A Conversation With…

The Government Finance Research Center works with researchers from a variety of backgrounds to analyze the role that public finance plays in our lives. In the interviews below, we talk with experts to dig deeper into pertinent topics and get their perspective on the past, present, and future of government finance.

Shayne Kavanagh, Senior Manager of Research for the Government Finance Officers Association

Shayne Kavanagh

You’ve written that story-telling is an important way to communicate financial information. Why do you think this is true?

People are narrative-making machines, they are not calculating machines. So, it makes sense that if you explain your numbers with a story, you’ll get people’s attention. It’s a better way to communicate than just to provide abstract data.

It would seem like it might be a challenge for finance officers to put their messages in story form. Aren’t many accustomed to thinking in numbers?

Like anything, it’s a skill you can learn. Developing a facility for using metaphors is an important skill. That way, people can link the data to real-world experiences.

Could there be pushback from people who are highly numerate? 

I’ve yet to meet anyone who says people don’t like stories.

Is part of the reason this is important is that many people just have difficulties understanding numbers in the first place?

One of my favorite quotes is this: “’Narrative is the currency of the elected official.” But it’s not the currency of the finance people. They would prefer using their currency, which are the numbers. But they must convert their thought processes into stories, in order to communicate with other people, notably the elected officials themselves.

Do any examples come to mind of a good story – or a good image – that helped explain data? 

I’ll tell you a story about a government, working on a long-term plan, that had put together underlying data showed they were running out of land for future development. They had data on the number of acres available and other pieces of information you’d expect to have from a quantitative perspective.

To supplement the data, they put together images showing specific parcels of land that used to be available that were no longer available. That helped get across the message that there was a reduction in the amount of land available for development.

You’ve written that psychological research shows that people often misunderstand and/or misuse numbers to create a narrative that favors their point of view.

Yes. This problem creeps up. Finance officers must recognize that there’s an ethical responsibility to represent numbers accurately when telling the story behind them. For example, you could tell stories or paint a picture that makes a problem look worse than it is to spur the elected officials into taking action. And then the other option is to represent the information in a way that makes it look like it’s not so bad because elected officials might be angry.

Are there any techniques for avoiding the possibility that people will buy into misleading information?

People tend to be a blank slate, and we tend to believe the first thing that we’re told. So, it’s important for finance officers to get accurate news out first.  If inaccurate bad news gets to people first, the finance officer will have to come along later and dislodge all that information. So, it’s a lot better to get your message out first, and that way you won’t be in the position of dislodging or overriding inaccuracies later on.

People sometimes use the phrase “overconfidence bias,” in connection with the way we use and hear stories. Would you please explain that phenomenon?

People can be overconfident in their abilities, including their abilities to communicate. There are surveys that show that 25 percent of people think they’re in the top 1 percent of the population for likeability. And I’ve come across surveys that show that 50 percent of people in business think they’re in the top 10 percent of ethical business people.

How does that work when it comes to people using stories to communicate complex messages?

People have overconfidence in the ability to be understood. Let me tell you about a pretty cool experiment — a game that you and I could play. My job, in the game, is to tap out a song on a desk. Maybe it’s Happy Birthday to You. And I’m confident that you’ll know the song I’m tapping out because I know it. It sounds like Happy Birthday to me.  But sometimes it just doesn’t sound that way to you.

[Interview note: As Kavanaugh told this story, he did indeed tap out the tune of Happy Birthday. The interviewer, however, thought he heard an entirely different tune.]

Any more thoughts about the hazards of overconfidence in relaying financial information?

There’s overconfidence in how the future will turn out. People think that the future will look a lot like the past. And if you’re telling a story about what the future looks like, that story could be rooted in how things are now.

That kind of thing could be a problem when people consider how to spend American Rescue Plan money. They may implicitly assume that this level of resourcing is going to last forever. And that would be a mistake. Beyond that, there can be overconfidence in revenue forecasting generally. If people assume that the future is going to look like the past, they’ll frequently make errors in the revenues that they anticipate will come in over future years – both on the positive and negative sides.

Is there a way to overcome this pitfall?

One approach is to bring in an outside view, including data from other jurisdictions. Or there’s a thought experiment that’s one of my favorites. If a financial officer thought about a situation in which he left the organization, what would that person think the new financial officer would think. That’s a way of getting a second opinion from yourself.

It’s also helpful letting people know that whatever stories you tell about the future you’re not 100 percent certain. 

 

Interview conducted by Richard Greene, senior advisor, GFRC

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