A Psychologist Explains How AI and Algorithms Are Changing Our Lives
Behavioural scientist Gerd Gigerenzer has spent decades studying how people make choices. Here’s why he thinks too many of us are now letting AI make the decisions.
4 min
In an age of ChatGPT, computer algorithms and artificial intelligence are increasingly embedded in our lives, choosing the content we’re shown online, suggesting the music we hear and answering our questions.
These algorithms may be changing our world and behaviour in ways we don’t fully understand, says psychologist and behavioural scientist Gerd Gigerenzer, the director of the Harding Center for Risk Literacy at the University of Potsdam in Germany. Previously director of the Center for Adaptive Behaviour and Cognition at the Max Planck Institute for Human Development, he has conducted research over decades that has helped shape understanding of how people make choices when faced with uncertainty.
In his latest book, “How to Stay Smart in a Smart World,” Dr. Gigerenzer looks at how algorithms are shaping our future—and why it is important to remember they aren’t human. He spoke with the Journal for The Future of Everything podcast.
The term algorithm is thrown around so much these days. What are we talking about when we talk about algorithms?
It is a huge thing, and therefore it is important to distinguish what we are talking about. One of the insights in my research at the Max Planck Institute is that if you have a situation that is stable and well defined, then complex algorithms such as deep neural networks are certainly better than human performance. Examples are [the games] chess and Go, which are stable. But if you have a problem that is not stable—for instance, you want to predict a virus, like a coronavirus—then keep your hands off complex algorithms. [Dealing with] the uncertainty—that is more how the human mind works, to identify the one or two important cues and ignore the rest. In that type of ill-defined problem, complex algorithms don’t work well. I call this the “stable world principle,” and it helps you as a first clue about what AI can do. It also tells you that, in order to get the most out of AI, we have to make the world more predictable.
So after all these decades of computer science, are algorithms really just still calculators at the end of the day, running more and more complex equations?
What else would they be? A deep neural network has many, many layers, but they are still calculating machines. They can do much more than ever before with the help of video technology. They can paint, they can construct text. But that doesn’t mean that they understand text in the sense humans do.
Does being able to understand how these algorithms are making decisions help people?
Transparency is immensely important, and I believe it should be a human right. If it is transparent, you can actually modify that and start thinking [for] yourself again rather than relying on an algorithm that isn’t better than a bunch of badly paid workers. So we need to understand the situation where human judgment is needed and is actually better. And also we need to pay attention that we aren’t running into a situation where tech companies sell black-box algorithms that determine parts of our lives. It is about everything including your social and your political behaviour, and then people lose control to governments and to tech companies.
You write that “digital technology can easily tilt the scales toward autocratic systems.” Why do you say that? And how is this different from past information technologies?
This kind of danger is a real one. Among all the benefits it has, one of the vices is the propensity for surveillance by governments and tech companies. But people don’t read privacy policies anymore, so they don’t know. And also the privacy policies are set up in a way that you can’t really read them. They are too long and complicated. We need to get control back.
So then how should we be smart about something like this?
Think about a coffee house in your hometown that serves free coffee. Everyone goes there because it is free, and all the other coffee houses get bankrupt. So you have no choice anymore, but at least you get your free coffee and enjoy your conversations with your friends. But on the tables are microphones and on the walls are video cameras that record everything you say, every word, and to whom, and send it off to analyze. The coffee house is full of salespeople who interrupt you all the time to offer you personalised products. That is roughly the situation you are in when you are on Facebook, Instagram or other platforms. [Meta Platforms Inc., the parent company of Facebook and Instagram, declined to comment.] In this coffee house, you aren’t the customer. You are the product. So we want to have a coffee house where we are allowed again to pay [for] ourselves, so that we are the customers.
We’ve seen this whole infrastructure around personalised ads be baked into the infrastructure of the internet. And it seems like it would take some pretty serious interventions to make that go away. If you’re being realistic, where do you think we’re going to be headed in the next decade or so with technology and artificial intelligence and surveillance?
In general, I have more hope that people realise that it isn’t a good idea to give your data and your responsibility for your own decisions to tech companies who use it to make money from advertisers. That can’t be our future. We pay everywhere else with our [own] money, and that is why we are the customers and have the control. There is a true danger that more and more people are sleepwalking into surveillance and just accept everything that is more convenient.
But it sounds so hard, when everything is so convenient, to read privacy policies and do research on these algorithms that are affecting my life. How do I push back against that?
The most convenient thing isn’t to think. And the alternative is start thinking. The most important [technology to be aware of] is a mechanism that psychologists call “intermittent reinforcement.” You get a reinforcement, such as a “Like,” but you never know when you will get it. People keep going back to the platform and checking on their Likes. That has really changed the mentality and made people dependent. I think it is very important for everyone to understand these mechanisms and how one gets dependent. So you can get the control back if you want.
This interview has been condensed and edited.
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Competitive pressure and creativity have made Chinese-designed and -built electric cars formidable competitors
4 min
China rocked the auto world twice this year. First, its electric vehicles stunned Western rivals at the Shanghai auto show with their quality, features and price. Then came reports that in the first quarter of 2023 it dethroned Japan as the world’s largest auto exporter.
How is China in contention to lead the world’s most lucrative and prestigious consumer goods market, one long dominated by American, European, Japanese and South Korean nameplates? The answer is a unique combination of industrial policy, protectionism and homegrown competitive dynamism. Western policy makers and business leaders are better prepared for the first two than the third.
Start with industrial policy—the use of government resources to help favoured sectors. China has practiced industrial policy for decades. While it’s finding increased favour even in the U.S., the concept remains controversial. Governments have a poor record of identifying winning technologies and often end up subsidising inferior and wasteful capacity, including in China.
But in the case of EVs, Chinese industrial policy had a couple of things going for it. First, governments around the world saw climate change as an enduring threat that would require decade-long interventions to transition away from fossil fuels. China bet correctly that in transportation, the transition would favour electric vehicles.
In 2009, China started handing out generous subsidies to buyers of EVs. Public procurement of taxis and buses was targeted to electric vehicles, rechargers were subsidised, and provincial governments stumped up capital for lithium mining and refining for EV batteries. In 2020 NIO, at the time an aspiring challenger to Tesla, avoided bankruptcy thanks to a government-led bailout.
While industrial policy guaranteed a demand for EVs, protectionism ensured those EVs would be made in China, by Chinese companies. To qualify for subsidies, cars had to be domestically made, although foreign brands did qualify. They also had to have batteries made by Chinese companies, giving Chinese national champions like Contemporary Amperex Technology and BYD an advantage over then-market leaders from Japan and South Korea.
To sell in China, foreign automakers had to abide by conditions intended to upgrade the local industry’s skills. State-owned Guangzhou Automobile Group developed the manufacturing know-how necessary to become a player in EVs thanks to joint ventures with Toyota and Honda, said Gregor Sebastian, an analyst at Germany’s Mercator Institute for China Studies.
Despite all that government support, sales of EVs remained weak until 2019, when China let Tesla open a wholly owned factory in Shanghai. “It took this catalyst…to boost interest and increase the level of competitiveness of the local Chinese makers,” said Tu Le, managing director of Sino Auto Insights, a research service specialising in the Chinese auto industry.
Back in 2011 Pony Ma, the founder of Tencent, explained what set Chinese capitalism apart from its American counterpart. “In America, when you bring an idea to market you usually have several months before competition pops up, allowing you to capture significant market share,” he said, according to Fast Company, a technology magazine. “In China, you can have hundreds of competitors within the first hours of going live. Ideas are not important in China—execution is.”
Thanks to that competition and focus on execution, the EV industry went from a niche industrial-policy project to a sprawling ecosystem of predominantly private companies. Much of this happened below the Western radar while China was cut off from the world because of Covid-19 restrictions.
When Western auto executives flew in for April’s Shanghai auto show, “they saw a sea of green plates, a sea of Chinese brands,” said Le, referring to the green license plates assigned to clean-energy vehicles in China. “They hear the sounds of the door closing, sit inside and look at the quality of the materials, the fabric or the plastic on the console, that’s the other holy s— moment—they’ve caught up to us.”
Manufacturers of gasoline cars are product-oriented, whereas EV manufacturers, like tech companies, are user-oriented, Le said. Chinese EVs feature at least two, often three, display screens, one suitable for watching movies from the back seat, multiple lidars (laser-based sensors) for driver assistance, and even a microphone for karaoke (quickly copied by Tesla). Meanwhile, Chinese suppliers such as CATL have gone from laggard to leader.
Chinese dominance of EVs isn’t preordained. The low barriers to entry exploited by Chinese brands also open the door to future non-Chinese competitors. Nor does China’s success in EVs necessarily translate to other sectors where industrial policy matters less and creativity, privacy and deeply woven technological capability—such as software, cloud computing and semiconductors—matter more.
Still, the threat to Western auto market share posed by Chinese EVs is one for which Western policy makers have no obvious answer. “You can shut off your own market and to a certain extent that will shield production for your domestic needs,” said Sebastian. “The question really is, what are you going to do for the global south, countries that are still very happily trading with China?”
Western companies themselves are likely to respond by deepening their presence in China—not to sell cars, but for proximity to the most sophisticated customers and suppliers. Jörg Wuttke, the past president of the European Union Chamber of Commerce in China, calls China a “fitness centre.” Even as conditions there become steadily more difficult, Western multinationals “have to be there. It keeps you fit.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
