Can you smell financial bullshit?

Can you tell when someone is bullshitting you? Hopefully so – because an ability to spot financial bullshit predicts financial well-being.

At least so say the psychology and economics researchers behind the paper: Individual Differences in Susceptibility to Financial Bullshit.1

The researchers claim that young, higher-income males are particularly susceptible to BS. These individuals tend to be overconfident about their level of financial competence, too. Quelle surprise

This leaves older, lower-income females as the most sensitive financial bullshit detectors. (Presumably because young males give them plenty of practice from an early age.)

The researchers even built a Financial Bullshit Scale to test consumers’ gullibility vulnerability. 

Sorry, that sentence should read: 

The multi-disciplinary task force of highly-skilled, cognitive behavioural scientists deployed a proprietary FBSTM system to leverage high-value client identification solutions. 

You get the picture.

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The Financial Bullshit Scale measured participants’ ability to detect meaning within a series of ‘profound’ and contrasting ‘pseudo-profound’ statements. 

The profound statements were classic quotes about finance, as dispensed by luminaries such as Adam Smith and Benjamin Franklin. 

The ‘pseudo-profound’ statements came from an internet Bullshit Generator. 

See if you can spot the difference:

The scores refer to the researchers’ six-point meaningfulness rating: 

1 = not meaningful
2 = hardly meaningful
3 = slightly meaningful
4 = rather meaningful
5 = meaningful
6 = very meaningful

Controversially, Adam Smith was rated as less meaningful than five out of seven spins from the bullshit generator. Pegged as a blatant bullshitter, Smith was axed from the final table. Oh the ignominy!

For the study, a participant’s receptivity to the pseudo-profound statements was subtracted from their receptivity to the wisdom of the financial greats. This generated their financial bullshit score. 

The lower your score, the more easily impressed you are by financial bullshit.

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Further tests probed participants financial knowledge, behaviour, well-being, numeracy, and capacity for cognitive reflection. 

Scores were correlated to establish whether an individual’s bullshit susceptibility could predict their financial behaviour and well-being. They also tested whether a weakness for BS was related to age, gender, education, and other demographic markers.  

The academics evaluated financial behaviour by asking participants how often they engaged in various money-related activities:

Activities are rated on a five-point scale. 1 = never; 5 = always.

I suspect that many Monevator readers would notch hi-scores for this stuff. Though perhaps NHS-loving Brits would drop points for health insurance.

I’d earn black marks for maxing out credit cards and making minimum loan payments. (Only on 0% terms in my defence as a recovering stoozer). 

A quiz tested financial knowledge:

Again, I’d expect the Monevator massive to scoop A stars for this test.

(You got less than half marks? You’re hereby sentenced to re-read our entire website, starting with this warning on gullibility from 2007). 

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Thankfully the study concludes most people can smell bullshit to some degree. 

Females were typically more bullshit aware than males. 

And surprisingly, lower-income subjects had a better BS-sense than higher-income people. 

The study’s authors commented:

It seems reasonable to believe that as income rise[s] consumers become less vigilant when it comes to financial matters and therefore less alert when it comes to be[ing] affected by impressive financial language.

This seems to fly in the face of anecdotal evidence that lower-income groups are attracted to lotteries. 

Then again, high-income individuals can be easy marks for schemes that flatter their sense of status. ‘Attractive opportunities’ can be hard to resist when teamed up with ‘exclusive access’.  

The good news for Monevator types is that:

Participants with higher levels of numeracy, cognitive reflection, and objective financial knowledge were less susceptible to financial bullshit.

But the researchers warn:

Overconfident consumers (i.e., low objective but high subjective financial knowledge) were most susceptible to financial bullshit. 

File away that away for the next time someone insists their ‘monotonically disintermediated DeFi cloudified solution’ is going to the moon. 

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Other interesting findings included:

The financial bullshit score did not correlate significantly with financial anxiety.

So a well-tuned BS radar did not contribute to how anxious people felt about their finances. 

Fair enough. My concerns about the heating bill aren’t much influenced by my desire to “currency trade like a pro” as per yon swish YouTube ad.

However, people’s financial bullshit score was negatively related to their financial security. 

Just because you’re paranoid doesn’t mean they’re not all out to get you. 

The authors believe gullible types may enjoy an “ignorance-is-bliss effect” when it comes to their subjective financial well-being. 

Finally, having an acute olfactory sensitivity to bovine excrement does not make people better behaved, according to the financial management behaviour scale. 

But the researchers do believe it will help you judge financial products and services that play bullshit bingo with your brain. 

Dynamically delivering organic bovillus faeces?

Well, I can’t wait to hear what you all think. 

For their part, the study’s authors anticipate that future research could:

Advance understanding on how to make individuals better equipped to distill financial communication and navigate the financial landscape.

That’s a laudable aim. 

The boffins also hope their research could cause financial institutions to lower the bullshit cannon that makes BS-savvy customers feel more insecure about their finances. 

On the other hand, perhaps the emerging field of Bullshit Studies will be flipped by corporate interests. 

Retailers infamously scour behavioural psychology literature, looking for cunning ways to route consumers past their sweetie displays.

Either way I don’t think the academics will run out of material anytime soon.

From my own experience, I can any assure budding professors of bullshit that the corporate world just can’t get enough of the stuff.  

Take it steady,

The Accumulator

P.S. Please post your favourite examples of financial bullshit in the comments. 

P.P.S. The Corporate BS Generator was of invaluable assistance in producing this article’s subheads. It’s a compellingly envisioneering career-maximising tool for networked professionals wishing to make an impact.  

Published 22 June in the Journal of Behavioral and Experimental Finance.

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