This news article by Tiffany Hsu explains how the big bucks earned by Matt Damon, Larry David, LeBron James, etc., from Crypto.com, etc., did not come for free. These celebs are now paying in terms of their reputation.
That’s all fine. After all, what’s the point of reputation if you can’t convert it to something else—in this case, more money for people who are already unimaginably rich—actually, my guess is that the reason these celebs were endorsing crypto is not so much for the money but because they felt they were getting in on the ground floor of the next big thing, i.e. they were more conned-upon than conning, although conned-upon in a very mild way as I guess they made some $$$ from it all—, and a positive social benefit to these stars being considered clueless at best and fraudsters at worst is that maybe for awhile we’ll be spared the advice of Matt Demon, Larry David, LeBron James, etc., on politics, culture, health, etc. So good news all around: these stars made money, and we’ll be less subject to their influence.
The episode reminded me of what’s been happening with the medical journal Lancet over the years: they keep lending their reputation to fraudulent or politically-slanted research, and now it’s reached the point where when we see that something’s published in Lancet, we get a little bit suspicious. Not completely so, as they publish lots of good stuff too, but a little bit.
Or Dr. Oz, who cashed in on the reputation of the medical establishment (and Columbia University!) to get money and fame. When it turns sour, that reduces the future value of the “Dr.” label and the Ivy League connection. On the other hand, if he gets elected to the Senate, then maybe the presidency, then eventually is elected king of the world, then maybe they’ll change the rules on who gets to be called Dr.: maybe it will be an absolut requirement that if you want the “doctor” label you have to endorse at least two fraudulent cures.
Or the Wall Street Journal, which published a regular column by someone associated with fraudulent research?
Reputation is a two-way street.
I am struggling to understand why a “celebrity” with no training in economics, finance, or any remotely related field has “reputation” to give investment advice in the first place.
Because of this, I am skeptical that next time they recommend something, people will be “less subject to their influence”. Yes, maybe people who got burned with cryptocurrencies (or medical snake oil etc) will not be listening to a particular celebrity about a particular topic for a while, but I am pretty sure that said celebrities will be recommending something equally silly in a couple of months, and few people will see a problem with that.
To put it differently, since their “reputation” is not founded on any kind of rational basis, it is an inexhaustible resource, at least in the medium run (again, we are talking about months, the public forgets quickly).
Tamas:
Yes, good point. Matt Damon endorsing crypto is like a celeb endorsing Coca-Cola or McDonalds: there’s no claim of expertise, it’s just a way to build warm feelings.
Still, every time I hear about Matt Damon, Larry David, or LeBron James in the future, I’ll think of how they endorsed a scam, and that makes me like them less. So I think there is a bit of a Newton’s-third-law thing going on here. Endorsing crypto seems worse to me than endorsing Coke. Crypto is basically a scam (oh, sorry, it’s a multilevel marketing scheme), while Coke is a legit drink, ok it rots your teeth and they’re probably involved in sugar subsidies etc., still it doesn’t bother me the same way.
Crypto is a scam in the same way the stock market and fiat currency is a scam.
People love turning things into pump and dump ponzi schemes, but that doesn’t mean the underlying technology is a scam.
In fact look at a stock like Moderna which is down 75% from the peak. There are many stocks like this. Same as bitcoin. If the US treasury starts doing those bond buybacks these will all pump back up.
I agree but an investment advice from an actor is likely less harmful than public health or global energy advice from a computer programmer and philanthropist. ;-)
I’m not buying the “victim” claim. LeBron and Witherspoon have the leisure to conduct due diligence. No doubt, either one of them could give Krugmann or Larry Summers a buzz if they wanted an educated opinion. Performers and athletes – but athletes in particular – are famous for frittering away fortunes, so it would be hard to take their financial recommendations too seriously. I guess many performers have the advantage that they can continue to work after age 40, so even if they blow their first billion, they still have a chance to earn enough for a modest coastal mansion with space for their yacht collection.
They paid Joe DiMaggio to endorse Mr. Coffee machines. I can say from experience that the Mr. Coffee machines were not the best coffee machines. But who cares? Much more to the point is that Joe DiMaggio isn’t expected, *even by the people who are influenced by him to buy Mr. Coffee machines,* to know anything about coffee machines.
While I’m willing to grant that there are people who were influenced by LeBron James (or Larry David or Matt Damon) to invest in crypto (can it be coincidence that all have them have first names as their last names?) I very strongly suspect that not a single one of them thought any of those people knows anything about the thing they were recommending, though I’m sure some claim to now.
https://youtu.be/6M-ruH_s1Mg
(nothing antisemetic)
For DiMaggio, I think the ads had both pluses and minuses for his reputation. On the plus side, in addition to the money, the ads prolonged his fame for a few years. I guess that can be important for people who are used to being famous. On the minus side, instead of being a legendary athlete, he became a guy on TV advertising some crap. I remember that doing TV ads pretty much destroyed Orson Welles’s reputation for a few years—even though for Welles it was a more legitimate artistic endeavor in that he was using the money from those wine ads to finance his creative work.
But, again, I think endorsing a mediocre coffee maker or mediocre burger is not as bad as endorsing a scam. I’m not putting myself as a moral arbiter here, just saying, that to me personally, the crypto thing damages the reputation of Larry David etc. in a way that I would not feel if he were endorsing McDo.
https://www.youtube.com/watch?v=Nvxwf1jxdaM
I don’t find celebrities to be a big draw for me to buy anything so whatever. The thing that bugs me more is the Lancet and BMJ drifting into dubious territory and in some cases misinformation. That Doshi is still an editor at BMJ and Prasad has a blog there is hard to understand. They must bring in a lot of clicks I guess…
Jdk:
Journalists, pundits, and journal editors have something vaguely similar to academic tenure: once they’re plugged in, they can stay there for a long time. I don’t think that they need to bring in lots of clicks; it’s more that the people in charge of hiring journalists, pundits, and journal editors find it difficult to find people who can do the job at all, so once a person is in such a job, he or she can stay there essentially forever.
I got into crypto because this blog keeps pushing HMC [1] + NUTS [2] as the technical revolutions powering Stan
[1] https://www.coinbase.com/price/hamdan-coin
[2] https://coinmarketcap.com/nl/currencies/squirrel-finance/
The reputational blowback seems to be real, Dan Ariely’ column in WSJ has ended: https://www.wsj.com/articles/a-decades-worth-of-social-scientific-advice-11663871509
The problem, as you have pointed out previously, is that the sloppy research gets TEDified, while the denouement is barely a whisper.