The appeal to authority: when it works and doesn’t

In a series of tweets over the past week, until the crisis in Gaza abruptly shifted priorities, Richard Hanania claims he could produce work of the same quality as Shakespeare, generating predicable rebuke from his followers. The appeal to authority fallacy is invoked:

Is Mr. Hanania as skilled as Shakespeare? Right now? Likely not. With practice could he be? It’s possible. Maybe not probable, but I would not want to dismiss the possibility entirely. Years ago I would have been more dismissive, but we’ve seen over the past few decades how poor the track record of experts has been, whether it’s journalism, foreign policy, healthcare, or politics. The assumption that credentialed or esteemed experts have the answers or are the most competent at their jobs needs to be called into doubt or just dismissed outright. Why would literary criticism or assessing what art is better or worse be immune to this too? Some examples include:

-hate crime hoxes that are reported as news by ‘reputable’ outlets

-a $3-trillion-dollar war conceived on faulty intelligence data

-a candidate who only had a 1% chance in 2015 and was never supposed to win becomes President in 2016

-trillions of dollars of economic loss and millions of people inconvenienced based on dubious or wrong science to fight a pandemic that we are not even allowed to debate

-studies from reputable universities and researchers retracted due to faked data

-a $16 billion bank, SVB, fails because its risk department does not understand how long-duration bonds work

The appeal to authority is wrong for two reasons:

1. It’s a form of prejudice or even discrimination. I am hesitant to use those words, as the left does so loosely that they can mean anything, yet that it has the same properties. Looking at the comments of the tweet, many of the same people who oppose affirmative action seem to also subscribe to the appeal to the authority, but this is another way of discounting or dismissing someone on something superficial (e.g. credentials or skin color).

2. It significantly limits the pool of talent or labor. Economically, it is counterproductive by possibly reducing productivity. If consideration is only limited to the most esteemed or qualified based on credentials, this represents only a tiny percentage of the overall population. Even if tenured professors are smarter than the general population, the general population is so much bigger. Odds are the smartest person alive is not a tenured professor.

Examples:

The investment portfolio I oversee has posted an 10.5x total return since 2014, for a CAGR of 30% through a combination of tech stocks and leveraged ETFs, surpassing any hedge fund or manager second maybe to Renaissance Technologies, afik (there always exists the possibility others have surpassed this, but an exhaustive search has not borne any fruit for contenders of runner-ups to Renaissance). One would assume the best investor would be at a hedge fund, but not always. The best in the world at something isn’t always where you’d look first. Same for Bitcoin trading. Thousands of people trade crypto, and the vast majority of them lose money, yet I was able to find the suppurative winning strategy (shorting Bitcoin when the stock market is open to take advantage of Silk Road selling) out of a sea of losers.

On Reddit’s /r/WallStreetBets, it’s not unheard of for unknown traders to make large, consistent returns at a rate that cannot be eastly dismissed as luck or survivorship bias. There is skill, such as position sizing, choosing the right stocks, having an intuition of the markets, etc. It was some annon, later revealed as Keith Gill, an otherwise unknown analyst, who in early 2021 nearly brought down some hedge funds during the ‘GameStop saga’.

The majority of actively-managed funds lag their respective benchmarks; it does not surprise me at all that random, uncredentialed annons on Reddit are better at trading and investing compared to ‘the experts’ who are being paid six or seven figures with terrible results to show for it. [The usual retort is that hedge funds are supposed to hedge, not beat the S&P 500, and even then they come up short after accounting for fees compared to something like the 60-40 portfolio or a mix of bonds, which can be replicated with ETFs.]

Having a high IQ helps in this regard, more so than expertise, by allowing one to see the answer or optimal strategy and cutting through the noise. Warren Buffett’s IQ according to his biographer is 150. By his early 20s, Mr. Buffett was already among the best in the world at trading despite not having a college degree, having already surpassed his mentors. Or Bill Gates. Yes, these are outliers, but it shows it is possible. I was able to isolate the exact timeframe when the US government is selling its Bitcoin holdings and then front-run the sales. I didn’t have to waste my time and money on losing strategies. I saw the pattern and honed in on it, having read the articles about the liquidation and putting two and two together.

To bring this back, what properties makes literature as good as Shakespeare–or not quite rising to the level of Shakespeare–is always going to be in the eye of the beholder. Attempts at trying to quantify this, such as iambic pentameter, doesn’t mean the work is as good as Shakespeare, only that it shares some of its properties. ‘Goodness’, with Shakespeare as the reference point, means that we’re already biased by looking at it through a predetermined filter.

A more impartial way of assessing this would be to give study participants who are unfamiliar with Shakespeare’s work–passages of Shakespeare (preferably from some of his lesser-known or less famous works) and imitation-Shakespeare, and have them rank which is better. This can be done for famous artwork or songs, too. It makes one wonder how much of ‘goodness’ is just a matter of consensus by intellectuals and critics, not the public.

On the contrary, the appeal to authority is a useful heuristic as far as math or physics are concerned, more so than other STEM subjects. Outsiders occasionally can make progress at biology (such as nutritional science, genomics) or computer science (such as AI, R/Python, GitHub, etc.), but hardly ever for math or physics, in which there is a lot of prior art and a difficult literature. Physics and math results tend to be sound, compared to the replication crisis in the social sciences.

Yet, we can assume a surgeon is going to know a lot more about the intricacies of human anatomy compared to a random person online. You would trust a brain surgeon with credentials over someone not possessing credentials. Perhaps the appeal to authority works best for technical, domain-specific fields for applications that are more descriptive than prescriptive. A research doctor can explain in great detail how human metabolism works, but this is a long way from knowing which diet is best for treating obesity. Economists have predicted 10 of the last 7 recessions.

The field of human physiology has given rise to a lot of small, underpowered studies, many of which contradict each other, such as about obesity, in which after decades of research and many studies, no one has much of a clue about how or why humans get fat and how to reverse it except the obvious (CICO). Gary Taubes, despite his official credentials being a master’s degree in journalism at Columbia University, in a 2002 NYTs column declared “carbs are bad,” and a lucrative career as a nutrition expert was born.

Or health policy, in which the experts were wrong about masks and social distancing by vastly overestimating the efficacy of those–or at least the answer is not as conclusive as let on by the media. Ronald Reagan famously said to trust but verify, but at this point I am finding it hard to even want to trust these people.