No. 5: Objectively measuring data isn’t our strong suit. If keeping our emotions under control is difficult, evaluating data is even more challenging. Compelling narratives can easily sway us, even when the facts say otherwise. Sports fans and partisans are so deeply invested in a specific outcome that they simply lose the ability to objectively judge reality.
As an example, when confronted with the lack of evidence for the wiretapping claim above, the pushback was “the lack of evidence does not mean it did not happen.” As physicist Carl Sagan once observed, “Extraordinary claims require extraordinary evidence.”
We believe what we want to believe, regardless of the evidence. In the capital markets, the costs of such an approach can be quite expensive.
This column was provided by Bloomberg News.