The Wisdom of Crowds Review

The Wisdom of Crowds: Why the Many Are Smarter Than the Few - James Surowiecki

We all know that crowds and mobs are notorious for coming up with a final decision. The basic thesis of this book is to counter this statement. It is stated in his book that all of us are smarter than any of us and a group of ordinary people who pool their knowledge effectively can often obtain better results than an expert or even a group of experts. In other words, large groups of people are smarter than an elite few, no matter how brilliant. They are better at solving problems, fostering innovation, coming to wise decisions and predicting the future.

Surowiecki writes:

“The idea of the wisdom of crowds is not that a group will always give you the right answer, but that it will consistently come up with a better answer than any individual can provide.”

He is describing the phenomenon that a crowd’s “collective intelligence” is able to produce better outcomes than a small group of experts.

Before reading the book, I had the mindset that crowds were inefficient and have a huge opportunity cost (which is the value of the next best alternative forgone) of time especially in the process of decision making. My thoughts were exactly like German philosopher, Friedrich Nietzsche: “Madness is the exception in individuals but the rule in groups.” It goes to show that a crowd becomes in a complete havoc when there are fifty brains thinking differently to just figure out a solution for only one problem when it could be done by a specialist. However, after several cases and real-life situations mentioned in the book, I, and surely majority of the readers would have changed their perceptions. Most of our everyday decisions have been made, whether directly or indirectly, as a crowd based on our collective wisdom.

Surowiecki clearly lays out the prerequisites for successful decision making in groups: diversity, independence and decentralisation. These three aspects are really the core...