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The Wisdom of Crowds
Book

The Wisdom of Crowds

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

James Surowiecki
Doubleday Broadway, 2004
First Edition: 2004
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Editorial Rating

9

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  • Innovative

Recommendation

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 getAbstract recommends this comprehensive, fresh presentation.

Summary

The Weight of an Ox

In 1906, scientist Francis Galton discovered something remarkable in a very nonscientific setting: the West of England Fat Stock and Poultry Exhibition. Galton had spent his career studying human characteristics, work that left him convinced that the only way to ensure social health and stability was to put power in the hands of a few elite people. Yet his experience at the exhibition strongly suggested that such elitism was unwise in the extreme, and it taught him a lesson about crowds. One attraction at the livestock fair was a contest to guess the weight of a live ox - or rather, what a live ox would weigh after it had been butchered. Contestants bought tickets on which they entered their guesses.

Galton aimed to prove that the average fairgoer would be far off the mark. Much to his surprise, after he tallied and averaged the guesses to get a consensus estimate from the crowd, he found that the crowd had estimated the weight of the dressed ox almost exactly. In fact, the crowd’s estimate was only a pound off - the ox ultimately weighed 1,198 pounds, and the crowd’s average guess had been 1,197 pounds. "The result seems more creditable to the ...

About the Author

James Surowiecki is a staff writer at The New Yorker, which publishes his popular business column, "The Financial Page."

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