Confirmation Bias? Dangerous

I heard a speaker yesterday refer to “confirmation bias.” It’s an idea I know well, but it had been a while since I heard the actual phrase, so it caused me to think. The idea behind confirmation bias is that if you believe something to be true (or if you even want something to be true), you will be able to find facts you can interpret in such a way that they will seem to support the belief you want to be true.

For consumers, confirmation bias can be a dangerous thing. Here are some hypothetical (but realistic) examples of how that could work.

  • Several friends have purchased a very-expensive brand of Widgets, and they all swear by the benefits of the brand. Undoubtedly, a search will lead to other positive reviews of the widget that persuade you that your friends are right; this may leave you feeling justified in spending much more money than planned on your new widget.
  • You hear a rumor that now is a great time to invest in Company X. You do an on-line search and you find several articles that support your desire to jump into the investment, so you move forward with the idea.

In both of these examples, the fact that you knew in advance what answer you wanted to find made you much more likely to find it.

There has been much discussion in recent months about facts and what to believe. Sadly, the abundance of information available on the internet includes “sources” that claim opposing facts: one source shows how “Fact A” is definitely true, while another source cites information which “prove” the false-ness of “Fact A.”

This simply reminds me how critical it is for consumers to protect against confirmation bias, as well as against unreliable information in any situation. The best decisions are based on research conducted by well-respected scientists. Three tips to protect yourself:

  • Always shop around (at least 3 sellers) before making any significant purchase or consumer decision.
  • Always seek information from multiple sources; ideally, those multiple sources would not be connected to each other. (For example, if you read an article in 3 different publications, but all those publications are operated by the same umbrella company, it’s really not equal to three different sources).
  • The most reliable on-line sources on most topics are sites whose URLs carry a “.gov” or a “.edu” extension. Some “.org” sites are reliable, but use caution because they may have an agenda. Two reliable “.org” sites are www.consumerreports.org and www.nefe.org.
Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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