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I read somewhere that people like conspiracy theories because it gives them a sense that they know secret information that others don't know.
I wish I could say my family member was my only exposure to conspiracy derangement, but I've know a handful of them.
And it's ABSOLUTELY what you said. These are people who don't understand things. They don't have a grasp of scale of things, they don't know math and numbers and don't get how populations work and how systems work, from city infrastructure to political institutions. They get severely insecure or anxious when something comes up that makes them feel that insecurity... like almost any news story or political scandal.
So they write their own story using magic and mysticism and ideas they pulled from grifters online basically telling children's stories and fairy tales about flat worlds and goblins who steal children.
Having a "secret" story makes them feel knowledgeable, like they have something they can teach others, a way to be relevant and respected. Even if it's just by other delusional people.
Yep, this pretty much nails it.
The conspiracy makes them feel a sense of importance that they can't get in any other aspects of their lives. It is sad, these people cause real harm to those around them with these fantasy worlds they buy into.
Telling them they are wrong, often just feeds the delusion; because you don't know the secrete, this makes them feel more of the same, feeding the conspiracy further.
There is also a kind of reverse virtue signaling to each other about how "edgy" they are when it comes to being steeped in/buying into what they think is insider knowledge...
For example, the ones that claim they are flat-earthers - I honestly think many of them might not really believe it, but use it as a way to play the kid skipping science class and smoking out behind the school, basically as a way to raise up their middle finger to annoy the people they think are just being schoolmarms: "you're not going to tell ME what to believe, I did my own research!"
The reality is, anyone they think of as a schoolmarm ("normie") just mostly would rather ignore these asshats, and just roll our eyes at their juvenile and backward ways. Sadly, what these idiots do in large groups ends up harming everyone - e.g., not vaccinating, being terrible at reasoning skills, basic numeracy and literacy, while at the same time being able to vote for the Republicans.
There is much of what you describe in these communities, and a lot of it is even simpler and sadder than that, which is people desperately scared of death and clinging to religion to provide some level of comfort.
One of my favorite documentaries of all time is Dan Olsen's In Search of a Flat Earth, it's a sublime journey that starts with a beautiful and pleasant journey into measuring the humbling scope and scale of our world, and in the second act, delves deep into conspiracy theorists and their motivations.