The title quotation is usually attributed to early Christian philosophers St. Augustine and St. Anslem who stressed faith over reason in that great philosophical debate, but I'm more interested in Spinoza's version that belief is the first step in the process of reasoning. Disagreeing with Descartes, Spinoza argued that the way our minds work on new ideas is a two-step process—first, accept a statement as true, i.e., believe it, and then in a second process, which may not occur for various reasons, subject the new belief to critical reasoning and confirm, modify, or reject it.
Edward Harrison writes about this in Spinoza, Descartes and suspension of disbelief in the ivory tower of economics.
Descartes was of the view that people process information for accuracy before filing it away in memory. Spinoza made the opposite claim, that people must suspend disbelief in order to process information. The two competing ideas were put to the test; and it appears that Spinoza was right about the need for naïve belief, something that has grave implications for investing, the subject of Montier's essay [from which Harrison quotes at length].
Harvard psychology professor Daniel Gilbert has pitted Descartes against Spinoza in the laboratory. The experiments involved giving the subjects information and then immediately subjecting some of the subjects to distractions that, it was hypothesized, would interfere with the second, truth-testing and pruning step. It worked; more of the distracted subjects believed as true the untrue information. Harrison accepts the empirical evidence that belief is a precondition to understanding a la Spinoza, but says we have deeper—he says lizard brain—resistance to considering challenges to pre-existing beliefs that are important to us.
What Gilbert, Petty, and Montier have demonstrated is that human beings have to suspend disbelief to process information and make judgments based on that information. Unfortunately, distractions (think bread and circuses) can lead people to believe something is true when in fact it is not – with grave implications for investing.
However, that's not what happens with strongly-held beliefs at all. I remember talking to my mother about the Montier post, asking her about her own strongly held views on religion. Her answers were interesting because it demonstrated to me an unwillingness to even process information that ran counter to her most cherished and strongly-held beliefs. She admitted this interpretation was correct when we discussed it afterward. Remember what Montier said "in order for somebody to understand something, belief is a necessary precondition." The point was that she didn't even process the information – such an existential threat it was to her.
Human beings have a very clear view of self and this is strongly intertwined with a belief system which generates what we describe as core values. So, if you attack those core values, you are likely to get an irrational and reptilian response. There is no processing of information as I described in "Through a glass darkly: the economy and confirmation bias in the econoblogosphere" going on; the cognitive dissonance is too great. Instead what you get is fear and an irrational defence. This is what my mother described.
Spinoza's view has profound implications everywhere, and certainly in the areas of my greatest interest, economic theory, politics, and education. One implication is that the beliefs one naively accepts as true in the first step of the reasoning process are critically important because many of them are likely never to be re-examined. It would be interesting to know if naive beliefs become more entrenched over time. I suspect they are, especially if they become enmeshed within a "system" of related beliefs.