Part 1 - Black Swans

For those who are not familiar with the idea behind 'Black Swan' I will explain. It is a simple idea all about induction. Imagine someone were to ask the question "what colour are swans?" If you have ever only experienced white swans then you would say all swans were white. You would base this on your experience. The key here is that no matter how many white swans you see it will not confirm the fact that all swans are white. Even if you studied swans all your life and never see anything other than a white swan you cannot confirm the fact. It only takes 1 black swan to destroy the entire proposition that all swans are white. If you were to believe this fact (all swans are white) then then seeing a black swan would be earth shattering (not really but you get the point). Your whole perspective would be overturned.

Induction is a tricky thing. Yet we rely upon it everyday. In the book Taleb takes this basic issue of the 'Black Swan' and outlines mankind's inability to deal with uncertainty. It is human nature to think inductively, to base their future on what has occurred in the past. Because of this we only predict things (even then inaccurately) based upon a set of experiences we have had. Most of these experiences do not include 'Black Swan' type events. We have never seen a black swan therefore all swans are and will be white.

It is this blindness to uncertainty (the fact that we cannot know the future based upon the past) that permeates every aspects of our lives. Black swans affect us in the form of stock market crashes, natural disasters and in many more subtle ways (terrorism).

Taleb talks at length about our predictions. He really has it in for statisticians and economists who regularly provide predictive models all of which affect policy in government, banking, medicine and in fact just about everything.

The key things I took away from this book when it comes to prediction was

1) The people who predict rarely look back at past predictions and test their accuracy. They simply update their predictions ignoring the the fact that the methods that produced the previous ones are the same as they use for the modern predictions and see no difficulty in this.
2) Understand the error rate. If you are going to predict then understand the error margins. The further out the bigger the effect of the error rendering the far out predictions to be useless. If you do not understand this then don't predict.
3) Silent evidence. Predictions and past performance favours only the winners.

What do I mean by 3. He shows that winners are not necessarily winners because of what they have done or proved. There is a famous approach to marketing stocks. Send 1000 people a marketing letter predicting which way the stock market will go, up or down. The following week do the same thing but for each 50% send 50% up and 50% down. After a number of weeks one or two of the recipients will be amazed that your company will have predicted every rise and fall of the market over a long period (too long to be deemed to be lucky).

In fact many of the winners we see today fall foul of the silent evidence. You only get to see the miraculous winner and not the other 999 losers. The losers are never seen.

If you can grasp these simple points then next time the trending graph goes up in a supplier presentation think about what they are saying.

I had one such presentation the other day. They predicted the rise costs of IT. The fact that all their previous predictions have been wildly out did not stop them. Or even stir them to say 'watch out may be inaccurate'. They followed up with an interesting set of stats.

We have 800 users of this IT system. Here are 5 of them that made a good (but not great saving). The question should be "but what about the other 795?" Yes it is cynical to make such a statement (they could not fit them on) but the fact is that if 800 people made that saving you would want to make such a claim.

So next time the graph goes up,

1) ask the relevant questions
2) ensure that you ask about the silent evidence

Look at these things through more sceptical eyes and it is almost funny quite how bad some suppliers can be.

Black Swan

I was recommended this book by a rather clever fellow so I thought I would give it a go and see if this was the source of all his wisdom. It was not. But it is still an excellent book and worthy of a few blog entries to help distill my thoughts about it.

So head to the library or the book store and pick up a copy of The Black Swan by Nassim Nicholas Taleb. If you are uncertain about whether to buy this book or not, then buy it and he will tell you all about uncertainty.

Modern Loos

It is rare that I am concerned about the practical things in life. The newly refurbished toilets at our office though have 'solved' a set of problems that really just did not need solving.

There used to be taps. You could get cold water and hot water. These were not the most useful in the world as you could either have cold or very hot but not warm (and nobody puts the plug in even if there were plugs to wash ones hands). The world solved this problem with the mixer tap. You could get hot, cold or warm to your liking. The newly fitted 'hygienic' taps unfortunately take us a step back. They are automatic (good as you no longer have to touch them) but only produce warm water. No choice. No option to have cold (itself a strange climate change option, if you are happy to wash hands in water requiring no energy).

I quite like, after a long grimy day in London, to be able to splash some cold water on ones face to freshen up. No longer an option (perhaps I should buy bottled water instead). This brings me on to the second gripe.

We used to have those blue and white hand towels (you know the ones. they were either tied in so tight you could not get your hands in to dry them or the time between pull downs was so long you had to use the wet bit of the towel from the last guy). But when they worked they worked well. They allowed you to dry your face. The new drier is a cheap copy of the Dyson turbo jet skin remover blaster. You stick your hands in between two high powered jets of air and it blasts the water off rather than dries. They work rather well. However, you try getting your head in one to dry your face! I am not saying that the standard hot air driers are any better (who wants to swivel the nozzle upwards to blast dusty hot air on ones face and look like a dog with its head out of a car window on the M1).

A true modernization that has taken a perfectly workable solution and replaced it with a high tech set that does less than the old solution (albeit faster) at a higher price.

Stop the world I want to get off.

Thank you Mr Ed

I sometimes think that a country run by Mr Ed (the horse) would be a better place to live. One would imagine that MPs and Ministers saying anything at the moment would be risky and that they should say as little as possible.

I had one of those warm feelings listening to Radio 4 this morning. Not one of those nice warm feelings of a cup of coco on a cold day but the warm feeling you get when your pet puppy decided its time to have a pee on your lap. That moment of disbelief and disgust followed by the need for a shower.

This morning Ed Milliband was being interviewed. As usual the topic of Gordon Brown came up. Ed was very supportive. The whole of the Labour party was right behind Gordon, there were no contenders for leader and no vacancy. He went on to point out that they had no intention of triggering an election and a catastrophic loss to the Tories who he thought had no idea how to lead the country out of these difficult issues.

Bravo Ed.

Let's just run that again in slow motion. You do not want to change leader as it would trigger an election and nobody would vote for them and would vote for the Tories.

Even slower,
You know that the people of this country do not want you as government and you do not want to go to the vote as you would lose.

And even slower
Knowing the population does not want you to govern them anymore, you want to avoid giving them the power to do what you and they know they want. I.e. ignore democracy. You do not think democracy is worth it if it means people vote the wrong way.

And in detail. Everyone will vote for the Tories. Ed does not think they are good (they are not Labour). Ed knows better than the whole population so lets not let them have a vote. What do the population know after all.

Ed, FUCK YOU.

Blugger this!

I just added Adsense (google) to my page as a way of generating revenue from my wisdom (said in jest). I put on the adsense through the sign up process and then I get an email that says I must verify and they will decide whether I can have this (they asked for god sake). Then (and this is great) they start advertising on my blog (even though I may not be allowed an account to earn revenue I am allowed to show their adverts).

Then Google writes to me and says my blog is a spam blog and will be deleted in 20 days unless I go through a further review process.

And the templates for the ads clash with the sites own standard supplied template.

They must spend tens of dollars on building this stuff. No wonder they are profitable. They save a fortune on competent developers.

This won't hurt. Much.

1 hour 30 mins to my first exam. Not first exam ever. The first exam for over 10 years and the first piece of hand written work I will have had to do since I left school at 16 22 years ago. My biggest worry is not about the content (although that does worry me) but the fact I will need to write solidly for 2 hours. And then again tomorrow and again the day after.

I can type extremely fast, I do not have to worry about spelling and if I want to change my argument or text I can do so easily. Typing at the speed of thought is useful. I can write at the speed of continental drift and my writing does look like it was done in one of the consequential earthquakes to continental drift.

So why the hell do they force us to write by hand. Ignore the stamina, what are they actually testing. Surely our ability to make philosophical arguments. But hand written ones mean that we have to get the structure right first time.

Its a real shame they still live in the dark ages. Its just not well thought through. And that is a big disappointment for a leading Philosophy department.