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Harnessing Economic Incentives to Combat Fake News
The rise of social media platforms and the internet, have revolutionized the way information is disseminated and consumed. However, this digital has also provided us with incipient cancer that threatens the flourishing of democracy, freedom of speech, and press all over the world, Fake News. We’ve witnessed in the last couple of years the significant consequences for individuals and society, but how can we stop it from spreading?
To combat this issue, there is a growing interest in exploring the potential of economic incentives to encourage users to exercise caution and critical thinking when engaging with news on social media and the web. Luckily researchers have come up with some insightful and interesting results that might push us towards new business models that will help societies more as we delve deeper and deeper into the future of humanity.
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How much of a threat is this?
I know at this point we’re all familiar with the concept of fake news so I’m not going to bore you to read some definitions, but I believe it is still relevant to point out the influence and power this noxious phenomenon have in our societies. Well, for starters there is the fact that they spread out 6 times faster than regular news. Or This is because Fake News are designed to take advantage of two things of human nature and exploit them to make this a very profitable market. One is our weakness of having strong emotional reactions when our biases are validated or targeted to provoke outrage. So whenever we see something that boils our blood or that makes us feel vindicated it triggers the good brain juices to flow in us. And on the other hand, they are a continuation of the business model of tech companies and surveillance capitalism where social media platforms only desire our engagement that helps them by providing data and clicks on their sponsors sometimes, but nowhere in any business model of any social media platform is there an incentive for a healthy discussion but of outrage and engagement.
We have seen the effects that misinformation spread by fake news can have in the real world for example during covid a research published in The American Journal of Tropical Medicine and Hygiene found out that more than 5.800 died explicitly by misinformation regarding COVID-19. Now these numbers might seem incredibly low, but then again if just a little bit of digital literacy and caution regarding fake news can save almost 6000 lives I think that would be a great thing for us as a species.
Also, we can see the problem it is having in our democratic institutions, from the Cambridge Analytica scandal to the alleged Russian interference in the US 2016 elections. The impact of fake news has been tremendous since its usage as a tool for eroding democratic institutions or skewing results toward unscrupulous candidates that desire victory regardless of the damage done to the institutions that hold their own power.
Show me the Money!
One of the core concepts used in behavioral economics (which is way more fun than Macroeconomics) is economic incentives and how they can influence and motivate individuals to modify their behaviors. Economic incentives are defined as rewards or punishments that are designed to encourage or discourage certain actions. These incentives can be financial, social, or psychological.
For example, a company can offer a bonus for their employees to achieve certain goals for sales, that's a financial incentive. Social incentives can be when an authoritarian regime gives you a point system so citizens who follow the party’s ideology and is a cooperative agent has a higher social standing. And psychological incentives can be when you were in kindergarten and your teacher gave you a gold star if you did something good, and that felt so nice (no one has given me a gold star sticker in such a long time 😢)
Even though these examples seem trivial (or horrifying) they are incredibly effective in shaping human behavior due to our nature, we are social animals we seek the approval of our peers, and we have needs so we want more capital to be able to satisfy these needs. It is fascinating to see the intersection of our human nature, with the real world and put that under the perspective and study of economics.
Designing Effective Economic Incentive Models
Now, there was recently a paper published in Nature that offers an interesting perspective that could provide the basis for an interesting innovation in the business model of our social media platforms. In the paper the researchers provided different incentives to over 3000 participants to discern between true and false news headlines. And the results were very interesting for starters the researchers found out that in control settings (which would be the closes to reality) conservatives had an easier time falling for fake news or believing in fake headlines more than liberals (under a US-centric political spectrum but still interesting find nonetheless)
Now, the results that came out of the experiment show that with proper incentives both liberals and conservatives would increase their accuracy for discerning between real and fake news, so much so that conservatives after incentives were almost as good as liberals in their discerning capabilities. This implies very interesting conclusions that we could extrapolate from this study as a whole that overall most conservatives tend to fall for fake news, not because of a lack of information but a lack of motivation and desire to be thoughtful and critical of what they read. This could be because of a confirmation bias or other reasons, this depth is not touched upon in the research and could be a more complex topic.
Nonetheless, I highly recommend checking the research because it is very interesting indeed and has some very fun conclusions ( also you can download its data and the R code they used so you can play around with the data too or corroborate the results by yourself if you’re feeling extra meticulous. But also because it goes into other types of motivations such as social motivation which has shown to have almost as good results as financial incentives which is great news because it means that this could be used cheaply and on a scale that social media companies could use to protect their platforms from fake news.
New business models for social media.
Based on the research by Steve Rathje and the rest of the researchers we could be developing a new and innovative business model for social media platforms that don’t rely specifically on engagement and recommendation engines churning outrage to our faces. With something like this maybe we could provide a system of moderators and “morally premium” users to reduce the amount of fake news present in today’s media landscape.
Because as previously stated the problem is not related to the capacity of some groups of identifying and discerning real from fake headlines, but their motivation to do so. Also, another problem is how you scale such an incentive. If you try and have a financial incentive for fake news prevention it might be costly to implement and the upside might not be worth the cost. If you do it through a social incentive that gives a sense of superiority or of belonging to those who volunteer and support the “moderation” of the platform how do you keep that sustainable in the long run?
Also, you have to weigh in the ramifications a change like this might have on the profitability of some of these platforms, or how willing to make such a radical shift would a board of directors be? Because after a while decisions like this are to be approved by the people who are running the company and who the CEO reports, so it might be unlikely but I think Rathje’s research shows us an interesting alternative pathway for social media companies to develop the focus of their incentive systems for keeping engagement on their platforms.
The downstream on humanity
This could also reduce the impact of these behavior-modification-engines that social media has become in the past couple of years. Reducing the number of radicalized people that because of this almost pipeline-like funnel of content go from one fake news outlet to the next until they fall so much down the rabbit hole of conspiracy and fantasy that we’ve seen driving people to overtake their governments and eroding democracy in many countries.
This should not only be a business problem for social media companies, but also it is an issue that governments and other institutions should work towards solving because the permeation of social media has been such that most of humanity is susceptible in one way or another to the behavior modification capacity of social media platforms. If not directly affected by it probably indirectly; social media influences humanity as a whole and is a mighty but unnerving power that at the moment no one seems to be able to control or truly understand to its full extent. This is due to the “black-box” nature of most social media algorithms that are systems upon systems of neural networks and other types of artificial intelligence built and optimized with a utility function based on what is the most profitable variable for its parent company.
Hopefully the claims from social media companies that they really, really, pinky-promise want to fight fake news regardless of the amount of engagement and eyeballs that remain on their platforms catalyzed by the outrage that fake news is able to elicit from its users.
The Way Forward
The way forward for me might seem kinda obvious with results like these, of course, there is an inherent bias in every research such as this, but the overall insight I think is much more interesting than just the results. If we design proper incentives regular people can have a surprisingly good capacity for developing proper digital literacy which is a much-required skill and especially given the landscape we are seeing because, in all of this article, we haven’t even begun to include as a variable the coming onslaught of fake news, and fake news portals that will sprout once these noxious users and fake news farms start using AI tools en masse.
Then, incentive structures such as the ones recommended by Rathje and his team will be of utmost importance to implement in social media websites if we want to keep having sane discourse and prevent further erosion of democracy and governments on the planet. Because sadly democracy is a powerful but fragile thing. The good thing is that when used properly Democracy can increase economic growth, bring forth the highest levels of individual freedom, and enhance the human condition to a higher place, making each person in society a relevant voice to be heard instead of an obstacle in the way of whatever the ruling party claims is the direction the country should be going for their great leap forward.
So to protect democracy people’s freedoms and overall our society as a whole we need more and better tools like incentives to stave off the threat of fake news in our social spaces, we haven’t done a good job and probably we will not be perfect, but as humans, we must do better and we will do better.
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