I have noticed recently a tiny debate going on between two blogs concerning whether or not it is sensible to assign the class of people called peasants a different distribution of ability scores to the class of people called lords. The distinction in question – 2d6 for peasants, 3d6 for lords – seems roughly fine to me in the renaissance setting in which it’s proposed, though I prefer 2d6 for peasants with a further roll of 2d4-2 if the first roll is a 12, since this gives a small probability of numbers greater than 12. I agree with this method because being a peasant is the single biggest determinant of every aspect of your life, malnutrition and lack of even basic education being a significant impediment to the development of even normal stature and mental function, let alone decent wisdom or strength scores. My Eternal Antagonist over at Monsters and Manuals disagrees, because (it would appear) he objects to the epistemic arrogance of claiming one can model class effects, and it’s an inductive fallacy to propose that just because most peasants have 2d6 stats, the next peasant one meets will have 2d6 stats.
I’m not going to address either of these arguments directly, because it’s impolite – I’m arguing with Noisms at his own blog and I’ve got nothing to say at Alexis’s. What I thought I’d do instead is briefly give my opinion of the Black Swan thesis, which Noisms references in his objection to the model. Taleb, you see, who wrote The Black Swan, is opposed to modelling.
I haven’t read this book, but I’m vaguely interested in the philosophy of science and I had heard that Taleb was not overly respectful of global warming theory, so I picked it up at a friend’s house and read the first chapter, and I was struck by the complete failure of the fundamental analogy, that of the black swan. Taleb argues that black swans, when they were discovered in Australia in the 18th century, were a freak unexpected event that biological theories of that time had not predicted, and which were worked into the theory in hindsight. These have come to represent in his theory the unpredictability of nature, and the inherent dangers of modelling anything.
Except, the problem with this is that in 1790 the biologists were working from the wrong theory. They didn’t have anything like a theory of evolution, which came later after Darwin visited Australia. Evolution, I have read, gives biologists the power to predict new animals, and in fact even to predict where they might be found or how they might behave, and had the theory been developed at that time the black swan wouldn’t have constituted much of a surprise at all, let alone a “significant random event.” While it’s trivially true that the black swan might have appeared like a significant random event at the time, what is more important is the fact that the scientists of that time were working with an imperfect theory, that had no predictive power. Taleb’s whole book about random events screwing predictive models is based on an analogy to a situation in which a (possibly) predictable event was not predicted by a theory that lacked any predictive power. It’s essentially a book whose thesis could be rewritten “Don’t make predictions from the wrong model.” Also, I would add, it’s disingenuous to claim that the swans were worked into the theory with the benefit of hindsight – Australian flora and fauna were essential data in the construction of a revolutionary new theory, evolution, which had greater predictive power. This is not the same as justifying their existence in hindsight.
There is also something a bit strange in a book which purports to claim that financial models are doomed to fail to predict significant random events (black swans) by an author who claims to have predicted the Global Financial Crisis (GFC), which he simultaneously claims is the key black swan of our time. Figure that out. He isn’t the only one to have predicted this black swan, either – I did in 2004, and lots of economists and financial people did, starting around 2004. Of course, the claim that modelling can’t handle unpredictable events is prima facie true, but vacuously so. For example, global warming theory can’t predict rapid global cooling if in 2020 a ginormous meteor hits the earth, because random events like that can’t be factored into anyone’s theory. But a meteor strike in 2020 doesn’t invalidate global warming models or the theory, and to say so is to deliberately ignore the underlying assumptions of the modelling process.
It’s actually quite hard to find on the internet criticism of Taleb’s theories, though I found one article here, also by someone who has not read The Black Swan, but who is primarily riffing off of a very shoddy-sounding Financial Times opinion piece by Taleb. This blog appears to be by a quantitative analyst, so is undoubtedly biased about Taleb’s criticisms of quantitative analysts, but makes some interesting points, particularly about the business consequences of Taleb’s theories, and the silliness of some of Taleb’s claims about the actual models that are used in finance.
I would also add that the finance world isn’t the best place to look for examples of sound modelling. It isn’t subject to any of the checks and balances of science, doesn’t have the historical lessons of science, and a lot of its methodology and results (beyond “making money”) are not made publicly available for us to check. Also, the “making money” part appears to be driven by human interpretation of the models the analysts provide, and not necessarily by the models directly. But Locklin makes the point here, I think nicely, that Taleb has made a big claim that normally distributed data is insufficient for finance modelling; but modern finance modelling doesn’t use the assumption of normality very much. Locklin claims that for this very reason he, like me, had to become a “small-time expert in kernel regression.” Kernel regression modelling has many flaws, but an assumption of normality ain’t one of them. Locklin’s rather malicious claim is that Taleb makes money and fame by telling people who know nothing about finance about something very obvious to the modellers (non-normality), while simultaneously making them think the modellers don’t realise this.
You see the same tactics in global warming denialism all the time, and hordes of armchair scientists eager to claim that they’ve seen the obvious thing (“climate isn’t weather!”) that a generation of climatologists have missed. It may make for entertaining reading, but it’s neither enlightening nor correct.
Further, Taleb is an inheritor of Popper, although Locklin claims he is an inheritor of Feyerabend and therefore an “intellectual nihilist,” an accusation I think is valid regardless of his intellectual inheritance. It’s very easy to claim that all models don’t work because of unexpected events; but a lot harder to square this “philosophy” against the continuing excellent success of, for example, life tables in the insurance industry, or models of global warming. And, a claim that all models will be destroyed by a black swan event is, contra Popper, unfalsifiable. If the event comes and doesn’t destroy the model, you claim it wasn’t really a black swan; if no black swan ever comes in our lifetime due its low probability, you never get to test the model against a black swan. I don’t think Popper would like this. Also, Taleb’s explanation for the causes of the GFC – interconnected markets sharing bad models that didn’t expect the housing meltdown – conveniently deflects blame from the agencies and institutions that were actually responsible for the crash[1], while simultaneously failing to explain the fact that the black swan event (the housing meltdown) was being predicted in very many models for years beforehand. Not only is his model built on a false analogy, but its fundamental test doesn’t have all the characteristics of a black swan anyway.
I suppose the consequence of this intellectual nihilism is what bothers me, the idea that people who don’t do science will reject perfectly good models of important stuff on the basis that you can’t ascribe theories to observed facts. It’s for this reason that we have the unedifying spectacle of Sir Noisms, who hails from the most class-stratified society in the developed world, trying to argue that it’s impossible to model differences between peasants and lords because life is just too complex. The sad finding of 100 years of research on poverty in the UK is that no, life really is that simple[2].
—
fn1: To be fair, Taleb does provide a reasonable set of rules to avoid a subsequent GFC, but they’re so clearly common-sense based that his “theory” is hardly necessary to justify them.
fn2: Yes, I’m aware I’m being facetious here, ecological fallacy etc. etc. blah blah
Note: the picture is from this site about the 303rd bomber group in world war 2, and the fate of the Black Swan. Models of aircrew survival in world war 2 very much allow us to expect the kind of events described on this page…
May 24, 2010 at 4:37 pm
While I can’t find any significant flaws in your logic on models [1] (largely driven by my utter refusal to do the required reading for this course), I will take umbrage with your clear class biases. After all, I can’t let you post something without responding with a baseless objection can I? [2]
To wit, if there is one thing that Marx, Stalin and Mao have taught us it is that the proletariat, especially one who is not alienated from the product of his labour such as a rural farmer/freeholder/serf in a medieval setting, is the epitome of human development. Such an individual turns their hand to whatever task is required and this range of experience would result in a bonus to all stats represented in the game. That’s why the peasants, united, can never be defeated. [3]
In the event that your data does not align with the historical inevitability of my argument then your data must have been corrupted by capitalists. Or possibly you’re a 6th columnist [4]. Either way, assume I’m looking for a wall and as soon as a suitable one [5] is found then you’ll be up against it.
Other points that your preferred model fails to account for:
1. The range of human activates available, which could be better modelled in game by splitting people into a wider range of classes/occupations which could then each get different stat rolls.
2. Hereditary inbreeding amongst the highest echelons of society. Clearly this should inflict severe stat penalties for those whose mothers’ are also their 2nd cousins.
3. Gender. Are you also going to apply a Str penalty to the fairer sex? Just remember that Gary took years to live this down.
Finally, regardless of how historically accurate your model may be, you seem to be overlooking the fact that we’re playing these games so that we can see the farm boy become the master dual class wizard/warrior and the rogue get the princess. That’s part of their enduring appeal. And given that we’ve already got elves and magic potions in the setting, it’s not like hand waving nutrition is going to make a difference.
[1] I will note that while I don’t have a degree in mathematics it does seem Taleb’s argument can be refuted by a simple: “Model’s only predict what the mode accounts for. Out of context problems will always break them. Duh” I’d also note that if you assume that this makes models worthless then you also have to embrace the idea that common sense is also worthless, given that it’s nothing more than a fuzzy model that each individual forms based on their own experience. And if we did that we’d have to eliminate the D&D Wisdom stat.
[2] And before you respond that the rest of this post must therefore be baseless, I assert my right to subsequent replies. One of the replies will be baseless, but no single reply can be assumed to be such.
[3] This should not be taken as any promise or guarantee, expressed or implied, about the relative immortality of peasant characters, even in large quantities, in a setting containing dragons.
[4] Such columnists sneer at earlier columns for their failure to convincingly brainwash themselves, a la Arnold Swartzenager in Total Recall.
[5] I’m not really sure what I’m after in the wall, but maybe a whitewashed one would be best for the added drama of the stains. Ideally it’d also have a Banksy piece in the bottom corner so I reflect on the juxtapositioning while signing further “re-location” warrants.
May 24, 2010 at 4:59 pm
I’m sorry comrade, but you’ve got your dialectical materialism arse-about, as Engels said to the paper boy, and I’m going to have to report you to the central committee. The peasants represent an inferior incarnation of the proletariat, at a point in history when they were objectively incapable of revolution, and therefore definitely do not constitute a refined stage of human development, which is reserved for the industrial working class. This, comrade, is why Stalin’s republicans took my Grandad’s guns away and booted him across the border to France in 1938[1]. In fact, were we, as good communists, to join in a comradely game of “Kulaks and Kommissars,” we would be forced to give the peasants 1d6 on all stats to represent their rustic underdevelopment and inadequate positioning on the historical materialist pathway to communist utopia[3].
I agree with all your points (except maybe gender[4]), but it’s not my model so I don’t care. However, attempts to more finely granulate the model will simply attract further ire by Taleb, since they involve a more detailed model!
I also agree entirely with your last point, but the blog this model was written up on was distinctly intending to make a “historically accurate” renaissance model. And I want to point out that there’s an interesting contradiction in the OSR here, where on the one hand they want to talk about how serious and important sci-fi and fantasy is, but on the other hand they seem to try very hard to background all aspects of the game (like elves and halflings and historically inaccurate stat blocks) which might actually reflect the fantasy-ness of the game.
—
fn1: As far as I know this is true, in that my Grandad did have to flee spain, and he was in the POUM so he was betrayed by Stalin[2]; whether or not a communist apparatchik physically took his gun from his warm peasanty hand I will never know, as he has sadly passed away.
fn2: Note that all good modern communists know that political intransigence is not hereditary, so my Grandfather’s accidental birth on the wrong side of the historical material struggle in the wrong point in time should not be taken as a sign that I, too, am ideologically suspect, so hold your order for a wall
fn3: Playing this commy language game is fun, isn’t it? Maybe I should have had those missives from Satan to his followers written in this vein.
fn4: my exception for gender is that, as far as I know, the main reason women are weaker than men is that they have more fat per kg of body weight; and since there is no relationship between body size and strength in D&D, it’s obviously easy to imagine that the woman with 18 strength is just gigantic. Also, in severely malnourished populations I suspect gender differences in strength no longer obtain, due to low fat reserves, though I have no evidence to support this. But gigantic rosie-rivets style warriors would actually be kind of cool to play[5].
fn5: though of course in any game of “Kulaks and Kommissars” I would decry her vulgar American decadence regularly and in the most vulgar of terms, for even in play one must remember one’s responsibility to the eternal goal of the worker’s victory over the Hegemonic American Capitalist Enemy!
May 25, 2010 at 12:53 am
I haven’t read this book
You really should read the full argument before you dismiss it based on the opening chapter, you know. (The Black Swan isn’t Taleb’s analogy, by the way; it’s Karl Popper’s.)
author who claims to have predicted the Global Financial Crisis
He doesn’t claim that (or at least I haven’t heard him claim it). Instead he’s claimed that it vindicates his particular strategy to investment – namely putting as much money as possible into investments that are largely insulated from Black Swan events (like gilts) while using money that he can afford to lose on the most risky investments possible (which have the highest potential profit).
While it’s trivially true that the black swan might have appeared like a significant random event at the time, what is more important is the fact that the scientists of that time were working with an imperfect theory, that had no predictive power.
This is, I think, the point that Taleb (and Popper) are making. No theory is perfect. A better (but less simple and thus less memorable) analogy is Newtonian physics and Einstein.
May 25, 2010 at 12:54 am
Or, at least, you can never tell in advance whether a theory will be perfect or not.
May 25, 2010 at 1:11 am
I don’t think Karl Popper has a great deal of respect amongst scientists, Noisms, because his theories about scientific practice are a long way from the way science is actually practiced. The black swan may not be Taleb’s analogy, but he has certainly picked it up and run with it, so I’m happy to criticise his work on the basis of the fundamental analogy being crap.
Newtonian physics and Einstein are not a good example at all, because
a) the Newtonian physicsts always knew that they had a flawed model, due to the perihelion recession of mercury
b) When physicists worked with Newtonian physics they knew it was an approximate model, and not actually a definitive description of the way the world works
c) at slow (as in, lower than the speed of light) speeds and normal (as in, less than planetary) masses Newtonian physics works really, really well, so well in fact that we have things like airplanes and rockets built on its foundations. As a predictive model on a sub-planetary framework it is very very good
If Taleb’s point is that “no theory is perfect,” well, he’s of no relevance to scientists anywhere. All scientists know this, and we don’t approach our work on the assumption that our models are perfect or that they represent the truth. They’re convenient approximations until something better comes along. Maybe Taleb lost sight of this while working in the finance industry, where the standard philosophical framework of science maybe doesn’t apply.
Also, I think Taleb did predict the GFC; certainly the big quote on his wikipedia page appears to, and you’ll find lots of people claiming he did. So, no black swan there. Existing theory could have handled the GFC perfectly well, which is why that Locklin chap I linked to claims that quantitative analysts didn’t cause the GFC.
Not only can you never tell in advance whether a theory will be perfect or not, you know in advance that it won’t be. But you apply it with necessary caveats, because the alternative is… what, exactly?
May 25, 2010 at 2:03 am
I don’t think Karl Popper has a great deal of respect amongst scientists, Noisms, because his theories about scientific practice are a long way from the way science is actually practiced.
Just like Christmas doesn’t have a great deal of respect amongst turkeys, you mean? Funny, that. Of course they are a long way from the way science is actually practiced – that’s why they are a critique of how science is actually practiced!
If Taleb’s point is that “no theory is perfect,” well, he’s of no relevance to scientists anywhere. All scientists know this, and we don’t approach our work on the assumption that our models are perfect or that they represent the truth.
Right. And yet who was it who was saying that scientists have the power to “predict new animals” a minute ago?
You’re excluding the middle here. It’s not that scientific theories not being perfect is Big News. It’s that the fact that they aren’t perfect is not adequately explored or recognised. (Viz: Newtonian physics and Einstein; Newtonian physics was not properly falsified, to use Popper’s term, i.e. there wasn’t a thorough and rigorous attempt to falsify it, until Einstein came along.)
Also, I think Taleb did predict the GFC; certainly the big quote on his wikipedia page appears to
Nope, that quote says that Black Swan events are a greater threat in the current global financial system. It doesn’t predict anything other than there being greater potential for harm now than before.
May 25, 2010 at 7:22 am
funny analogy, Noisms, but I don’t think Popper came along and ate the scientists, and by “a long way from the way science is actually practised,” I am referring to his critique of what scientists do, i.e. he criticized a process that doesn’t reflect what scientists do. His criticism had little relevance to the actual practice of science.
You seem to find it difficult to reconcile scientists’ awareness of the imperfection of our own theories with our faith in their predictive power. It’s not unusual to find this difficult, but it’s exactly this sort of contradiction which informs the practice of science and makes claims like “no theory is perfect” so vapid.
You say
to which I can only respond that you should try reading a good history of physics. I recommend Sagan’s Cosmos, which is very engaging. By the Popperian definition of falsification, as far as I understand it, Newtonian physics has always been subject to rigourous testing. Everyone knows how to falsify Newtonian physics – any simple test of a two-body interaction will do the job. This means that people have known the limits of Newtonian physics since its inception (well, since the common availability of calculus), and have held in their minds its limits as a theory (can’t handle the many-body problem, can’t handle the three body problem, can’t handle some celestial mechanics) while falsifying it daily on a sub-celestial level (cannonballs, pendulums, tides, etc). Remember that falsification means “able to generate an experiment which can be used to disprove the theory.” This is a trivial task with Newtonian mechanics and a bit of high school mathematics. Einstein didn’t falsify it either; in the sub-celestial limit special relativity reduces to Newtonian mechanics, and the problem of the speed of light and its ramifications for Newtonian physics had already been recognised by Michelson and Morley in 1898.
As you can see from that, the fact that scientific models aren’t perfect has been explored and recognised by scientists since, well, since their inception. This is a pointer to the uselessness of frameworks like Taleb’s and Popper’s – they don’t take into account the actual practice of scientists or modellers, but argue against a straw model, as Locklin observes in the blog I linked to.
re: the GFC, the internet is swarming with people who claim that Taleb predicted it, and that quote gives explicit conditions (the collapse of Fannie Mae) under which it will happen. Unless your version of “predicted a Black Swan” is to find a quote of him saying “on this day an event of this magnitude will happen in this way”? ‘Cause that ain’t a black swan, by definition.
May 25, 2010 at 6:07 pm
You seem to find it difficult to reconcile scientists’ awareness of the imperfection of our own theories with our faith in their predictive power. It’s not unusual to find this difficult
Yeah, I know, you like to set yourselves up as witch-doctors. There are more things in heaven and earth, poor non-scientist, than are dreamt of in your philosophy!
I don’t find this difficult; I find it very easy. It’s called cognitive dissonance.
By the Popperian definition of falsification, as far as I understand it, Newtonian physics has always been subject to rigourous testing. Everyone knows how to falsify Newtonian physics – any simple test of a two-body interaction will do the job. This means that people have known the limits of Newtonian physics since its inception (well, since the common availability of calculus), and have held in their minds its limits as a theory (can’t handle the many-body problem, can’t handle the three body problem, can’t handle some celestial mechanics) while falsifying it daily on a sub-celestial level (cannonballs, pendulums, tides, etc). Remember that falsification means “able to generate an experiment which can be used to disprove the theory.” This is a trivial task with Newtonian mechanics and a bit of high school mathematics. Einstein didn’t falsify it either; in the sub-celestial limit special relativity reduces to Newtonian mechanics, and the problem of the speed of light and its ramifications for Newtonian physics had already been recognised by Michelson and Morley in 1898.
I bow to your superior knowledge of this history of science, but what you’re saying is all in support of Popper – i.e. that scientific theories cannot be justified, but only falsified, and that scientific progress comes about through falsification. You have a problem, a number of theories are postulated to explain it, these are subject to rigorous attempts at falsification, and by a quasi-evolutionary process all theories are eliminated until in the end the one that best “fits” remains. But the “fit” is never perfect.
re: the GFC, the internet is swarming with people who claim that Taleb predicted it, and that quote gives explicit conditions (the collapse of Fannie Mae) under which it will happen.
The internet is swarming with people who claim all kinds of bollocks; what else is new? The quote doesn’t attribute the crisis to the collapse of Fannie Mae; it’s in a separate paragraph in which Taleb rails against bankers. [Another news flash: wikipedia quotes are not to be trusted.] All he’s saying is that Fannie Mae is leaving itself open to catastrophic losses due to unpredictable events, on account of its financial risks. Fannie Mae was eventually ruined, but this is not a vindication of any soothsaying on Taleb’s part, only a vindication of his general thesis.
May 25, 2010 at 9:28 pm
This is a classic case of “damned if you do, damned if you don’t.” On the one hand, if scientists act as if their predictive models actually describe the universe, they are arrogant and doomed to fail and don’t understand their own method; on the other, if they accept that their models are just approximations and judge them on empirical results, they have cognitive dissonance.
The “fit” is never perfect is a different statement to Taleb’s, which is a more fatalistic version in which models are doomed to fail because scientists don’t understand non-normal data (facetiousness there). I think you’ll be hard-pressed to find scientists who claim the “fit” is perfect (though you’ll find many who are proud of and vigorously defend their own models).
I think it’s amusing that you find yourself claiming Taleb never achieved any predictive success, in order to defend him from a logical pitfall of his own making. That quote is accurate, as far as I can tell from other sites’ repetition of it, and the paragraphs segue directly into one another. It’s a strong claim he made and short of defining success as “the GFC will happen on this date and cost this much,” it’s a prediction of a black swan, thus invalidating the black swan nature of Taleb’s black swan. And as I said, he’s hardly the only one to have predicted this particular unpredictable event. Where does that leave his theory?
I don’t understand what you’re trying to do by distinguishing between a vindication of soothsaying and a vindication of a general thesis. He wasn’t soothsaying – he was making a prediction of a catastrophic event, which after the fact he claimed, against the evidence, was a black swan. The I would say this is a profound invalidation of his own thesis, since the driving forces of the collapse were well understood and predicted by large numbers of people. It’s almost as if Black Swan events can be predicted, and thus risk analysis does have a place in modern finance. As if, had the right people been doing the right thing, and a certain cozy coterie of American and British bankers been properly monitored by their governments, in a financial system where the requirements for risk minimization were in fact understood and publicized, the black swan could not only have been predicted, but modelled and avoided.
Where does that leave Taleb, exactly? Resting his whole thesis on the claim that “bad models are bad models.”
May 25, 2010 at 11:01 pm
On the one hand, if scientists act as if their predictive models actually describe the universe, they are arrogant and doomed to fail and don’t understand their own method; on the other, if they accept that their models are just approximations and judge them on empirical results, they have cognitive dissonance.
That’s not what I meant. I’m talking about the means by which people subconsciously convince themselves of something silly, because holding contradictory ideas is psychologically unsettling. Of course scientists want to believe that imperfect theory can be reconciled with their own faith in said theory’s predictive power – and they achieve this by, largely, coming up with a witch doctor charade in which non-scientists are told “It’s not unusual that this is difficult for you to understand, but that’s because you aren’t a scientist.”
This is unconscious and entirely natural, and members of all professions do it.
I think it’s amusing that you find yourself claiming Taleb never achieved any predictive success, in order to defend him from a logical pitfall of his own making. That quote is accurate, as far as I can tell from other sites’ repetition of it, and the paragraphs segue directly into one another.
As far as you can tell from other sites’ repetition of it… You’ll forgive me if I’m entirely dubious about anything you have to say on the matter, then. The paragraphs do segue into each other, but there’s a whole chunk of text before the Fannie Mae bit that is cut out of the wikipedia entry – but hey, if you want to live your life by simply learning about things in regurgitated form and deciding you disagree with them, who am I to stop you?
It isn’t a prediction of a black swan event; it’s a warning about the level of financial risk Fannie Mae was taking.
I would say this is a profound invalidation of his own thesis, since the driving forces of the collapse were well understood and predicted by large numbers of people.
Large numbers of people can say “there will be trouble ahead” and they will be right simply due to brute mathematics. If a hundred people make a prediction on a coin toss, about 50 will be correct. Do the same thing again with that 50, and you’ll have about 25 soothsayers on average. Do the same thing again with those 25, and you’ll have 12. Same again, you’ll get 6. Repeat, and you’ll now have 3 people who have successfully predicted 5 coin tosses in a row. What does this prove? That those 3 people can see the future, or that random largescale guesswork will inevitably make some people look as if they can make accurate predictions?
You’ll probably pull some financial expert or commentator out of your back pocket now who you’ll argue will have predicted the entire thing and can explain it in great detail, so much so that the above argument doesn’t work. This will be utter nonsense, as the causes still are not agreed upon beyond the very broad and banal statement that sub-prime lending was the proximate cause, the driving forces are still not well understood, and the extent of the crisis’ effects are still not apparent. (See e.g. Greece and Spain.)
Where does that leave Taleb, exactly? Resting his whole thesis on the claim that “bad models are bad models.”
Read his books, not the wikipedia entry and a few random blogs, and then come back and make this statement, and you’ll be taken seriously.
May 25, 2010 at 11:12 pm
Such a charming bedside manner, Noisms. Would you like me to find all the examples of Taleb describing the GFC as a black swan, to prove my point?
Predictions of the GFC were not the same as coin-tosses, and I think in your more lucid moments you know this. I’ve no doubt you’re terrified of getting on a plane, since you know in your black heart that only randomness is holding it up … or do you?
The GFC was predicted by people positing a quite simple and reliable model of sub-prime debt default, debt repackaging, and a housing bubble driven by particular tax and housing policies in a few big markets. Trying to pass that off as just luck is a classic example of what the blog I linked to describes as “intellectual nihilism.” It may appeal to the curmudgeonly side of human nature, but it also robs you of any ability to engage critically with the world. What good is that to you or anyone else?
I suppose it’s a type of philosophy – “all science is random guess work,” but it’s not one that gets bridges built or economies running smoothly. Nor does it provide a very good framework from which to analyse the relative importance of social class and hobbies for determining stats in Renaissance Europe.
May 26, 2010 at 12:43 am
Would you like me to find all the examples of Taleb describing the GFC as a black swan, to prove my point?
That wouldn’t prove your point at all, because Taleb wasn’t predicting the GFC.
Predictions of the GFC were not the same as coin-tosses, and I think in your more lucid moments you know this. I’ve no doubt you’re terrified of getting on a plane, since you know in your black heart that only randomness is holding it up … or do you?
This isn’t the same thing. Let me try to explain this again. A thought experiment (I know you love these): Let’s imagine there are 10,000 professional people in the world making public predictions about the future of the global economy in e.g. financial newspapers, blogs, websites, etc. Now let’s imagine that in any given year, 1% of them predict economic catastrophe. The ones who make inaccurate predictions are discredited and lose their jobs, but they are replaced by another 100 people who are thrown into the mix. 20 years go by – no catastrope, 2,000 financial commentator jobs have gone through the revolving door. In the 21st year, however, there really is a global economic catastrophe. Suddenly, the 100 people who predicted this are hailed as genuises and soothsayers.
Do you understand why this means that the existence of successful predictions about complex systems like the economy is not an indication that there are large numbers of people out there who really understand what is going on?
The GFC was predicted by people positing a quite simple and reliable model of sub-prime debt default, debt repackaging, and a housing bubble driven by particular tax and housing policies in a few big markets.
People predict these sorts of things every year – for Christ’s sake, I was reading articles in around 1999 in The Economist warning that the housing bubble would soon start to deflate. The sheer number of people who make predictions about this sort of thing is unspeakably vast.
This doesn’t mean that they’re all that much more competent than a monkey throwing darts at a dartboard with various predictions written on it.
I suppose it’s a type of philosophy – “all science is random guess work,”
This isn’t it at all. Taleb is mostly talking about economics, which really isn’t a science in any meaningful sense (it can’t be falsified – there’s Popper again). This is also why your jumbo jet analogy is irrelevant.
May 26, 2010 at 9:05 am
Noisms, Taleb clearly posited a mechanism for the failure of the financial system (interconnected banks), a risk (Fannie Mae, the housing collapse) and a theory (black swan events). Within his own framework, this constitutes a prediction (since within his own framework, the timing of black swan events is impossible to predict). Claiming lack of a smoking gun phrase “I expect the system to collapse on this date” doesn’t exonerate you from this. I’m sorry, but his statement about the financial system constitutes a predictive statement consistent with his own theory, and you just have to wear that.
You’ve now fallen back on a weaker claim about models, namely that economics can’t predict anything. This is a nice advance on your previous efforts, and much more defensible since the main school of economics we have been following in the past 20 years is what got us into this mess in the first place. But you don’t get a free pass here either. There is a large body of economic literature criticising the economic model of the past 20 years and predicting the problems we face now, written by economists. There is a large body of literature defending the chicago school which is now binnable. This is the process of falsification (which I am increasingly convinced you don’t understand).
The fact that economics is full of charlatans and rubes posturing in The Economist (what a surprise that you read that, and what a surprise that you treat it as serious economic theory!) doesn’t mean that it doesn’t also have serious predictive abilities, and in this case the problem of prediction really wasn’t difficult – bubbles are actually quite easy to spot.
Economics can be falsified, just the way aerodynamics can, through the development of appropriate tests with a measurable null and alternative hypothesis. You’re throwing the baby out with the bathwater here, trying to claim that an entire field of human study is irrelevant because some people (mostly the ones you read in The Economist, incidentally) were working from a theory which has shown by recent events to be wrong. And all in defense of a man who you simultaneously claim failed himself to predict the single biggest event in economics in 20 years, even though he’s written a popular book on economics which we should all take very seriously.
The contradictions do stack up here, don’t they?
May 26, 2010 at 10:25 pm
Noisms, Taleb clearly posited a mechanism for the failure of the financial system (interconnected banks), a risk (Fannie Mae, the housing collapse) and a theory (black swan events). Within his own framework, this constitutes a prediction (since within his own framework, the timing of black swan events is impossible to predict). Claiming lack of a smoking gun phrase “I expect the system to collapse on this date” doesn’t exonerate you from this. I’m sorry, but his statement about the financial system constitutes a predictive statement consistent with his own theory, and you just have to wear that.
Nope, he posits a reason why the system has a potential to suffer greatly from a black swan event (interconnected banks), then goes on to rail against bankers for a pargaraph before saying at the end of that paragraph that, specifically, Fannie Mae, a bank, stands to lose a lot from a black swan event if it were to occur.
The fact that we’re getting such different interpretations from something which I think is so brutally obvious is yet another indication that you and I shouldn’t discuss anything, because I apparently speak Martian and you speak Saturnian. It’s also an indication you should at least get books you’re critiquing out of libraries and read full quotations in context!
You’ve now fallen back on a weaker claim about models, namely that economics can’t predict anything. This is a nice advance on your previous efforts, and much more defensible since the main school of economics we have been following in the past 20 years is what got us into this mess in the first place.
No – not that just economics can’t predict anything. I include psychology, political science, and more germainely to the discussion sociology in this. That’s where all of this started, remember? Social strata and “ability”?
There is a large body of economic literature criticising the economic model of the past 20 years and predicting the problems we face now, written by economists.
See previous comment. Economists criticise economic models and predict problems as a matter of routine. That some of them should be right some of the time is largely a function of mathematics.
There is a large body of literature defending the chicago school which is now binnable.
Most literature on most economics is binnable.
The fact that economics is full of charlatans and rubes posturing in The Economist (what a surprise that you read that, and what a surprise that you treat it as serious economic theory!) doesn’t mean that it doesn’t also have serious predictive abilities, and in this case the problem of prediction really wasn’t difficult – bubbles are actually quite easy to spot.
Who said anything about “treating it as serious economic theory”? Don’t put words into my mouth – I know it’s a habit of yours. If you’ll remember I was talking about professional people making public predictions in “e.g. financial newspapers, blogs, websites, etc.” No mention was made of “serious economic theory”.
“Serious predictive abilities” is a meaningless term. If you mean saying something like “if taxes go down people have more disposable income” is a “serious predictive ability”, then I’ll give you it. Otherwise no.
Economics can be falsified, just the way aerodynamics can, through the development of appropriate tests with a measurable null and alternative hypothesis.
This is question-begging if ever there was such a thing! Statistical hypothesis testing deals with likeliness, which is precisely the point at issue when we’re talking about black swans (unlikeliness is unlikely, but can have a disporportionately large effect). It also requires a controlled experiment, which can’t exist when you’re talking about economics (random unpredicted events have a large effect on economies). This isn’t even to mention the problem of the near-infinite number of variables which come into play during testing – literally billions of individuals, not to mention the number of financial interactions between those individuals.
Statistical hypothesis testing may be very useful in medicine, but not in highly complex social systems like the economy.
trying to claim that an entire field of human study is irrelevant because some people (mostly the ones you read in The Economist, incidentally) were working from a theory which has shown by recent events to be wrong. And all in defense of a man who you simultaneously claim failed himself to predict the single biggest event in economics in 20 years, even though he’s written a popular book on economics which we should all take very seriously.
No, silly, I’m not claiming that economics is irrelevant because some people predicted something to be wrong. I’m claiming that economics is (largely, not entirely) irrelevant because predictions about it can’t be trusted. The point is not that people writing in The Economist were right or wrong. It’s that whether they were right or wrong could be entirely independent of their own capabilities.
Taleb’s books are only incidentally about economics (you’d know this if you’d read them), and are specifically about why one should be wary of making predictions, so one should expect him not to make them. But I refer you back to the opening paragraph of this comment.
May 27, 2010 at 9:01 am
This, and your claims about “sociological” models and psychology, etc. show the heart of the problem – you just don’t get what these models are doing. I’ve got one at the end of this very post, which shows that models of the relationship between inequality and poor health in London had predictive power for 100 years. That’s what you consider to be a “binnable” sociological model?
There are different strands of economic work with different amounts of value, and the mainstream model that we’ve been raised on is, as you say, completely poor at predicting anything. But this doesn’t mean that the actual underlying principles of economics can’t be used to generate useful models, just that economics more than any other academic field is vulnerable to institutions being captured by ideologies.
It’s just not true that economics is always and everywhere right or wrong “independent of their own capabilities” as you say, the many failings of the Chicago school aside. You’re giving Taleb a free pass with this blanket claim, because he can’t have his cake and eat it too – he can’t claim that the GFC was a black swan when he himself predicted it, but he can’t have his theory without a black swan. Which is why you have to use your delicate and slightly exotic redefinition of prediction to get around the fact that Taleb laid out in his own words a perfectly valid predictive model of the GFC.
Finally, in comment 12 you say he is largely talking about economics; in comment 14 you say his books are only incidentally about economics.
May 27, 2010 at 7:04 pm
We really are just getting into question-begging territory here, so I’d just be repeating myself. You can just re-read the discussion.
There’s a discrepancy between comments 12 and 14, sure; to clarify, if Taleb is talking about any academic subject it’s economics (or perhaps business studies) but his books aren’t really about economics itself. Economics is the springboard for this discourse on what he calls convexity.
Incidentally I was catching up on recent episodes of the Econtalk podcast at the gym last night, and lo and behold one of the episodes was an extended interview with our friend Taleb. Give it a listen. You’ll hate it, but it might interest you. The direct link is this, but you can get it on iTunes.
Anyway, I’m reminded by this discussion of the Karl Popper quotation about other philosophers being unable to bring themselves to believe that he holds the opinions he does, let alone believe that they are right.
May 27, 2010 at 8:33 pm
It’s not question-begging, noisms, it’s you refusing to put aside your biasses against some fields of study whose more robust aspects you clearly don’t know or care about.
I’ll check the econtalk podcast soon, I think… maybe there’ll be a follow-up mea culpa post…
May 27, 2010 at 9:48 pm
It is question-begging – you keep referring to issues on which we disagree (e.g. Taleb predicted the GFC) and then using these as a springboard for making further arguments as if the initial disagreement is settled. This is the very definition of begging the question.
The podcast may surprise you, in two directions – firstly you may agree with more than you expected, and secondly you may be astonished at some of the insane things that come out of the guy’s mouth. He’s gone beyond skepticism to an almost disturbing extent, but it’s no less entertaining for that.
May 27, 2010 at 9:50 pm
Sounds interesting…
June 9, 2010 at 7:03 am
Wow, when you guys get your teeth into a subject…
I would have liked to see Paul’s take on things.
I’m only going to say one thing on an area I do know something about. Regarding female vs male musculature, male muscle tissue contractions are generally faster and stronger whereas female muscle tissue is more fatigue resistant and also recovers faster. This behviour is at the myofibril level so skeletomuscular factors are not at play. So, STR boost for the guys and CON boost for the gals ! The question of which gender get’s the INT vs WIS boost is left as an exercise for the reader 🙂
June 9, 2010 at 8:23 am
I’m not sure if this argument counts as getting your teeth into a subject so much as pissing on it, but thanks for noticing. Sorry you got caught in moderation too.
I don’t think a CON boost for girls would work because CON in AD&D seems to have heavy elements of toughness/robustness in it that aren’t specifically about fatigue. The speed of your myofibrillar blah blah probably isn’t relevant to how many hit points you have… so I don’t know that in stat terms the raw physical nature of male/female difference is that relevant. Similarly, strength scores must be able to at least partially be seen in terms of size, which is why halflings get a penalty, so it seems reasonable to suppose that a chick with 18 strength is just really really big. Other systems state explicitly that strength is relative to size or represents your ability to use your strength (what a cop out that is!) but I don’t think D&D does. The same problems apply, I think, for INT vs. WIS (and what a difficult exercise you’ve set us, Lord Merton!) In fact I think in another one of his games, Gygax explicitly stated that high INT represents “rocket scientists” (talk about turning a cliche into a yardstick!), which really seems like a very silly definition of intelligence. Gollum ain’t no rocket scientist but in my view he’s a cunning rat-bastard, and that deserves a high INT score.
Anyway, certain people would object to any of this because you can’t MODEL something as simple as male/female difference. What is all this natch you’re talking about myofibrillar blah blah? The world is too complex for that stuff!