How to Be a Skeptic—The Right Way: Part IVSubmitted by Bernhardt Wealth Management on September 14th, 2020
In this final article of our series on “positive skepticism” and your finances, we’ll look at some practical ways you can perform your own due diligence process on information you receive before taking action on it. As we mentioned in Part III, this is especially important when you are making financial decisions, because almost all providers of financial information—the media, advertisers, sales people, and others—typically use words, phrases, and other techniques that are designed to motivate you emotionally in some way, causing you to act without taking enough time to consider all the ramifications.
“But,” you may be thinking, “I’m not a professional fact-checker or investigator. I get so much information every day, I don’t have time to cross-check and verify every claim I hear.” You are absolutely correct; especially in this digital age, all of us are bombarded daily with claims, counter-claims, unsolicited advice, and advertising urging us to “act now.” If we chose, we could truly spend all of our waking hours just determining the veracity of all the things we hear and see.
Fortunately, there are some techniques you can use to filter out a lot of the obvious informational “chaff” that we all encounter each day. At that point, you’ll have greater clarity to focus on the fewer, really important choices. Let’s take a look.
Reality Check. Does a claim make you wonder, “Really?” Especially if it’s a relatively extreme position, a good first step is to refer to one or more fact-checking resources, such as FactCheck.org, PolitiFact, Snopes, or Vote Smart. While none of these are infallible, you should be able to at least filter out any flagrantly false claims before sharing them with others or acting on them yourself.
Just Google It. Next, use your favorite search engine to learn more. Don’t just depend on the most popular hits. Just as you wouldn’t turn to tabloids to tell you whether aliens really exist, you should avoid the online equivalents and turn to reputable sources offering educated insights. Examples of more robust sources include academic and similar philanthropic institutions (especially if the website ends with “.edu”), respected journalists, government publications (websites ending in “.gov”), quality trade organizations, and subject matter experts with appropriate credentials. As you review these, don’t forget to think about the source’s dominant motivations (do they benefit by selling you something?), their depth of experience (do they really know what they’re talking about?), and their thoughtful vs. emotional approach (do they use emotional triggers to convey their information?). Ideally, identify multiple credible sources to substantiate, strengthen, and/or clarify any given claim.
Consider the Source. Merely stating a fact does not make it so! (Remember from our previous discussion: a lie that is repeated becomes easier to believe) When sharing facts and figures, the author should explain how they came up with them, and/or cite a reputable source. Beware if it is unclear where the claim originated. Whenever possible, take the time to verify and confirm the validity of original sources. If the author has not provided the links, an internet search of key terms or phrases often uncovers them. And this is a good time to mention Wikipedia. While a quick check on Wikipedia.org, the online “free encyclopedia,” can be helpful for getting a quick overview of basic facts, you should not rely on it for substantial decision-making. As an “open-source” site, Wikipedia relies on information received from all comers, some of whom are likely biased in one direction or another (In fact, Wikipedia markets itself as “the free encyclopedia that anyone can edit”). You can take a good extra step on Wikipedia, though, by checking the sources referenced at the end of the Wikipedia article; these can sometimes lead you to more authoritative information. In academic settings (and even in some high school classes) Wikipedia is not an allowable source for citation.
4. Academically Speaking. While we’re on the subject of academic research, we should mention a few additional cautions. At least in theory, academics are motivated by discovering and publishing their most objective findings—typically the gold standard for evidence-based understanding. That said, academics are human, too. They are subject to the same biases and misjudgments as the rest of us. Highest priority should be given to studies that exhibit a disinterested outlook (don’t have an axe to grind or a product to sell); are based on robust data sets (studies or surveys with reliable statistical parameters); can be reproduced by others and repeated across multiple environments (have been verified by outside experts); and have been published and rigorously peer-reviewed (have been examined by other disinterested experts and found reliable).
Of course, you can always consult an expert or advisor if questions or uncertainties remain. In fact, that is one of the most important services we provide our clients: professional, certified financial advice, offered with no motivation other than the client’s best interest. If we can help you filter out some of the “noise” as you make financial decisions, please contact us for more information. In addition, click Part I, Part II, or Part III to read the other articles in this series or click our blog or articles to read any of our other articles or blogs on other topics.