Thinking Economics

Thinking Economics

Most human behaviour can be viewed through an economic lens to identify trends, patterns, biases and misconceptions. This column assesses Nigerian behaviour by applying Economics to behaviour and behaviour to Economics.

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Time Lags: Consequences can be delayed but not denied

Chuba Ezekwesili

Chuba Ezekwesili

Chuba is an economist, a data analyst, and the co-founder of Akanka - a global design studio.

Think about the first time you touched a hot stove and immediately withdrew your hand once you felt a searing pain. You immediately inferred that the hot stove was the cause of the pain.

To protect ourselves, we humans evolved to infer causality and conclude on consequences. The immediacy of the pain helped you avoid a dangerous or potentially deadly burn. Imagine if the pain were delayed, instead, and it took ten seconds for your brain to register that your fingers were being roasted like suya – you’d lose a couple of fingers.

That sort of delayed feedback (or pain) is called a time lag. It impairs the quality of decisions we make in different spheres, often to devastating effect. To understand what makes these consequences devastating, we have to understand two concepts that make it difficult for us to see these consequences beforehand.

First, the presence of a time lag (the lack of an immediate effect) misleads us into thinking there is no effect or consequence. We mistake the absence of evidence for evidence of absence. We see a classic example in the ancient presumption that black swans did not exist. Everyone held that view until black swans were discovered in the wild. Unfortunately, unlike real life black swans, when the effects reveal themselves, they are far deadlier than if they were apparent at the start.

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