Professional Skills Series
The Many Faces of Bias
An interactive introduction
Running time: approx. 30 minutes
Note that the examples used are purely illustrative
Use the scroll button to navigate through each screen
Introduction
This resource is designed to help members explore and learn about how bias can affect all of us in our everyday work and decision-making.
The first thing to look at is what is bias and what forms does it take? Here’s the dictionary definition
"An inclination or prejudice for or against one person or group, especially in a way considered to be unfair."
Biases may be held by an individual, group, or institution and can have both negative or positive consequences. There are two types of biases:
- Conscious bias (also known as explicit bias) and
- Unconscious bias (also known as implicit bias)
It is important to note that biases, conscious or unconscious, are NOT limited to ethnicity and race. Though racial bias and discrimination are well documented, biases may exist toward ANY social group. A person’s age, gender, gender identity, physical appearance/abilities, religion, sexual orientation, and many other characteristics can be subject to bias.
Unconscious biases are social stereotypes that we hold about certain groups of people outside of our own conscious awareness. Everyone holds unconscious beliefs about various social and identity groups, and these biases stem from our brain’s tendency to organise social worlds by categorising them.
Unconscious bias is far more prevalent than conscious prejudice and is often at odds with our own conscious values. Certain situations can activate unconscious attitudes and beliefs. For example, biases may be more prevalent when working in a group or under time pressure.
1. Anchoring and adjustment
Think about how we all produce estimates. Our initial idea of the answer (‘the anchor’), is typically the first number mentioned or encountered. Then we adjust away from this initial anchor, to arrive at a final judgement.
Our initial perception is based on past experience, or ‘expert’ opinion, amended to allow for differences to the current situation. Experimental evidence shows that these adjustments tend to be too small, so people are said to be too ‘anchored’ on the initial value.
Also, we all exhibit ‘belief preservation’. Once we have formed a belief, we tend to be overly reluctant to change it, even in the face of strong contrary evidence. Here are a couple of video examples:
2. Framing
The way a question or choice is presented, or ‘framed’ can have great impact on the response and also the subsequent decisions made afterwards. A change of only a word or two in the ‘framing’, can have a profound effect.
We also need to think about ‘loss aversion’ bias here – psychologically, we all want to avoid loss MORE than we seek out reward – we hate missing out; simply put, it’s better not to lose £10, than to find £20!
So any discussion of framing should take this bias into account. Here are a couple of video examples:
3. Estimating probabilities – availability heuristic
Heuristics are rules of probability, or ‘rules of thumb’ that we make on an unconscious level.
The ‘availability heuristic’ means that when we try to answer a question, we are influenced by the ease with which a potential solution can be brought to mind. It’s ‘how we see the world around us’, rather than the relevance or correctness of a potential answer.
This can lead to biased judgements when examples of one event are inherently more difficult to imagine than examples of another.
For example, we imagine plane crashes or shark attacks happen more often than they do, or that air travel is more dangerous than driving, because we hear about it.
Whereas it’s rare that you hear about car accidents despite the fact that they are far more common and likely per mile travelled.
An important thing to remember about the availability heuristic is that it is a rule of thumb that is often right; it is only when it is consistently wrong that it becomes a bias.
For example, in the UK, we might have an availability heuristic that says we drive on the left.
As long as we don’t leave Britain, that unconscious rule of thumb works – we never have to even think about it. But try that in Italy, and you’ll be in for a surprise! The heuristic now shows itself up as a bias. Here’s a couple of video examples:
3. Estimating probabilities – availability heuristic : Example 1
HOVER HERE TO REVEAL THE VIDEO TRANSCRIPT TEXT
3. Estimating probabilities – availability heuristic : Example 2
HOVER HERE TO REVEAL THE VIDEO TRANSCRIPT TEXT
4. Representativeness heuristic
Representativeness heuristic bias refers to the tendency to overestimate the probability of an outcome based on the similarity of objects or events.
We all have a tendency to believe that two similar things or events are more closely correlated and representative of each other than they actually are, without taking into account other information. Here are a couple of video examples:
5. Sunk cost fallacy
The ‘sunk cost fallacy’ refers to continuing an action due to already having invested in it, rather than reconsidering what the best current action may be.
It refers to the tendency to continue further investing resources (e.g. time, money or effort) into something, by mistakenly believing that resources already invested in it will be otherwise lost.
It hinders us realising what the best choice may be at this given moment, by placing greater emphasis on the loss of previously invested resources. Here are a couple of video examples:
6. Overconfidence and hindsight bias
Overconfidence bias refers to the tendency to overestimate our own abilities, knowledge and skills; to think we are better than others; to have absolute certainty in our judgements.
Hindsight bias is based on events that have happened, which could have been thought of as ‘predictable’ prior to the event. This bias leads us to believe that we are better at projecting the future than we actually are!
This is why it is overconfidence, and hindsight bias is also known as the “I told you so” effect. Here are a couple of video examples:
7. Confirmation bias
Confirmation bias is our tendency to look for evidence that confirms our point of view and also to dismiss any evidence that does not justify it.
Here are a couple of video examples:
Discussion points
Now it’s your turn to have a think about these different types of biases and how they could affect you in the workplace and the decisions you make. Work through these questions and note down your answers.
QUESTIONS FOR YOUR CONSIDERATION
1. Firstly, why do we need to be aware of such biases?
2. Is it possible for anybody to ever be 100% free of biases?
3. What could be the consequences and implications of these biases for your company?
4. What do you think feeds such biases? Therefore, what should you be aware of in your role?
5. What could be done differently in your organisation to minimise such biases? If biases are so hard to overcome, what can your organisation do to make it easier?
6. What principles from the Actuaries’ Code are relevant here? We’ll take a look at these in more detail in the next section
7. What training or education could you or your department benefit from?
Click the link below for more details on the Actuaries' Code or the arrow button below to move onto the next section.
The Actuaries' Code
A common theme in all the above is that an organisation may need to make changes to its ‘corporate culture’ to start to tackle the different types of bias.
There is an example of an orchestra holding blind auditions rather than relying on selection by individuals who claimed they were neither sexist, nor racist, yet of course, they were!
This was indicated by the changed statistics of those who succeeded at the auditions when done “blind”.
This is similar to anonymising CVs (Curricula Vitae) insofar as it’s possible. Anonymising CVs may help with gender and race biases, but not age biases, as years of work and education are left in the document.
Another way to try and help eliminate bias in decision-making processes could be to include a ‘cooling off period’, where the individuals involved can reflect on their preferred decisions and contemplate whether any biases are at play, before certain decisions become public or irrevocable.
A final suggestion could be to tweak processes and policies to reinforce the behaviours you want to encourage and punish those you want to discourage, “office banter” for example.
Now let’s look and see how all of this fits into the Actuaries’ Code and how it can help.
Using the Actuaries’ Code
Let’s work through the relevant sections within the Actuaries’ Code that can help when we are facing situations where we feel conscious or unconscious bias is involved:
Integrity
1. Members must act honestly and with integrity.
1.1 Members must show respect for others in the way they conduct themselves.
At the core of the Actuaries’ Code is the need to act in an ethical and professional manner, being fair and straightforward.
In determining whether a course of conduct demonstrates a ‘lack of respect’, it’s important to consider how YOU would feel if the behaviour in question were being directed at you instead.
We also need to remember that we should behave in a way that recognises and respects diversity and different cultures.
Impartiality
3. Members must ensure that their professional judgement is not compromised, and cannot reasonably be seen to be compromised, by bias, conflict of interest, or the undue influence of others.
Impartiality can be described as the principle that ‘decisions ought to be based on objective criteria, rather than on the basis of bias, prejudice, or preferring to benefit one person over another for improper reasons’.
If a member is put in a situation that they think breaches this principle, there is a clear obligation to try and resolve the situation or desist from acting on behalf of the client. A good rule of thumb would be to ask yourself 'What would a fair-minded observer think?'
Sometime bias isn’t immediately clear. It may be built into the system, organisation or culture, (Institutional bias) or may occur when multiple individuals are involved and working together to make a decision, (Groupthink) so we should always be aware of the potential for it.
Speaking up
5. Members should speak up if they believe, or have reasonable cause to believe, that a course of action is unethical or is unlawful.
5.4 Members must take reasonable steps to ensure users are aware of any substantial issues with a piece of work for which they are responsible or in which they have had significant involvement, if those issues might reasonably influence the decision-making or judgement of users.
The Speaking Up principle gives each member the framework to raise any issues regarding bias at an early stage. This can help to minimise any bias (or the perception of it) before it really becomes a much bigger issue later on.
It can help members work on a peer-to-peer basis and challenge a colleague by addressing them directly, when they may appear to be behaving in a way they shouldn’t, whether intentionally or unintentionally.
When deciding whether to challenge a colleague or ‘Speak Up’, ask yourself these questions: -
Does the conduct violate the principles of the Code, company policy or any ethical codes?
What might happen if I don’t report the conduct?
Will it damage my reputation, my organisation’s reputation or the reputation of the profession as a whole in the eyes of the general public, if it’s not reported to the relevant regulators or other authorities?
How would it look if it were reported in the media, for example?
Is the conduct widely unacceptable socially, commercially or professionally?
Also think about what would a trusted colleague say if you asked them for advice? What advice would you give to them if the situation were reversed?
The answers to these questions will help you decide what action to take.
The IFoA's Professional Support Service is available to help all members with such professional matters.
That's the end of this interactive microsite.
Please note down the time you've spent for CPD purposes and click the arrow below for more information on the IFoA's Professional Support Service.
For help & guidance on professionalism issues contact:
Professional Support Service
Institute and Faculty of Actuaries
https://www.actuaries.org.uk/upholding-standards/professional-support-service
