In the day job, I say that gold’s rise has enriched some very silly people, and a reader replies that he wishes he had been even sillier. This highlights the fact that being right is no evidence of being rational.
The point here is not merely Ecclesiates’ one, that riches don’t go to men of understanding because time and chance happeneth to us all. It’s that irrationality might actually be necessary for success. As a higher authority than the Bible said, “no great thing has ever been accomplished without somebody's crazy belief."
The example of gold shows this. The man who, who a few years ago expected hyperinflation and/or full-blown debt crises in the UK and US would have piled into gold and made a packet by now - much more, in fact, that the less idiotic investor who took a more cautious position.
This is not the only example. Irrationally overconfident people are more likely to be promoted, because others mistake their overconfidence for real ability. And, indeed, irrational overconfidence is necessary to motivate people to enter risky jobs such as sports, politics, the arts or entrepreneurship. As Richard Nisbett and Lee Ross said in one of the earliest works on cognitive biases:
We probably would have few novelists, actors or scientists if all potential aspirants to these careers took action based on a normatively justifiable probability of success. We might also have few new products, new medical procedures, new political movements or new scientific theories.
All this should be well-known. But here’s my concern. What if this selection for irrationality combines with a form of hindsight bias in which people attribute wisdom to the successful? We will then give too much credence to the idiotic investor who over-weighted gold for barmy reasons, to the boss who won promotion by being irrationally overconfident, to the politician who won power by unreflectingly articulating the prejudices and idiocies of his colleagues and the public, or to the novelist or entrepreneur who just got lucky. The bland or foolish thoughts of the rich and successful will be lauded, whilst the interesting ideas of the more obscure will go unnoticed. We will then celebrate irrationality.
I fear this might explain a lot of editorial decisions at the BBC and in the print media.