Practical analysis for investment professionals
13 January 2017

Weekend Reads: Have You Heard the (Fake) News?

Posted In: Weekend Reads

Did you read that Pope Francis endorsed Donald Trump for president of the United States? That the Republic of Ireland is officially accepting disgruntled Trump refugees from the United States?

Perhaps you also heard something about #Pizzagate? Or that President Barack Obama signed an executive order banning the Pledge of Allegiance in US schools?

Do these “news” stories sound familiar? Did you read them? Share them?

They are just a small sampling of the avalanche of “fake news” that has inundated social media in the past few months.

While perusing last week’s Weekend Reads by my colleague Jason Voss, CFA, I was intrigued by his mention of a Stanford study that shows US students often cannot tell when news is fake.

So I decided to dig a little deeper. Down the rabbit hole I went. Suffice it to say, the deficiency highlighted by the Stanford study is not limited to the younger set. It seems to be a mental epidemic, running rampant among all ages, education levels, and political affiliations.

While versions of bogus news stories have surfaced over the decades — does Orson Welles and “War of the Worlds” spark any recollections? — the advent of online information and social media has provided the means and the method for their proliferation.

The phrase “fake news” is a reality. It references an actual phenomenon that goes to the heart of how we define “news.” Is news only that which is true? That which entertains? And while we may think as reasonably intelligent adults we can recognize and discard what is patently false, does that lessen the impact?

Follow me down this crooked path.

What Is It?

So what is “fake news?” How is it defined? Abby Ohlheiser describes it as “deliberately fabricated stories, often with the purpose of making money for the creators. . . . It can also refer to comedy or satirical news, faked for the purposes of entertainment. Both of these types of stories are often shared across social media — and are taken as true by some readers.” (Washington Post)

Seems simple enough. Just a few gullible people are fooled by it, right? Well, apparently fake news can also refer to “the phenomenon of a news source publishing something that is inaccurate but is still believed and shared by readers.” So, it masquerades as actual news, and seemingly well-meaning but misinformed people spread it further. It gains a life of its own until fiction becomes “fact.”

And while many express confidence in their ability to detect such fakery, they also acknowledge its influence on others and realize that such fabrications “cause a great deal of confusion about the basic facts of current issues and events.” Unfortunately, these same individuals also expect social networking sites, politicians, and one another other to do the policing. Obviously, that isn’t working out very well. (Pew Research Center)

How Bad Can It Be?

So back to that Stanford study. From middle school to college age, students were evaluated on how they assess the veracity of information sources. The “researchers weren’t looking for high-level analysis of data but just a ‘reasonable bar’ of, for instance, telling fake accounts from real ones, activist groups from neutral sources and ads from articles.” The results? “Dismaying,” “bleak,” and a “threat to democracy.” So read this, especially if you have kids. (National Public Radio)

Twitter and Facebook are certainly under the microscope for contributing to the fake news contagion. In fact, Facebook is attempting to navigate something of a content crisis: What should and should not be censored? And what exactly should the process look like, anyway? Turns out there really is no process at the moment. The current method seems to be, “Whoever screams the loudest gets our attention. We react.” More sobering, another source for the article said, “The hardest problems these companies face aren’t technological. They are ethical, and there’s not as much rigor in how it’s done.” (National Public Radio)

A declaration made on Twitter turned into a fake news phenomenon in a fascinating tale of how, “in an ever-connected world where speed often takes precedence over truth, an observation by a private citizen can quickly become a talking point, even as it is being proved false.” The most telling part of the piece? This quote from the perpetrator: “I’m also a very busy businessman and I don’t have time to fact-check everything that I put out there.” That seems to be the norm. (The New York Times)

What Explains Our Behavior?

“If you study the dynamics of how information moves online today, pretty much everything conspires against truth.” Not only is there a glut of media to pick and choose from, we can also tap or swipe away from anything that displeases us, “gorging on information that confirms our ideas, and shunning what does not.” In essence, our preconceptions and biases guide what news we believe, not necessarily the truthfulness and accuracy of any particular piece. (The New York Times)

Research shows that people listen to information that supports their positions and filter out contrary information. This is our “myside” or confirmation bias in action. What is this bias? It’s the “tendency to judge a statement according to how conveniently it fits with one’s settled position” and it is pervasive regardless of age, gender, or politics. Apparently, “no group clearly out-stupids the others. They appear about equally stupid when faced with proper challenges to their position.” (The Atlantic)

At Enterprising Investor we are no strangers to such behavioral miscues and have explored the confirmation bias effect in detail. (Enterprising Investor)

Where Does It End?

Either with a chuckle or a sigh, I will leave you with some examples of the most creative attempts to spread “all the news that’s unfit to print”:

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©

About the Author(s)
Susan Hoover, JD

Susan Hoover was the editor of Connexions, the CFA Society Leader newsletter, and the digital editor of Enterprising Investor at CFA Institute. Prior to CFA Institute, Hoover worked for McCallum & Kudravetz, PC, and the US Department of the Navy in real estate and labor law. Hoover earned the CFA Institute Investment Foundations™ Certificate and holds a BA degree from Lehigh University and a JD degree from the Washington College of Law, American University.

3 thoughts on “Weekend Reads: Have You Heard the (Fake) News?”

  1. Clement Gavi says:

    ‘Is news only that which is true?’

    First of all, a phenomenon can be described as an objective representation of sensitive reality. How news as information is news when news are dynamic or when news cease to news as soon as they have been heard? Is the news that found or news that need to be founded through a retrospective in terms of verification or the truth is it in the news or in the news back up by facts?

    ‘Research shows that people listen to information that supports their positions and filter out contrary information. This is our “myside” or confirmation bias in action. What is this bias?’

    What research reveals here highlights the fact the reality is a combination of a fact and a sense (interpretation). The news is what has been given, it form depends not on the news per se but the sensitivity and intellectual structure of the knowing subject. That’s why news that supports self position affects positively; it is heard, integrated, reminded, etc.

    There is something given (news), but by a form which is that of sensibility and intellectual organization.

  2. Susan,

    Thanks for the article.

    Fake news is an old problem:
    —-“A lie will go round the world while the truth is still putting its
    boots on.” (C.S. Spurgeon, 1859; sometimes attributed to Mark Twain)
    —-“Falsehood flies and the truth comes limping after it.” (Jonathan Swift, 1710)

    But is fake news persuasive? Academic research suggests that fake news is persuasive mainly when the source is credible. Here’s a sample conclusion from research on the topic of message framing and source credibility:

    “We find that a more credible media source strengthens the framing effect while a less credible source has no influence on the framing effect, indicating that the source credibility serves as a moderator.”

    This research is mainly about the “framing” of a message, rather than an outright lie. But the research I’ve read makes me believe that source credibility is a critical restraint on fake news.

    Yes, it’s true that some people are gullible or partisan. As Todd Rungren said, “You believe what you want to believe.” (Refugee) But the evidence suggests that the persuasiveness of fake news is limited by the credibility of the source.

    Perhaps I should update my article on how to read financia news.
    ; )


  3. Susan Hoover says:

    Hi Rob,
    Thanks so much for your note. I particularly liked your first quote above. Persuasiveness is an interesting characteristic. I do believe our own biases will have an affect on what we hear and what we then discard as meaningless. I also believe they influence our beliefs.
    Whether I am persuaded or not by another’s point of view is something else entirely. I would agree that the source of the information would have a huge impact on whether I am persuaded by the points.
    I think in the fake news category, people don’t go as deep. They hear and pass it on. They do not take the time to fact check, as the viral tweet in the New York Times article made obvious.
    Still, it is an interesting phenomenon and one with great influence.

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