The Demand and Supply of Misinformation

Bryan Caplan reminds us that misinformation wouldn’t work well if people weren’t so irrational.

The [standard misinformation] story focuses exclusively on the flaws of speakers, without acknowledging the flaws of the listeners. Misinformation won’t work unless the listeners are themselves naive, dogmatic, emotional, or otherwise intellectually defective. In economic jargon, the problem is that the story mistakes an information problem for a rationality problem.

The motivation for this crucial omission is fairly obvious. Blaming listeners for their epistemic vices sounds bad. It makes the accuser sound elitist, if not arrogant. Blaming a few high-status liars for the world’s problems is a lot more compatible with Social Desirability Bias than blaming billions of low-status fools who fail to choose to exercise their common sense.

I agree but it’s an equilibrium process. The demand and supply of misinformation both matter. Moreover, it’s not implausible that social media has increased the supply of misinformation, essentially because it has greatly accelerated the evolution of memes. As Dawkins taught us, memes evolve like genes but in the past memes evolved like rabbits, more rapidly than human beings but not so rapid that we couldn’t keep up. Now memes evolve like viruses, mind viruses. Even worse we have made improving memes profitable so we have capitalist energy added to faster random mutation.

I am somewhat hopeful that social media hit us hard because it was novel. A generation raised on social media may have more natural immunity–assuming we survive the infection. I also encourage (as does Bryan) institutions like betting markets to raise the price of misinformation (a bet is a tax on bullshit). Betting markets and expert aggregation markets like Metacuulus can help. We should invest more in the support and prestige of tools for developing rational consensus. More generally, if we can’t raise the cost of misinformation, better tools to aid our limited rationality could reduce the demand.


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