This theory explains why there are so many scams

Have you noticed that many things in the world are not what they seem? They’re actually fake. I’m going to tell you my simple idea that I call replica theory, which helps explain why there’s so much fake stuff all over the place. But before I get into that, let’s consider some examples of things that are not what they seem. Supplements are an excellent example. They claim all sorts of health benefits. Clear skin, enhanced energy, a longer life. But guess what

Happens when supplements are tested in rigorous studies that measure long-term outcomes. They’re typically found to do nothing at all. Most supplements at best are expensive placeos. Of course, there are exceptions such as caffeine and creatine, but most supplements, even popular ones, give you absolutely no benefits. Or consider what self-help gurus are constantly telling you on the internet that they have a proven system that will transform your life in 30 days, guaranteed. These are, of course, fake claims. Most people going through

Most of these programs will see little if any benefit in such a short period. Fakeness can also get much more sophisticated than in the examples we’ve seen so far. Consider the academic field of psychology. Researchers attempted to carefully redo previously published studies in peer-reviewed journals. Well, guess what they found? About 40 to 50% of the time running the same study failed to get the same result. In other words, a lot of this research was fake. Thankfully, most of this fake research

Was not fraudulent. that is researchers weren’t lying about their studies or falsifying results. But if it wasn’t fraudulent, what made it fake? Most of the time, the issue was that the researchers were using unreliable methods that produced false positive findings. But in many ways, the net effect was the same as if it had been fraud. Lots of fake results were published in top academic journals. Or consider an example from a completely different field, investing. Guess what

Percent of professional investors who aim to beat the stock market actually do so in the long term? less than onethird do. That’s right. Substantially more than half of professionals who offer the service of outperforming the stock market over the long term will give you worse results than if you simply bought a lowcost index fund. How can we explain all this fakery in our midst? This brings us to replica theory, a simple model I developed to help provide an

Explanation. Replica theory will work guaranteed in 30 days. Just kidding. Replica theory actually consists of the following claim. When people are rewarded as much for doing an easy fake version of something as they are for doing the real valuable version, most of what you’ll see will be fake. At its core, replica theory is based on incentives. If people can benefit by doing something and it’s widely known, then many people are likely to do it. But if people are just as rewarded by

Doing a fake easy version of the thing as they are doing the real version, then those doing the fake version will tend to out compete and crowd out those doing the real version. If the payoff is the same, then the easier route wins. Let’s apply replica theory to some of the previous examples that we’ve discussed. First, consider supplements. What do you think is easier and more profitable? Developing a new supplement that has genuine health benefits or manufacturing

A cheap compound that does nothing and simply claiming in your marketing that it works. The second option is usually going to be easier and more profitable. If we lived in a world where supplement manufacturers had to prove their claims before marketing their products, then this wouldn’t be the case. And because of the placebo effect and the fact that people often misattribute improvements to whatever they happen to try recently, many taking fake supplements will think the supplements are helping them. So,

Replica theory predicts that the supplement industry mainly sells false promises. And that’s exactly what we find to be the case. What about academic psychology? Well, what do you think is easier? making a genuine fascinating discovery about human psychology or using fishy statistical methods to make it seem like you found a genuine interesting discovery about humans. It turns out the second of these is much easier. But in the past, both of them would reward you equally. You’d get a

Publication in a top academic journal. Therefore, as replicary would predict, we saw a proliferation of fake findings being published in academic journals. Thankfully, there are signs of progress in psychology. We have a project called transparent replications where we replicate new papers coming out in top psychology journals. And I’m happy to say that in our replication studies, we’re seeing fewer fishy statistical methods being used. We think this is likely because awareness of the replication crisis has increased.

Editors and peer reviewers may be less likely now to let dodgy methods appear in their journals. This changes the equation. As the reward for doing fake work shrinks compared to the reward for doing real work, we’d expect to find that more and more published psychology findings are real. And that seems to be what’s happening. Let’s go back to another one of our examples, investors. It turns out it’s really, really hard to create an investment strategy that

Outperforms the stock market in the long term. The competition is incredibly intense. Billion dollar companies hire top talent and numerous PhDs doing everything they can to do better than you at investing. And anytime one stock market investor does better than the stock market on average, that logically necessitates some other stock market investor does worse than the market. This makes it pure brutal competition. Excluding a small number of exceptionally talented investors. The easiest path to success for most

Investors is to convince people using slick marketing that they have a way to outperform the market even though they’re likely to underperform it. Conversely, taking on extra risk can actually make this pitch easier for them, even if it’s worse for their clients. With all of this talk of fakery, you might be thinking that I’m saying that all of these people are lying. That’s mainly not the case, though. While there are some evil people out there who knowingly tell brazen lies

To the public without remorse. Thankfully, most people aren’t like that. Our human minds have a strange quirk that makes it possible to do lots of fake stuff without telling lies. The way that works is that we become convinced by our own For instance, a supplement maker is likely to take their own supplements and through the placebo effect or misattributing real improvements they had to the supplement, they can become convinced that their supplements really work. Or consider an academic

Psychologist who publishes non-replicable results due to fishy statistics. They’re likely to justify those fishy methods to themselves. They’re already convinced that their results are real, so what does it matter if their statistics aren’t impeccable? And anyway, they can also remind themselves that lots of others in their field use the same methods, so they must not be that bad after all. In other words, the human capacity to rationalize is astounding. Taking this into account allows us to extend replica theory to a

More refined form that I call delusional replica theory. Just as in replica theory, it says that when people are rewarded as much for doing an easy fake version of something as they are for doing the real valuable version, most of what you’ll see will be fake. But delusional replica theory adds one more element. It says that most of those doing the fake stuff won’t believe they’re producing something fake and harmful. They’ll find arguments to convince themselves that what they’re

Doing is real or at least morally acceptable. This doesn’t mean that they’ll never have doubts. Maybe in the back of their mind, they occasionally have a small feeling that they’re doing something wrong. But those who feel really awful about what they’re doing will be likely to leave the field. This gives way to others willing to do the same thing who are better at rationalizing. In other words, we’ll be left not only with lots of fake activity, but most producers of the fake

Stuff will believe their own BS. While replica theory predicts that we’ll see a lot of fake stuff all around us, thankfully it also points to a solution. We need to make it more costly or less rewarding to do the fake version of the thing than the real valuable version. This can be done, for example, by making the fake version illegal or by increasing transparency so the consumers can tell the difference between what’s real and what’s fake. Critical thinking

Can also help. The better people are at critical thinking, the harder it is for others to pass off fake things as being real. I hope that you’ll keep replica theory in mind when you’re trying to understand the world. It can help you figure out which areas are full of I’d also really be interested to know where do you see examples where a lot of what’s out there is fake? And do you think that replica theory explains the

Situation? If you enjoyed this video, I’d really appreciate it if you’d subscribe. You can also check out our in-depth article on this topic or find much more on our website at clearthinking.org.