Warren Buffett realized something he never told anyone before. He has spent more time talking to journalists than any CEO in America. The reason he says is partially because he’s in his 80’s, and the other part is that he likes journalists. As everyone knows who follows the “Oracle of Omaha,” they like him right back.
Which may explain my surprise when he pointed a wagging finger at journalists during our 2015 interview. According to Buffett, even the good ones have a blind spot called confirmation bias:
“The biggest sin in journalism is a journalist has to start with a working hypothesis but they don’t always give that up when the facts prove misleading,” Buffett says. “You’ve got to start a story with a hypothesis. You’re looking into something because you have a working hypothesis. But you have to give up on that hypothesis if it turns out not to be correct or if it’s misleading in a major way.”
There’s no mystery as to how and why confirmation bias seeps into business journalism, according to Buffett.
“It’s very natural. You get time invested in it, you’ve got this working hypothesis—what Wal-Mart does with their employees or whatever it may be—and you may have some people who have an interest in it feeding you a lot of material along that line,” Buffett says. “Once you’ve invested a lot of hours and your editor knows you’ve invested a lot of hours…there’s a lot of momentum toward a bad story. There’s a lot of momentum toward a good story, too, but you have to be able, as a writer, to say ‘my hypothesis is no longer correct.’ And a hypothesis is all it was—that’s no sin to say that, but it’s hard to do.”
Since the days of Henry Luce, the iconic editor in chief and founder of Time Inc., a journalist had to work hard to create a happy marriage between the editorial and business sides. The healthy tension was good for the country and very good for the media. It balanced the journalist’s natural elitism with the need to appeal to the masses. Soon, a national market was created (as opposed to the coastal elite media markets today), and it led to huge profits, which paid for higher quality, and gave the media astounding influence.
“I always worry about the journalist that calls me and they’ve already decided the story that they’re working on, and all they’re looking for is confirmatory evidence.” – Warren Buffett
Yet, today, the media is distrusted by 82% of the world, according to Edelman’s Trust Barometer. What went wrong?
The digital revolution shoved traditional journalism aside like a salt and pepper shaker. The new platforms, Google and Facebook, overwhelmed a very soft corporate culture. Like all species threatened with extinction, it mutated — into a zombie monster, part news, gossip, and schmaltz, and prone to spiteful rage. Then it was given a catchy name: digital media.
It took one decade to complete the experiment: media went from a force in society to an app on your iPhone, one that would hardly be used, but it survived. It was a new world alright, only not very brave.
To complete the transformation, the algorithm junkies made one last request. Above all, be viciously, reflexively anti-mainstream. Because the new Pulitzer Prize goes to whomever gets the most shares (and likes), which begets the most search results. Anyone following our nation’s cultural shift knows that meant turning ordinary into extremism and extreme into ordinary.
Which helps explain why, as Buffett told me, a business story starts out with a reporter’s bias or it may be the editor’s bias, that a faceless chief executive somewhere, somehow messed up unforgivably. So the object of scorn is described as they wish it to be, not as it actually is, a definition of confirmation bias, according to Nobel Prize psychologist Danny Kahneman.
“I always worry about the journalist that calls me and they’ve already decided the story that they’re working on and all they’re looking for is confirmatory evidence,” Buffett says.
The incentives are abundantly clear, the contemptuous narrative gets the views. Then, fact checkers at headquarters demand a few sources to support the thrashing. After Gawker, no one wants to be caught with their libel protection expired.
Buffett calls it ‘quote shopping.” Reporters reach out to Buffett to get his name into the first paragraph (helps their search results), and they talk for as long as an hour, he says. When the story is published, it quotes the one comment in favor of the article while ignoring the other 59 minutes that disputed their theory.
Alternatively, journalists also like quoting plain vanilla consultants, too. But they often turn out to be well-disguised enemies who want to do a hatchet job on the company.
Turning around the Queen Mary is a well worn punch line about the difficulty of changing direction once a course is set. Buffett poses a similar question, have you ever tried to turn a journalist around? After putting in all that hard work, the journalist isn’t very likely to walk into the editor’s office and say “oops, turns out the CEO is actually doing a better job.”
So the story runs, with its faults, biases, and sour temperament. Few will know it was a botched job held together by errant and random sources, a quick deadline that eliminated self doubt, and an avalanche of social media which became the real story, after all.
Then it gets amplified. The journalism community marches in lockstep, even recycling the same biased sources. If you haven’t read much positive press about Wells Fargo or Uber lately, it’s not because they haven’t done anything worthwhile. The media is having too much fun chewing over the old bones to let them go.
Editorial objectivity is a sentimental tale Walter Cronkite might tell over a martini at the Pen and Pencil bar in New York, if he were alive today. There may never again be such a luxury as a fair and balanced editorial policy. The downside isn’t merely a business matter, either. When a company gets trashed due to journalistic bias, the intention is to damage the CEO. But shareholders, with savings in pension accounts and 401(k)s set aside for retirement or to see them through an illness, are wiped out as well.
As the Oracle of Omaha says, it is the biggest sin in journalism.