America has a pundit problem

How about requiring them to publish their prognostication track records?


Published:

Despite being somewhat of a pundit, I make a hobby of poking fun at them. That's because in today's world no qualifications whatsoever are required to be a pundit.

Celebrities make great pundits because we are fascinated by all things celebrity. Ex-politicians often become lobbyists or pundits. I get the lobbyist thing. What else are ex-politicians qualified to do other than peddle the influence they garnered as politicians? But pundits? If these people are so qualified at giving advice, why is the government so dysfunctional?

Academics -- especially PhDs -- are "natural" pundits because they are so educated. The only problem is that they are often not educated in real life. Their advice tends to rely on theory rather than on real-world experience.

The Motley Fool recently published an interesting perspective on punditry. One insight came from famed economist John Kenneth Galbraith, who once said "Pundits forecast not because they know, but because they are asked."

I think we should stop asking.

The Fool went on to say that no one with a PhD or an MBA or "Goldman Sachs" on their business card will ever utter the words, "I don't know." I would add business graduates of any Ivy League university to that list. These individuals equate innate intelligence and an elite level of formal education with the ability to make accurate predictions.

The problem with relying solely on intelligence is that it is only one element in the predictive equation. Life experience, an understanding of human behavior, and the ability to recognize valuable data versus extemporaneous information are essential to making accurate predictions.

To those who possess only intellect, nothing else matters. Clearly the world needs their insight. Worse yet, to justify whatever position they hold, they seek data to support their beliefs. Being intelligent makes this a fairly simple task. It's certainly easier than seeking the facts.

 

The Darwin example

 

Charlie Munger -- Warren Buffet's sidekick at Berkshire Hathaway -- often cites Charles Darwin as an example of how pundits should operate.

According to Munger, Darwin wasn't abnormally smart, but his approach to science was far more pragmatic, at least if your goal is to arrive at the truth.

Darwin devoted his energies to trying to prove himself wrong rather than attempting to validate his beliefs. Darwin searched for data that would disconfirm his ideas. Munger believes that such a strategy can create a "marvelous thinker instead of one more klutz repeatedly demonstrating first-conclusion bias."

Well said.

Compounding the pundit problem is that in today's culture you only have to be right on one big prediction to earn a lifetime membership into the Pundit's Hall of Fame. Meredith Whitney of "I called the banking crisis" notoriety comes to mind. Since that big call, the only thing that can be said about Ms. Whitney's insights is that they are consistent -- consistently wrong.

I truly believe that if one is going to be entrusted with giving advice in the public arena that he or she should be obligated to have demonstrated the ability to be correct at least 51 percent of the time. I've advocated that pundits should be forced to announce their record prior to giving any advice in the same manner stock advisers disclose positions they may hold in a given stock.

If the dream of obligating pundits to publish their track records were ever to become a reality, there's one prediction I can make with certainty: There would be far fewer pundits in the world.

Tony Paradiso of Wilton is an author, professor, entrepreneur, radio and TV commentator. His website is tonyparadiso.com.


 

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