Radical Uncertainty

Decision-Making Beyond the Numbers

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This book explores the thorny nature of uncertainty, considering the related topics of risk, probability, predictability, etc.. The authors concentrate on economics (John Kay is, among other things, an econ prof at Oxford; Mervyn King was the Governor of the Bank of England) but their discussion is very wide-ranging, slopping over to other areas where our knowledge is less than perfectly complete. Which is, pretty much, everywhere.

Their discussion of probability is a fine example of how weird the concept can get. Physics folks know that (for example) an atom of carbon-14 will undergo beta decay sometime in the next 5700 years with probability 50%. And we've all heard about Schrödinger's kitty. But once you get beyond that, things get hairy. We also think of a coin-flip coming up heads as having probability ½; but that's only because we don't pay very much attention to the details of the coin's trajectory, which is (after all) deterministic, with no quantum funny business involved.

Things get a lot more fuzzy when we look at betting odds. As I type, the FiveThirtyEight website tells me the Boston Celtics have a 28% chance of winning the NBA finals; the Election Betting Odds nails down a 37.1% probability that Joe Biden will win the 2024 presidential election. What's that mean?

And finally, the discussion preceding Obama's 2011 decision to send the SEALs into Abbottabad to get Osama bin Laden is examined. One CIA advisor put the probability that Osama was present in the compound at 95%. "But others were less sure. Most placed their probability estimate at about 80%. Some were as low as 40% or even 30%."

If that sort of quantification strikes you as absurd, good. It gets stranger:

The President summed up the discussion. 'This is 50-50. Look guys, this is a flip of the coin. I can't base this decision on the notion that we have any greater certainty than that.' Obama did not mean that the probability that the man in the compound was bin Laden was 0.5; still less that he planned to decide by flipping a coin. His summary recognized that he had to make his decision without knowing whether the terrorist leader was in the compound or not. Obama would reflect on that discussion in a subsequent interview: 'In this situation, what you started getting was probabilities that disguised uncertainty as opposed to actually providing you with more useful information.

That gets pretty far afield from our Carbon-14 atom. Kay and King do a fine philosophical job of teasing out distinctions and confusions in the language surrounding uncertainty.

I winced a bit at the authors' mangled history of the early personal computer market (page 29), which implies that Apple's desktop GUI was present from the company's origin. But in other spots, Kay and King can get downright hilarious (in a staid British manner) in describing the efforts of firms and regulators as they try to quantify the unquantifiable. Their advice on how (better) to handle situations where you just don't know the inherently unknowable is (probably) good.

Last Modified 2024-01-13 1:01 PM EDT