Saturday, December 28, 2013

Investing Your Credulity

What to believe? is among the eternal questions. So many people are propounding so many dramatic claims about so many different subjects -- often in stark contradiction to one another -- that the most common reaction is to dismiss them all, draw into one's own protective shell, and spend one's attention solely on reruns of Millionaire Matchmaker and Real Housewives of Beverly Hills.

The critical word in the above is believe. The propositions of which I speak are ones which resist objective verification. Some are about things that happened long ago; some are about things to come; and some are about things supposedly going on right now under a thick cloak of concealment. Whatever the case, the claimant is passionate about his claim and wants you to invest in it equally.

Is this wise? Seldom. As I wrote just yesterday, Man is highly fallible. We screw up a lot. We keep damaged, tendentious records; we forecast on the basis of insufficient knowledge and insight; and we tend to believe lurid fantasies over banal facts.

Yet it is in the nature of things that now and then a wild-eyed type actually gets one right and surprises us all...all of us, that is, except for whatever tiny group took him seriously. Sometimes, being a part of that tiny group produces a payoff. And we like payoffs. So: when confronted with such a dramatic proposition, how should we allocate our credibility?


In case you were wondering, this subject is on my mind because of a flock of recent Web articles. The Web has become the preferred outlet for outlandish claims, a phenomenon that should require no explanation. The mere fact that such claims appear on the Web and not in "respectable" organs is often cited as a reason to dismiss them with prejudice. Yet now and then, a claim will prove correct, startling the more skeptical and reinforcing the credulity of the credulous.

Here are three such articles:

Note the epistemological commonalities among the three pieces:

  • All three forecast a looming disaster;
  • All three rely upon imputed authority over the subject matter;
  • All three imply that drastic action on the part of individuals is necessary to ensure our survival.

These pieces are about as lurid as lurid gets before we enter alien-invasion territory. Yet any one of them could be correct in its claims. The average reader has no way to know.

Assuming you haven't adopted the turtle-defense measures I mentioned above, how do you cope, Gentle Reader?

I'm a skeptical sort. I prefer to deal with verifiable facts and causal mechanisms that I can confirm from observation. That's my front-line defense against being panicked about some development or some representation being urged upon me by crisis-mongers. Were I present in Seldon's Trantor, I'd have been one of those reluctant to put stock in his forecast.

But skepticism is a play on probabilities. It's not guaranteed to be correct; unlikely-seeming things happen all the time. Inasmuch as some of those unlikely-seeming things have had significant, wide-ranging consequences in the past, giving some attention to those who prognosticate about them is a reasonable investment of a modest fraction of one's time...always with the proviso that one be on the lookout for evidence at all times, and ever mindful of the major wisdoms about human credulity:

  • We tend to believe that which favors our prejudices;
  • We tend to believe that which would benefit us personally;
  • We tend to believe that which issues from persons we like or admire; some degree independent of the plausibility of the claim involved. Which makes mechanisms for "tuning" one's degree of credibility investment important enough to ponder at some length.

"Proportion your belief to the evidence." -- David Hume

Facts trump theories, always. If facts relevant to a claim are available, they should be gathered and measured against the representations of the claim. This is particularly important in gauging claims based on trends -- and the most dramatic claims are all based on trends.

Trends are important. Trends can have a significant impact on our decision-making. But trends are neither universal nor eternal. Indeed, by their very existence they tend to evoke damping mechanisms of equal intensity.

Financial trends are a good example. If you haven't heard the term contrarian investing, it's proved to be one of the surest routes toward modest but steady gain. Contrarian thinking proceeds from the postulate of fallibility, as confirmed by the evidence: Nearly all forecasts are wrong nearly all the time.

The contrarian must have a stolid disposition, inclined to walk, not run. He doesn't bet on the exact opposite direction of the current trend. Rather, he prepares for its eventual dissipation. He looks for "irrational optimism" and cautiously takes a stake in the opposing view. Speculators riding the trend, looking for a "big score," are the contrarian's natural feeding ground. It's an approach that requires patience and an imperturbable nature, but it's solidly founded on the facts: No trend lasts forever. Equilibrium always triumphs.

Which leads to the next yardstick for gauging the plausibility of a claim.

"Action equals reaction." -- Sir Isaac Newton

As I stated above, a strong trend is likely to evoke a damping mechanism of equal intensity. The nature of the damper will depend on the nature of the trend; it need not be of identical form.

In the late Nineteenth Century, when a largely free market, the rapid industrialization of the cities, and a little political favoritism gave rise to the first very large enterprises, a critical damper arose in the form of the Progressive movement. This rapidly swelling movement, founded upon envy and inherently fallacious in its claims, was the counterweight to the great industrial fortunes. It was a political response to an economic and technological phenomenon. And it largely succeeded in reining in the industrial development of the United States.

Compare that development with its contemporary analogues. The Eighties and Nineties saw a second huge burst of capitalist enterprise, resulting in a new crop of major commercial firms and figures. The most effective counterweight in recent years was political environmentalism, only modestly buttressed by old-style "compassionate" Progressivism. (The latter had been weakened by rampant "compassion fatigue" from the Great Society and its sequelae.) Some who bet on the speeding elevator of Eighties capitalism gained from their gambles, but more others lost their shirts as the countertrends kicked in.

Consider in this light the massive gun purchases by private citizens since 2008, the Tea Party response to Obamunism, and the flood of new interest in preparationist writers, non-traditional schooling, concierge and other alternatives to traditional medicine, and the precious metals.

Keeping an eye peeled for asymmetrical responses to a development is among the most prudent ways to gauge the credibility of a claim founded on a trend.

"Three can keep a secret if two of them are dead." -- Origin unknown

There's nothing quite as confounding as a claim premised on "inside information." The claimant might actually have it; you have no way to tell. What, then, are we to make of dramatic claims founded on such knowledge?

These are the cases that demand the most reliance upon our knowledge of Mankind. In particular, we must lean upon the aphorism at the start of this segment. No matter the stature of the claimant, the mere fact that he claims knowledge or insight unavailable to others casts a pall over his representations. Why him and no one else? Alternately, If others also know, why has he alone spoken of it?

The principle is most significant in assessing claims that imply a degree of conspiratorial action. There have been real conspiracies in the past, and no doubt there will be others in the future. However, the larger a conspiracy becomes, the more visible it becomes, both from the impact of the coordinated actions of its participants and from the inability of most people to keep their mouths shut.

We've all read about "conspiracies in plain sight" such as the Council on Foreign Relations, the Trilateral Commission, the Bilderberger Group, and so forth. Those are all real organizations, each with a moderately coherent agenda. But the public nature of such groups gives rise to the forces that dampen their influence. To be genuinely important, a conspiratorial organization would have to fly under the radar, working its will without being detected until it was too far along to be thwarted. This isn't impossible, but it is exceedingly difficult, for reasons already stated.

Besides all that, a completely secret conspiracy of power and skill sufficient to impose its will on the nation against all countervailing forces would therefore be unopposable. There'd be nothing to be done about it. So believe in it if you please, but take Bobby McFerrin's advice to heart and tend your own garden.

This ramble proceeded from that part of my psyche wherein resides my faculty for amusement at Man's follies, including my own. I recognize my own credulity -- mostly after it's gotten me kicked good and hard -- as typical of the human race. I've believed enough absurd things in my sixty-plus years to have taught me the value of amiable skepticism: a let's-wait-and-see attitude that gives way to others' assertions only after amassing significant evidence and slow-roasting it on the rotisserie of reason and history.

This isn't a brief against ever believing any dramatic claim. It's an exhortation to a degree of imperturbability: not absolute immovability of conviction but a preference for reposing confidence in the laws of equilibrium. Yes, things change; that's absolute and inevitable. But swift, dramatic changes are fairly rare, are normally preceded by visible harbingers, and are predicted consistently by more than a few prognosticators at any given time.

And now that that's off my chest, on to more practical matters. I must pay the dues for my memberships in the Knights Templar, the Freemasons, and the Illuminati today, and buy another quarter-ton each of rice, beans, and peanut butter before DHS and FEMA close the stores. After that, perhaps I'll have time to clean all the guns. The voices have become most insistent about that lately.


Xealot said...

Nassim Nicholas Taleb would seem to agree with you, Francis. Black Swan events are notoriously difficult to predict. In fact, it may simply be random chance that anyone is correct in those sorts of predictions at all.

People buying canned foods and shotguns right now are probably going to be disappointed that the their preparations were not necessary. However, I do agree that an economic collapse is likely, simply because most of the headlines I'm reading every day are talking about how great the Stock Market is.

In other words, I don't predict an economic collapse, per se, I predict that the largest group of predictors are going to be wrong. It's like the entrepreneur running toward an investment because John Q. Public is running away from it. When the majority of people are convinced something is a sure thing, it's time to plan your exit strategy.

So I'd wager that both sets of predictors are going to be wrong. The stock market and the economy will not recover, and will likely get worse. But canned foods and shotguns aren't likely to be needed either. John Q. Public is buying guns -- now would probably be a good time to sell some at an inflated price.

F.J. Dagg said...

"...only after amassing significant evidence and slow-roasting it on the rotisserie of reason and history."

I had to take a moment, Fran, to congratulate you on truly outstanding metaphor. Thanks!

lelnet said...

I have a simple and effective response to most such claims:

"OK, let's say I believe that you do indeed possess inside information of the sort that you claim. Am I, as an individual, capable of rendering assistance to your efforts which might plausibly make the difference for you between success and failure? No? Well, surely you realize that the value of a secret diminishes rapidly with the number of people who know it, yes?'re doing this out of the pure generosity of your soul, eh? Well, since we don't know each other, by what means did you determine that I was worthy to be brought into the circle? Or did you -- just askin', here -- perhaps have some _other_ motive at heart, than my best interest?"