search. It doesn’t tell you that search and RPV are related, or why someone spent more, it only presented a single data point for comparative analysis between default and that recipe. Any story you come up with adds nothing to why you should make the decision (it raised RPV) and it can set dangerous precedent for believing that dropping search always results in raising RPV (it might, but a single data point in no way provides any insight into that relationship).

Any set of data can be used to make a story. There doesn’t have to be a connection between the real world and the story we tell, since we are the ones that are filling in the gaps between data points. Randomness and direct cause are confused easily when we start to narrate an action. We love these stories because they make it accessible and easy for someone to hear, first event A happened, then event B, then event C. What happens is our minds instantly race to say, event B happened BECAUSE event A happened. Because event A lead to event B, then naturally event C happened. This might be true, it might not be, but the story we use and tell ourselves grants us the excuse to not understand what really went on. We are eliminating the discovery of the reality of this relationship by granting ourselves the story that fills in those gaps, despite its lack of connection to the real world. This action can completely ignore hundreds of other causes and also rules out the involvement of chance.

The world is a very complex place, and there is almost never as simple an answer as a simple series of events to explain any action, let alone one that would actually be important enough to make a business decision. So why then do we let ourselves fall into this and why do we fall back on stories as a tool to make those decisions? We are not actually adding any real value to the information from these stories, we are simply packaging them in a way to help get across an agenda.

We don’t actually need stories to make decisions, we only need discipline. Often times we find ourselves stuck trying to convey concepts beyond others ability to understand in short period and between many different draws for their attention, but this is not an excuse for us believing the fiction that we narrate. Many people base their entire jobs on their ability to tell these stories, not on their ability to deliver meaningful information or change. The reality is that to make a decision, you simply need the ability to compare numbers and choose the best one. I don’t need to know why variant C was better than B, I simply need to know that it was 5% better. Pattern and anomalies are powerful tools and the analyst best friend, but we can never confuse them with explanations for those events. Often times things happen for very complex and difficult reasons, and while it is nice if we feel that we understand them, it does not change the pattern of events.

One of the main opportunities for groups to grow is to move past this dangerous habit of creating stories, and to instead focus on create disciplined and previously agreed on rules of action in order to enable decisions to be made away from the narrative. This move allows you to stop wasting energy on this discussion and instead use it to think of better more creative opportunities to explore and measure the value of. Any system is only good as the input into it, so start focusing on improving the input, and stop worrying about creating stories for every input into that system.

Because of the difficult nature of this change for some groups, many are turning to more advanced techniques in hope of avoiding this bias. The fundamental goal of machine learning is to remove human interpretation of results, and to instead let an algorithm find the most efficient option. All of these system fail when we lose focus and get back into storytelling, when we let the ego of others dictate an action based on how well they understand the reality of the situation. They also fail when we allow our own biases to make the decisions over the system, instead of letting the system learn and choose the best option. When we free ourselves from storytelling, it allows us the freedom to focus on the other end of that system. We don’t need to worry about acting on the data, or in others understanding it; we can instead focus ours and others energy in trying new things and in feeding the system with more quality input.

Love your stories, and if you need them to get a point across, do not instantly remove them from your arsenal. Just don’t believe that they are conveying anything resembling the cause and effect of the world, and do not let them be the deciding factor in how you view and act on the world. They are color, and they make others feel good, but they add no value to the decisions being made. Be clear with others on how you are to act before you ever get to the storytelling and you will discover that stories are simply color. Every journey is a story, just make sure yours is less fiction and more about making correct decisions.

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