Video: Gun Debate between Alex Jones and Piers Morgan; the Behavioral Perspective

Marquez-Pacquiao move over: Alex Jones of the Infowars.com and PrisonPlanet.TV and CNN’s Piers Morgan in an impassioned debate over gun control at the CNN  (hat tip: Bob Wenzel)

Video 1 

Video 2 

Many will be turned off by the mercurial stance of Mr Jones in handling the debate.

But from the behavioral point of view, the debating tactic employed by CNN’s Piers Morgan’s seems hinged on the devious ploy called the “power of suggestion” or the "priming effects". Mr. Morgan repeatedly attempts to oversimplify what truly has been a complex issue through the selective use of statistics or by framing the argument on specific instances. This is an example of a debate where people talk past each other.

Writes Daniel Kahneman in Thinking, Fast and Slow (p.128) “our behavior are influenced, much more than we know or want, by the environment of the moment”, such that priming makes the audience “susceptible to the biasing influence”(p.127).

In short, by anchoring the debate on issues of the moment, Mr. Morgan’s technique appeals to the emotions of the gullible audience.

How to deal with this negotiation or debating strategy?

Mr. Kahneman advices (p.126)

If you think the other side has made an outrageous proposal, you should not come back with an equally outrageous counteroffer, creating a gap that will be difficult to bridge…Instead you should make a scene, storm out or threaten to do so…

This seems exactly how Mr. Jones deftly eluded Mr. Morgan’s traps.

This debate reminds me of the chilling words of Germany's Adolf Hitler whose Nazism was responsible for the death of about 25 million people during World War II (including the Holocaust),

The most foolish mistake we could possibly make would be to allow the subject races to possess arms. History shows that all conquerors who have allowed the subject races to carry arms have prepared their own downfall by so doing. Indeed, I would go so far as to say that the supply of arms to the underdogs is a sine qua non for the overthrow of any sovereignty...

Quote of the Day: The Illusions of Pundits

People who spend their time, earn their living, studying a particular topic produce poorer predictions than dart-throwing monkeys who would have distributed their choices evenly over the options. Even in the region they knew best, experts were not significantly better than non-specialists.

Those who know more forecast very slightly better than those who know less. But those with the most knowledge are often less reliable. The reason is that the person who acquires more knowledge develops an enhanced illusion of her skill and becomes unrealistically overconfident. “We reach the point of diminishing marginal predictive returns for knowledge disconcertingly quick,” Tetlock writes. (Philip E. Tetlock, University of Pennsylvania in 2005 book Expert Political Judgment: How Good is It? How Can We Know?—Prudent Investor) “In this age of academic hyperspecialization, there is no reason for supposing that contributors to top journals—distinguished political scientists, area study specialists, economists, and so on—are better than journalists or attentive readers of the The New York Times in ‘reading’ emerging situations”. The more famous of the forecaster, Tetlock discovered, the more flamboyant the forecasts. “Experts in demand,” he writes, “were more confident than their colleagues who eked out existences far from the limelight.”

The above quote is from 2002 Nobel laureate psychologist and professor Daniel Kahneman in his insightful book Thinking, Fast and Slow p.219

There are many reasons not to trust pundits, aside from overconfidence, which essentially oversimplifies human action.

I believe that the substantial chunk of “expert errors” emerge from the influences of conflict-of-interest relations, particularly the principal-agent problem, where “experts” tend to promote the interests of employers, sponsors, donors, grant providers and or even political agents (perhaps through implicit ambition to be part of the political institution) whom are sources of the self-interests of such pundits.

Forecasting inaccuracies may also be linked to the rigid application of ideology and or on the overreliance on math models (scientism).

Add to this the desperate desire by “experts” to attain social acceptance via social signaling.  Such would include making extreme (media attracting) projections or providing the veneer of expertise on what truly is about populism—forecasting based on what is popular, or as I previously wrote 

For many, thus, expertise signify more as social signaling (posturing or seeking social acceptance) and or “telling people what they want to hear” but predicated on certain technically based paradigms which produces an aura of supposed superiority rather than representative of the true domain knowledge.

Dr. Kahneman suggests that to determine “true expertise” from merely displays of the “illusions of validity”, one should identify conditions where pundits have excelled in “an environment that is sufficiently regular to be predictable” and from their having “to learn these regularities through prolonged practice” (p 240). In short, in an unpredictable world, expert opinion should be less trusted.

However by simply associating expertise with “regularity” and “prolonged practice” seems to contradict logically his earlier critique of pattern seeking behavior (which is about the human psychological propensity to seek regularity or constancy through patterns while at the same time underestimating the role of randomness). The nuance will be on the marginal efforts applied by practitioners via  “prolonged practice” in dealing with such regularities. 

The point is despite being able to minimize the influences of “expert or non-expert” intuition on decision making that may result to lesser degree of judgmental errors, behavioral economics/finance will not lead to omniscience or come close to solving the knowledge problem: a complex society will always be subject to irregularities and unpredictability from the dynamic and intricate feedback mechanism of human action and of environmental changes. Dr. Kahneman acknowledges this: "Errors of prediction are inevitable, because the world is unpredictable" (p. 220)

Nevertheless the best way to acquire “expertise” is primarily through investing in oneself

Quote of the Day: The Illusion of Stock-Picking Skill

Professional investors, including fund managers, fail a basic test of skill: persistent achievement. The diagnostic for the existence of any skills is the consistency of individual differences in achievement. The logic is simple: if any individual differences in any one year are entirely due to luck, the ranking of investors and funds will vary erratically and the year-to-year correlation will be zero. Where there is skill, however, the rankings will be more stable…

There is general agreement among researchers that nearly all stock pickers, whether they know it or not—and a few of them do—are playing a game of chance. The subjective experience of traders is that they are making sensible educated guesses in a situation of great uncertainty. In highly efficient markets, however, educated guesses are no more accurate than blind guesses.

This excerpt is from 2002 Nobel laureate psychologist and professor Daniel Kahneman in his insightful book Thinking, Fast and Slow p.214

Well Mr. Kahneman’s thesis seems to have been recently validated as passive long term investment funds (via equity bond index) has trumped active fund management represented by hedge funds 

The Economist notes,

The S&P 500 has now outperformed its hedge-fund rival for ten straight years, with the exception of 2008 when both fell sharply. A simple-minded investment portfolio—60% of it in shares and the rest in sovereign bonds—has delivered returns of more than 90% over the past decade, compared with a meagre 17% after fees for hedge funds...

The widening disparity means that randomness or providence or lady luck has increasingly played a bigger role in determining the performances of the fast expanding hedge fund industry. 

The same Economist article subliminally acknowledges this,

The average hedge fund is a lousy bet, and predicting which will thrive and which will disappoint is a task that would tax even a Nobel prizewinner.

Yet in the finance industry where many of the participants believe that they possess presumptuous knowledge which in reality exhibits inflated egos, the role played by luck/randomness exists in a vacuum. 

Why? As Mr. Kahneman from the same book p 216 explains,

The illusion of skill is not only an individual aberration; it is deeply ingrained in the culture of the industry. Facts that challenge such basic assumptions—and thereby threaten livelihoods and self esteem—are simply not absorbed. The mind does not digest them. This is particularly true of statistical studies  of performance, which provide base-rate information that people generally ignore when it clashes with their personal impressions from experience.

Quote of the Day: We are Pattern Seekers

We are pattern seekers, believers in a coherent world, in which regularities appear not by accident but as a result of mechanical causality or of someone’s intention. We do not expect to see regularity produced by a random process, and when we detect what appears to be a rule, we quickly reject the idea that the process is truly random. Random processes produce many sequences that convince people that the process is not random after all. You can see why assuming causality could have evolutionary advantages. It is part of the general vigilance that we have inherited from ancestors.

This is from 2002 Nobel laureate psychologist and professor Daniel Kahneman in his splendid book Thinking, Fast and Slow  p.115. 

While pattern seeking impulses had been necessary for the survival of our hunter gatherer ancestors, ignoring the role of luck and randomness in today's world extrapolates to perspectives detached from reality.