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 enlarge | Author: James Surowiecki
Publisher: Anchor
Category: Book
List Price: $14.95
Buy Used: $6.00
You Save: $8.95 (60%)
New (51) Used (31) from $6.00
Rating:  161 reviews
Sales Rank: 2309
Media: Paperback
Pages: 336
Number Of Items: 1
Shipping Weight (lbs): 0.6
Dimensions (in): 8 x 5.2 x 0.8
ISBN: 0385721706
Dewey Decimal Number: 303.38
EAN: 9780385721707
ASIN: 0385721706
Publication Date: August 16, 2005
Availability: Usually ships in 1-2 business days
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| Customer Reviews:
Never judge a book by its cover! August 25, 2008
Declan Trott
1 out of 1 found this review helpful
I have a confession to make. I started reviewing this book before reading it, based purely on the rather lengthy subtitle `Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations'. First, I planned to make a sneering reference to the dotcom bubble as evidence of this collective wisdom. Then, point to Charles Mackay's classic Extraordinary Popular Delusions and the Madness of Crowds. How sad that this ignorant journalist had pinched the title but absorbed none of the content. Finish with a brief summary of the theory of information cascades, which shows how it can be individually rational to follow the crowd instead of your own opinion.
I thought all this, and suffered terrible embarrassment, if only in the privacy of my own home. For James Surowiecki, of course, covered all these bases and more. The book is not a mindless hymn to the virtues of the marketplace but a nuanced analysis, supported by many historical and contemporary examples, of the conditions under which groups can and can't make better decisions than even the most brilliant individuals.
He argues that there are
"four conditions that characterize wise crowds: diversity of opinion . . . independence . . . decentralization . . . and aggregation"
Unfortunately, the meaning of these terms is not entirely clear. And later in the book the necessary conditions are whittled down to three, aggregation for some reason being left out. Similarly, his classification of cognition, coordination and cooperation problems is not well explained. Since the entire first half of the book is based on these distinctions, it can be a little hard to follow. The second half, which applies these concepts to real world problems like traffic jams, peer reviewed science, committees, company organization, markets, and democratic government, is much better.
So much for the form of the book. Fortunately, the content is excellent. The pages are crammed with humorous and illuminating tales. My own favorite: In the wake of the Challenger disaster, the stock of the four major contractors involved with the shuttle program all lost value. By the end of the day, Thiokol (who built the solid fuel boosters) was down 12%, the other three only 3%. The next day, the New York Times reported two rumors unconnected with Thiokol and declared there were "no clues". Six months later the Presidential Commission revealed its findings: the O-ring seals on the boosters were responsible. There was no evidence of any insider trading.
If this story does not take your fancy, there are dozens of others to choose from (many from more systematic if less memorable studies). Failures of rationality are given space along with successes: stock bubbles, intelligence failures, the Columbia disaster. Some of the conclusions are commonplace to economists and possibly surprising to those who are not: seemingly "wasteful" competition can be a valuable discovery procedure, central planning fails because those who have the information lack the power and incentive to act on it, fund managers tend to underperform market indexes, prediction markets (which were so strongly rejected when proposed for terrorism) are the way of the future. And some may be shocking to economists and commonplace to everyone else: sometimes the collective good is served by individually irrational decisions, such as voting or paying taxes.
Like Freakonomics, The Wisdom of Crowds is based on a wealth of informative and amusing material that is partly spoiled by its presentation. Unlike Freakonomics, it is a book which is unashamedly devoted to one central theme. As such, the sheer abundance of information is sometimes a distraction. It also lacks an index, which can be a considerable nuisance. A little pruning, combined with clear and consistent terminology and organisation, would have lifted this book into the five-star category.
Originally published in the Economic Record, September 2006.
 Excellent Primer August 24, 2008
Jeffrey Card
1 out of 1 found this review helpful
There's a reason why democracy is the crappiest form of government, except all others (to paraphrase somebody famous).
The theme of this book is that groups of people are smarter than individual people. It's sort of counterintuitive to the American spirit of individualism, but James Surowiecki does a creditable job of providing a good case to support his thesis in a very readable format. Anyone who regularly works in problem-solving groups will immediately recognize the fundamental truth of the author's message.
It contains excellent (and entertaining) historical examples that should provide plenty of food-for-thought for any student of government, economics or history. Which means, in a perfect world, it should provide something of interest for just about any participant in any collaborative, collective or power-sharing structure (ie, any effective organization, and a double-dose for every ineffective organization).
My only problem with this volume (and it's not really a problem) is that Surowiecki didn't go far enough. He could have productively doubled the size of this book, and given many more prescriptive formulas for effective group participation and leadership. It would provide a great counter-weight to a number of existing works that seem to suggest the same thing (but are far more tedious). A good updating would be helpful as well (considering the plethora of abundant, and more recent, examples of the disasters of individual [or 'siloed'] decision-making).
In its current form, the book is a great primer on the subject; in an expanded format it could be enormously powerful. His basic thesis, however, could not be more relevant. I strongly recommend it.
Groups of People are Smart! August 13, 2008
Robert P. Burton (Pittsburgh, PA United States)
1 out of 1 found this review helpful
This author has done an outstanding job of proving his thesis that groups of people are smarter than the smartest person in the group. The book touches on markets, juries, and economics, and many more topics, furthering his main point. This book will persuade the reader that experts and loners do not make the best decisions, but groups of informed people do.
The Wisdom of The Wisdom of Crowds August 2, 2008
J. Bosiljevac (san fran, ca)
1 out of 1 found this review helpful
This fascinating book it based on a simple, but counterintuitive premise--that a crowd of diverse people will almost always be smarter than any single expert. That is, take a group of people, some who may be educated, some who may be experts, and some who may be completely misinformed, and let them each independently solve a problem. Then, if you can take the average solution, it will be close to correct. Moreover, it will be closer than almost everyone else in the group. It's basically a bell-curve of knowledge, in which the exact center point would be the best guess.
Surowieki gives numerous examples, from betting markets, stock markets, psychological experiments, game theory, nature, artificial intelligence, economics and business. Two of the cases that really stand out to me are the search for a missing submarine, the Scorpion, in 1968, and the stock market's reaction to the Challenger disaster in 1986. In the case of the Scorpion, an enterprising naval officer named John Craven assembled a diverse team of men with a wide range of knowledge and had each guess, without consulting with one another, where the sub was. He then averaged their guesses. The sub was found 220 feet from that location. Similarly, after the Challenger crash, the stocks of most companies involved in the space program predictably took a quick nosedive. Most also quickly recovered, with the exception of Thiokol, the company that produced the O-rings on the rocket boosters. The stock market seemed to say that Thiokol was responsible, though all news at that point was that the cause was unknown. It wasn't until six months later, when the Presidential Commission released a report that the stock market was proven correct. It had been the O-rings.
Surowieki discusses different types of group decisions and how the theory applies to each. He also covers the many dangers that often befall groups making decisions leading to things like groupthink and stock market bubbles.
The Wisdom of Crowds is a radical theory, one that runs counter to much of what we believe in a democratic society and an economy based on the hierarchical org chart--namely in the power of the individual, the knowledge of our experts, and the wisdom of our leaders. Its implications for the way we manage our companies and our government is enormous. But after reading this book, it's hard to doubt its wisdom.
An Entry Level Review July 7, 2008
Kristen Zatina (Baltimore, MD)
Afterthoughts: The title could have been "The Wisdom of One Man" because author James Surowiecki impressively exemplifies his theory - that large groups of people are collectively smarter than the smartest individuals themselves - through countless examples from past and present world affairs. Diverse and thought-provoking, Surowiecki's selection takes us from ocean floor to outer space, from a New Mexico bar to a field goal post, Detroit's first car to Zara's latest shipment, gangster films, traffic jams - the list goes on and on. This actually creates a conflict - you're learning so much from each paragraph that it's hard to remember what you read on the page prior. The reading experience is best described as "fleeting factual fun."
Takeaway: The knowledge must sink into the subconscious somehow because it can be applied instantaneously. For instance, barely into chapter three, I found myself jogging around Washington DC. Normally, I cross streets wherever and whenever I want. Citing the pedestrian's right of way, I basically run amuck with everyone else. But I quickly noticed that on these streets, no one else's feet were as arrogant as mine. Everyone was standing at the crosswalks waiting for the little white man to light up for permission to go. Were they just an obedient bunch of tourists OR were police officers in DC more likely to ticket jaywalkers? I opted to wait and walk with the wisdom of this crowd. I'll never know what could have happened had I chose to walk my way but I definitely felt like I had championed my inner intellect in knowing why I acted like I did. At the very least, it balanced out the feeling of inadequacy that resulted when I tried to pronounce the author's last name...
Kristen Zatina
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