“Ships will sail around the world, but the Flat Earth Society will continue to flourish.” – Warren Buffett
In 1984, renowned investor and multi-billionaire, Warren Buffett, delivered a speech at Columbia Business School to share his insights about the Efficient Market Hypothesis (EMH).
The EMH, or the mantra that stocks reflect all available information, suggests that investors attempting to beat market indexes are merely wasting their time because stock prices follow a “random walk”. This theory further postulates that, in the long-run, the most adept hedge fund manager will perform just as well as a monkey throwing darts at the newspapers’ financial pages. The implications are as follows: if stock prices reflect all available information, investors need not conduct any research about companies, sectors, nor the macroeconomic environment. Due diligence, in essence, is meaningless, as are the hundreds of high-paying jobs on Wall Street dedicated towards researching companies for potential investment.
In 1984, Warren Buffett attempted to put the Efficient Market Hypothesis to rest, attesting: “I’m convinced there is much inefficiency in the market…superinvestors of Graham-and-Doddsville have successfully exploited gaps between price and value.” (Note: Benjamin Graham and David Dodd were Professors at Columbia Business School and the authors of a renowned book, “Security Analysis”, which is thought to have laid down the intellectual framework for the philosophy that later became known as value investing.) Buffett reported how nine investors he had studied over a 26-year time period had independently achieved returns far superior than that of index funds, all nine investors exploiting the difference between the intrinsic value and the market price of their investments. Buffett concluded his speech by stating: “Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to prosper.”
While this quote was specifically directed towards current and future investors questioning the validity of the Efficient Market Hypothesis, Buffett’s quote can be extrapolated to many different scenarios, as his words speak volumes about truths that have been proven, yet are still denied.
Can fixed mindsets ever truly be altered?
Scientific American published an article in January of this year, How to Convince Someone When Facts Fail, in which Michael Shermer wrote:
“Have you ever noticed that when you present people with facts that are contrary to their deepest held beliefs they always change their minds? Me neither. In fact, people seem to double down on their beliefs in the teeth of overwhelming evidence against them. The reason is related to the worldview perceived to be under threat by the conflicting data.”
Shermer continued to discuss the following examples: creationists who dispute evolution, “anti-vaxxers” wary of big pharma, those who blame the U.S. government for 9/11 and, of course, climate deniers who erroneously point to tree rings and ice cores. “In these examples, proponents’ deepest held wordviews were perceived to be threatened by skeptics, making facts the enemy to be slayed. The power of belief over evidence is the result of two factors: cognitive dissonance and the backfire effect.”
Cognitive Dissonance, resulting from an individual’s desire to hold beliefs and attitudes in harmony, is the tension that occurs when an individual’s beliefs and opinions contradict. In 1956, social psychologist, Leon Festinger, presented cognitive dissonance theory, stating that individuals are prone to seek consistency among their cognitions (opinions and beliefs), sometimes resulting in irrational, and even maladaptive behavior. In other words, individuals often seek to remove the displeasing tension known as dissonance by forcing their views to align, even if it is illogical to do so.
Five decades later, social psychologists Carol Tarvis and Elliot Aronson documented a series of experiments in the book, Mistakes Were Made (But Not by Me), demonstrating live examples of how subjects twisted facts in order to reduce dissonance and fit preconceived opinions.
When Corrections Fail
In 2006, Professors Brendan Nyhan (Dartmouth) and Jason Reifler (Exeter) conducted a series of experiments leading to the realization of a related factor they called the backfire effect: such that “corrections actually increase misperceptions among the group in question.” Think about this for a moment. If true, the existence of the backfire effect implies that attempting to amend incorrect truths with credible evidence often has no effect in changing preconceived inaccurate beliefs. In these experiments, subjects were presented with false newspaper articles that “confirmed” widely held misconceptions, for example that there were weapons of mass destruction in Iraq prior to the 2003 U.S. invasion. When subjects were later presented with a corrective article stating that these weapons were never found, liberals accepted the new article, but conservatives reported feeling even more convinced of the existence of weapons of mass destruction subsequent to reading the corrective article, twisting facts in order to make the new story align with previously held beliefs.
The implications of cognitive dissonance and the backfire effect for climate change advocacy are important. Climate change has become a highly politicized issue, an issue that has become bigger than the warming atmosphere. If correct facts only magnify disbeliefs, how is one to convince naysayers of the severity of the issue? Scientific American proposes six suggestions: 1.) listen, 2.) leave emotions out of the conversation, 3.) do not attack, rather discuss, 4.) be respectful, 5.) acknowledge an understanding of an opposing view and 6.) attempt to relay how changing facts need not be synonymous will changing entire worldviews.
It has been proven that individuals, when seeking to relay pertinent facts or convince others of specific opinions, often forget the most important aspect of conversation: listening. My anecdotal observations allow me to believe that the ensemble of society which outright denies human-contributed global warming, while certainly exists, is small. The greater skepticism exists as to confusion, uncertainty, and/or disbelief regarding the magnitude of the problem. Climate change feels temporally and geographically distant to many. Yet, climate change is arguably the greatest challenge humanity has ever faced: exacerbating inequalities, heightening poverty, threatening national security, and destroying the livelihood of plants, animals, and humans. See here. It seems reasonable to conclude that the worldview to “alter” is not an outright denial of climate change, rather a misunderstanding of just how much is at stake.
To my readers struggling an uphill climate advocacy battle, empathy is paramount. What Scientific American implies, yet fails to specifically state in its thought-provoking and intelligent article, is that in order to successfully employ suggestions 1 through 6, one must empathize. Why might someone hold an opposing view? Can you wear another pair of shoes for a day? Moreover, consider incentives. If not sustainability, what do people care about? Security, children, money, happiness, and “success” as defined by the individual, come to mind. As once stated by Bill Bullard: “Opinion is really the lowest form of human knowledge. It requires no accountability, no understanding. The highest form of knowledge…is empathy, for it requires us to suspend our egos and live in another’s world. It requires profound purpose larger than the self kind of understanding.”