(By Jack Bigelow) 60 years ago, our nation was stunned by Sputnik. The Soviet Union caught the United States by surprise when it launched the first human-made satellite. Sputnik became the trigger-title for starting an intense period of national introspection, concluding that U.S. attention to Science, Technology, Engineering, and Mathematics (now known in academic circles as STEM) was in dangerous decline. The need to beef up our STEM became a matter of national security and, we began an intense campaign to upgrade STEM programs and participation.
I’d like to suggest that we live in a parallel crisis these days—a crisis signaled by the volume of fraud cases but extending to many other modern trends as well. This time, the issue is not a deficiency in math and science; it’s a decline in our capacity and willingness to engage in critical thinking.
My definition of critical thinking is that it’s the ability and motivation to test a piece of information against reality, logic, conflicting possibilities, credibility of source, consequential risks, and integrity of process to award or deny that information its acceptance as probable fact. A technical term for it is cognitive reflection. And auditors call it “healthy skepticism.” An example: There’s an old story about two men on a train. One of them, seeing some naked-looking sheep in a field, said, “Those sheep have been sheared.” The other looked a moment longer, and then said, “They seem to be—on this side.”
—John Holt, How Children Learn
Can you think of any case of fraud where some deficiency in critical thinking was not involved? Just examine the spectrum of posts on this blog site. In some, fraudsters admit to failure to see that the expedient choice of the moment carried grave risks for them, their organizations, and their families. In others, we see where the victims of fraudsters choose to accept empty assurances and distorted promises to feed their irrational urges for money, for power, for status, and other immediate gratification. In her recent interview with The Behavioral Forensics GroupTM, best-selling researcher and author Bethany McLean notes, “The press did call the housing market, over and over again. They said that this is a bubble, this is a problem, but nobody wanted to hear it. It was the same thing with Enron, with Valeant….They didn’t want to hear it. And so I guess I would say that if you don’t want to accept blame after the fact, engage in critical thinking. There are things that are too good to be true.” Ms. McLean’s books about Enron, the near-collapse of our financial system, and Freddie Mac and Fannie Mae abound with examples of failure in critical thinking.
What this suggests is that deficiencies in critical thinking represent peril well beyond this blog site’s focus on fraud:
• Mass mood swings in our populations come from blind acceptance of demagogic blaming, empty promises, distorted assertions, and outright untruths. Those mood swings influence political and policy decisions.
• We have a growing epidemic of false news items being distributed, and they are being accepted as fact!
• The scientific community reaches for the outcomes of studies conducted with flawed protocols.
• While we are on science, a classic case of the point being made here was failure to postpone the launch of Challenger in the face of engineering advice that the temperature was too low.
• Educators are seduced by trendy patterns of educational strategy without thinking through the long-term consequences (an example: Expecting computers to teach what they cannot teach, such as critical thinking!). (Many teachers want to develop critical thinking among their students but are constrained by systemic limitations that result from deficiencies in critical thinking.)
• On Wall Street and therefore in business, long-term survival is trumped by short-term results as business performance is assessed. Think of how this affects executive decisions.
• In local governments, pension obligations bow to funding daily operations and become victimized by “loans” that are impossible to repay under current taxing structures.
• And the federal government becomes dysfunctional as “winning the battle” supercedes doing the public’s business.
Can you see where public weakness in cognitive reflection is now so widespread that its manifestations are everywhere?
But back to fraud. Our bloggers at this site point over and over again to motivators far deeper than greed at work in these many cases. There are technical terms, but my interpretation goes something like this: We allow our emotional receptors to overwhelm any questioning logic with the seductive appeal of easy answers to very complex issues. We believe an item of information—whether it be zero risk, inflated earnings, distorted value, or any other state—because we want to believe it. Not because we have subjected this information to rigorous testing of logic, experience, challenges, long-term consequential projection, “common sense,” and other forms of evaluation. Healthy skepticism begone! And then we act on our perceptions because we want to believe them and because it may be easier. Often, that action is to our detriment.
I don’t believe such behavior to indicate “stupidity.” Brilliant people can have tragically limited capacity for critical thinking. One of our bloggers here, Daven Morrison, MD, has been researching leadership qualities than can be collectively described as “judgment.” In fact, he and others have developed an instrument to measure an individual’s judgment capacity. I suspect that a major component of judgment, whether in business leadership or in public policy areas, is being able to assess information received via communication and personal perception with a critical thinking process that is executed with integrity. Can a person be brilliant and still be handicapped in judgment? I believe so. How many brilliant CEOs gave themselves permission to encourage or tolerate fraudulent activity?
What situations can you identify where critical thinking was impaired? The key is to look for bad choices leading to terrible results.
What can we do about this crisis?




The Behavioral Forensics GroupTM LLC is a team of professionals with vast experience in detecting fraud, understanding why it occurs, and in recommending steps to mitigate fraud incidence within the corporate workplace, particularly within higher-level (and therefore more costly to the enterprise) executives.  The fields of investigation, organizational psychiatry, accounting and behavioral forensics, and law enforcement are represented within the Behavioral Forensics GroupTM LLC.  Acting in synergy to help organizations prevent, find, and/or reduce fraud, B4GTM is a premier, pioneering practice in this field.

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