Product Description

In this fascinating book, New Yorker business columnist James Surowiecki explores a deceptively simple idea: Large groups of people are smarter than an elite few, no matter how brilliant–better at solving problems, fostering innovation, coming to wise decisions, even predicting the future.

With boundless erudition and in delightfully clear prose, Surowiecki ranges across fields as diverse as popular culture, psychology, ant biology, behavioral economics, artificial intelligence, military history, and politics to show how this simple idea offers important lessons for how we live our lives, select our leaders, run our companies, and think about our world.

Product Details

• Amazon Sales Rank: #1481 in Books
• Published on: 2005-08-16
• Released on: 2005-08-16
• Original language: English
• Number of items: 1
• Binding: Paperback
• 336 pages

From Publishers Weekly
While our culture generally trusts experts and distrusts the wisdom of the masses, New Yorker business columnist Surowiecki argues that "under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them." To support this almost counterintuitive proposition, Surowiecki explores problems involving cognition (we're all trying to identify a correct answer), coordination (we need to synchronize our individual activities with others) and cooperation (we have to act together despite our self-interest). His rubric, then, covers a range of problems, including driving in traffic, competing on TV game shows, maximizing stock market performance, voting for political candidates, navigating busy sidewalks, tracking SARS and designing Internet search engines like Google. If four basic conditions are met, a crowd's "collective intelligence" will produce better outcomes than a small group of experts, Surowiecki says, even if members of the crowd don't know all the facts or choose, individually, to act irrationally. "Wise crowds" need (1) diversity of opinion; (2) independence of members from one another; (3) decentralization; and (4) a good method for aggregating opinions. The diversity brings in different information; independence keeps people from being swayed by a single opinion leader; people's errors balance each other out; and including all opinions guarantees that the results are "smarter" than if a single expert had been in charge. Surowiecki's style is pleasantly informal, a tactical disguise for what might otherwise be rather dense material. He offers a great introduction to applied behavioral economics and game theory.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From Bookmarks Magazine
Surowiecki first developed his ideas for Wisdom of Crowds in his “Financial Page” column of The New Yorker. Many critics found his premise to be an interesting twist on the long held notion that Americans generally question the masses and eschew groupthink. “A socialist might draw some optimistic conclusions from all of this,” wrote The New York Times. “But Surowiecki’s framework is decidedly capitalist.” Some reviewers felt that the academic language and business speak decreased the impact of the argument. Still, it’s a thought-provoking, timely book: the TV studio audience of Who Wants to Be a Millionaire guesses correctly 91 percent of the time, compared to “experts” who guess only 65 percent correctly. Keep up the good work, comrades.

Copyright © 2004 Phillips & Nelson Media, Inc.

From AudioFile
What does guessing the weight of an ox at a country fair have to do with the 9/11 attacks? How does a flock of birds relate to a traffic jam? Why doesn't collective wisdom believe in collective wisdom? Addressing complex and sociological theories, James Surowiecki explores these and other questions as he explains how groups of people, in specific kinds of circumstances, can reach intelligent, accurate decisions that can then go horribly wrong. The material is complex, and narrator Erik Singer is wise to stay out of the way, delivering a clear, straightforward reading with a tone of scientific professionalism. The strength and warmth in his voice do well to engage listeners with the ideas--as do his frequent dashes of humor. While the subject matter is weighty, Singer makes listening to it effortless. R.G.M. © AudioFile 2004, Portland, Maine-- Copyright © AudioFile, Portland, Maine

Customer Reviews

Never judge a book by its cover!

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
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!
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.