The Black Swan

I continue to be impressed by what Taleb has to say in The Black Swan and how it can be applied in real life. (One immediate impact on me has been the reduction of TV viewing time. That helps me a great deal in the domestic front too.)

In any case, this is about how good (or poor) are predictions by experts.

[Psychologist Philip] Tetlock studied the business of political and economic "experts." He asked various specialists to judge the likelihood of a number of political, economic, and military events occurring within a specified time frame (about five years ahead). The outcomes represented a total number of around twenty-seven thousand predictions, involving close to three hundred specialists. Economists represented about a quarter of his sample. The study revealed that the expert's error rates were clearly many times what they had estimated. His study exposed an expert problem: there was no difference in results whether one had a PhD or an undergraduate degree. Well-published professors had no advantage over journalists. The only regularity Tetlock found was negative effect of reputation on prediction: those who had a big reputation were worse predictors than those who had none.
Now this is interesting as I have made some predictions for 31st December 2009 and I am no expert.

But what is more important is to check out the predictions made by economists on the present crisis. I have seen in innumerable news reports that the present economic crisis is likely to last throughout the 2009 and most possibly into the first few months of 2010. The good news: these predictions were made by experts. So, they are bound to be wrong. The bad news:, they could err on both sides: perhaps the economic gloom will lift with the next few months ... or last for the next few years.

Ditto with the environmental predictions.

In any case, you can track my predictions by subscribing to it. We shall know by end-2009, how far I was from reality.

This must be pure coincidence ... but more of that later.

In his book, The Black Swan, Nassim Nicholas Taleb discusses the reasons for our being blind to Black Swans (defined as events that we unable to predict due to our tendency to extrapolate historical data or past events.) I am still reading the book and have reached a very interesting point (from this posts point of views, that is; actually the whole book is extremely interesting) where the author discusses human tendency to simplify data and facts. Humans, rather quickly, simplify a set of facts as per their convenience / upbringing and come to a conclusion. We weave for ourselves a story and assign a cause to an event post-facto. For obvious (or not so obvious) reasons, we cannot assimilate all the data that is available. But worse we do not know that we do not assimilate all the data and pick ad choose as per convenience. This tendency is obviously not limited just to the humans. Even machines would do so (or do so more than humans as machines are built to supply closed form answers.

That got me thinking. What if there were people who take in all information that is made available. Or at least take more information than normal humans do. Then BAM. I realized that I know what would happen. Pure coincidence. I did not realize this when I listed The Curious Incident of the Dog in the Night-Time as a gift in my previous post. The protagonist, a child with 'special needs' takes in all information he gets (has a photographic memory) and does not take a judgment call (takes every information at face value) and is brilliant at Mathematics (perhaps, that's why). He is obviously a social misfit (his character is more complicated that can be described in two lines).

So, is it impossible for a normal human being to predict Black Swan?

Hmmm...

I haven't finished reading. Will update after I complete reading The Black Swan.

And then need to re-read The Curious Incident of The Dog in The Night-Time after I finish reading The Black Swan. I am glad I buy books.