Suppose I want you to believe something and after hearing what I say you can, at some cost, check whether I am telling the truth.  When will you take my word for it and when will you investigate?

If you believe that I am someone who always tells the truth you will never spend the cost to verify.  But then I will always lie (whenever necessary.)  So you must assign some minimal probability to the event that I am a liar in order to have an incentive to investigate and keep me in check.

Now suppose I have different ways to frame my arguments.  I can use plain language or I can cloak them in the appearance of credibility by using sophisticated jargon.  If you lend credibility to jargon that sounds smart, then other things equal you have less incentive to spend the effort to verify what I say.  That means that jargon-laden statements must be even more likely to be lies in order to restore the balance.

(Hence, statistics come after “damned lies” in the hierarchy.)

Finally, suppose that I am talking to the masses.  Any one of you can privately verify my arguments.  But now you have a second, less perfect way of checking. If you look around and see that a lot of other people believe me, then my statements are more credible.  That’s because if other people are checking me and many of them demonstrate with their allegiance that they believe me, it reveals that my statements checked out with those that investigated.

Other things equal, this makes my statements more credible to you ex ante and lowers your incentives to do the investigating.  But that’s true of everyone so there will be a lot of free-riding and too little investigating.  Statements made to the masses must be even more likely to be lies to overcome that effect.

Drawing: Management Style II: See What Sticks from www.f1me.net

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