How important is new information? How do we know? Often, we don’t, according to a study in a September 2024 paper in the Quarterly Journal of Economics. Professors Eben Lazarus, Ned Augenblick, and Michael Thaler found evidence in sports betting, financials markets, and other situations that people overreact to weak or less relevant information and “underreact to strong signals” (at the end of basketball games, for example, when players hit or miss key shots).

The Challenge of Weighting New Information

Most of us are simply not that good at properly weighting, including, or excluding new evidence or data. As a result, we tend to split the difference, use averages, or treat information equally. This can result in overreacting to weak information, perhaps because it is recent or surprising, or insufficiently accounting for stronger information relevant to our thinking and decisions.

For example, we can overweight information simply because we agree with it, using that as a proxy for credibility, when in fact our own understanding may be weak. This is a tough situation because it requires some humility and the ability to put information into context. If not, we may double down on our own ignorance by adopting new information simply because it’s consistent with our own (mis)understanding. Or we may simply waste time on something, taking energy away from the critical few things that truly matter to our family or business.

Example: Harvesting More Trees from Federal Lands

On Saturday March 1, 2025, the White House told federal agencies to look for ways to increase timber production on public lands. The executive orders, which also directed government officials to streamline regulations and reduce costs associated with forest harvesting, generated dozens of emails and phone calls for my team of forestry researchers and analysts at Forisk, and I ended up writing a post to provide context about this and other policy issues.

While the idea of increasing forestry activities on public forests is doable and viable on the margin, the forest industry remains constrained by the physical realities of people and distance. Just because something is allowed, permitted, or signed does not guarantee its relevance or importance. In this instance, the biggest challenge is labor: the forest industry in the U.S. is short labor, so any effort to increase harvesting, trucking, and forest products manufacturing relies on employees we don’t have.

This reality extends to the use of those forest products when building homes. According to US Census data, construction had the highest percentage of immigrant workers, at 28.6% of all construction employees, or over 3.3 million people. Manufacturing was next with 3.2 million foreign born workers. And there are hundreds of thousands in agriculture, forestry, and fishing. In my quarterly calls with forest industry manufacturers and timberland managers, labor remains a primary constraint for filling shifts and transporting product. Firms can barely fill the shifts they have.

Conclusion

How important is new information? In forestry and other sectors, the answer starts with stepping back, applying basic frameworks, and asking simple questions related to the physical facts and actual economics. Is this a big change relative to the total volume, total acreage, total value, total budget, or overall population? Is this a long-term impact affecting our strategy or short-term bump in the road? These questions help us decide whether or not this new information accelerates or slows our ability to get things done.