Personal Finance

Our Tendency to Believe Confident People Over Cautious People

Comments 6 Comments

People prefer advice from an expert who projects confidence over an expert who shows caution, according to a recent study. That's understandable — after all, it makes sense to follow the opinion of someone who seems sure of what they're talking about instead of someone who hem, haws, and hedges. But the more surprising finding of the study was that people have a statistically significant tendency to prefer the advice of confident advisers even after those advisers demonstrate themselves to be unreliable.

The researcher, Don Moore of Carnegie Mellon University, presented his findings at the Association for Psychological Science Convention in May, in a symposium with the delightful title of "Often in Error, Rarely in Doubt."

In the experiment, volunteers were asked to guess the weight of a person in a photograph. They were allowed to buy advice from volunteer "experts." Some of the experts offered answers as a spread of probabilities for different weight ranges. The more confident experts provided just one weight range. (See table here.) The guessers favored the advice of the confident advisers. After they learned that the confident advisers weren't as accurate as the more cautious advisers, they stopped buying their advice as much as before, but even so, the confident experts were called upon more frequently than they should have been, statistically speaking.

Another interesting finding of the study was that the less confident advisers eventually began to change their advice to be more like that given by the more confident advisers. They made their advice more precise, but not any more accurate.

Unfortunately, cable TV news seems to breed this kind of confident expert who delivers simplistic advice in sound bites. I'm reminded of the pundits who scoffed at Euro Pacific Capital president Peter Schiff when he warned in 2006 and 2007 that our economy was on the verge of collapse.

Here's a bit of expert advice: The next time you see a talking head on TV telling you he is certain about something that's not certain, change the channel.

Mark Frauenfelder – Editor-in-chief of MAKE magazine and the founder of the popular Boing Boing weblog, Mark was an editor at Wired from 1993-1998 and is the founding editor of Wired Online.
  • Skrambed Egghead

    Ah yes. Confidence, a critical element in the term “Con-Man”. http://en.wikipedia.org/wiki/Confidence_trick
    Makes perfect sense indeed.

  • Chris

    “The problem with the world is that the stupid are cocksure, and the intelligent are full of doubt.”
    - Bertrand Russell

  • Alex

    I’m confused… Who are you saying was making a mistake: Peter Schiff, the pundits, or both?

  • http://creditbloggers.com Mark Frauenfelder

    “Who are you saying was making a mistake: Peter Schiff, the pundits, or both?” Well, Schiff was right and the pundits were wrong, but I meant the people who believed the confident pundits were making the mistake.

  • Alex

    What about the people who believed Schiff? True, he turned out to be right, but it’s not clear if he *knew*, or if he just guessed right (like predicting coin flips).
    (I’m not sure if he was confident or not.)

  • http://creditbloggers.com Mark Frauenfelder

    I’m not sure either. They were both confident. Smart viewers would seek the advice of more realistic advisers who don’t pretend they know for sure what is going to happen.

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