Institute For The Future

Trust Me. We Need a Gullibility Index

In a recently posted article at the Social Science Research Network, University of Minnesota Mathematics Professor Andrew Odlyzko adds to the growing list of things we should measure by arguing that we need a means to quantify gullibility. Why quantify gullibility? Odlyzko argues that excessive levels of trust--which could be quantified and tracked through an "objective measure of gullibility"--would signal that we need to be cautious about things like the future performance of markets, as well as the future of systems in general.

 

Of course, trust is an increasingly critical need for systems in the world to function, given that it's increasingly difficult to keep up with the rate of progress in a specific field, much less in a variety of domains. Take an example Odlyzko offers from medicine:

 

As society becomes more complicated, individuals understand smaller and smaller fractions of what is going on around them, and rely on others. As an example, today doctors are among the most trusted professionals. They can do incomparably more than their predecessors could in the early Victorian times. Those had not progressed too much beyond blood-letting, and the placebo effect of snake oil and other “patent medicines” was among their most effective tools. However, while those earlier physicians could be said to have complete mastery (however little it was worth) of their craft, today their heirs have to rely on labs to perform tests correctly (and not mix up samples), on specialists to provide correct diagnoses, on pharmaceuticals to be manufactured according to specifications, etc. Thus there is a need for growth in trust to parallel the growth in complexity of society.

 

 

Which is to say, there's too much information in the world to stay on top of even a small sliver of it, so as a result, we need to trust in others even if it might create a certain amount of risk and danger for us.

 

This dilemma reminds me of a recent New York Times article by behavioral economist Richard Thaler, who notes the seemingly counterintuitive finding that CFOs of large corporations are just as likely as college students to be overconfident about their forecasts for future market performance.

 

Thaler's article treats this as a surprise, but to be honest, I found it surprising that CFOs weren't more overconfident than every day people. Think about what CFOs have to do for a living. They need to be able to make snap decisions with limited information and then, without regret, move on. While a college student, or an average employee, can, if so inclined, dither around on an individual decision or question, a senior executive of a major corporation really doesn't have that sort of luxury.

 

Put differently, Thaler argues that:

 

In fact, the competition may tend to select overconfident people. One route to the corner office is to combine overconfidence with luck, which can be hard to distinguish from skill.

 

 

But I think this understates the point. Given the demands of being a CFO, or any other senior leader of a large organization, it would be hard to rise to that level in an organization without being overconfident, at least some of the time.

 

Which brings me back to Odlyzko's concept of a gullibility index. Like CFOs who have to have confidence in their ability to operate with limited information, I think we're increasingly finding ourselves in a world where gullibility is a necessary pre-condition to being able to process information in a functional way. It would simply be impossible to function in the world without being gullible, which is to say trusting that the fast food cook knows how to prepare our food, that the mechanic knows how to change our oil, and on and on and on.

 

Which is not to dismiss the idea of a gullibility index out-of-hand. Odlyzko suggests, for example, that surveys about future market performance--such as expectations of 20 percent annual returns--could be used to indicate high levels of gullibility that might suggest the a future market bubble. And that seems perfectly reasonable.

 

But I think there's a bigger story here. We have to be gullible to function. And in the future, we will have to be more and more gullible to simply make it through the day. Sensing sudden spikes and upticks in gullibility could be helpful, but I think that more than an index of gullibility, we will need new tools for understanding and managing this unprecedented, but increasingly important need for trust.