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 Images
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The future of policing is still at risk even after George Osborne's U-Turn

The police have avoided the worst, but crime is changing and they cannot stand still. 

We will have to wait for the unofficial briefings and the ministerial memoirs to understand what role the tragic events in Paris had on the Chancellor’s decision to sustain the police budget in cash terms and increase it overall by the end of the parliament.  Higher projected tax revenues gave the Chancellor a surprising degree of fiscal flexibility, but the atrocities in Paris certainly pushed questions of policing and security to the top of the political agenda. For a police service expecting anything from a 20 to a 30 per cent cut in funding, fears reinforced by the apparent hard line the Chancellor took over the weekend, this reprieve is an almighty relief.  

So, what was announced?  The overall police budget will be protected in real terms (£900 million more in cash terms) up to 2019/20 with the following important caveats.  First, central government grant to forces will be reduced in cash terms by 2019/20, but forces will be able to bid into a new transformation fund designed to finance moves such as greater collaboration between forces.  In other words there is a cash frozen budget (given important assumptions about council tax) eaten away by inflation and therefore requiring further efficiencies and service redesign.

Second, the flat cash budget for forces assumes increases in the police element of the council tax. Here, there is an interesting new flexibility for Police and Crime Commissioners.  One interpretation is that instead of precept increases being capped at 2%, they will be capped at £12 million, although we need further detail to be certain.  This may mean that forces which currently raise relatively small cash amounts from their precept will be able to raise considerably more if Police and Crime Commissioners have the courage to put up taxes.  

With those caveats, however, this is clearly a much better deal for policing than most commentators (myself included) predicted.  There will be less pressure to reduce officer numbers. Neighbourhood policing, previously under real threat, is likely to remain an important component of the policing model in England and Wales.  This is good news.

However, the police service should not use this financial reprieve as an excuse to duck important reforms.  The reforms that the police have already planned should continue, with any savings reinvested in an improved and more effective service.

It would be a retrograde step for candidates in the 2016 PCC elections to start pledging (as I am certain many will) to ‘protect officer numbers’.  We still need to rebalance the police workforce.   We need more staff with the kind of digital skills required to tackle cybercrime.  We need more crime analysts to help deploy police resources more effectively.  Blanket commitments to maintain officer numbers will get in the way of important reforms.

The argument for inter-force collaboration and, indeed, force mergers does not go away. The new top sliced transformation fund is designed in part to facilitate collaboration, but the fact remains that a 43 force structure no longer makes sense in operational or financial terms.

The police still have to adapt to a changing world. Falling levels of traditional crime and the explosion in online crime, particularly fraud and hacking, means we need an entirely different kind of police service.  Many of the pressures the police experience from non-crime demand will not go away. Big cuts to local government funding and the wider criminal justice system mean we need to reorganise the public service frontline to deal with problems such as high reoffending rates, child safeguarding and rising levels of mental illness.

Before yesterday I thought policing faced an existential moment and I stand by that. While the service has now secured significant financial breathing space, it still needs to adapt to an increasingly complex world. 

Rick Muir is director of the Police Foundation