unSpun_ Finding Facts in a World of Disinformation - Brooks Jackson [36]
Bullock might have avoided prison by practicing a little “active open-mindedness” and asking himself how likely it was that the IRS would actually allow this kind of dodge. He might also have called someone who didn’t stand to make money on the scheme, unlike the promoter who collected thousands of dollars in fees for his “services.” Bullock’s own lawyer or accountant might have quickly set him straight about what a dim view the IRS takes of sham transactions and international money-laundering. Bullock might also have conducted a quick Internet search on the name of the promoter who sold him the scheme, which might have turned up the fact that the man had already been convicted on seven counts of aiding and assisting the filing of false tax returns. Today, a simple search for the term “tax schemes” brings up page after page of official warnings about similar scams and the prosecutions that often result. Try it yourself.
Bullock’s story shows that letting bad information go unchallenged can have grave consequences. He is not alone. Thousands of people have used tax-evasion schemes like the one he fell for, and while most don’t go to prison they all risk being forced to pay fines, big penalties, and interest on top of the back taxes when they are caught. Some may know they are engaging in criminal activity, but we suspect the majority are like Bullock, actively obtuse when it comes to matters that improve their tax returns. And it hardly matters whether we have been deceived by somebody else or have failed to check out our own dubious assumptions. The price for getting the facts wrong is the same whether we are deceived or self-deceived, misinformed or disinformed, spun by others or spun by the pictures in our head. The message here is simple: facts matter.
The “Grey Goose Effect”
Most bad information won’t land you in jail or ruin your career, but much of it will cost you money. For proof of that, look no further than the snake-oil hustles we mentioned in Chapter 1. We can be manipulated into spending too much money in more subtle ways, too. For example, we tend to think of higher-priced goods as being of better quality than lower-priced goods; but while “You get what you pay for” may be common folk wisdom, it isn’t always true. In the 1950s, Pepsi competed with Coca-Cola by selling its soda at half the price of Coke and advertising “twice as much for a nickel.” But more people bought Pepsi after it raised its price, a lesson not lost on other marketers. A formerly obscure brand of Scotch whiskey also increased its sales by raising its price, giving its name to what is now known as the Chivas Regal effect.
Today it might better be called the Grey Goose effect, after the hot-selling French vodka that came on the U.S. market in 1997 selling for $27 a bottle, nearly triple the price of the top-of-the-market Smirnoff brand. Grey Goose sales exploded. Vodka is officially defined by U.S. government regulations as “neutral spirits…without distinctive character, aroma, or taste,” so it is hard to see how one vodka can be three times better than another on any objective basis. The drink is basically distilled alcohol cut with water.
Now, when our sharp-eyed Random House editor, Tim Bartlett, first saw this he objected: “Expensive vodkas on average are significantly smoother than cheap ones, which taste like rubbing alcohol.” We’re quite sure that’s how it seems to Tim and many others, but they’re not judging only on the basis of what their taste buds tell them. They are also taking into account, perhaps unconsciously,