In a world of too much data, researchers find that using dashboards helps people avoid common biases that are triggered when we focus too much attention on recent events.
We live in a world with a lot of data. In fact, we’re bombarded by it.
Estimates suggest that today we take in about five times as much information as we did 25 years ago, and that we process as much data in a day — approximately 34 gigabytes — as our 15th-century ancestors would have in their lifetimes.
We tend to think of all that data as a rather cold and rational collection of numbers. Yet, on an individual level, the information we process is often quite emotional.
A simple example is the daily weigh-in on a bathroom scale. With modern apps and smart scales, this data is collected and stored in the cloud, ready to be reported back to the user in multiple forms and over a variety of time frames. Yet for many people it is the one number they see when they step on the scale that has the most impact.
Another example is the ability to get real-time updates on our financial status. We no longer have to go into a bank to learn our balances or read the newspaper to find out what happened in the stock market. Mobiles devices allow us to retrieve this data any time and anywhere. We can see the minute-to-minute fluctuations in our net worth.
Information pushed at us“We tend to think of all that data as a rather cold and rational collection of numbers. Yet, on an individual level, the information we process is often quite emotional.”
Even if we aren’t reaching out to pull this type of data in, it is being pushed at us. News outlets and social media provide constant notifications that range from economic data to politic polls to sports scores.
As we process this information, we are affected by it. Numbers about our health, our financial status, our local sports teams, or global social and economic events have an emotional impact on us.
We have been studying how all this data processing makes us feel and, in particular, how organizations can best communicate information to consumers.
For example, we know that when people see events in sequence, the “peak” event has a disproportionate influence on how they feel about the information. Which suggests, for example, that the worst of those daily weigh-ins is likely to loom larger than an average day.
Or consider the investor who regularly checks on the value of her portfolio. We know that the current value and the highest value will likely have a disproportionate effect on how she feels about her investment success and may influence her decision making.
Similarly, the last piece of information — or the “end” of the sequence — that people encounter also has a disproportionately strong influence. This means that our daily weight-watcher is likely to put more emphasis on his last weigh-in than the (more important) trend in his weight over time. As a result, his emotional response to dieting is likely to fluctuate as much as his weight, and the impact of that heavier weigh-in will remain top of mind.
This could very well lead to the classic error of buying high (when excited by recent market increases) and selling low (when disappointed with market declines).
Dashboards to the rescue?
We have found, however, that a dashboard interface on our devices or information services — which presents data simultaneously — can mitigate the impact of peak and end events. Dashboards allow people to see the trend over time and make a more holistic assessment of the data.
To illustrate the difference, let’s return to the investor watching her portfolio on a daily basis. The advantage of a dashboard that includes the entire sequence of fluctuations over a one-, three- or five-year period provides a higher-level perspective than daily market returns.
This allows the investor to focus more on the overall trend, rather than peak and end events.
Similarly, gaining or losing a pound or two on the scale in a given day is a less useful indicator of progress towards a goal than a trend in weight fluctuations that spans months or years.
In both cases, providing a more holistic snapshot of the data reduces the probability that too much emphasis is put on one or a few selected events.
As a result, our investor is less likely to overreact to short-term market fluctuations or a market peak, and more likely to focus on long-term portfolio performance.
Along the same lines, our weight-watcher is more likely to rely on the data trend than a single event, such as a peak or recent weigh-in.
Overall, in a world of too much data, we find that using dashboards helps people avoid common biases that are triggered when we focus too much attention on recent events, or outliers.
As we struggle to manage the ever-increasing flow of information that we are asked to process, our devices and information services can help us out by designing dashboard interfaces that replace or, at least, supplement momentary notifications.
It’s a simple step that can ease information overload and, potentially, improve our ability to use the data we have to make better decisions.
This article was first published by The Conversation.