There’s a reason economists obsess over productivity growth. When it stagnates, so do living standards. The ensuing economic frustration opens the door to populism, protectionism, and social divisiveness. That’s why George Osborne, Britain’s former Chancellor of the Exchequer, described rekindling productivity growth as “the challenge of our time.

15. The hedgehog and the fox

The political scientist Phillip Tetlock has used his taxonomy in a long-term study of expert political judgement. Over two decades, he invited respondents to predict political events and used hindsight to assess the quality of their responses. The experts were not very good at anticipating the future. No surprise: the world is complex and uncertain, our understanding of it is incomplete.

But Tetlock’s most striking discovery is that although the foxes perform better in terms of the quality of their judgments, the hedgehogs perform better in terms of public acclaim. Hedgehogs are people who know the answers. Foxes know the limitations of their knowledge. Hedgehogs create headlines for journalists, and their confident certainties attract the attention of politicians and business leaders. Give me a one-handed economist, goes the saying, but careful judgement really is often a matter of ‘on one hand, and on the other’. Yet explicit hedgehogs who claim to predict the future will always attract a larger audience than eclectic foxes who acknowledge they can’t, even if the larger audience learns nothing useful from the predictions.

Very well then, I contradict myself

F. Scott Fitzgerald expressed a similar thought: ‘The test of a first-rate intelligence is the ability to hold to opposed ideas in the mind at the same time and still retain the ability to function.’ The oblique decision maker, the fox, is not hung up on inconsistency and frequently holds contradictory ideas simultaneously.

Part 3: The Blind Spots

6. Economics and How It Got That Way

This has been all but eclipsed by another kind of economics. One of Friedrich Hayek’s contemporaries defined economics as ‘the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses’. It’s this idea of a generalised study of human behaviour under conditions of scarcity that has been responsible for the economists’ intellectual imperialism. Because if you announce that you’re the experts on human beings when they have to choose between different priorities under conditions of scarce resources, well, when aren’t resources scarce? When don’t people have to choose between different things they want?

For some people in the study, making the economics work proved relatively easy, whereas for others it proved much more difficult. Family wealth served as a significant means to pursue a hedgehog in only six of the 34 lives we studied, whereas in ten of 34 cases people endured at least one significant phase of scarcity while in pursuit of a hedgehog. Yet whether easy or difficult (or somewhere in between), they committed to focus their inner fire in line with their encodings and they figured out how to make the economics work.