The Value of Being a Contrarian
I recently read Robin Hanson about Best Case Contrarians and it got me thinking. The great value of being a contrarian, of thinking differently, is not in always being right.
On the contrary, if you want to almost always be right, you best bet is to follow the average opinion of the majority. As Philosophical Majoritarianism holds, “in general, on most issues, the average opinion of humanity is a better and less biased guide to the truth than your own judgment.” Several experiments show that, for example, when it comes to guessing the number of jelly beans in a jar, the average of opinions is much closer to the correct value than any individual guess.
It’s important to keep this in mind when your opinion goes against that of the majority. Most likely you are wrong. So reflect again, and if you’re still convinced you are right, even so keep in mind that most likely you are still wrong.
Still, the great value of thinking differently is not in always being right. The great value of being a contrarian and thinking differently from the majority is in those critical albeit few times when the average opinion of the majority is wrong, and you are right. It is in avoiding the Bandwagon Effect and Conformity Traps when everyone else is falling into it.
That’s where great opportunities live. Being right with everyone else is ok but it doesn’t bring any great insight, any arbitrage opportunity, any strategic leverage. But being right when everyone else is wrong, that’s what happened to Steve Jobs when he bet that the future of technology was in user experience, design and ecosystems. That’s what happened to Jeff Bezos when he bet that customer experience and growth were more important for digital retail than sales margin.
So do think differently. Do be a contrarian, not by reactance, but knowing that, in the few times when you’re right and everyone else is wrong, that has amazing value. Bet on your contrarian opinions. Do control the risk of these bets, knowing that, in most cases, you will be wrong. But when you’re finally right, and everyone else is wrong, that’s where you’ll find your great successes.