Fri Jul 31st, 2009 at 04:37:36 AM EST
Why are we still listening to the fools who got us into the situation we're in? From the Irish Times:
IT IS AN often-noted but rarely understood phenomenon: the significant number of people who manage to earn a living, often a handsome living, by being wrong. Not always wrong, necessarily, but wrong enough, frequently enough, to warrant the description wrong-headed. We see evidence of it everywhere, from those sporting commentators who consistently struggle to accurately predict a result (“Manchester United have way too much for this Barcelona team” – often heard in May 2009) to the financial advisers whose advice proved very costly indeed (“You can’t go wrong by investing in property and bank shares” – often heard from 1998 to 2007).
Why, one might reasonably ask, are so many of these people still paid to offer their opinions or advice, despite having a demonstrably flawed track record? Well here’s the science bit – research by Prof Don Moore of Carnegie Mellon University in Pittsburgh, Pennsylvania, shows that given the choice between two people offering advice, we’ll tend to go with the more confident source, even if their track record is less reliable. At a symposium in San Francisco last month, quite brilliantly called “Often in Error, Rarely in Doubt”, Moore gave a paper describing how “When advisers must compete with each other, we find that the confidence they claim escalates over time. This overprecision helps advisers sell their advice.”
This goes some way towards explaining why a characteristic shared by many of these wrong-headed “experts” is an overweening self-confidence. All those brass-necked pundits whose self-assurance seems inversely proportional to their wisdom are merely the inevitable result of free markets, because selling certainty is easier than selling nuanced opinions that embrace complexity and doubt.
It's better to seem certain than to be right, even though you've a record of being wrong. Humans are broken.