It's true. There are three kinds of lies -- lies, damned lies and statistics. (The picture is that of a statue of dramatist Friedrich Schiller, in Kaliningrad, Russia.)
Market research companies specialize in the third kind of lie, namely statistics. While these companies were originally created to help clients deal coherently with the market, that's no longer the sole source of income.
The process of market research has been corrupted by paid research done on behalf of:
- corporations
- trade groups
- politicians
- political interests
Yes, the categories do overlap. More, and what to do about all this, after the break.
Note: The above statue's picture was labeled "shill" on the Kaliningrad site. This is what most Americans think of when they hear that word. From the University of Minnesota. Don't fall for high pressure sales tactics, the copy adds.
Even in straight-on market analysis, there is always a bias toward the sunny side. Few will pay for a study showing that a market is not going to take off, and if you write such a study you won't make money if the market does take off. More will pay for a study showing a market will take off, and then there are those follow-on opportunities from market participants, trade groups that arise to defend their interests, and politicians.
One big problem with the field is these financial conflicts of interest are not always disclosed. They don't have to be. Government doesn't demand it.
Worse, journalists don't demand it.
So most studies are Astroturf. (I've participated in writing some.) They state what the person paying for the study wants them to state. And it doesn't matter to what extent numbers need to be twisted in order to arrive at that conclusion, as Tomi Ahonen writes.
The first rule in journalism is always Follow The Money.
It's high time for that rule to be applied when it comes to anything produced by any market research firm. Demand to know who paid for the study. Put that name near the top. If the firm won't tell you, don't run the story. If they lie, don't run any of their future studies.
Until this happens, you as a reader, as a businessperson and as a consumer need to know this about market research.
Don't believe a word of it.
Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
1. Brad Hutchings on May 2, 2005 02:23 PM writes...
Most of us are skeptical and cynical enough. An interesting challenge is making decisions based on facts in an atmosphere of cynicism. For example, take private accounts in Social Security. The cycnical view is that they are a payoff to Wall Street. Respected blogger Mindles H. Dreck points out that private accounts actually represent the only real "lock box" on funds contributed to the system! So let's say you're a good liberal and you go with a plan that Al Gore, Joe Lieberman, and just about every other Democrat espoused the underlying requirement of Social Security reform ("set SS money aside from general fund") 10 years ago. The problem with taking that position is that all your liberal friends are caught in the cycnicism of Wall Street payoff rhetoric.
Another example... The Register took Groklaw to task today for Pamela Jones' version of events in her series of stories on the Monterey project (supposed secret IBM/SCO deal to phase out UNIX in favor of Linux). As Andrew points out, the problem is not so much the errors in the article, but the echo chamber context in which it is posted. Pamela posts here exposé and suddenly 100 stories appear claiming the same premise. How does the truth eventually become the dominant meme in such a dynamic? Slahsdot has a post on The Register's post today, and the comments are 99% rabidly pro-Groklaw. Not with any additional evidence, of course, but just because Groklaw is right because they are. Or because they have a corrections section (which will never spew out into the echo chamber like the original story did). So you know... when Tom DeLay says that judges shouldn't be doing research for facts in cases they are deciding on the Internet, he probably has a point :-).
Permalink to Comment2. Jesse Kopelman on May 2, 2005 05:02 PM writes...
Off topic I know, but I don't see how private accounts in the Bush plan represent a "lock box." My understanding is that a main component of the Bush plan is that the government can still borrow against these private accounts. That is defintiely not what Gore meant by "lock box." Of course, I thought Gore's plan which required higher taxes was also quite stupid . . .
Permalink to Comment3. Brad Hutchings on May 2, 2005 06:02 PM writes...
Jesse, The most "conservative" version of the plan (conservative not in the political spectrum sense, but in the not too revolutionary sense) is to only allow private accounts to buy treasury bonds. Minimally, it would ensure that the funds in those private accounts are a contractual obligation of the government rather than a political obligation, as Social Security is 100% right now. Note that we could cut benefits or raise the retirement age with a simple vote of Congress. Defaulting on debt would be a lot tougher than using payroll taxes surpluses to pay for general fund items is now. And FWIW, I'd prefer to see private accounts more in line with 401(k)s rather than be an institutionalized gas tank for more public spending.
But to get back on topic, ask yourself... who put it in your mind that the Bush plan would let the government borrow against a private account? Sounds to me like the echo chamber effect Andrew discusses in The Register. Trust me... Republicans in favor of private accounts want to dismantle the Social Security Ponzi scheme gracefully before it gets to the point where younger people say "screw the old people". Reducing the government's ability to spend surpluses today is a key component.
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