Was reading something this morning about the Murray Gell-Mann Amnesia effect.
Michael Crichton wrote about it in 2002 in an essay titled: “Why Speculate?”
And I quote:
Media carries with it a credibility that is totally undeserved. You have all experienced this, in what I call the Murray Gell-Mann Amnesia effect. (I call it by this name because I once discussed it with Murray Gell-Mann, and by dropping a famous name I imply greater importance to myself, and to the effect, than it would otherwise have.)
Briefly stated, the Gell-Mann Amnesia effect works as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward-reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them.
In any case, you read with exasperation or amusement the multiple errors in a story-and then turn the page to national or international affairs, and read with renewed interest as if the rest of the newspaper was somehow more accurate about far-off Palestine than it was about the story you just read. You turn the page, and forget what you know.
That is the Gell-Mann Amnesia effect. I’d point out it does not operate in other arenas of life. In ordinary life, if somebody consistently exaggerates or lies to you, you soon discount everything they say. In court, there is the legal doctrine of falsus in uno, falsus in omnibus, which means untruthful in one part, untruthful in all.
But when it comes to the media, we believe against evidence that it is probably worth our time to read other parts of the paper. When, in fact, it almost certainly isn’t. The only possible explanation for our behavior is amnesia.
I really dig the transparency there (and mostly agree with his conclusion).
I also see this playing out in the financial shnewz all the time.
… and on personal finance blogs.
‘Tis why I have hardly any good book or website recommendations for people.
Instead, I usually recommend folks learn personal finance by demonstration and experimentation (which is what my financial courses will focus on).
It’s a much harder road to walk but also a more successful one when you nail it.
Here’s what I mean:
I read a long time ago that something like 40% of financial planners don’t have a financial plan themselves.
20% or 30% do have a plan but don’t buy most or any of the products they sell to their clients.
I checked those stats again recently and they haven’t changed much.
Are they true?
Maybe but maybe they’re being misreported too (I can’t see a motive for doing so though since they’re published in financial trade journals and not for the general public or as a sales tool).
My personal experience is a lot of planners don’t have their own financial house in order.
And yet people take advice from them.
Even the government does this… runs a deficit and huge debt and yet tells people how they should be saving money through 401(k) plans and sets market rules for doling out investment advice.
It don’t make no sense.
And in case you’re sitting there wondering… yes, I use the same cash flow management system I describe in my Cash Flow Kickstart eBook (albeit a more advanced version).
I also own the same type of life insurance I recommend to my clients. So does my wife… and my family.
We’re all in the same boat together.
And if I’m wrong… this captain is going down with his ship.
If that scares you, it’s OK. But… I recommend you stay on the shore.
OTOH, if you want to sail with me and the rest of my clients, hop on the email list (first) and get acquainted with how we do things downtown.