Credibility

Over at Slate, Juliet Lapidos asks, how much is $700 billion?

Let’s say Slate charged its advertisers $30 per 1,000 ad impressions, a common industry rate. And let’s imagine for a second that the federal government decided to nationalize Slate in order to pay for the bailout. We’d need our readers to rack up enough page views to see 23.3 trillion banner ads before the feds were satisfied.

For historical perspective, consider that the Marshall Plan, which helped finance the recovery of Western Europe after World War II, cost the United States about $13 billion. Of course, in 2008 dollars that’s more like $100 billion. And Niall Ferguson has estimated that as a comparable share of the U.S. GDP, it’s more like $740 billion.

Nicholas Kristof has a sticky piece today on the grotesque overpayment of CEOs who fail. Case in point: Richard Fuld, chief of the now-flushed Lehman Brothers, made a half-bil between 1993 and 2007. Good investment.

This story, and others like it, run the board on the traits of a sticky idea: They’re simple (Too much money!). Unexpected ($17,000 an hour!). Concrete ($6,000 shower curtains). Credible (the amounts are indisputable). Emotional (Outrage, envy, disgust). Story (Pick your CEO). And yet the public outcry never builds up to a roar. Only a half-hearted squawk.

I can’t explain it. Maybe people feel powerless to affect it. I.e., if you were really angry, to your core, about CEO pay, what would you do next? At least with global warming, you can switch out a  lightbulb. But sadly, there’s no incremental action with CEOs — you can’t take a dollar out of Fuld’s pocket. (Even if you did, it wouldn’t be worth his time to retrieve it, because in the next 10 seconds, he’d have made another $47.)

Reader Greg Miller has made one of our book concepts stickier. Here’s the relevant passage of our book and then Miller’s improvement…

Another way to bring statistics to life is to contextualize them in terms that are more human, more everyday.  As a scientific example, contrast the following two statements:

1. Scientists recently computed an important physical constraint to an extraordinary accuracy.  To put the accuracy in perspective, imagine throwing a rock from the sun to the earth and hitting the target within 1/3 of a mile of dead center.
2. Scientists recently computed an important physical constraint to an extraordinary accuracy.  To put the accuracy in perspective, imagine throwing a rock from New York to Los Angeles and hitting the target within 2/3 of an inch of dead center.

Which seems more accurate? 
As you may have guessed, the accuracy levels in both questions are exactly the same, but when different groups evaluated the two statements, 58% of respondents ranked the statistic about the sun to the earth as “very impressive.”  That jumped to 83% for the statistic about New York to Los Angeles.   We have no human experience, no intuition, about the distance between the sun and the earth.  The distance from New York to Los Angeles is much more tangible.  (Though, frankly, the distance is still far from tangible.  The problem is that if you make the distance more tangible—like a football field—then the accuracy becomes intangible.  “Throwing a rock the distance of a football field to an accuracy of 3.4 microns” doesn’t help.)

Miller says: “I’ll offer this suggestion for improving the analogy of throwing the rock from New York to Los Angeles and hitting within 2/3 inch of dead-center. Units of distance are still too abstract. Better to say throwing a rock from New York to Los Angeles and hitting a 50-cent piece (which has a radius of about 2/3 inches.)”

Great point, Greg — thanks for making us more concrete!

The evidence says that people who buy mutual funds retire a lot poorer than if they’d simply bought index funds. So why do mutual funds keep growing? In our latest Fast Company column, we explore why it’s so hard to get the truth to stick.

You know that one GM Olympics ad? The one that’s seemingly stuck on repeat, the one with the uplifting song that starts, “All of these lines across my face…” Well, I adore it, because it seems to be a rare specimen: the self-refuting argument. First, there’s the primary argument, made via the titles: “…goes for miles and miles on every gallon,” “hybrid,” “biofuel,” “clean diesel,” “fuel cell.” I.e., GM is Rainforest Pure. GM = Green Motors.

Then, at the end of the ad, as the song comes to an emotional close, comes the rejoinder: the HUMMER logo. Brilliant! Objection sustained.

The GM spot has made me dream of launching my own ad, with a (tough but inspiring) Lucinda Williams song playing over a montage of great moments in feminist history — from Seneca Falls to Rosie the Riveter, from Elizabeth Cady Stanton to Betty Friedan to Carly and Hillary. And then, with a dramatic flourish, as the cymbals crash and fade, comes: the HOOTERS logo.