Usually, when you read about the people most vulnerable to financial scams, you hear about a little old lady who was willing to sign her Social Security checks away. And yet, according to a new study, the real suckers look a lot more like cocky crypto dudes and arrogant finance bros.
Researchers looked at susceptibility to “financial pseudo-profound bullshit” and concluded that the most gullible people are “more likely to be young, male, have a higher income and be overconfident with regards to their own financial knowledge.”
The concept of bullshit might seem a bit messy and abstract, but it was theoretically defined by philosopher Harry Frankfurt in 2005 as something that isn’t necessarily incorrect, but just phony. “This points to a similar and fundamental aspect of the essential nature of bullshit: Although it is produced without concern with the truth, it need not be false,” Frankfurt wrote. “The bullshitter is faking things. But this does not mean that he necessarily gets them wrong.”
Several past studies have used Frankfurt’s framework to study bullshit and misinformation — particularly the use of seemingly impressive words and profound statements that mean absolutely nothing, otherwise known as “pseudo-profound bullshit.” And more recently, economists have become curious about who is the most receptive to bullshit when it comes to money. “Financial markets and economics are two things that many people think are hard to understand,” study co-author Gustav Tinghög, an associate professor in economics at Linköping University, explained in a press release. “There are lots of seemingly impressive terms, jargon and slogans that we don’t always fully understand.”
To get more information about the bullshitters and the bullshitted, researchers surveyed 1,058 adults — 47 percent of whom were women and 53 percent of whom were men — about their overall financial management habits, like if they paid their bills on time. Participants were also asked to rate a series of quotes from the winners of the Nobel Prize in Economics — a la “Finance is not merely about making money. It’s about achieving our deep goals and protecting the fruits of our labor,” by Robert Shiller — mixed in with nonsense statements like, “A cheap loan is beyond all new destiny.”
Finally, study subjects were given a series of 16 true-or-false questions with impressive financial jargon about things like investments, loans and money management — e.g., “The current price of an asset should reflect its future discounted cash flow.”
Again, the results suggest that young, overconfident men with higher paying salaries are more likely to be tricked by such incomprehensible babble. Moreover, older women with lower incomes were less likely to fall prey to it, which researchers believe is because they didn’t overestimate their financial expertise in the same ways. “Of course, this is a general result — we can’t say that all young men fall for bullshit. But a reasonable interpretation of the results is that men are more easily impressed by financial statements,” Tinghög concluded, noting that the world of finance is a traditionally male-dominated one, perhaps not because men make better decisions but because they’re more willing to take risks.
Yet when it comes to sniffing out financial bullshit, a little trepidation may go a long way. “We know from previous studies that women, generally speaking, worry more about finance,” Tinghög added. “This makes it more likely that they pay attention to and are critical of financial information.”
The funny thing is, when Tinghög and his team looked at participants’ overall feelings about money, young men who were bad at sniffing out bullshit were the happiest about their finances.
It would seem as though “ignorance is bliss” is another piece of empty jargon they wholeheartedly embrace.