Friday, January 24, 2014

Scam Psychology: Intelligence is NOT Rationality

Many people have asked... How can intelligent people, lawyers, doctors, people who got rich through their own efforts, and so on, end up joining a scam? Aren't they intelligent enough to avoid such things? Some even use this as a bad argument that I termed "association with authority" argument, such as "X is not dumb or stupid, therefore he could not have joined a scam. Thus, whatever he joined cannot be a scam."

Turns out psychologists knew about this problem for a while, and the explanation is very simple: intelligence is not the same as rationality.

Intelligence is usually defined as "ability to acquire and apply skill and knowledge"

Rationality, on the other hand, is  "the state of having good common sense and sound judgment".

The two definitions can overlap, butare not required to overlap. It is possible to have no sound judgment, yet have ability to acquire and apply skill and knowledge. A savant, for example, esp. an "idiot savant", has the phenomenal abilities such as mental math, perfect recall, photographic memory, and so on, yet has virtually no judgment or social skills outside of his/her expertise.

Of us the common people, we are just as guilty of what appears to be irrational decisions, caused by our various cognitive biases, and often, what we WANTED to be true. We are intelligent, but we are NOT always rational.

And scammers are very quick to convince us that being intelligent is being rational... and it's rational to join their scheme. And scammers are often amateur psychologists exploiting your cognitive biases to coerce you (without you realizing it).

I previously wrote an analysis on why Zeek Rewards ponzi scheme was so successful... I'll give you a few summarized points:

  • Mis-direction -- did you know that Paul Burks was a magician, skilled in mis-direction?
  • Ikea effect -- once you participated, you feel you 'own' it
  • Spotlight effect -- you saw only one part, and you ignore the parts you can't see
  • Intuitive mind vs. Rational Mind -- they show you just enough so you don't analyze with the rational mind. Rather, you just accept what your intuitive mind says 'it's kinda like that'
  • Sunk Cost -- even if you realized it's a scam, you keep going because you are afraid of losing what you put in
  • Self-delusion -- people will pretend they did not see evidence of scam... even after it's shut down
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Skepticality hi (Photo credit: Wikipedia)
And there's probably a few more.  It is clear that of the 1 million victims in Zeek Rewards, many of them are quite intelligent, but most of them are not rational when they joined.

Recently Skepticality Podcast had an interview with Dr. Keith Stanovich, who specialized in critical thinking and intelligence, and there is a long discussion on how intelligence doesn't measure everything and why isn't there a test for rationality which is arguably more useful in everyday life.

Go listen to the podcast (and maybe even subscribe to Skepticality)
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