In 1906, English scientist Francis Galton visited a country livestock fair and stumbled upon an intriguing contest. An ox was about to be slaughtered, and the villagers in attendance were invited to guess the animal's weight after being slaughtered and dressed. Nearly 800 gave it a go, and not surprisingly, no one hit the exact mark: 1,198 pounds. Astonishingly, however, the average of those 800 guesses came close - very close indeed.
It was 1,197 pounds.
This anecdote captures the striking thesis of James Surowiecki's new book, "The Wisdom of Crowds: How the Many Are Smarter Than the Few." "Under the right circumstances," Surowiecki argues, "groups are remarkably intelligent, and are often smarter than the smartest people in them."
For evidence, he cites how groups have been used to find lost submarines, correct the spread on a sporting event, locate a Web page, even predict the president of the United States. So why aren't we using groups more?
Well, for one, crowds have a pretty bad rep. When evil or foolish influences rise to the fore, they ignite mob rule, lynching, financial panic, and styling trends like the mustache or jock-hawk.
Furthermore, as Surowiecki notes, corporate structure is enthralled with the idea of expertise. Strategy consultants demand hundreds of dollars an hour to tell companies what to do, while executives rake in 8-figure salaries to rescue sinking ships. To accept that the masses might know something valuable would mean radically altering how our country operates.
As counterintuitive as it sounds, however, the mathematics work so long as Surowiecki's three key criteria - independence, diversity, and decentralization - are satisfied. "If you ask a large enough group," he says, "to make a prediction or estimate a probability," the errors they make cancel each other out. "Subtract the error, and you're left with the information." In this fashion, the TV studio audience of "Who Wants to Be a Millionaire," guessed the right answer to questions 91 percent of the time, torching the "experts," who guessed the right answer only 65 percent of the time.
In the book's first half, Surowiecki explains his three criteria in depth, and then shows how they play out in the three types of problems that groups can solve: cognition problems (such as who will win the Patriots game), coordination problems (such as how crowds move through a city), and cooperation problems (such as how to price a gallon of orange juice fairly).
Surowiecki is a business columnist for The New Yorker, and "The Wisdom of Crowds" packs more textbook terms than an introduction to economics. One need not be a CEO or amateur stock trader to appreciate his book, but a certain patience with the lingo does help.
Overall, however, Surowiecki is a patient and vivid writer with a knack for culling entertaining examples. To demonstrate the importance of diversity on group wisdom, he describes how NFL head coaches continue to have players kick field goals when, statistics have shown, they're better off going for it. Coaches come from similar backgrounds and work in similar situations, leading to a group of risk-averse decisionmakers. Hence: the bad decision.
The application of group wisdom stretches far beyond football games, though, which is why this book is not just revolutionary but essential reading for everyone.
Take national security. In one section, Surowiecki describes how the US blundered into the Bay of Pigs because the decisionmaking group - the president and his advisers - all shared similar conceptions and assumptions. In short, the group lacked diversity and, as a result, demonstrated a colossal example of the failings of groupthink.
"The Wisdom of Crowds" is likely to raise a certain amount of controversy and not just because of Surowiecki's counterintuitive thesis.
In one section, he encourages the intelligence community to revisit the idea of using futures markets to ensure homeland security. And football fans might object to the idea of having economic models determine play outcomes.
Still, there's something hopeful about Surowiecki's grand idea. One need only read his lengthy subtitle to appreciate the whiff of populism here. New York, Boston, and Los Angeles might remain our nation's cultural capitals, Surowiecki suggests, but the rest of the madding crowd knows a thing or two. If for that reason alone, one hopes the group approves of his book - and in a big way.
• John Freeman is a writer in the very crowded city of New York.