The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations

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Overview

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,...

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Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations

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More About This Book

Overview

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.

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Editorial Reviews

Eric Klinenberg
… Surowiecki, who has fashioned a fascinating financial column in the New Yorker by using cutting-edge social science research to interpret market life, finds ample evidence to support his argument. He writes with command and flair, weaving together entertaining anecdotes from popular culture and business history and accessible summaries of arcane theoretical debates in behavioral economics, sociology and psychology. The Wisdom of Crowds is both intellectually challenging and a pleasure to read.
— The Washington Post
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. Agent, Chris Calhoun. (On sale May 18) Forecast: While armchair social scientists (e.g., readers of The Tipping Point) will find this book interesting, college economics, math, statistics and finance students could really profit from spending time with Surowiecki. National author promos and print ads will attract buyers. Copyright 2004 Reed Business Information.
Library Journal
According to Surowiecki, the "simple but powerful truth" at the heart of his book is that "under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them." Surowiecki, a staff writer for the Financial Page of The New Yorker, analyzes the concept of collective wisdom and applies it to various areas of the social sciences, including economics and politics. The author examines three kinds of problems involved in collective wisdom: cognition, or problems with definite solutions; coordination, where members of a group figure out how to coordinate their behavior with one another; and cooperation, involving getting self-centered individuals to work together. Part 1 studies the three problems (cognition, coordination, and cooperation) and the factors it takes for the crowd to be wise (diversity, dependence, and a specific type of decentralization). Part 2 contains case studies illustrating both success and failure of collective intelligence. Surowiecki also draws upon studies and works of past theorists of collective intelligence, including Charles Mackay's landmark Extraordinary Popular Delusions and the Madness of Crowds. This work is an intriguing study of collective intelligence and how it works in contemporary society. Recommended for larger public and academic library collections.-Lucy Heckman, St. John's Univ. Lib., Jamaica, NY Copyright 2004 Reed Business Information.
Soundview Executive Book Summaries
Western society is focused on the power of the individual mind, but under the right circumstances, groups can actually make better decisions than even the smartest person within them. When individuals in a crowd are appropriately diverse, independent and decentralized, their aggregated decisions are surprisingly on point. With this knowledge, the power of groups can be used to find unknown answers and determine how to coordinate behavior and cooperate in all areas of society. Our everyday activities, our government and our economy are all affected by the power of crowds, and when things go awry, it is often because one of the key elements of an intelligent crowd is missing or underexpressed.

In The Wisdom of Crowds, journalist James Surowiecki explores the underlying implications of the idea that large groups of people are smarter than an elite few, no matter how brilliant.

Tapping Into Crowds
In 1906, British scientist Francis Galton watched a weight-judging competition at a livestock fair. People bet on the weight of an ox after it was slaughtered and dressed. Butchers, farmers and nonexperts all bought tickets and guessed.

Galton borrowed the tickets after the competition and calculated the mean of the 787 guesses — the collective wisdom of the group. The crowd guessed 1,197 pounds. After the ox was slaughtered and dressed, it weighed 1,198 pounds. Galton had discovered that, under the right circumstances, groups are remarkably intelligent and often smarter than the smartest people in them, especially if individual guesses are aggregated and averaged. The group is not better than every single person, and some individuals will be smarter the more incentive they receive, such as in the stock market. But it is rare that the same person will be right as consistently as the group.

Game Show Contestants
On the TV show Who Wants to be a Millionaire, contestants answered a series of four-answer, multiple-choice questions. When stumped, they could have two choices of answers removed, call a smart friend or poll the audience. The smart people were right 65 percent of the time, but the studio audience was right 91 percent of the time.

Cognition problems can also have answers that are unknown or in the future. For example:
Within 21 minutes of the 1986 Challenger explosion, the stock price of Morton Thiokol had fallen well below that of the other three companies involved in building the shuttle. Six months later, the cause of the explosion was determined to be the O-ring seals on the booster rockets made by Thiokol.

The Iowa Electronic Markets (IEM), made up of about 800 people buying and selling futures on different election outcomes, is often more accurate than national polls.

Futures markets like the IEM exist for Hollywood box office receipts, news and sports. They work because they have the fundamental characteristics — diversity, independence and decentralization — that are key to making good predictions.

The Difference Difference Makes

Ransom E. Olds started selling cars in 1899 and prospered by selling the curved-dash Olds: a car for the middle class. With amazing marketing, he did quite well and sold more cars than any other U.S. manufacturer in 1903. Olds had fierce competition from hundreds of automobile companies. There was no standard, so they were peddling a huge array of vehicles with different sizes, shapes and power generators. Toward the end of the decade, most contenders began to fade, but innovators like Cadillac and Ford stayed. By World War I, Olds had been bought by General Motors.

The histories of most new industries are similar — a profusion of alternatives in the early days and a winnowing out of the winners who effectively choose the prevailing technologies. It seems inefficient, but the diversity of ideas allows meaningful differences among early ideas, not just minor variations on the same concept. The system works when it can recognize losers and kill them off quickly.

It is not enough to generate a diverse set of possible solutions. The crowd also needs to be able to distinguish the good from the bad. Diversity adds perspectives that would otherwise be absent and makes a group better at solving problems. In fact, grouping only smart people together might not be that good an idea because they tend to resemble each other in skills. Adding people who know less but have different skills improves the group's performance. A group with diverse knowledge and skills will almost always make a better decision than one or two experts. Copyright © 2005 Soundview Executive Book Summaries


—Soundview Summary
Kirkus Reviews
Multitudes are generally smarter than their smartest members, declares New Yorker writer Surowiecki. With his theory of the inherent sagacity of large groups, Surowiecki seems to differ with Scottish journalist Charles Mackay's 1841 classic, Memoirs of Extraordinary Popular Delusions and the Madness of Crowds, which dealt with such stupidities as the South Sea Bubble, tulip-mania, odd styles of whiskers, and dueling. Our 21st-century author admits that there are impediments and constraints to the intelligence of large groups, usually problems of cognition, coordination, and cooperation. A group must have knowledge, Surowiecki states: not extensive knowledge, but rudimentary comprehension of basic fact with harmonized behavior by individual members. Finally, individuals must go beyond self-interest for the good of all. That's how capital markets and Google's algorithm work, and how science isolated the SARS virus. Lack of the basics leads to traffic jams, the dot-com crash, and the Columbia shuttle mission disaster. If crowds are inherently clever, a reader may be prompted to ask, just how smart is a flock of turkeys? Not very smart, certainly, but smarter, Surowiecki would assert, than the smartest turkey individual. A school of herring is going to be more intelligent than any single fish in it. All this may be less than encouraging to hot-stock analysts, high-profile CEOs, and others who sell their personal expertise for a high salary, but the author argues persuasively that collective wisdom works better than the intelligent fiat of any individual. His wide-ranging study links psychology and game theory, economics and management theory, social science and public policy. And it advancesMackay's report from times when, as the Scot put it, "knavery gathered a rich harvest from cupidity."Valuable insights regarding information cascades, crowd herding, cognitive collaboration, and group polarization. There is some individual, independent wisdom to be found here.
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Product Details

  • ISBN-13: 9780385721707
  • Publisher: Knopf Doubleday Publishing Group
  • Publication date: 8/16/2005
  • Edition description: Reprint
  • Pages: 336
  • Sales rank: 119,994
  • Product dimensions: 5.14 (w) x 8.00 (h) x 0.73 (d)

Meet the Author

James Surowiecki is a staff writer at The New Yorker, where he writes the popular business column, “The Financial Page.” His work has appeared in a wide range of publications, including the New York Times, the Wall Street Journal, Artforum, Wired, and Slate. He lives in Brooklyn, New York.

www.wisdomofcrowds.com

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Read an Excerpt

The Wisdom of Crowds

I

If, years hence, people remember anything about the TV game show Who Wants to Be a Millionaire?, they will probably remember the contestants' panicked phone calls to friends and relatives. Or they may have a faint memory of that short-lived moment when Regis Philbin became a fashion icon for his willingness to wear a dark blue tie with a dark blue shirt. What people probably won't remember is that every week Who Wants to Be a Millionaire? pitted group intelligence against individual intelligence, and that every week, group intelligence won.

Who Wants to Be a Millionaire? was a simple show in terms of structure: a contestant was asked multiple-choice questions, which got successively more difficult, and if she answered fifteen questions in a row correctly, she walked away with $1 million. The show's gimmick was that if a contestant got stumped by a question, she could pursue three avenues of assistance. First, she could have two of the four multiple-choice answers removed (so she'd have at least a fifty-fifty shot at the right response). Second, she could place a call to a friend or relative, a person whom, before the show, she had singled out as one of the smartest people she knew, and ask him or her for the answer. And third, she could poll the studio audience, which would immediately cast its votes by computer. Everything we think we know about intelligence suggests that the smart individual would offer the most help. And, in fact, the "experts" did okay, offering the right answer--under pressure--almost 65 percent of the time. But they paled in comparison to the audiences. Those random crowds of people with nothing better to do on a weekday afternoon than sit in a TV studio picked the right answer 91 percent of the time.

Now, the results of Who Wants to Be a Millionaire? would never stand up to scientific scrutiny. We don't know how smart the experts were, so we don't know how impressive outperforming them was. And since the experts and the audiences didn't always answer the same questions, it's possible, though not likely, that the audiences were asked easier questions. Even so, it's hard to resist the thought that the success of the Millionaire audience was a modern example of the same phenomenon that Francis Galton caught a glimpse of a century ago.

As it happens, the possibilities of group intelligence, at least when it came to judging questions of fact, were demonstrated by a host of experiments conducted by American sociologists and psychologists between 1920 and the mid-1950s, the heyday of research into group dynamics. Although in general, as we'll see, the bigger the crowd the better, the groups in most of these early

experiments--which for some reason remained relatively unknown outside of academia--were relatively small. Yet they nonetheless performed very well. The Columbia sociologist Hazel Knight kicked things off with a series of studies in the early 1920s, the first of which had the virtue of simplicity. In that study Knight asked the students in her class to estimate the room's temperature, and then took a simple average of the estimates. The group guessed 72.4 degrees, while the actual temperature was 72 degrees. This was not, to be sure, the most auspicious beginning, since classroom temperatures are so stable that it's hard to imagine a class's estimate being too far off base. But in the years that followed, far more convincing evidence emerged, as students and soldiers across America were subjected to a barrage of puzzles, intelligence tests, and word games. The sociologist Kate H. Gordon asked two hundred students to rank items by weight, and found that the group's "estimate" was 94 percent accurate, which was better than all but five of the individual guesses. In another experiment students were asked to look at ten piles of buckshot--each a slightly different size than the rest--that had been glued to a piece of white cardboard, and rank them by size. This time, the group's guess was 94.5 percent accurate. A classic demonstration of group intelligence is the jelly-beans-in-the-jar experiment, in which invariably the group's estimate is superior to the vast majority of the individual guesses. When finance professor Jack Treynor ran the experiment in his class with a jar that held 850 beans, the group estimate was 871. Only one of the fifty-six people in the class made a better guess.

There are two lessons to draw from these experiments. First, in most of them the members of the group were not talking to each other or working on a problem together. They were making individual guesses, which were aggregated and then averaged. This is exactly what Galton did, and it is likely to produce excellent results. (In a later chapter, we'll see how having members interact changes things, sometimes for the better, sometimes for the worse.) Second, the group's guess will not be better than that of every single person in the group each time. In many (perhaps most) cases, there will be a few people who do better than the group. This is, in some sense, a good thing, since especially in situations where there is an incentive for doing well (like, say, the stock market) it gives people reason to keep participating. But there is no evidence in these studies that certain people consistently outperform the group. In other words, if you run ten different jelly-bean-counting experiments, it's likely that each time one or two students will outperform the group. But they will not be the same students each time. Over the ten experiments, the group's performance will almost certainly be the best possible. The simplest way to get reliably good answers is just to ask the group each time.

A similarly blunt approach also seems to work when wrestling with other kinds of problems. The theoretical physicist Norman L. Johnson has demonstrated this using computer simulations of individual "agents" making their way through a maze. Johnson, who does his work at the Los Alamos National Laboratory, was interested in understanding how groups might be able to solve problems that individuals on their own found difficult. So he built a maze--one that could be navigated via many different paths, some shorter, and some longer--and sent a group of agents into the maze one by one. The first time through, they just wandered around, the way you would if you were looking for a particular cafe* in a city where you'd never been before. Whenever they came to a turning point--what Johnson called a "node"--they would randomly choose to go right or left. Therefore some people found their way, by chance, to the exit quickly, others more slowly. Then Johnson sent the agents back into the maze, but this time he allowed them to use the information they'd learned on their first trip, as if they'd dropped bread crumbs behind them the first time around. Johnson wanted to know how well his agents would use their new information. Predictably enough, they used it well, and were much smarter the second time through. The average agent took 34.3 steps to find the exit the first time, and just 12.8 steps to find it the second.

The key to the experiment, though, was this: Johnson took the results of all the trips through the maze and used them to calculate what he called the group's "collective solution." He figured out what a majority of the group did at each node of the maze, and then plotted a path through the maze based on the majority's decisions. (If more people turned left than right at a given node, that was the direction he assumed the group took. Tie votes were broken randomly.) The group's path was just nine steps long, which was not only shorter than the path of the average individual (12.8 steps), but as short as the path that even the smartest individual had been able to come up with. It was also as good an answer as you could find. There was no way to get through the maze in fewer than nine steps, so the group had discovered the optimal solution. The obvious question that follows, though, is: The judgment of crowds may be good in laboratory settings and classrooms, but what happens in the real world?

II

At 11:38 am on January 28, 1986, the space shuttle Challenger lifted off from its launch pad at Cape Canaveral. Seventy-four seconds later, it was ten miles high and rising. Then it blew up. The launch was televised, so news of the accident spread quickly. Eight minutes after the explosion, the first story hit the Dow Jones News Wire.

The stock market did not pause to mourn. Within minutes, investors started dumping the stocks of the four major contractors who had participated in the Challenger launch: Rockwell International, which built the shuttle and its main engines; Lockheed, which managed ground support; Martin Marietta, which manufactured the ship's external fuel tank; and Morton Thiokol, which built the solid-fuel booster rocket. Twenty-one minutes after the explosion, Lockheed's stock was down 5 percent, Martin Marietta's was down 3 percent, and Rockwell was down 6 percent.

Morton Thiokol's stock was hit hardest of all. As the finance professors Michael T. Maloney and J. Harold Mulherin report in their fascinating study of the market's reaction to the Challenger disaster, so many investors were trying to sell Thiokol stock and so few people were interested in buying it that a trading halt was called almost immediately. When the stock started trading again, almost an hour after the explosion, it was down 6 percent. By the end of the day, its decline had almost doubled, so that at market close, Thiokol's stock was down nearly 12 percent. By contrast, the stocks of the three other firms started to creep back up, and by the end of the day their value had fallen only around 3 percent.

What this means is that the stock market had, almost immediately, labeled Morton Thiokol as the company that was responsible for the Challenger disaster. The stock market is, at least in theory, a machine for calculating the present value of all the "free cash flow" a company will earn in the future. (Free cash flow is the money that's left over after a company has paid all its bills and its taxes, has accounted for depreciation, and has invested in the business. It's the money you'd get to take home and put in the bank if you were the sole owner of the company.) The steep decline in Thiokol's stock price--especially compared with the slight declines in the stock prices of its competitors--was an unmistakable sign that investors believed that Thiokol was responsible, and that the consequences for its bottom line would be severe.

As Maloney and Mulherin point out, though, on the day of the disaster there were no public comments singling out Thiokol as the guilty party. While the New York Times article on the disaster that appeared the next morning did mention two rumors that had been making the rounds, neither of the rumors implicated Thiokol, and the Times declared, "There are no clues to the cause of the accident."

Regardless, the market was right. Six months after the explosion, the Presidential Commission on the Challenger revealed that the O-ring seals on the booster rockets made by Thiokol--seals that were supposed to prevent hot exhaust gases from escaping--became less resilient in cold weather, creating gaps that allowed the gases to leak out. (The physicist Richard Feynman famously demonstrated this at a congressional hearing by dropping an O-ring in a glass of ice water. When he pulled it out, the drop in temperature had made it brittle.) In the case of the Challenger, the hot gases had escaped and burned into the main fuel tank, causing the cataclysmic explosion. Thiokol was held liable for the accident. The other companies were exonerated.

In other words, within a half hour of the shuttle blowing up, the stock market knew what company was responsible. To be sure, this was a single event, and it's possible that the market's singling out of Thiokol was just luck. Or perhaps the company's business seemed especially susceptible to a downturn in the space program. Possibly the trading halt had sent a signal to investors to be wary. These all are important cautions, but there is still something eerie about what the market did. That's especially true because in this case the stock market was working as a pure weighing machine, undistorted by the factors--media speculation, momentum trading, and Wall Street hype--that make it a peculiarly erratic mechanism for aggregating the collective wisdom of investors. That day, it was just buyers and sellers trying to figure out what happened and getting it right.

How did they get it right? That's the question that Maloney and Mulherin found so vexing. First, they looked at the records of insider trades to see if Thiokol executives, who might have known that their company was responsible, had dumped stock on January 28. They hadn't. Nor had executives at Thiokol's competitors, who might have heard about the O-rings and sold Thiokol's stock short. There was no evidence that anyone had dumped Thiokol stock while buying the stocks of the other three contractors (which would have been the logical trade for someone with inside information). Savvy insiders alone did not cause that first-day drop in Thiokol's price. It was all those investors--most of them relatively uninformed--who simply refused to buy the stock.

But why did they not want Thiokol's stock? Maloney and Mulherin were finally unable to come up with a convincing answer to that question. In the end, they assumed that insider information was responsible for the fall in Thiokol's price, but they could not explain how. Tellingly, they quoted the Cornell economist Maureen O'Hara, who has said, "While markets appear to work in practice, we are not sure how they work in theory."

Maybe. But it depends on what you mean by "theory." If you strip the story down to its basics, after all, what happened that January day was this: a large group of individuals (the actual and potential shareholders of Thiokol's stock, and the stocks of its competitors) was asked a question--"How much less are these four companies worth now that the Challenger has exploded?"--that had an objectively correct answer. Those are conditions under which a crowd's average estimate--which is, dollar weighted, what a stock price is--is likely to be accurate. Perhaps someone did, in fact, have inside knowledge of what had happened to the O-rings. But even if no one did, it's plausible that once you aggregated all the bits of information about the explosion that all the traders in the market had in their heads that day, it added up to something close to the truth. As was true of those who helped John Craven find the Scorpion, even if none of the traders was sure that Thiokol was responsible, collectively they were certain it was.

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Interviews & Essays

Some years ago, a professor at the University of Southern California named Jack Treynor began to do a curious thing: he would bring a jar of jellybeans to class and ask his students to guess just how many jellybeans the jar contained. The guesses ranged widely -- some students guessed high, some guessed low, and a few got close to the actual number of beans in the jar. The remarkable thing, though, was this: whenever Treynor ran this experiment, the class's average guess was close to perfect, and was better than the individual guesses of nearly every student in the class. On a day when the jar held 850 beans, for instance, the class' guess was 871, off by just two percent. And out of 56 students, only one made a better guess.

This was no party trick. Instead, the jellybean-counting experiment demonstrated something I call the wisdom of crowds: under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them. A group does not need to be dominated by exceptionally intelligent people in order to be smart. Even if most of the people within a group are not especially well-informed or rational, collectively they can still be brilliant.

The wisdom of crowds is at work all around us, although it's easy to miss. It helps explain why the economy works well at getting people what they want as cheaply as possible, even though no one is in charge of the economy as a whole. It helps explain why people in a healthy society cooperate with each other by doing things like paying taxes and contributing to charities. And it explains why, if you're trying to solve a problem with a definitive answer, you're better off with the group than with even the most well-informed expert.

Take the show Who Wants to Be a Millionaire. When a contestant on the show is stumped by a question, he can ask the audience for help or consult someone he's designated as an expert. The experts do a reasonable job: they get the answer right 65 percent of the time. But the audience is close to perfect: it gets the answer right 91 percent of the time. Similarly, at the race track, the final odds on a race reliably predict the race's order of finish (that is, the favorite wins most often, the horse with the second-lowest odds wins second most often, and so on) and also uncannily predict how likely it is that a horse will win. In other words, horses that run at 3-to-1 odds win just about a quarter of the time. The Hollywood Stock Exchange -- a kind of online stock market where people can wager on how movies will do at the box office -- has become a more reliable forecaster of ticket sales than any other method. And in the stock market, for all of its crazy swings, it's very difficult for even the best money managers to do better than the market as a whole.

So what's the catch? Simply this: not all crowds are wise. Groups can only be smart if they're made up of people with diverse information who are making decisions relatively independently. Groups that are too much alike get stuck because they don't have access to enough information and because they favor harmony over dissent. The wisdom of crowds isn't about consensus or compromise, so groups in which everyone agrees are likely to be less intelligent. Similarly, when people are worried too much about what others think, groups get dumber, too. The real paradox of the wisdom of crowds is that the way for the group to be smart is for each person to act as an individual. When they don't -- like during a stock-market bubble, where people buy stocks only because they think they can dump them on someone else -- groups go wrong.

Wise crowds, then, are diverse, independent, and decentralized. As it happens, that means that one place that is tailor-made for the wisdom of crowds is the Internet. Because no one is in charge of the Net, and because it features a cacophony of diverse voices, with no one voice being loud enough to drown out others, the Internet's collective intelligence is potentially immense. One place you can see this is in the plethora of rating systems for everything from consumer electronics to -- as on this site -- books. Until recently, there was no way to aggregate the judgments of readers or TV watchers across the country, let alone the world. So most of the information a person got came from a relatively small circle of friends and acquaintances. Today, we can draw on a far more diverse and eclectic pool of information. To the degree that we do so, our decisions will be better as a result.

The most striking example of the wisdom of crowds on the Net is, of course, Google. Google is able to routinely survey 4.3 billion web pages and pick exactly the one that has the information that you are looking for. And it does this by relying on the collective intelligence of the Web. Roughly speaking, Google finds the right pages by asking Web page producers to vote on which other pages are most worthwhile, with each link to a page counting as a vote. Google is a republic, not a pure democracy; the more people that have linked to a given page, the more influence that page has on the group's final decision. But the principle is fundamentally democratic -- let the masses decide. Far more often than not, they decide wisely.

Most of us, whether as voters or investors or consumers or managers, believe that valuable knowledge is concentrated in a very few hands (or, rather, in a very few heads). We assume that the key to solving problems or making good decisions is finding that one right person who will have the answer. But Jack Treynor's jellybean experiment and Google's success should teach us a different lesson. When it comes to problem-solving, stop looking for that one right person. Ask the crowd instead. Chances are, it knows. James Surowiecki

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  • Anonymous

    Posted June 19, 2006

    Well-written explanation of why crowds are smart

    This well-written bestseller explores the apparent anomaly that crowds of nonexperts seem to be collectively smarter than individual experts or even small groups of experts. This basic insight is at the heart of contemporary financial investment theory, with its emphasis on the difficulty of outguessing the market. Beginning with British scientist Francis Galton's remarkable discovery in 1906 that a crowd of nonexperts proved surprisingly competent at guessing the weight of an ox, financial columnist and author James Surowiecki skillfully recounts experiments, discoveries and anecdotes that demonstrate productive group thinking. The concept does not come as news to anyone reasonably well read in modern financial literature, but we recommend this comprehensive, fresh presentation.

    3 out of 3 people found this review helpful.

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  • Anonymous

    Posted May 26, 2004

    A huge disappointment

    I had high expectations for this book because James Surowiecki's New Yorker column is usually so good. But THE WISDOM OF CROWDS is one of the most disappointing books I've read in years. (Indeed, I feel somewhat ripped off by having purchased it and devoted several hours to reading it.) The main problem with this book is that despite Surowiecki's often breathless tone, nothing he says is new. Every point he makes has been made many times before by many other writers. For instance, the key theme of his book is that groups can solve certain 'cognition problems' better than individuals. No kidding. Ever hear the phrase 'Two heads are better than one?' The thesis is so self-evident and widely-known that it comes with its own cliché! Yet Surowiecki devotes more than one-third of the book essentially to arguing that two people can solve a crossword puzzle faster than one person. Amazing, no? What's more, Surowiecki's central point about the power of 'collective intelligence' has long been a staple of business education. If you've ever taken an organizational behavior class, you've done the exercise where groups of varying sizes are stuck on a desert island with a dozen supplies -- and then each group must devise a solution for escaping the island using those supplies. Inevitably, the larger the group, the better the solution -- because larger groups reflect the accumulated experience and expertise of more people. (In other words, five heads are even better than two.) Want another example of how threadbare this idea is? Google the phrase 'none of us is as smart as all of us' - and you'll discover that Surowiecki's supposedly 'counterintuitive' notion has been talked about in business circles since Bill Gates was in short pants. If that weren't bad enough, the rest of the book -- particularly Suriowiecki's discussion of 'coordination,' his second 'stunning' insight--- is essentially a retread of arguments that have been made elsewhere for more than a decade. James Gleick made many of these points in CHAOS. Kevin Kelly said everything that Surowiecki says ten years ago in OUT OF CONTROL. Steven Johnson said it again four years ago in EMERGENCE. Howard Rheingold said lots of it last year in SMART MOBS. And Surowiecki's third argument -- that sometimes cooperation is preferable to competition -- is even older. Charles Darwin told us this in the 19th century! Indeed, there's an entire branch of evolutionary psychology devoted to studying cooperation. Just read Robert Wright's THE MORAL ANIMAL if you want a more thorough and engaging account of this point. If this book were an undergraduate term paper that summarized the self-evident and reviewed what others had already had said, I'd give it a B. But for book that costs 20 bucks from a writer who's obviously got some talent, I'd have to give THE WISDOM OF CROWDS an Incomplete. Please try again, James. But next time, try a lot harder.

    3 out of 3 people found this review helpful.

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  • Posted February 14, 2010

    more from this reviewer

    "The Wisdom of Crowds": Relevant Suggested Reading

    I never do this--comment before having read the book. And I will read the book. But also consider Elias Canetti's "Crowds and Power" from many years ago. It will scare the daylights out of you when you think of crowds. To say nothing of the fact that the judiciary in this country was established to protect the individual against crowd rule.

    2 out of 5 people found this review helpful.

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  • Anonymous

    Posted June 29, 2004

    Essential

    This is one of the most entertaining and intellectually engaging books I've come across in a long while. Surowiecki has a gift for making complex ideas accessible, and he has a wonderful eye for the telling anecdote. His thesis about the intelligence of groups made up of diverse, independent decision-makers seems initially counterintuitive, but by the end of the book it seems almost obvious, because of all the evidence Surowiecki piles up on its behalf. The book does cover a lot of ground in not very much space, and the pace of the argument is at times too fast. But the throughline of the argument is almost always clear, and the stories Surowiecki tells are often memorable. The chapter on NASA's mismanagement of the Columbia mission and the tale of how a man named John Craven relied on collective wisdom to find a lost submarine are especially striking. This is one of those books that I expect people will still be talking about and referring to years or even decades from now. It's also a book that I hope will have a concrete impact on the way that people make decisions, since the implications of Surowiecki's argument are radical in the best way. All in all, a terrific read.

    2 out of 2 people found this review helpful.

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  • Anonymous

    Posted July 5, 2006

    go with the crowd, else loose

    yes the author is right, unfortuately the paranoid that others might prosper is driving us to follow the herd. men like organic molecules, aggregate or segregate with trends rich become rich, poor are further stripped, with weak vandervals forces in place. the sheep off the herd is lost dead. how ever happiness and satisfaction of having done something different what u believe is right is diiferent. think different and live different live a custom-dreamt life unlike sheep. consumer economy is governed by these laws of masses, 'mobocracy'.

    1 out of 3 people found this review helpful.

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  • Anonymous

    Posted January 12, 2006

    try advanced phyics or math

    The crowd theory only works, and then only sometimes, in fields without rigor. Ten million people who have not studied calculus could not integrate a simple polynomial. How many would it take to come up with Maxwell's equations? The book is a poor answer to an unasked question.

    1 out of 1 people found this review helpful.

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  • Anonymous

    Posted August 9, 2005

    Worst book that I've read in years

    This book is actually a fine example of the kind of 'cascading' systems talked about in the book. It is enormously overhyped and poorly argued. The author presents what amounts to a dumbed down explanation of game theory with pseudo-social science. Horrible book skip it. Excellent books that cover this topic (generall) and are accessible are Dixit and Nalebuff's _Thinking Strategically_ and Barabasi's _Linked_.

    1 out of 1 people found this review helpful.

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  • Posted March 22, 2013

    This is an entertaining and engaging book. It's somewhat repetit

    This is an entertaining and engaging book. It's somewhat repetitive, yet Surowiecki uses a great variety of intriguing examples to prove his viewpoint.

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  • Posted March 8, 2012

    more from this reviewer

    I enjoyed The Wisdom of Crowds. I found the book to be well res

    I enjoyed The Wisdom of Crowds. I found the book to be well researched and well written. While the arguments for crowd wisdom can often be very complex, Surowiecki presents them in a clear fashion so that even numbskulls like me can get the message.

    And while I agree with his arguments and positions on the wisdom of crowds and found truth is each of the 12 chapters I do not believe that I am fully sold on this idea. Certainly not when we look at a variety of other arenas. The stupidity of crowds is why our nation as a republic. God forbid that we were a true democracy and forged our laws passed strictly on the crowd sentiment. I also didn’t find a lot of wisdom in the recent OWS movement. I’m not saying this from a political point of view as I do not care either way but this movement couldn’t muster enough cognitive power to formulate a simple goal, much less the strategy to achieve the objective.

    And finally, from a personal viewpoint, I have found through years of collective bargaining that the wisdom of crowds is usually absent from these groups of contract voters. I have seen more than one manufacturing facility closed by management because the crowd would not pass a labor contract over a minor detail. Nope, no wisdom here.

    I could go on but this is suffice to say that while the book is excellent, the reader would be advised to approach these theories with a wide open mind. I do recommend as a thought provoking well executed tome on a very important subject.

    Michael L. Gooch, SPHR – Author of Wingtips with Spurs

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  • Posted May 20, 2011

    Interesting insight into modern society and technology.

    Worth the read to understand how we have evolved as a society through the technology. Working in IT and developing tools for info sharing it gave me insights into how these same technologies have permeated into every day life.

    Like many books of it's genre it did stretch the points a bit and could have been more concise.

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  • Anonymous

    Posted June 20, 2008

    Ought to be Required Reading

    Absolutely fascinating. It transformed my thoughts about democracy, organizational governance, investing, management styles and executive salaries -- among other things.

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  • Anonymous

    Posted January 5, 2007

    The Smart Crowd

    When I heard a synopsis of the book, I knew I had to read it. My instincts were that crowds were always smarter than the 'experts' give them credit. The author's stories about livestock judging and the first shuttle disaster makes his point. The stock market is another great indicator of what we, as a crowd, believe and bet our money. Must read for anyone working with groups/organizations and needs validation that the crowd can make informed decisions.

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  • Anonymous

    Posted August 18, 2006

    When are the Many Smarter Than the Few and When Aren't They?

    A marvelous book!! It tells us that the crowd is much smarter than many of us think. But it also tells us under what conditions the crowd is not so smart. Its delight is in the counter-intuitiveness of its conclusions. The 'experts' will be bored, thinking it is old stuff, but the author shows us that the crowd is often smarter than they are. The book is worth reading more than once.

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  • Anonymous

    Posted January 26, 2005

    Skip it

    The Wisdom of Crowds crafted no unique theory of human interactions, psychology, or economics. It did not even serve as a good starting meta-text for those who are not initiated into the world of micro economics, game theory, and market theory. It did include a bevy of very interesting anecdotes, but it was unable to utilize them in defending a specific theory of behavior because the book. Yes, it is amazing that the mean of a few hundred guesses about the weight of a farm animal is 99.9% accurate, but it is neither a show of 'democracy' nor a solid proof of why stock markets operate as they do. It sadly, feels as if the author took an 'if Malcolm Gladwell (author of the tipping point) can do it, then I can do it, too,' approach to writing this book. The difference being that Wisdom's thesis is, at its core, anecdotes about a specific type of market. It is not an overarching principle to be applied across society. Wisdom's purpose seems to be to defend the idea that the stock market is rational- all while the author hedges his own bets and statements by conveniently footnoting that (paraphrase) 'What I just wrote doesn't prove anything, it just describes the idea that it is *possible* for averages and means to be more accurate than experts.' The emphasis (and reason why this book is a waste of time) there lies with the word, 'possible.' If it could be replaced with 'provable,' then we would be talking about a five-star review. ps. In defense to the author, the situations in which his anecdotes could be reapplied have almost all been rejected as 'cold-hearted,' 'immoral,' or 'not realistic,' and I applaud him for even mentioning the benefit they could have to society.

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  • Anonymous

    Posted June 13, 2004

    Excellent

    I'm a big fan of James Surowiecki's 'Financial Page' column in The New Yorker. He's consistently able to come up with unusual takes on seemingly familiar topics, and he has a great knack for making business stories compelling and entertaining as well as understandable. But because it's only a page long, I sometimes come away from the column wanting more, and I always wondered how Surowiecki would do if he was able to develop his ideas and arguments more fully. Luckily, 'The Wisdom of Crowds' lives up to all my expectations. It's wonderfully readable, full of terrific stories, funny, and its basic argument -- that groups, under certain conditions, can make better decisions than even the smartest individuals -- is counterintuitive without being willfully contrarian. The roots of the argument obviously stem from the way markets work -- buyers and sellers find each other and reach efficient outcomes without anyone being in charge, while the stock market (at least some of the time) does as good a job as possible of setting prices. But what I really like is the way Surowiecki extends this argument way beyond business and markets, showing how collective wisdom can be seen (and can potentially be used) in a host of other situations, including the racetrack, on the Internet, and on city streets. He also does a good job of drawing out the possible implications of this for everything from the U.S. intelligence community to the way companies are run. This is definitely a big-idea book, but the author is cautious in laying out his evidence, and is careful to show that groups, even if they're potentially wise, are often stupid and dangerous. The chapter on small groups in particular, which focuses on NASA's mismanagement of the Columbia mission, is powerful stuff, and useful to anyone interested in how to run a meeting well (or badly, for that matter). The least satisfying part of the book is the chapter on democracy, where Surowiecki shies away from pushing his conclusion to its logical end. But on the whole, this is just a wonderful book, elegant and enlightening. If you're interested in this book, it's also worth checking out Paul Seabright's 'The Company of Strangers' and Robert Wright's 'Nonzero.'

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  • Anonymous

    Posted March 1, 2010

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  • Anonymous

    Posted April 6, 2010

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  • Anonymous

    Posted October 25, 2010

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  • Anonymous

    Posted June 26, 2010

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  • Anonymous

    Posted January 11, 2011

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