The Narrative Fallacy

The narrative fallacy leads us to see events as stories, with logical chains of cause and effect. Stories help us make sense of the world. But if we aren't aware of this tendency, it leads us to believe we understand the world far more than we actually do.

Stories of how people, businesses, and empires rise and fall strike a chord because they offer exactly what the human mind craves: a simple message of triumph and failure that identifies clear causes and ignores the role of luck and the inevitability of regression to the mean. These stories create an illusion of understanding, offering lessons that feel timeless to readers who are all too eager to believe them.

Stories serve real and wonderful functions: teaching, motivating, inspiring. The problem is that we too often believe our stories are predictive. We make them more real than they are. The writers of business case-study books certainly believed the explanations of success they put forth would predict future success (the title Built to Last implies as much), yet many of the companies profiled soon became shells of their former selves: Citigroup, Hewlett Packard, Motorola, and Sony among them.

Just as many tall, talented, hard-working basketball players have failed to make it, many corporate cultures that met every criterion in Built to Last subsequently failed. The road to success was simply more complicated than the reductive narrative of any book could allow. Strategic choices, luck, circumstance, and the contributions of specific individuals may have all played a role. It's hard to say. And unless we recognize the narrative fallacy for what it is, a simplified and often incorrect view of past causality, we carry an arrogance about our knowledge of the past and its usefulness in predicting the future.

The deep structure of the mind is such that stories, reasons, and causes, anything that points an arrow in the direction of why, are the things that stick most deeply. The best teaching and storytelling methods, the ones that use reasons and narrative to help our brains store information efficiently, are also the ones that lead us into some of our worst mistakes. Our craving for order betrays us.

The first step is simply to become aware of the problem. Once we understand our brain's craving for narrative, we start to see it everywhere, especially as we consume news.

The key question to ask ourselves is: "Of the population subject to the same initial conditions, how many turned out similarly? What hard-to-measure causes might have played a role?"

Consider a fictional example of an NBA player named Steven. A magazine profile of him might read like this:

It was clear from a young age that Steven was destined for greatness. He was taller than his whole class, had skills that none of his peers had, and a mother who never let him indulge laziness or sloth. Losing his father at a young age pushed him to work harder than ever, knowing he'd have to support his family. And once he met someone willing to tutor him, someone like Central High basketball coach Ed Johnson, the future was all but assured. Steven was going to be an NBA player come hell or high water.

If you read this story about a tall, strong, skilled young man with good coaching and a fierce work ethic who came to dominate the NBA, would you stop for even a second to question whether those were the total causes of his success? If you're like most people, the answer is no. We hear stories like this over and over again.

These stories are subject to a deep narrative fallacy. Think again about the supposed causes of Steven's success: work ethic, great parents, strong coaching, a formative life event. How many young men in the United States alone have the exact same background and yet never came close to NBA stardom? The question answers itself. There are probably thousands of them.

Some of those factors were necessary but not sufficient (height, talent, coaching among them), and some may have been negligible or even negative. Would it have helped or hurt Steven's NBA chances if he had not lost his father? Impossible to say.

It is just as useful to ask the inverse: of the population not subject to those conditions, how many still ended up with the same results? Which basketball players had intact families, easy childhoods, and still ended up in the NBA? Which corporations lacked the traits described in Good to Great but achieved greatness anyway?

A second way to work against narrative is to avoid or reinterpret sources of information most subject to the bias. Turn the TV news off. Stop reading so many newspapers. Be skeptical of biographies, memoirs, and personal histories. Be careful of writers who are extraordinarily talented at painting a narrative but claim to be writing facts.

Narrative is so powerful it can overcome basic logic, so we have to be rigorous about what kinds of information we allow to pass through our filters. Be wary of where narrative can mislead.