Why don't well-educated adults understand accumulation? A challenge to researchers, educators, and citizens

Matthew A. Cronin, Cleotilde Gonzalez and John D. Sterman

Organizational Behavior and Human Decision Processes, 2009, vol. 108, issue 1, pages 116-130

Abstract: Accumulation is a fundamental process in dynamic systems: inventory accumulates production less shipments; the national debt accumulates the federal deficit. Effective decision making in such systems requires an understanding of the relationship between stocks and the flows that alter them. However, highly educated people are often unable to infer the behavior of simple stock-flow systems. In a series of experiments we demonstrate that poor understanding of accumulation, termed stock-flow failure, is a fundamental reasoning error. Persistent poor performance is not attributable to an inability to interpret graphs, lack of contextual knowledge, motivation, or cognitive capacity. Rather, stock-flow failure is a robust phenomenon that appears to be rooted in failure to appreciate the most basic principles of accumulation, leading to the use of inappropriate heuristics. We show that many people, including highly educated individuals with strong technical training, use what we term the "correlation heuristic", erroneously assuming that the behavior of a stock matches the pattern of its flows. We discuss the origins of stock-flow failure and implications for management and education.

Keywords: Dynamic; decision; making; Cognitive; capacity; Accumulation; Stocks; and; flows; System; dynamics (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:jobhdp:v:108:y:2009:i:1:p:116-130

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