Why? The way the brain builds its internal models of the world has a lot to do with it. We have come to rely upon these models because they have been so good at keeping us alive. We invest so much biological energy and sense of self in these models that we have difficulty comprehending information that is at odds with them. This is why mere facts alone will never convince people that they are wrong about any deeply held belief, whether it's about religion, partisan affiliation, global warming, vaccinations and so on; facts don’t really matter because if they challenge the mental model, the brain works to downgrade it.
This is a feature, not a bug. It has helped humans survive, create a functional society, adapt and thrive, besting all other hominids for control of the surface of the Earth and beyond.
Novelist and journalist Will Storr, in his book “The Unpersuadables: Adventures with the Enemies of Science,” speaks with what he calls “heretics” -- the alien abductees, homeopaths, young-earth devotees, Holocaust deniers and others who hold fringe beliefs. The results are fascinating.
What is so intriguing about these individuals isn't that they are crazy -- rather, the exact opposite. They are perfectly rational, lucid individuals who happen to hold outlier beliefs at odds with not only accepted wisdom, but demonstrable factual evidence. Somehow, their models of the world are off-kilter. But the rest of their mental faculties are perfectly fine.
Think of this in the context of mental model creation -- the internal depiction of the world around you, and it is easy to see how it could lead to expensive investing mistakes. It is chilling to hear the subjects in Storr's book rationalize their own belief systems, and not recognize our own errors when it comes to markets and investing. Even worse, these decisions are for the most part unconscious, often built upon a flawed foundation we are wholly unaware of.
We may believe we are rational, but the reality is often something terribly different.
This column was provided by Bloomberg News.