Why Aren’t More Doctors Wealthy?

In the 1960s, Lew Goldberg showed that a physician’s intuition and judgment could be fatally flawed.

Interestingly, the same fatal flaw that Goldberg exposed is the same fatal flaw that causes some of the biggest financial mistakes that doctors make with money.  Why aren’t doctors rich?  Psychology has an interesting explanation that everyone should understand.

After the deep dive, we will discuss how to defeat this flaw and set ourselves on a path for financial success.

Why Aren’t More Doctors Wealthy?

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In the beginning, Goldberg asked several well-trained radiologists how they set out to determine when people had stomach cancer. The doctors explained that there were 7 criteria that they use to make the diagnosis.

Goldberg’s Experiment

Goldberg created an algorithm that would strictly adhere to these 7 criteria.  Thus, he removed many of the psychological hoops that radiologists jump through when making a decision.

The results were surprising. First, though the physicians were the ones with the experience and knowledge to provide the criteria, the algorithm outperformed the doctors by a staggering margin.

The Results

Second, many of the physicians made a different diagnosis based on the same image.  In other words, they saw the same image twice and gave a different diagnosis. Of course, during the testing, they didn’t realize it was a duplicate image.

Third, the accuracy of the judges did not correlate with experience. The least experienced doctor was just as likely as the most experienced to make the same mistakes.

Because we are irrational. Just like everyone else. But we are also really good at reasoning our way to bad decisions. The way to defeat our irrational thinking is by creating a rational financial plan that we can stick to.

Why Aren’t Doctors Rich?

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