Human Behavior in a Crisis: Populism and Fake News

Julian Koski, Co-Founder and Chief Investment Officer, New Age Alpha
Apr 2, 2020 3:23:46 PM 7 min read

Populism is the worst form of government to handle a health and informational crisis like COVID-19. How can we state this so confidently? Founding father Thomas Jefferson said the same: “If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.” In effect, Jefferson was saying the voting public can’t have it both ways—they can’t be free without actively staying informed. We can’t elect leaders whose only interest is their own reelection and expect proper leadership during a crisis. Such leaders’ next moves will be perpetually clouded and reelection concerns will loom over every decision they make. In the process, they will exploit the H-Factor—the human tendency to interpret vague or ambiguous information in a biased way—to the fullest. One of their main weapons? Disinformation and cheapening claims of “fake news.”

The disease IS worse than the cure

Everyone knows certain networks skew to opposite sides of the political aisle. At key moments in history, one could watch their news side-by-side and the coverage would appear to be from completely different countries. Walter Cronkite’s stoic professionalism had conditioned the nation to believe in verifiable, unbiased reporting but, nowadays, there is more competition than ever. In addition to cable news channels, networks are now competing with clicks, links and ever-expanding sources of diversions. Thus incentivized to stay in business, first and foremost, many news outlets now tell people what they want to hear rather what they need to hear. The result? We now feel like there are multiple versions of the truth.

This is where claims of fake news come in. The term itself is purposefully ill-defined and conditional to the speaker and politicians on both sides of the aisle utilize it. The very name implies a preferential type of news—suggesting your information is wrong while my information is right. That’s exactly what makes it so dangerous. If one can pick and choose verifiable facts at one’s leisure, what’s to stop enormous amounts of human biases from getting incorporated in these facts? If a populist’s main goal is reelection and nothing else, imagine how dangerous such gerrymandering of facts is when this leader is forced to tell voters something they don’t want to hear.

What do you do at a green light?

It’s important to recognize the importance of context. In the 1950 film classic, Rashomon, the protagonist is presented with three different eyewitness accounts of a murder, yet each contradicts the others. At the time, no one had seen a movie like it. In fact, the film’s opening line of, “I just don’t understand,” was chosen very purposefully to serve as a warning to what the viewer was about to experience. The movie then proceeds to utilize flashbacks to tell each witness’s seemingly incompatible tales as true in their own regard. The understated point, though never bluntly articulated, is that it’s possible for something to be both true and false at the same moment.

Does this mean fake news is actually true? Absolutely not. The overarching point of the film is that human communication itself is flawed. Claims of fake news, by their very nature, are designed to exploit this. Three contradictory versions of the movie’s events can all be correct given the vagaries of language. But that doesn’t mean you should believe every formal / informal logical fallacy you hear. Instead, we must learn to identify and weed out the H-Factor in these claims.

The H-Factor loves disinformation and faulty logic

Reasons for claims of fake news and such distrust in facts abound: unsavory political motives, profiteering, even lazy journalism. The unfortunate result is the recirculation of flawed or incorrect beliefs. Facts are boring—secret conspiracies are much more click-worthy. However, this distrust in knowledge and resultant breakdown in logic can go from aggravating to tragic very quickly. We’ve all heard about the hoax “cures” for the COVID-19 virus. Such disinformation ranges from dangerous false-positives concerning immunity to the deadly self-poisoning of 48 people in Iran. Meanwhile, consumer insights company STAANCE polled more than 2,000 Americans and found that while 54-55% of Millennials and Gen Xers were afraid of contracting COVID-19, only 43% of Baby Boomers were afraid. Predicting the exact mechanics behind this comparative disregard is hazardous but a disinterest in seeking out the truth appears to be shared between them and the poisoned Iranians.

Yet such active avoidance of knowledge persists

Let’s say you read an assertion that COVID-19 originated in the U.S. The person’s proof is an article outlining how Fort Detrick, a U.S. Army lab researching viruses and biological weapons, had been shut down. Upon hearing such a claim, you must ask yourself how it makes you feel. What emotions are evoked? If you’d read previous reports about the origination of the virus in China and you trusted those news sources, you’re likely skeptical. However, if you already distrusted the government and noticed unrelated reports of suspicious government-enforced lockdowns, you might become curious.

The visceral reaction here is critical because, whether you know it or not, you’ve already reached a crossroads. As described in the first part of this series, Human Behavior in a Crisis: Confirmation Bias, your own mind is now biased and ready to receive confirming information. Most who investigate the article would see there is no mention of COVID-19 in it whatsoever. That might be enough for them to recognize causation and correlation had been confused and they’d disregard the claim. Yet those predisposed to believe it might persevere. They’d explain that there’s no way the government would admit it created COVID-19 anyway. On the surface, it’s a logical claim. Yet the causal fallacy is obvious—cum hoc ergo propter hoc (Latin for, “with this...therefore because of this"). Just because the government shut down the facility doesn’t prove COVID-19 was present and further unrelated truths won’t support this false conclusion. Yet this is exactly the sort of anti-logic utilized by claims of fake news—as everyone knows, the most effective liars include enough grains of truth to make their lies seem plausible.

The above example is purposefully simplistic. A 2nd-string junior high debate team member could debunk it. Yet we chose it expressly for that reason—this is the dangerous world we live in. Now, more than ever, we need rational thought and responsible thinking. We can’t let emotions cloud our rational minds because that’s exactly what populists prey upon via claims of fake news and propaganda.

Where to Go from Here

So, returning to the question above, “What do you do at a green light?” As likely surmised, it’s a trick question. Some people’s knee-jerk response would be to say, “stop,” due to the context. Particularly if surprised, many would revert to this pre-existing bias. Others may offer responses such as, “go,” or “keep driving,” based on their expectations. But the proper answer? “I don’t know.” Based on the information presented, you could be waiting at a red light or hurtling down the avenue at 45 MPH. The H-Factor causes such errors in a rush to judgement when an admission of ignorance is the proper logical response.

The real-life dangers of the H-Factor are more serious than a traffic riddle, though. From the horrors at Stalingrad to near nuclear devastation during the Bay of Pigs, the choices made with biased or faulty information can carry deadly implications. Leaders whose priorities begin with themselves, rather than their constituents, are bound to suffer from the H-Factor. And they’ll also use other’s H-Factor to their advantage. With the COVID-19 crisis upon us and likely to loom for some time, we must reject populism and the disinformation that allowed it to flourish in the first place. Reject fake news. Reject complacency. Reject the H-Factor.

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Co-Written by Julian Koski, Co-Founder and Chief Investment Officer and Matthew Waterman, Investment Writer