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Risk Insider: Jack Hampton

Truthiness: The New Threshold of Reality

By: | February 28, 2017 • 3 min read
John (Jack) Hampton is a Professor of Business at St. Peter’s University and a former Executive Director of the Risk and Insurance Management Society (RIMS). His recent book deals with risk management in higher education: "Culture, Intricacies, and Obsessions in Higher Education — Why Colleges and Universities are Struggling to Deliver the Goods." His website is www.jackhampton.com.

In 2016, the media reported that Ringling Brothers Circus ended its elephant show. Subsequently, it announced the Circus was closing down completely after more than 100 years in operation. Are these messages true? Who knows?

To understand what’s going on the world, we must confront new definitions of “truth.” Not serious, you say? Tell that to the editors of dictionaries.

“Truthiness” was Merriam Webster’s Word of the Year in 2006. It refers to a truth that won’t allow itself to be held back by evidence. We know truthiness intuitively “from the gut” or because it “feels right.” We completely ignore evidence, logic, intellectual examination, or contradictory information.

Post-truth was Oxford dictionary’s Word of the Year in 2016. It describes circumstances when appeals to emotion and personal belief shape public opinion despite sharply conflicting and largely accurate facts. Evidence is ignored as a message is accepted and repeated.

The concept of “truth” has been changing but it exploded during the 2016 presidential campaign. Umpteen candidates vied for attention in endless rude skirmishes that seized the attention of a widely-divided electorate: “The country is in serious trouble.” “The economy is in great shape.” “You are a crook.” “She is a liar.” “He is an idiot.” Who should we believe?

People play with facts. Are they lying?

PolitiFact.com, a project operated by the Tampa Bay Times, checks the “facts” in statements by members of Congress, the White House, lobbyists and interest groups. It proclaims itself to be a non-partisan effort.

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In the 2016 election campaign, PolitiFact graded the statements of Democratic and Republican candidates. It found dozens of questionable statements identified as mostly true, half true, mostly false, false, and pants-on-fire (my personal favorite).

The sad truth about politics is a person can get elected by appealing to sticky messages that have no substance. Truth is nowhere to be found because we ignore messages that conflict with what we believe. Don’t blame the media. The fault is ours. We believe what sounds good.

“A diamond is forever.” Does it really matter when our lifespan is 80 or so years, if we are lucky?

“Maxwell House: Good to the last drop.” Who drinks coffee to the last drop?

“BMW: The Ultimate Driving Machine.” What about Ferrari or Lamborghini?

People play with facts. Are they lying?

Advertising slogans are one thing. It is far more dangerous for us to be guided by false statements that win elections but do not address the risks we face solving real world problems. Does it hurt us when we cannot or do not separate truth from falsehood? When we try to manage the risks in our lives, shouldn’t we know the difference?

Remember the story of the six blind men touching different parts of an elephant and describing what it looked like. Everybody has an accurate picture of something but nobody grasps the concept of “elephant.”

Does anybody really care about the truth? Of course they do. Pick a version.

I want to go to the Ringling Brothers Circus next summer. Thanks to truthiness, I have that option. I am particularly looking forward to touching an elephant.

More from Risk & Insurance

More from Risk & Insurance

Black Swans

Black Swans: Yes, It Can Happen Here

In this year's Black Swan coverage, we focus on two events: An Atlantic mega-tsunami which would wipe out the East Coast and a killer global pandemic.
By: | July 30, 2018 • 2 min read

One of the most difficult phrases to digest without becoming frustrated or judgmental is the oft-repeated, “I never thought that could happen here.”

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Most painfully, we hear it time and time again in the aftermath of the mass school shootings that terrorize this country. Shocked parents and neighbors, viewing the carnage, voice that they can’t believe this happened in their neighborhood.

Not to be mean, but why couldn’t it happen in your neighborhood?

So it is with Black Swans, a phrase describing unforeseen events, made famous by the former trader and acerbic critic of academia Nassim Nicholas Taleb.

We at Risk & Insurance® define these events in insurance terms by saying that they are highly infrequent, yet could cause massive damages. This year, for our annual Black Swan issue, we present two very different scenarios, both of which would leave mass devastation in their wake.

A Mega-Tsunami Is Coming; Can the East Coast Even Prepare?, written by staff writer Autumn Heisler, profiles an Atlantic mega-tsunami, which would wipe out lives and commerce along the East Coast.

On the topic of whether the volcanic island of La Palma, the most northwestern of the Canary Islands, could erupt, split and trigger an Atlantic mega-tsunami, scientists are divided.

Researchers Steven Ward, a geophysicist at UC Santa Cruz, and Simon Day of University College London, say such a thing could happen. Other scientists say Day and Ward are dead wrong; it’s an impossibility.

One of the counter-arguments is backed up by the statement that there has never been an Atlantic mega-tsunami. It’s never happened before and thus, could never happen here. See exhibit “A” above, re: mass school shootings.

Viral Fear: How a Global Pandemic Kills an Economy, written by associate editor Katie Dwyer, depicts a killer global pandemic the likes of which hasn’t been seen in a century.

Tens of millions of people died during the Spanish Flu outbreak of 1918.

Why it could happen again includes the fact that it’s happened before. The science on influenzas, which are constantly mutating, also supports just how dangerous a threat they pose to millions of people beyond the reach of antibiotics.

Should a mutating avian flu, for example, spread widely, we could see a 10 percent drop in GDP, mostly from non-physical business interruption.

As always here, the purpose is to do exactly what insurance modelers and underwriters do; no matter how massive the event, we create scenarios, quantify possible losses and discuss risk mitigation strategies. &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]