A sideways look at economics
Stereotypes fascinate me: their origin, their motives, their many exceptions and the strong emotions they elicit. Let’s embrace some controversy and dive straight into a few.
Consider stereotypes about men having better spatial awareness or being better drivers than women. It’s easy to find references either disproving or supporting these old chestnuts. Women have lower car insurance premiums than men, but there’s an irrefutable body of anecdotal evidence of ladies asking random men for help in parking their car (it’s happened to me twice in the past 18 months). Some academic research seems to validate that men are better at navigation than women, claiming that social and cultural factors may be at work over hardwired evolutionary traits. However, yours truly, like many others, is well renowned for not excelling in navigating from A to B. It’s a running joke among my friends (and rapidly taking hold in my family too) about being ‘Lost with Zazz’ whenever I suggest a shortcut. The ‘Lost with Zazz’ saga has spiralled into a fictional TV series plot where brave souls follow their seasoned guide, Zazz, only to end up in improbable and often unspeakable situations.
My real fascination lies in why and how stereotypes come about and take hold, rather than proving or disproving them. To explore this, we’ll delve into the realm of information theory and concepts like entropy.
Claude Shannon, the father of information theory, borrowed the concept of entropy from physics to quantify the amount of uncertainty in a system. The more possible states a system can take on, the higher its entropy. Entropy has two key components: the number of possible events or states, and the probabilities of each event occurring. The more evenly distributed the probabilities or the higher the number of states, the higher the entropy.
Stereotypes may appear as harmless ways of reducing the world’s complexity by lumping people into easily digestible categories. They decrease the number of mental ‘states’ we have to consider, allowing us to categorise the world on limited data. For instance, the stereotype that Brits love to queue is based on observed behaviours suggesting a cultural preference for order and patience. In information theory terms, this stereotype attempts to reduce the entropy associated with understanding British cultural norms by providing a simple, albeit reductive, explanation for a complex set of behaviours.
However, stereotypes often introduce inaccuracies about reality, potentially adding ‘noise’ rather than clarity. This noise could distort the ‘signal’, or the true information, making these shortcuts misleading. While trying to reduce entropy about a group or situation, stereotypes can instead inadvertently increase it, by spreading oversimplified narratives and caricatures that potentially lead to misunderstandings, tensions and confrontations.
This process underpins a phenomenon that, judging by my Twitter/X feed, is becoming more prevalent and mainstream: conspiracy theories. I think of conspiracy theories as the evil twin of stereotypes: less amusing (though some are hilarious in their outlandishness, while others – like flat earthers – are flat-out, obnoxious, attention-seeking expedients) and more harmful to society as a whole. Like stereotypes, they often arise as people’s cognitive attempts to manage the world’s entropy but on a much broader scale.
Conspiracy theories stitch together isolated and sometimes unrelated events (and sterotypes) into a narrative that seems intuitively plausible, effectively trying to reduce the entropy of a seemingly random or complex system. In terms of information theory, they drastically reduce the number of possible explanations while simultaneously assigning high probabilities to them, giving the illusion of making the world more predictable and less random. However, in the aggregate, the paradox is that they actually introduce more noise than signal, since the number of conspiracy theories that can be disseminated to wide audiences in the modern digital age is potentially infinite.
The proliferation of conspiracy theories is quickly becoming an even greater scourge than their content, as it has led to a crisis in credibility and standards. The increased availability of information and the inherently unverifiable nature of many casual inferences has levelled the playing field between credible sources of analysis and more dubious ones.
To counteract the negative impact of conspiracy theories and limit their proliferation, information theory prescribes enhancing the quality of the information signal while reducing unnecessary noise. One way to deal with conspiracy theories is actually to embrace the randomness of the world, accepting that there are no simple stories that account for everything. A more practical approach to reducing noise is to make educated guesses about the conditional probabilities of events. For example, believing in the existence of influential groups and the forces of competition shaping markets would lead to assigning a low probability to any group pulling off a grand design of total control over economies.
The concept of mutual information in information theory is also relevant. It measures the extent to which knowledge of one variable reduces uncertainty about another. Applying this to media, if a news source provides data that has high mutual information with verified events, it means this source greatly reduces uncertainty about these events.
Algorithms could exploit this feature of information theory. For example, algorithmic interventions on social media platforms can prioritise content with high mutual information with verified facts, promoting information that genuinely reduces entropy about the world. These algorithms could downrank sensationalist content or narratives that play into unfounded stereotypes and conspiracy theories, thereby cleaning up (some of) the noise in our information environment.
Ultimately, education both at home and school will play a huge role in counteracting the growing tendency towards higher entropy. Media literacy and critical thinking will become crucial in fostering a more discerning approach to information consumption.
Ending on a positive note, with a more uncertain world and higher entropy, the demand for credibility is likely to increase. We may be witnessing the dawn of a new age where credibility is at a premium. If this is true, the future will be bright for Fathom — an organisation that has long strived to help clients reduce noise through thorough research, while upholding core values around truth-seeking and independence, for example by actively avoiding advocacy work. Fathom will continue to serve as your trusted voice in an increasingly noisy information landscape.
Pic: Tom Radetzki/Unsplash
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