HOA Group Think

Written by Richard Thompson Posted On Thursday, 19 November 2020 00:00

Homeowner associations are often portrayed as the detached governed by thankless volunteers. It's the blind leading the blind or rather the clueless in charge of those that could care less. So how should this union of the unwilling go about acquiring the wisdom it needs?

James Surowiecki makes the case that a group is smarter than the smartest individual in his book "Wisdom of Crowds." Surowieki's research indicates that the wisdom of answers from those with only general life experience exceeds the wisdom of world experts. Here are some excerpts from an interview:

How did you discover the wisdom of crowds?

"The idea really came out of my writing on how markets work. Markets are made up of diverse people with different levels of information and intelligence, and yet when you put all those people together and they start buying and selling, they come up with generally intelligent decisions. I realized that it wasn't just markets that were smart."

Could you define "the crowd"?

"A "crowd" is any group which can act collectively to make decisions and solve problems. So, big organizations like a company count as crowds and so do small groups, like a team of scientists working on a problem. But so are groups that aren't really aware of themselves as groups, like investors in the stock market. They make up crowds, too, because they're collectively producing a solution to a complicated problem: the choices of investors determine stock prices."

Under what circumstances is the crowd smarter?

"There are four qualities that make a crowd smart:


• Diversity. Group members are bringing different pieces of information to the table.

• Decentralized. No one at the top is dictating the crowd's answer.

• Summarizes Answers. Combines all member answers into one collective verdict.

• Independent. Individual answers are independently arrived at without worrying about what others think."


And what circumstances can lead the crowd to make bad decisions?

"Bad answers are more likely when most of the group are biased in the same direction. When diverse opinions are squelched, groups tend to be dumb. It usually spells disaster when too much attention is paid to what others think. Stock market bubbles are a classic example of group stupidity: instead of worrying about how much a company is really worth, investors start worrying about how much other people think the company is worth. The wisdom of crowds is that the best decisions come from independent individual decisions."

What kind of problems are crowds good at solving and what kind are they not good at solving?

"Crowds are best when there's a "right" answer to a problem. If there is a factual question, groups consistently provide the correct answer. Groups aren't good at problems of skill -- for instance, don't ask a group to perform surgery or fly a plane."

Why are we not better off finding an expert to make all the hard decisions?

"Experts, no matter how smart, only have limited amounts of information. They also have biases. It's very rare that one person can know more than a large group of people, and almost never does that same person know more about a whole series of questions. It's actually hard to identify true experts."

How can the crowd's collective wisdom help an individual?

"The principle works for individuals as long as the groups are diverse and individuals try to be as independent as possible."

Is the wisdom of crowds about consensus?

"No. The wisdom of crowds emerges from disagreement. It's the "average" opinion of the group, but not an opinion that every one in the group can agree on. Collective wisdom does not result from compromise."

In the final analysis, while it's common to rely on the wisdom of experts or leaders when making difficult decisions, it's more effective to rely on the wisdom of the group. Together all of us know more than any one of us does. The Board of a homeowner association can draw wisdom from its members by involving them in policy and rule formation, the annual budget exercise, architectural design and a host of other decisions. Involving the members adds another bonus -- compliance is more likely when the governed are involved in the governance.

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