Be Skeptical Part 1: Watch Out for Fake News

published by:
TED TOAL, CFP®
May 15, 2020

What Does It Mean to be Skeptical?

Part 1: The Benefits of Having a Doubt

“I’m not an optimist. That makes me sound naïve. I’m a very serious ‘possibilist.’ That’s something I made up. It means someone who neither hopes without reason, nor fears without reason, someone who constantly resists the overdramatic worldview.”
— Hans Rosling, Factfulness

Whether you’re considering an investment opportunity or merely browsing various media for insights and entertainment, it has become increasingly evident. You cannot believe everything you see, hear, or read. Much of it is “overdramatic.” Too much of the rest is just plain wrong.

Thus it falls on each of us to be positively skeptical in our search for knowledge.

To be positively skeptical, we must continue to think and learn and grow.

But we also must aggressively avoid falling for hoaxes and hype.

Social Media: An Aggravating Allure

Of course, selling proverbial snake oil and falling for falsities is nothing new. As investors, citizens, and individuals, it will always be our task to remain informed purveyors of the truth. But in today’s climate of information overload, this is no easy task. The very features that make online engagement so popular also make it a powerful forum for sowing deceit and confusion.

First, it’s now all too easy to share a claim far and wide, long before it’s been through any reality-check. One or two clicks, and it’s on its way.

Second, evidence suggests false online news spreads faster than the truth. In a March 2018 Science report, “The spread of true and false news online,” a team of MIT researchers analyzed approximately 4.5 million tweets from some 3 million people from 2006–2017. They found that “Falsehood diffused significantly farther, faster, deeper, and more broadly than the truth in all categories of information.”

The authors also found that “human behavior contributes more to the differential spread of falsity and truth than automated robots do.”

In other words, we can’t just blame it all on “the bots.” We owe it to ourselves to be vigilant.

A Rigorous, But Rewarding Role

The challenge is, few of us enjoy engaging in detailed fact-checking. That’s not entirely our fault. It’s likely due to a multitude of mental shortcuts, or “heuristics,” which we have honed over the millennia to make it through our busy days.

In their landmark 1974 paper, “Judgment under Uncertainty: Heuristics and Biases,” Nobel laureate Daniel Kahneman and the late Amos Tversky are widely credited for having launched the analysis of human heuristics, including when they are most likely to lead us astray.

Mostly, we’re more likely to share and comment on a social media post, than to take the time to substantiate its accuracy. When considering an enticing investment opportunity, we find it easier to skim the marketing materials, than to dig for deeper understanding. Academic research that refutes current assumptions can be dense and difficult to decipher. If a particular assumption is already widespread, we’re prone to accept it as fact.

Unfortunately, there are legions of cunning con artists and slick sales staff who know all this, and have weaponized our behavioral biases against us.

This means it’s as important as ever to sharpen your skeptical lines of defense. Granted, it takes more time to separate fact from fiction carefully. But the upfront due diligence should ultimately save you far more time, money, and personal aggravation than it will ever cost you.

Being positively skeptical should richly reward you in the long run.

In this multipart series, we’ll explore how to strengthen your fact-checking skills. Join us next time as we leap the hurdle of your own emotions to be positively skeptical about specious claims.

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