Rare Things happen all the Time – Another Example of Deception

Rare Things happen all the Time - Another Example of Deception

Introduction

Far from the intent of teaching deception, I’m writing this to bring awareness to some of the practices of dubious entities towards the gullible masses. Most of what you’re going to read is not my original thought. It is from a recent book that I read. I will do my best to add some personal interpretation whenever I find it appropriate.

Statistical Clairvoyance

I’ve been reading numerous books on rationality, statistics, deception (including self-deception), and skepticism lately. One of them is A Survival Guide to the Misinformation Age, written by David Helfand of the Department of Astronomy at Columbia University.

The book expands on how to educate oneself not to be misled by the excessive stream of information you’re bombarded with every second you’re awake. Math and statistics are the heavy players of the book; Helfand delivers his ideas in examples from astronomy and from his personal life, which makes everything much easier to understand.

From everything I read on the subject, I currently assume that to be a good critical thinker you need to have strong knowledge of statistics and mathematics, awareness of innate biases (inborn brain flaws) as well as of the manipulative practices some will deploy to benefit from you, one way or another. Here’s an example from Helfand:

“Suppose tomorrow morning you receive an e-mail from me with a stock market prediction: over the next two weeks ticker symbol HAH is going to move up. You watch the stock out of curiosity and, as it turns out, I’m right. In a fortnight you get another tip from me: keep watching that stock – it’s going up again over the next two weeks. It does. Two Fridays hence my e-mail tip sheep is there again to let you know that, according to my analysis, HAH will experience a significant selloff over the next two weeks. And it does!” [1]

Unsurprisingly:

“This pattern continues for another two months; every two weeks you get an e-mail that predicts the direction of the stock’s movement, and seven times in a row I am right. The eighth message is slightly different however. It asks you for a $300 annual fee to keep receiving these tips. That sounds cheap given that, by investing $1,000 in HAH and following the tips I provided, you could have cleared $800 over three months; you sign up right away.” [1]

Sounds like a win-win. But, is it? Is there anything wrong here?

Helfand explains that you’re wrong if you think he had actually predicted the performance of the market. The chances to predict a binary outcome seven times in a row are quite low. It’s like predicting what you’ll get from seven consecutive coin flips. Simple stats:

1/2 x 1/2 x 1/2 x 1/2 x 1/2 x 1/2 x 1/2 = 1/128 or less than 1 percent probability.

Now, how did he do it?

“The first week, I sent the e-mail to 2,000 people. In half of the letter I said HAH would go up; in the other half I predicted it would decline. It went up. I discarded the addresses of the 1,000 people to whom I had predicted a decline; for the other 1,000 people to whom I sent a new e-mail, 500 predicted a continued rise and 500 claimed a selloff was imminent. For the third tip sheep, I used just the 500 addresses of people for whom I was two for two and sent 250 positive and 250 negative prognostications. After seven fortnightly predictions, there were about thirty-two people who were convinced of my market clairvoyance and 1,968 who had stopped hearing from me.” [1]

Clever, right?!

Helfand explained that in the days of postage stamps these mails would have cost him ~$1,700. However, if only six out of the 32 people convinced of his ‘psychic’ abilities would pay for the $300 subscription, he would be on profit. If all of them paid, he would have obtained good revenue ($32 x $300 = $9,600).

Today’s banal email, however, does not come with such costs. You could build an email list for free and do this con at no cost. Helfand is on point:

“Today, of course, postage is not required and a list of 2,000 could easily become 2,000,000 with a little extra effort.” [1]

This may not be a good long term strategy though. Since there is no ESP (extra-sensorial perception) involved, one would have to come up with other schemes to preserve the loyalty of this newly found followership. Or one could simply start a new list every now and then…

Concluding Thoughts

Manipulation and deception can be easily deployed – this is one of the downsides of today’s technology.

As in many instances in the book, Helfand ends with a suggestion:

“This is why your e-mail program has a spam filter. But it’s not perfect, so having your own spam filter continuously running in your prefrontal cortex is an excellent idea. HAH!” [1]

I’ll add that:

Self-education in cognitive biases, statistics, math, critical thinking, rationality and skepticism can help you avoid misinformation, manipulation and self-deception.

Source:

  1. David Helfand – A Survival Guide to the Misinformation Age: Scientific Habits of the Mind
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