Confirmation Bias: how do we bridge the gap between beliefs and reality?

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This article first appeared in City A.M. and is written by Paul Ormerod, Cowry’s Chief Economist. 

A tragic story over the weekend revealed how a man who died of lung cancer was failed
abysmally by the NHS. Two separate sets of doctors omitted to tell him for over a year that he had the disease. The added poignancy of the news item was that the victim was a relative of Nye Bevan, the Welsh socialist politician who founded the NHS in the late 1940s. Almost everyone has an account of how either they or someone well known to them has been let down by the NHS.

On a mundane level, a few years ago I had an accident which involved knee surgery, so I was on crutches for a few weeks. I had been waiting for months for a minor operation on my hand. By coincidence the date was fixed while I was on crutches.
The mere fact that I could not attend meant I went to the back of the queue. In vain, I
pointed out that I had just had a knee operation at the same hospital and needed hands for the crutches. It was many weeks later I discovered that the knee and hand consultants had offices literally next door to each other. But their staff were somehow unable to communicate.

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The evidence of poor performance by the NHS is not just based on casual empiricism and anecdote. In terms of survival from lung cancer, for example, a major study by the Swedish Institute for Health Economics shows that only one country in the EU has a worse record than the UK. Cancer survival rates are improving everywhere, but the UK lags behind. Five-year survival from colon cancer, for example, averages 58 per cent across the EU. It is 52 per cent in the UK.

Nye Bevan was a great believer in Soviet-style central planning. So it was natural for him to set the NHS up on these lines. Significantly, no other developed country has chosen to
design their own health service in a centrally planned way.

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Despite the widespread knowledge of the failings of the NHS, it continues to attract strong emotional support across the electorate. Witness the frenzied rage which greeted the US ambassador’s remarks earlier this month that America would want access to the NHS in any post-Brexit trade deal.

This dissonance between beliefs and reality is an example of an important challenge to the rational choice theory of economics. The concept is known as confirmation bias. It is a cognitive bias which involves interpreting evidence in a way which confirms existing beliefs instead of weighing the facts in a rational way.

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A classic example was provided by the psychologist Leon Festinger in the 1950s. He
infiltrated a group which believed a massive flood would shortly bring the world to an end. When the deluge failed to appear on the appointed day, the belief of the members that it would happen actually became stronger.

Unless politicians discover a way of overcoming this widespread bias, the tragedy of Nye Bevan’s great-nephew will continue to be repeated.

Paul Ormerod is an economist at Volterra Partners LLP, a Visiting Professor in the
Department of Computer Science at UCL, and author of Against the Grain: Insights of an Economic Contrarian, published by the IEA in conjunction with City AM