Join our community of smart investors
OPINION

Chilcot's lessons

Chilcot's lessons
July 7, 2016
Chilcot's lessons

First, beware of peer pressure. Chilcot reports Blair as telling Bush: "I will be with you, whatever", and that he thought it "essential" to stand "shoulder to shoulder" with the US. However, while loyalty to one's friends is a virtue, it can lead us to make poor decisions. For example, Hans Hvide has found that people invest in the same stocks as their colleagues although doing so loses them money; Dutch researchers have found that we spend more money if our neighbours do so; and US economists have found that companies are more likely to commit fraud if neighbouring ones do.

Second, question the data. Chilcot complains that the government did not acknowledge "the limitations of the intelligence." There is, he says, a "need for vigilance to avoid unwittingly crossing the line from supposition to certainty". It's not just politicians who should heed this. For many of us, information is subject to an endowment effect: we overvalue it simply because we have it and thus become overconfident. To correct for this, remember that the information you have is only a subset of all possible facts, and ask: what is missing? In what ways might this sample of the facts be biased?

This is subscriber only content
Start your trial to keep reading
PRINT AND DIGITAL trial

Get 12 weeks for £12
  • Essential access to the website and app
  • Magazine delivered every week
  • Investment ideas, tools and analysis
Have an account? Sign in