wise crowd

James Surowiecki’s The Wisdom of Crowds brings forth the notion that a crowd is best able to take in the information given to them and so to make a better, collective choice that will be infinitely more accurate than that of the smartest individuals in the group. That being said, there are four different factors that have to be factored in in order for the crowd to make collective decisions that are wise and useful. If the decisions that they make are lacking any of these four particular areas the results being less than satisfactory.

These four areas are:

1. Diversity of opinion

You know that saying, ”birds of a feather flock together”? Unfortunately, if you were to apply that concept to the idea of crowd wisdom, you would fail spectacularly. The reason being is that homogenous groups tend to have relatively similar cultures and upbringings, which results in a narrowness of thought. Whereas a diversity of opinion – having private information even if it’s an eccentric interpretation of known facts, results in groups being able to make better judgements by virtue of averaging all those judgements. Sure, there may be outliers that can provide better individual results, but they do not necessarily come close to that of the group’s collective knowledge.

Surowiecki also proposes that we should stop “chasing the expert” – the one smart person in the room does not necessarily equate to an answer that will bring in results. Instead, it is the diversity of opinion – the information known to both the smart and the not so, combined together make for a balanced solution. This is because thought/opinion contains both information and error: if you combine enough of them you will mostly get the right information with a lot of the major errors cancelled out.

2. Independence of thought

Surowiecki proposes the notion that most people are generally overconfident. Actually, you probably don’t need a rocket scientist to tell you that but most people will (obviously) deny that fact. It is this independence of thought that helps to bring out the best in crowd decisions. When people’s opinions are not determined by the opinions of those around them, you get different ideas on the table and when that is mixed with other non-conforming ideas, well, the results are undeniable.

He also proposes the notion that information cascades when it is passed from person to person and passes beyond the moment the information is a workable solution to the current problem. Easley postulates that an information cascade occurs when people “abandon their own information in favour of inferences based on earlier people’s actions”. It’s a lot like, monkey see, monkey do. These information cascades can be both good and bad, depending on what is passed on. He notes the example of plank roads as a bad example and the development of the standardised screw as a good one.

3. Decentralisation

The concept of decentralisation is one that already exists in economic theories. Here, Surowiecki adds on to that with the notion that decentralisation offers a solution. Take for example the example he used, Linux. Linux is an open source Unix based code that was developed by Finnish hacker Linus Torvalds and is possibly the best contender against Microsoft. He makes a point for Linux in that its operation is basically decentralisation in action; being open source means that many persons can work simultaneously on the code to make it better without receiving orders from a top management. Another great example is Firefox, which is also open source software; one of the best browsers to date, mostly because its fixes come from people that receive no orders and are genuinely vested in its wellbeing.

Friedrich Hayek, an economist, also mentioned by Surowiecki, postulates that decentralisation is key to what he proposes as tacit knowledge – knowledge that is difficult to write or verbalise but is nonetheless extremely useful. Tacit knowledge is different from explicit knowledge, which is the knowledge that can be written down or verbalised. Though tacit knowledge is specialist knowledge, usually gained from experience from a job or vocation, it is nonetheless useful to have people that have it in order to propose a better solution.

4. Aggregation

Now, we arrive at the final piece of the puzzle – aggregation. Lyon and Pacuit define aggregation as “to convert the contributions of your crowd into your desired output.” In Surowiecki’s book, it is the various methods of turning a clump of private judgements held by several individuals into a collective judgement. By using various private judgements to get an answer, it will collectively make for a more robust answer. This is because the knowledge that may not useful for one group or individual, when pooled together, may be useful for another is solving the overarching problem. Aggregation, not centralisation, is the way forward, Surowiecki says.


These 4 proposed aspects will definitely be able to help the crowd form a better, more informed decision that is not only accurate but is also all-encompassing. Though there are flaws in these aspects, if used correctly, they will yield the results that you want. Not to forget, that it is the crowds where the wisdom lies and although certain individuals will outperform the crowd’s collective decision, they are probably better off combining their expertise with that of the crowd to come up with an even better answer. Therefore, it can be said that it is the wisdom of crowds that is our most valuable commodity in this day and age, owing to the fact that most people are becoming increasingly connected with the internet.


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