“Narrative Fallacy” is a term I first came across in the book, “The Black Swan” by Nassim Nicholas Taleb.
The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding.
“Storytelling” and “business narratives” are increasingly touted as the effective way to get the message across – politicians, business leaders and motivational speakers all have this indispensable tool in their armoury – the more wonderful the story, the more we are blown away and buy into it, so the more correct these successful storytellers must be, apparently. True, pure facts and figures bore most of us; we need a compelling story to bring the message to life. The problem though, is that people are often so enamoured by any good, well-articulated story that we fall into the “narrative fallacy” trap without asking the tough questions about whether it all really makes sense.
An example of story-telling gone horribly wrong was in the sub-prime mortgage crisis. The facts and details were too difficult, too tedious or too boring for most people to process; even experts fell into this trap. Conversly, the stories were exciting, compelling, marvellous. Most people bought the stories. It took someone like Michael Burry (as told in the book “The Big Short” by Michael Lewis), with Asperger’s Syndrome, to see the pattern of a mortgage bubble forming way ahead of others, even experts, and bet against this, making good returns for the investors in his fund, Scion Capital. (Those with Asperger’s Syndrome sometimes possess great talents in seeing patterns, but unfortunately, for various reasons, have difficulties with other abilities and with fitting into society.) Of course, a number of factors can be blamed for leading to the sub-prime crises; our vulnerability to get carried away by narratives just added fuel to it.
Narrative fallacies trap us everywhere – politics, commerce, belief in the paranormal etc. etc. It helps to be cognizant of how our brains unwittingly deceive us and not place undue faith in great narratives and good storytelling.