When Facebook shares dropped a whopping 17 percent in one day last year, wiping almost $120 billion off the company's balance sheet in the second quarter earnings report, the culprit was one that has become familiar to us: fake news.
We need information to make decisions that help us function in the world. This need translates into a constant search for news, which can leave us vulnerable to uncritically accepting misinformation if it appears close enough to the truth we expect to hear, or if we have zero experience on the subject.
The fault lies in the hardwiring of our brain, which is designed to take shortcuts as a means of saving time and energy when faced with complex decisions. Psychologists call this "good enough" approach satisficing, and it's at the root of our vulnerability to fake news, as well as being the reason it is accepted so readily and spreads so fast.
Information that bends the truth just enough to play on our biases (which is what fake news is designed to do) is not new. Every time, however, a piece of news that is not factual is shared, it erodes the idea of knowledge-based trust businesses use to establish relationships with each other, and consumers require in order to make online purchasing decisions. Case in point: Unilever's threat to withdraw its advertising from Facebook YouTube and Twitter because of their inability to fight fake news.
Fake news hurts business.
It's not just big companies that are hurt by fake news. Research conducted by the University of Chicago and the Marshall School of Business shows that fake news, left unchecked, erodes trust and leads to lower engagement in social-media networks. Entrepreneurs and small businesses rely on their social-media activity to leverage the network effect and gain valuable publicity at a fraction of the cost. A loss of trust adversely affects all marketing and brand-building efforts and breaks the connection with the audience that companies and brands need to gain and maintain market share.
The widespread use of automated algorithms in market trading creates an additional area of vulnerability that affects everyone along the investment chain, from companies whose shares are being traded to small-time investors who end up losing money. Evidence of price volatility in shares due to fake news is also presented in a study by professor Shimon Kogan, MIT Sloan, that demonstrates what happens when verifiable information is scarce and fake news is not being filtered.
The effect is an overall loss of consumer sentiment, an erosion of individual household buying power, and less money being spent on nonessential purchases, which can slow down the economy and lead to job losses.
Fake news is a con that works by playing on our ignorance and bias to manipulate our emotions for a quick reaction that will bypass our more critical thinking. The solution lies in five simple skills that anyone who has successfully resisted a con has learned to apply.
- Familiarization -- We need to be familiar with the territory we are in, and the digital environment is no different. Unless we transform ourselves from visitors to digital natives, we shall always be the outsiders; the "easy mark" that is distracted, overwhelmed, and susceptible to getting conned.
- Analysis -- In the digital realm, everything is intentional and everyone has an agenda. We need to ask ourselves if we understand what that agenda is. If we can't understand it, then we can't understand the intention of an action, like sharing a piece of information, and we should not therefore easily trust it or the person who shared it.
- Verification -- Information is how we function. Unless we have a reliable means of verifying a source of information, we should not be willing to believe it.
- Awareness -- It is really hard to be aware of our own bias. After all, it is called bias for a reason. But unless we begin to examine our own blind spots and actively think about points of view we don't necessarily agree with, we will be open to being blindsided forever.
- Empathy -- This is an emotion that allows us to experience a situation through the perception of another person. As such, it broadens our mind and makes us aware of a much bigger picture than just what we can normally perceive ourselves. Developing it is a conscious decision that enhances our mental skill set.
None of these skills are rocket science. Routinely applied as we go about our lives, however, they become a potent filter that can save us from being conned by fake news and help trust keep flowing through our digital connections.