It has long been known that algorithms out-perform human experts on a range of topics (here's a LW post on this by lukeprog). Why, then, is it that people continue to mistrust algorithms, in spite of their superiority, and instead cling to human advice? A recent paper by Dietvorst, Simmons and Massey suggests it is due to a cognitive bias which they call algorithm aversion. We judge less-than-perfect algorithms more harshly than less-than-perfect humans. They argue that since this aversion leads to poorer decisions, it is very costly, and that we therefore must find ways of combating it.

Abstract: 

Research shows that evidence-based algorithms more accurately predict the future than do human forecasters. Yet when forecasters are deciding whether to use a human forecaster or a statistical algorithm, they often choose the human forecaster. This phenomenon, which we call algorithm aversion, is costly, and it is important to understand its causes. We show that people are especially averse to algorithmic forecasters after seeing them perform, even when they see them outperform a human forecaster. This is because people more quickly lose confidence in algorithmic than human forecasters after seeing them make the same mistake. In 5 studies, participants either saw an algorithm make forecasts, a human make forecasts, both, or neither. They then decided whether to tie their incentives to the future predictions of the algorithm or the human. Participants who saw the algorithm perform were less confident in it, and less likely to choose it over an inferior human forecaster. This was true even among those who saw the algorithm outperform the human.

General discussion: 

The results of five studies show that seeing algorithms err makes people less confident in them and less likely to choose them over an inferior human forecaster. This effect was evident in two distinct domains of judgment, including one in which the human forecasters produced nearly twice as much error as the algorithm. It arose regardless of whether the participant was choosing between the algorithm and her own forecasts or between the algorithm and the forecasts of a different participant. And it even arose among the (vast majority of) participants who saw the algorithm outperform the human forecaster.

The aversion to algorithms is costly, not only for the participants in our studies who lost money when they chose not to tie their bonuses to the algorithm, but for society at large. Many decisions require a forecast, and algorithms are almost always better forecasters than humans (Dawes, 1979; Grove et al., 2000; Meehl, 1954). The ubiquity of computers and the growth of the “Big Data” movement (Davenport & Harris, 2007) have encouraged the growth of algorithms but many remain resistant to using them. Our studies show that this resistance at least partially arises from greater intolerance for error from algorithms than from humans. People are more likely to abandon an algorithm than a human judge for making the same mistake. This is enormously problematic, as it is a barrier to adopting superior approaches to a wide range of important tasks. It means, for example, that people will more likely forgive an admissions committee than an admissions algorithm for making an error, even when, on average, the algorithm makes fewer such errors. In short, whenever prediction errors are likely—as they are in virtually all forecasting tasks—people will be biased against algorithms.

More optimistically, our findings do suggest that people will be much more willing to use algorithms when they do not see algorithms err, as will be the case when errors are unseen, the algorithm is unseen (as it often is for patients in doctors’ offices), or when predictions are nearly perfect. The 2012 U.S. presidential election season saw people embracing a perfectly performing algorithm. Nate Silver’s New York Times blog, Five Thirty Eight: Nate Silver’s Political Calculus, presented an algorithm for forecasting that election. Though the site had its critics before the votes were in— one Washington Post writer criticized Silver for “doing little more than weighting and aggregating state polls and combining them with various historical assumptions to project a future outcome with exaggerated, attention-grabbing exactitude” (Gerson, 2012, para. 2)—those critics were soon silenced: Silver’s model correctly predicted the presidential election results in all 50 states. Live on MSNBC, Rachel Maddow proclaimed, “You know who won the election tonight? Nate Silver,” (Noveck, 2012, para. 21), and headlines like “Nate Silver Gets a Big Boost From the Election” (Isidore, 2012) and “How Nate Silver Won the 2012 Presidential Election” (Clark, 2012) followed. Many journalists and popular bloggers declared Silver’s success a great boost for Big Data and statistical prediction (Honan, 2012; McDermott, 2012; Taylor, 2012; Tiku, 2012).

However, we worry that this is not such a generalizable victory. People may rally around an algorithm touted as perfect, but we doubt that this enthusiasm will generalize to algorithms that are shown to be less perfect, as they inevitably will be much of the time.