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Monday, March 30, 2009

Hi, I'm Dr. Fox

Nicholas Kristof of the NYT writes an amusing piece on the predictions of experts. He's interested in the so-called "Dr. Fox effect", based originally on a series of psychology experiments where a phony expert gave well-received but meaningless presentations. In more general form the Fox Effect refers to the tendency of otherwise savvy consumers of information to over-value the predictive capabilities of people who have educational credentials.

Classic example? Of course we all know: the economists! Other sooth sayers include scientists and social scientists (sociologists, political scientists) who model the past behavior of complex systems and present their conclusions as having predictive -- not just descriptive -- authority. Who will be a world power a decade from now? Dr. Fox will tell you. Will we have a shortage of food in 25 years? Will the world witness a population explosion? A resurgent Russia? Chinese economic dominance? A nuclear war? (I would add: will Florida be under water from Global Warming in two decades?!) Dr. Fox will tell you. He's got the magical ability to take descriptions of the past, precisely cast in mathematical language, and transform them into predictions of the future.

Philip Tetlock, a Cal Berkely professor -- the "expert on experts" as Kristof calls him -- wrote a book on the Fox Effect, "Expert Political Judgement", in 2005. In it he tracked two decades of predictions, 82,000 in all, from 284 experts. The predictions were tagged by those in the experts' field of study and "on subjects that they knew little about." I'll let Kristof tell you the result:

"...The predictions of experts were, on average, only a tiny bit better than random guesses — the equivalent of a chimpanzee throwing darts at a board."

That's striking enough. I'll add some comments of my own:

(1) People reason: "If not the expert, then who?", which ignores the fact that judgement and common sense are often more valuable than credentials when it comes to complicated inferences about the future. Indeed, Tetlock notes that the one key indicator of poor predictive performance was fame; those experts who were widely recognized as such, consistently did worse.

(2) Complex systems -- like the economy -- are scary as hell, because no one (literally no one) understands how things will turn out. And, unfortunately, most of the world we care about is complex in this sense. There aren't any "Diffy Qs", as physics students say, to tell us some outcome at time t + n for any n with much of a value at all. But the experts make us feel better. They talk in sophisticated language, they explain what happened in the past (note that with regard to past events, they really are experts), and they tell us what it means for the future. We want to know what's coming around the bend, and some people seem capable of telling us.

We just don't notice that they keep getting it wrong. They don't know what will happen tomorrow, anymore than you.

Read and be bummed out by our lack of predictive capabilities here.

The New Capitalists

European leaders are balking at Keynesian stimulus, to the degree that Obama has backed off his original plan to push this at the upcoming G20 sumit.

Did I miss something? In this country, the Neanderthal Republicans are sceptical of Keynesian stimulus, and Democrats -- especially liberal Democrats -- apparently think it's settled that it works and that nothing else in times of recession will. Forget inflation, stagflation, or any other bugaboo. If you're a liberal Democrat, this Keynesian spending stuff works.

So, what's wrong with Europe? Why aren't they buying fiscal stimulus? Really not buying it. Czech Prime Minister Topolanek called more spending right now "the road to hell". French President Sarkozy and German Chancellor Merkel have explicitly rejected Obama's call for more global spending. Their position is clear enough:

"...the problem is not about spending more, but putting in place a system of regulation so that the economic and financial catastrophe that the world is seeing does not reproduce itself."

What are these European leaders, closet Capitalists? Sheesh. I wonder what Paul if-only-we-could-spend-even-more Krugman thinks of the Continent now. Neanderthals.

Read it here.

Monday, March 23, 2009

We were blind, and now we see

Chris Mooney responds to George Will's Feb. 15th climate change op-ed piece in The Washington Post.

This debate goes on and on like a lover's quarrell, and I've long since given up on trying to "fell swoop" it with any argument or appeal to this or that empirical desiderata. Read Will. Read Mooney. Be confused. Be confirmed.

I'll add only that Mooney takes a predictable swipe at Will when he challenges the relevance of Will's observation that there was a global cooling scare-- a view espoused by enough scientists to get it aired in mainstream media -- in the 1970s. Will's point is that, every decade or two, some new bugaboo about the environment pops up, and after seeing enough of them, we ought to be a little sceptical of the latest "end of days" scenario. Mooney's point is that science is much more accurate and mature today than it was in the 1970s, and so who cares about what those cave men were screeching about three decades ago? We've got it right now. This is the trump card, I suppose, for anyone prone to what C.S. Lewis once called "chronological snobbery": the view that whatever we think now must by this fact alone be superior to what we thought yesterday.

But most of us who take Lewis' point will still admit to endorsing Lewis' snobbery when it comes to science, in particular. After all, we don't bleed people anymore to get rid of disease. We're pretty sure there aren't witches, or an elan vital, or ether, or phlogiston. As we continue to look at the world, we find what really does exist. Microscopic organisms (germs), not miasma ("bad air"). Oxidation, not phlogiston. Darwinian Evolution, not Lamarckism. Scientific progress is, in short, a manifest phenomenon. We see it marching forward from generation to generation.

But here's the disconnect. With sweeping questions about the future of the global climate, we're going way beyond pasteurizing milk, or vaccinating for polio. We're into much more speculative science. Speculative science wants desperately to be, well, established science, in the sense that it earns a place in the text books and is largely beyond question, complaint, or challenge. Climate theories, almost by definition given the complexity of the climate and the difficulty predicting its future behavior, are speculative much more than politicians or scientists themselves want to admit. The debate is closed, 'cause the global warming theorists said so. Oh really.

Put it this way: in the 1970s, global cooling scientists patiently explained to sceptics that the old climate theories of the 1950s were based on an undeveloped and much more primitive science. In the 70s, however, the theories were now correct. Fast forward to today. Decades from now, future scientists will no doubt proclaim that in the dark days of the early 21st century, we hardly had the techniques to get our arms around the problem at all. Someone in the back row of these future climate conferences, maybe some gung-ho freshman studying epistemology at the local U, may well wonder if more distant generations, reaching different conclusions yet again, will turn up their noses at the conclusions reached in his own time. If he was brave enough to ask the room of experts, he'd likely be rewarded with something like the following: "Perhaps, but we must act, young lad. We must act!" Indeed. And so too would the 1970s cooling crowd and by the same logic make the same assertion.

EU to US: Stop "Stimulating" and Fix the Banks!

I didn't know whether to laugh or cry when I read this. Jean-Claude Trichet, president of the EU Central Bank, remonstrating the Obama administration for all the chatter about economic stimulus-- much in the form of growing the welfare state-- at the expense of the 800 lb. Gorilla in the room: frozen markets. According to the article, European leaders like Trichet are distancing themselves from the Obama administration's economic stimulus strategy by claiming that "their more-generous social-welfare states provide a buffer that offsets the need for bigger fiscal boosts." In other words, do the welfare thing later. Fix the markets now!

And "Mr. Trichet also warned that if governments went too deeply into the red, the move could backfire by pushing up long-term interest rates and puncturing public and business confidence."

Wow. Sounds like the EU's got the pragmatism here. Good for us that Tim (do I still have a job?) Geithner released his proposal to unfreeze lending by buying up to 1 trillion in toxic mortgage-based assets today, using partnerships with private investors. Wall Street responded with a 500 point jump in the Dow, as I'm sure everyone is now well aware.

Maybe Obama can have Trichet over to the White House sometime to get some pointers on how the markets really work, and what really fixes them.

Friday, March 20, 2009

Tax them, not me

The WSJ editorial page will get you hatin' on liberals, if anything can. (Maybe to be more precise: hatin' on those on the Left who are sanctimonious about tax cuts.)

Here's the deal. Obama has to get money into the government to pay for "reform", which is to say, to finance an expansion of entitlements like health care, et cetera. How does he do this? One, he lets the Bush tax cuts expire in 2011, which puts them back to Clinton-era rates (top rate goes to 39.6% from 35%, 33% rate increases to 36%). Two, he caps the tax benefits for private donations at 28% for itemized tax filers in the top two income brackets, from 35% and 33%. In practical terms this just means that donating to non-profits, universities, and charities just got more "expensive", in the sense that the tax break for donations is less.

So what's the problem? No problem, unless you're running a non-profit, university, or charity. Suddenly you have less money. And what do you know? The Left is up in arms. The Ivy League, United Jewish Appeal, The Independent Sector--hardly Big Business on the Right-- are all preparing petitions. Don't raise our taxes! Don't raise our taxes!

This response from the Left, of course, gives the game away. No one likes taxes to be raised on them, and when it counts, everyone squeals. It's a bipartisan squeal. Maybe liberals and conservatives can agree on this, and we can pull a little of the hypocricy on the Left out of the debate. The same folks whose lips slaver at the thought of knee capping Big Business are suddenly self-righteous about their own bottom line. But the money's gotta come from somewhere, right? Buck up.

Tuesday, March 17, 2009

George Will Strikes

I rarely read Will like this. I take it he's feeling journalistically mistreated. I agree with him -- I hope not out of cynicism but epistemic humility -- that in a couple of decades, we'll be on to some new claim about the Earth writ large and what all industrialized nations must do immediately to avert disaster. It's worth a read if you follow George Will, though I haven't followed up on his references (i.e., to the NYT article).