In the Introduction to The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, James Surowiecki sets out some of the examples he says proves that many people, each with some information (but not total or information or even expert-level information), can, under certain conditions, better predict the future than so-called experts and can make better decisions than homogeneous, small groups:
This intelligence, or what I'll call "the wisdom of crowds," is at work in the world in many different guises. It's the reason the Internet search engine can scan a billion Web pages and find the one page that has the exact piece of information you were looking for. It's the reason it's so hard to make money betting on NFL games, and it helps explain why, for the past fifteen years, a few hundred amateur traders in the middle of Iowa have done a better job of predicting election results that Gallup polls have. The wisdom of crowds has something to tell us about why the stock market works (and about why, every so often, it stops working). The idea of collective intelligence helps explain why, when you go to the convenience store in search of milk at two in the morning, there is a carton of milk waiting there for you, and it even tells us something important about why people pay their taxes and help coach Little League. It's essential to good science. And it has the potential to make a profound difference in the way companies do business.
Even before starting the book, I read sections from random entry points, which would have been less random if there was an index to the hardcover edition, but when I saw the passage saying that Surowiecki could explain why people pay taxes, that compelled me to move ahead in the book, wondering why, even though people knew they were being forced to pay taxes under penalty of jail time, and they knew that the rewards for not paying taxes were very high, why did—and do—the vast majority of people abide by the law? Why, in other words, are millions of people willfully causing libertarians to spill so much ink in frustration by abiding by what they (the libertarians) feel is an unjust seizure of their assets?
The introduction is short, but fairly dense with examples, and the chapters get even denser with examples. The prose, however, is not dense: the book is geared towards a wide audience, and as do the authors (both are journalists who write for the New Yorker, for one), the book shares similarities with The Tipping Point by Malcolm Gladwell. Both books are contrarian in nature: they are more interested in finding out what the conventional wisdom is and then argue that the reality is either more complex or in opposition to the conventional wisdom (or both). In Surowiecki's case, it's about crowds, predictions and decision-making, where with Gladwell it is with how small ideas get turned into trends.
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