In 2004 a guy called James Surowiecki published a book called “The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations” about the aggregation of information in groups, resulting in decisions that, he argues, are often better than could have been made by any single member of the group. The book presents numerous case studies and anecdotes to illustrate its argument, and touches on several fields, primarily economics and psychology. The opening anecdote relates Francis Galton’s surprise that the crowd at a county fair accurately guessed the butchered or the “slaughtered and dressed” weight of an ox when their individual guesses were averaged (the average was closer to the ox’s true butchered weight than the estimates of most crowd members, and also closer than any of the separate estimates made by cattle experts).
The book relates to diverse collections of independently-deciding individuals, rather than crowd psychology as traditionally understood. There are parallels with statistical sampling theory—a diverse collection of independently-deciding individuals is likely to be more representative of the universe of possible outcomes, thereby producing a better prediction (Trivia: Its title is an allusion to Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds, published in 1841).
Now, because of market power and influential individuals – the wisdom of crowds may not have worked to its full effect. However, via social networks online we can really see the effect of crowd-wisdom in action! One good example of this is a new social shopping site called Crowdstorm where users recommend products to each other. In many ways it works a bit like my favorite new music discovery site Last.FM where you can tune in to a music stream which is based on tagging what sort of genres you’d like to listen to (ex. “alternative rock”) OR you can tune into your friends’ music radio. In web 2.0 People learn from people rather than from the “experts” and the industry.
All I can say is this: Welcome to the age of crowd-wisdom!