If you've got lucky, it's easy to convince people you're a sage

"Expert" predictions only need a few lucky guesses, then everyone believes them.

LSE's Nattavudh Powdthavee and Nanyang University's Yohanes E. Riyanto presented a paper last month titled Why Do People Pay for Useless Advice? (pdf) The authors demonstrate that people are prepared to pay for investment advice which they know cannot possibly be based on any real evidence – provided the advisor has got things right in the past.

Participants in the experiment were told to bet on five consecutive rounds of coin flips (they could pick the stake, provided it was higher than a minimum level and wouldn't make them lose all their money before the last round). Since they were using a fair coin, the chance of heads or tails coming up each time was 50-50, and the chance of someone calling the correct flips in all five rounds is one in thirty two. More importantly, no amount of expertise can help one predict the outcome of a sequence of coin tosses.

So when the participants were offered the chance to buy "predictions", you would expect them to ignore them. And most of them did, at least for round one (although even then, around 15 per cent of them did pay). But after the first round of tosses, everyone got to see their predictions, even those who hadn't paid. And for half the participants, those predictions were correct. Still, it's obviously just chance, right?

Apparently not so obvious. Those who got a correct "prediction" in round one were three times more likely to pay for one in round two than those who'd got an incorrect one. And by the time a subset of the group had got four correct predictions in a row, the possibility that they would buy a prediction for the fifth round had risen from 15 to 40 per cent.

In other words, just a few lucky guesses are all it takes to get people to pay for what the authors call "transparently useless advice". As they conclude:

Our experiment accurately describes how the real "false" experts typically operate in the information market, and the findings of this paper help to highlight how easy it is for an average person to form a belief in an expert when none may actually exist. 

Something worth bearing in mind next time you are looking at horse tips, stock pickers, or hedge funds, maybe.

George Bush tosses a coin. Is he an expert? Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
Show Hide image

The Home Office made Theresa May. But it could still destroy her

Even politicians who leave the Home Office a success may find themselves dogged by it. 

Good morning. When Theresa May left the Home Office for the last time, she told civil servants that there would always be a little bit of the Home Office inside her.

She meant in terms of its enduring effect on her, but today is a reminder of its enduring ability to do damage on her reputation in the present day.

The case of Jamal al-Harith, released from Guantanamo Bay under David Blunkett but handed a £1m compensation payout under Theresa May, who last week died in a suicide bomb attack on Iraqi forces in Mosul, where he was fighting on behalf of Isis. 

For all Blunkett left in the wake of a scandal, his handling of the department was seen to be effective and his reputation was enhanced, rather than diminished, by his tenure. May's reputation as a "safe pair of hands" in the country, as "one of us" on immigration as far as the Conservative right is concerned and her credibility as not just another headbanger on stop and search all come from her long tenure at the Home Office. 

The event was the cue for the Mail to engage in its preferred sport of Blair-bashing. It’s all his fault for the payout – which in addition to buying al-Harith a house may also have fattened the pockets of IS – and the release. Not so fast, replied Blair in a punchy statement: didn’t you campaign for him to be released, and wasn’t the payout approved by your old pal Theresa May? (I paraphrase slightly.)

That resulted in a difficult Q&A for Downing Street’s spokesman yesterday, which HuffPo’s Paul Waugh has posted in full here. As it was May’s old department which has the job of keeping tabs on domestic terror threats the row rebounds onto her. 

Blair is right to say that every government has to “balance proper concern for civil liberties with desire to protect our security”. And it would be an act of spectacular revisionism to declare that Blair’s government was overly concerned with civil liberty rather than internal security.

Whether al-Harith should never have been freed or, as his family believe, was picked up by mistake before being radicalised in prison is an open question. Certainly the journey from wrongly-incarcerated fellow traveller to hardened terrorist is one that we’ve seen before in Northern Ireland and may have occurred here.

Regardless, the presumption of innocence is an important one but it means that occasionally, that means that someone goes on to commit crimes again. (The case of Ian Stewart, convicted of murdering the author Helen Bailey yesterday, and who may have murdered his first wife Diane Stewart as well, is another example of this.)

Nonetheless, May won’t have got that right every time. Her tenure at the Home Office, so crucial to her reputation as a “safe pair of hands”, may yet be weaponised by a clever rival, whether from inside or outside the Conservative Party. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.