BS detection 101

In this post, I am trying to describe 5 methods I use regularly to avoid being made a sucker. This in no way an exhaustive list, but I hope it will help you in your day to day life.

When it “doesn’t add up”

Scott Adams, the man behind the affable Dilbert cartoon, in his book “How to fail at everything”, described his BS detection method as follows:

1. See if what you’re hearing matches your own personal experience.
2. Does any scientific data back the claims being made?
3. Does your friends’ experience or experience of those you know match the claims being made?
4. Does common sense agree with it?
5. Finally, what do the experts in the field say about it?

Shoot for consistencies across these parameters to evaluate if something is true or fiction. For example, if you read a study that says eating chocolate cake helps in weight loss and your personal experience and friends’ experience suggests otherwise plus common sense that eating high caloric food cannot lead to weight loss, you can say with some surety that it’s BS.

Look for assymetries in risk

This is the easiest strategy to detect BS when it comes to financial matters. Usually comes in handy when you’re being sold financial planning or asset management. If you detect that by conducting the business in the manner presented, the other party stands to risk a lot less (usually 0) in comparison to you, that’s the moment to rethink things.

This is also often called the agency cost, ie. the cost we incur by relying on authority figures or experts who have no “skin in the game” by doing their business (ex: managing our assets). For optimum results, their incentives must be aligned with ours. If you lose money, they should too. If you hurt yourself, they should suffer as well. The technical term for this is “moral hazard” - where the risk taker is immune to the effects of her actions.

Complicated statistics or data

In business and in life, always choose simplicity. Whenever you find yourself at the receiving end of a series of complicated statistics, it’s a red flag. The more complicated the data, the more likely it is to be manipulated or cherry picked to suit a particular narrative. Always spend some time going over the data in an open minded fashion while also asking for more data that may be related and that may help you make the decision. Always remember, “what you see is not all there is”.

Use of compliance techniques

Bob Cialdini, in his seminal book Influence, described a series of influencing techniques used by people who gain something from getting you to comply to their seemingly inoccuous requests. He called these people “compliance practioners” - you can imagine them all to be car salesmen.

Look out for these 6 techniques.

1. Pretending to be like you by saying they have friends in the same city or grew up in your part of world. We all like people like us and this gives them an edge.
2. Anchoring you to a higher price to move your baseline and getting you to overspend. The most common example is a realtor showing you two bad properties and then the one they want to sell you.
3. Offering you free food or samples to trigger your reciprocity drive (it’s way too powerful) and get you to buy something.
4. Telling you about other people you know who did business with them and give you social proof that they are reliable and trustworthy.
5. Proclaiming support of “experts” (who may not even be real experts or even if they are, they are usually paid to do it). The most common example of this is people pretending to be dentists appearing on toothpaste ads on TV.
6. Getting you to create a self image for yourself in your mind. Once a self image is created, you are forced to remain consistent with it by doing things you may not otherwise do. Imagine walking down the street and someone asks you if you care about the environment. You say yes and they pull out a donation form for an environmental charity. You will be forced to donate to the charity.

These can all be used in combination as well so be on the lookout for when more than one of them is being employed together.

Looking the part

Taleb, in his book, Skin in the game, described how appearances can persuade us. We all want our doctors to “look the part”. They should be refined and polished and should “look like a doctor”. Taleb argues that if looks are so persuasive, then it probably means that we should strive to find a doctor who doesn’t look like a doctor. The logic is that if, they don’t look the part, and yet are still where they are, then they must be really good as they have overcome the bias against them. This is counter intuitive but seems to make sense once you start thinking how biases work and how other people perceive you.

To be honest this one isn’t something I have been able to avoid yet. I still prefer my doctor to look like a polished doctor, my financial advisor to wear a suit and my restaurants by how clean its glass windows are and how well lit it is. But I am trying to be more open minded about this.

More on this list as I make more BS detection rules.

I run a startup called Harmonize. We are hiring and if you’re looking for an exciting startup journey, please write to jobs@harmonizehq.com. Apart from this blog, I tweet about startup life and practical wisdom in books.