A Religious Calling

Mormon Irrationality or Magical Thinking

I am regularly (such as last night) in conversation with well-educated Mormons who struggle when trying to deal with rational concepts related to things like science, investment strategies, politics and other purely secular matters. And I see in their struggles infections likely attributable to the magical thinking at the heart of what is required these days to be a literally believing Mormon. The conversation in which I participated last night that caused this essay had to do with an investment opportunity that a bright, successful young Mormon had been offered. Some Mormons still respect my judgment regarding investments that seem not to require "the Spirit", and he wanted to run by me what had been proposed to him. I was happy to listen for a few minutes and tell him what I thought.

Five seconds into my friend's explanation, I gave him a thumbs down. He has been offered the chance to get in on the ground floor of a “perpetual motion machine” that is going to revolutionize the energy and automotive industries. I summarized the many similar "opportunities" I have encountered during my career and how each of them caused a lot of investors to lose their money while usually also being sincerely believed in by a “genius” inventor who the scientific community “did not understand”. I explained how humans are congenitally (it seems) unable to resist huge upside propositions like this that have little to no support in the scientific theory that ultimately must explain how they work. That is, the speculative stock and real estate “investment” industries and Las Vegas are kept in business by the human inability to assess with reasonable accuracy what a small chance to win a large amount of money is worth. Our greed consistently causes us to pay more for chances like this than we should. And promoters of various types have from time immemorial taken advantage of this human weakness. It is far better to be a seller of chances to invest of this type than a buyer. At least, I told him, the people in Las Vegas are upfront about how they make their money. Everyone knows that most gamblers lose money and the “house” gets rich. And so most people who gamble treat the cost of gambling as the price of entertainment. Those invest in speculative stocks or real estate or multi-level marketing schemes are often sucked into the same game on the basis that they really do have a reasonable chance to make money.

And, I noted, when an idea has been around for a while and the people who have the most expertise in related fields have passed on it, you can be pretty certain that the idea does not work. We are far better off following the advice of the people with the greatest experience and expertise in a give field instead of trusting our instincts. This is because we are relatively ignorant; the experts are relatively wise and their collective judgment is likely to be the most accurate evidence available as to what will work and what will not; and humans (like us) have a proven tendency to each be overconfident in their own judgment (see James Surowiecki, “The Wisdom of Crowds”). Again, this is what shady and incompetent investment promoters have intuited forever, and why our securities laws require a certain amount of “due diligence” of such promoters. This constrains their natural tendency to exaggerate while not having done the work required to know what real scientists say about their investment proposal, or worse yet, suppressing that knowledge because it contradicts what the “know” to be “true”. Does that approach to reality ring a bell, by the way?.

My friend was unconvinced. He told me that NASA and other branches of the US government were