Business
Does Information Affect Our Beliefs?
It was the social-science equivalent of Barbenheimer weekend: four blockbuster academic papers, published in two of the world’s leading journals on the same day. Written by elite researchers from universities across the United States, the papers in Nature and Science each examined different aspects of one of the most compelling public-policy issues of our time: how social media is shaping our knowledge, beliefs and behaviors.
Relying on data collected from hundreds of millions of Facebook users over several months, the researchers found that, unsurprisingly, the platform and its algorithms wielded considerable influence over what information people saw, how much time they spent scrolling and tapping online, and their knowledge about news events. Facebook also tended to show users information from sources they already agreed with, creating political “filter bubbles” that reinforced people’s worldviews, and was a vector for misinformation, primarily for politically conservative users.
But the biggest news came from what the studies didn’t find: despite Facebook’s influence on the spread of information, there was no evidence that the platform had a significant effect on people’s underlying beliefs, or on levels of political polarization.
These are just the latest findings to suggest that the relationship between the information we consume and the beliefs we hold is far more complex than is commonly understood.
‘Filter bubbles’ and democracy
Sometimes the dangerous effects of social media are clear. In 2018, when I went to Sri Lanka to report on anti-Muslim pogroms, I found that Facebook’s newsfeed had been a vector for the rumors that formed a pretext for vigilante violence, and that WhatsApp groups had become platforms for organizing and carrying out the actual attacks. In Brazil last January, supporters of former President Jair Bolsonaro used social media to spread false claims that fraud had cost him the election, and then turned to WhatsApp and Telegram groups to plan a mob attack on federal buildings in the capital, Brasília. It was a similar playbook to that used in the United States on Jan. 6, 2021, when supporters of Donald Trump stormed the Capitol.
But aside from discrete events like these, there have also been concerns that social media, and particularly the algorithms used to suggest content to users, might be contributing to the more general spread of misinformation and polarization.
The theory, roughly, goes something like this: unlike in the past, when most people got their information from the same few mainstream sources, social media now makes it possible for people to filter news around their own interests and biases. As a result, they mostly share and see stories from people on their own side of the political spectrum. That “filter bubble” of information supposedly exposes users to increasingly skewed versions of reality, undermining consensus and reducing their understanding of people on the opposing side.
The theory gained mainstream attention after Trump was elected in 2016. “The ‘Filter Bubble’ Explains Why Trump Won and You Didn’t See It Coming,” announced a New York Magazine article a few days after the election. “Your Echo Chamber is Destroying Democracy,” Wired Magazine claimed a few weeks later.
Changing information doesn’t change minds
But without rigorous testing, it’s been hard to figure out whether the filter bubble effect was real. The four new studies are the first in a series of 16 peer-reviewed papers that arose from a collaboration between Meta, the company that owns Facebook and Instagram, and a group of researchers from universities including Princeton, Dartmouth, the University of Pennsylvania, Stanford and others.
Meta gave unprecedented access to the researchers during the three-month period before the 2020 U.S. election, allowing them to analyze data from more than 200 million users and also conduct randomized controlled experiments on large groups of users who agreed to participate. It’s worth noting that the social media giant spent $20 million on work from NORC at the University of Chicago (previously the National Opinion Research Center), a nonpartisan research organization that helped collect some of the data. And while Meta did not pay the researchers itself, some of its employees worked with the academics, and a few of the authors had received funding from the company in the past. But the researchers took steps to protect the independence of their work, including pre-registering their research questions in advance, and Meta was only able to veto requests that would violate users’ privacy.
The studies, taken together, suggest that there is evidence for the first part of the “filter bubble” theory: Facebook users did tend to see posts from like-minded sources, and there were high degrees of “ideological segregation” with little overlap between what liberal and conservative users saw, clicked and shared. Most misinformation was concentrated in a conservative corner of the social network, making right-wing users far more likely to encounter political lies on the platform.
“I think it’s a matter of supply and demand,” said Sandra González-Bailón, the lead author on the paper that studied misinformation. Facebook users skew conservative, making the potential market for partisan misinformation larger on the right. And online curation, amplified by algorithms that prioritize the most emotive content, could reinforce those market effects, she added.
When it came to the second part of the theory — that this filtered content would shape people’s beliefs and worldviews, often in harmful ways — the papers found little support. One experiment deliberately reduced content from like-minded sources, so that users saw more varied information, but found no effect on polarization or political attitudes. Removing the algorithm’s influence on people’s feeds, so that they just saw content in chronological order, “did not significantly alter levels of issue polarization, affective polarization, political knowledge, or other key attitudes,” the researchers found. Nor did removing content shared by other users.
Algorithms have been in lawmakers’ cross hairs for years, but many of the arguments for regulating them have presumed that they have real-world influence. This research complicates that narrative.
But it also has implications that are far broader than social media itself, reaching some of the core assumptions around how we form our beliefs and political views. Brendan Nyhan, who researches political misperceptions and was a lead author of one of the studies, said the results were striking because they suggested an even looser link between information and beliefs than had been shown in previous research. “From the area that I do my research in, the finding that has emerged as the field has developed is that factual information often changes people’s factual views, but those changes don’t always translate into different attitudes,” he said. But the new studies suggested an even weaker relationship. “We’re seeing null effects on both factual views and attitudes.”
As a journalist, I confess a certain personal investment in the idea that presenting people with information will affect their beliefs and decisions. But if that is not true, then the potential effects would reach beyond my own profession. If new information does not change beliefs or political support, for instance, then that will affect not just voters’ view of the world, but their ability to hold democratic leaders to account.
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Business
Cookies, Cocktails and Mushrooms on the Menu as Justices Hear Bank Fraud Case
In a lively Supreme Court argument on Tuesday that included references to cookies, cocktails and toxic mushrooms, the justices tried to find the line between misleading statements and outright lies in the case of a Chicago politician convicted of making false statements to bank regulators.
The case concerned Patrick Daley Thompson, a former Chicago alderman who is the grandson of one former mayor, Richard J. Daley, and the nephew of another, Richard M. Daley. He conceded that he had misled the regulators but said his statements fell short of the outright falsehoods he said were required to make them criminal.
The justices peppered the lawyers with colorful questions that tried to tease out the difference between false and misleading statements.
Chief Justice John G. Roberts Jr. asked whether a motorist pulled over on suspicion of driving while impaired said something false by stating that he had had one cocktail while omitting that he had also drunk four glasses of wine.
Caroline A. Flynn, a lawyer for the federal government, said that a jury could find the statement to be false because “the officer was asking for a complete account of how much the person had had to drink.”
Justice Ketanji Brown Jackson asked about a child who admitted to eating three cookies when she had consumed 10.
Ms. Flynn said context mattered.
“If the mom had said, ‘Did you eat all the cookies,’ or ‘how many cookies did you eat,’ and the child says, ‘I ate three cookies’ when she ate 10, that’s a false statement,” Ms. Flynn said. “But, if the mom says, ‘Did you eat any cookies,’ and the child says three, that’s not an understatement in response to a specific numerical inquiry.”
Justice Sonia Sotomayor asked whether it was false to label toxic mushrooms as “a hundred percent natural.” Ms. Flynn did not give a direct response.
The case before the court, Thompson v. United States, No. 23-1095, started when Mr. Thompson took out three loans from Washington Federal Bank for Savings between 2011 and 2014. He used the first, for $110,000, to finance a law firm. He used the next loan, for $20,000, to pay a tax bill. He used the third, for $89,000, to repay a debt to another bank.
He made a single payment on the loans, for $390 in 2012. The bank, which did not press him for further payments, went under in 2017.
When the Federal Deposit Insurance Corporation and a loan servicer it had hired sought repayment of the loans plus interest, amounting to about $270,000, Mr. Thompson told them he had borrowed $110,000, which was true in a narrow sense but incomplete.
After negotiations, Mr. Thompson in 2018 paid back the principal but not the interest. More than two years later, federal prosecutors charged him with violating a law making it a crime to give “any false statement or report” to influence the F.D.I.C.
He was convicted and ordered to repay the interest, amounting to about $50,000. He served four months in prison.
Chris C. Gair, a lawyer for Mr. Thompson, said his client’s statements were accurate in context, an assertion that met with skepticism. Justice Elena Kagan noted that the jury had found the statements were false and that a ruling in Mr. Thompson’s favor would require a court to rule that no reasonable juror could have come to that conclusion.
Justices Neil M. Gorsuch and Brett M. Kavanaugh said that issue was not before the court, which had agreed to decide the legal question of whether the federal law, as a general matter, covered misleading statements. Lower courts, they said, could decide whether Mr. Thompson had been properly convicted.
Justice Samuel A. Alito Jr. asked for an example of a misleading statement that was not false. Mr. Gair, who was presenting his first Supreme Court argument, responded by talking about himself.
“If I go back and change my website and say ‘40 years of litigation experience’ and then in bold caps say ‘Supreme Court advocate,’” he said, “that would be, after today, a true statement. It would be misleading to anybody who was thinking about whether to hire me.”
Justice Alito said such a statement was, at most, mildly misleading. But Justice Kagan was impressed.
“Well, it is, though, the humblest answer I’ve ever heard from the Supreme Court podium,” she said, to laughter. “So good show on that one.”
Business
SEC probes B. Riley loan to founder, deals with franchise group
B. Riley Financial Inc. received more demands for information from federal regulators about its dealings with now-bankrupt Franchise Group as well as a personal loan for Chairman and co-founder Bryant Riley.
The Los Angeles-based investment firm and Riley each received additional subpoenas in November from the U.S. Securities and Exchange Commission seeking documents and information about Franchise Group, or FRG, the retail company that was once one of its biggest investments before its collapse last year, according to a long-delayed quarterly filing. The agency also wants to know more about Riley’s pledge of B. Riley shares as collateral for a personal loan, the filing shows.
B. Riley previously received SEC subpoenas in July for information about its dealings with ex-FRG chief executive Brian Kahn, part of a long-running probe that has rocked B. Riley and helped push its shares to their lowest in more than a decade. Bryant Riley, who founded the company in 1997 and built it into one of the biggest U.S. investment firms beyond Wall Street, has been forced to sell assets and raise cash to ease creditors’ concerns.
The firm and Riley “are responding to the subpoenas and are fully cooperating with the SEC,” according to the filing. The company said the subpoenas don’t mean the SEC has determined any violations of law have occurred.
Shares in B. Riley jumped more than 25% in New York trading after the company’s overdue quarterly filing gave investors their first formal look at the firm’s performance in more than half a year. The data included a net loss of more than $435 million for the three months ended June 30. The shares through Monday had plunged more than 80% in the past 12 months, trading for less than $4 each.
B. Riley and Kahn — a longstanding client and friend of Riley’s — teamed up in 2023 to take FRG private in a $2.8-billion deal. The transaction soon came under pressure when Kahn was tagged as an unindicted co-conspirator by authorities in the collapse of an unrelated hedge fund called Prophecy Asset Management, which led to a fraud conviction for one of the fund’s executives.
Kahn has said he didn’t do anything wrong, that he wasn’t aware of any fraud at Prophecy and that he was among those who lost money in the collapse. But federal investigations into his role have spilled over into his dealings with B. Riley and its chairman, who have said internal probes found they “had no involvement with, or knowledge of, any alleged misconduct concerning Mr. Kahn or any of his affiliates.”
FRG filed for Chapter 11 bankruptcy in November, a move that led to hundreds of millions of dollars of losses for B. Riley. The collapse made Riley “personally sick,” he said at the time.
One of the biggest financial problems to arise from the FRG deal was a loan that B. Riley made to Kahn for about $200 million, which was secured against FRG shares. With that company’s collapse into bankruptcy in November wiping out equity holders, the value of the remaining collateral for this debt has now dwindled to only about $2 million, the filing shows.
Griffin writes for Bloomberg.
Business
Starbucks Reverses Its Open-Door Policy for Bathroom Use and Lounging
Starbucks will require people visiting its coffee shops to buy something in order to stay or to use its bathrooms, the company announced in a letter sent to store managers on Monday.
The new policy, outlined in a Code of Conduct, will be enacted later this month and applies to the company’s cafes, patios and bathrooms.
“Implementing a Coffeehouse Code of Conduct is something most retailers already have and is a practical step that helps us prioritize our paying customers who want to sit and enjoy our cafes or need to use the restroom during their visit,” Jaci Anderson, a Starbucks spokeswoman, said in an emailed statement.
Ms. Anderson said that by outlining expectations for customers the company “can create a better environment for everyone.”
The Code of Conduct will be displayed in every store and prohibit behaviors including discrimination, harassment, smoking and panhandling.
People who violate the rules will be asked to leave the store, and employees may call law enforcement, the policy says.
Before implementation of the new policy begins on Jan. 27, store managers will be given 40 hours to prepare stores and workers, according to the company. There will also be training sessions for staff.
This training time will be used to prepare for other new practices, too, including asking customers if they want their drink to stay or to go and offering unlimited free refills of hot or iced coffee to customers who order a drink to stay.
The changes are part of an attempt by the company to prioritize customers and make the stores more inviting, Sara Trilling, the president of Starbucks North America, said in a letter to store managers.
“We know from customers that access to comfortable seating and a clean, safe environment is critical to the Starbucks experience they love,” she wrote. “We’ve also heard from you, our partners, that there is a need to reset expectations for how our spaces should be used, and who uses them.”
The changes come as the company responds to declining sales, falling stock prices and grumbling from activist investors. In August, the company appointed a new chief executive, Brian Niccol.
Mr. Niccol outlined changes the company needed to make in a video in October. “We will simplify our overly complex menu, fix our pricing architecture and ensure that every customer feels Starbucks is worth it every single time they visit,” he said.
The new purchase requirement reverses a policy Starbucks instituted in 2018 that said people could use its cafes and bathrooms even if they had not bought something.
The earlier policy was introduced a month after two Black men were arrested in a Philadelphia Starbucks while waiting to meet another man for a business meeting.
Officials said that the men had asked to use the bathroom, but that an employee had refused the request because they had not purchased anything. An employee then called the police, and part of the ensuing encounter was recorded on video and viewed by millions of people online, prompting boycotts and protests.
In 2022, Howard Schultz, the Starbucks chief executive at the time, said that the company was reconsidering the open-bathroom policy.
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