Wednesday, June 17, 2015

Fat tails, nuclear war, Google, and lack of planning

Today's XKCD comic really struck me today.

Earlier in the week I was listening to a Russ Roberts EconTalk podcast with Martin Weitzman, co-author of the book Climate Shock. Weitzman seems to have moved Roberts toward the let's-take-action camp by appealing to the Nassim Taleb argument of climate change having "fat tails." Taleb and Weitzman use the term "fat-tailed" to describe an event where there is a low probability of a catastrophic outcome. The argument is that the greater the uncertainty, the greater the impetus for doing something because the outcome could be even worse than you think or perhaps more probable than you calculate. (I reviewed Taleb's Antifragile here.)

This had me thinking about all of the fat-tailed events that we generally ignore, and the fallacy of applying this logic to every human action. Flying commercially is a fat-tailed event: There is a low probability of anything going wrong but if something does go wrong you will not likely survive it-- catastrophe. This is different then, say, driving on the interstate where you still have a pretty good chance of survival if something goes wrong.

I thought about nuclear weapons, especially now that Vladimir Putin announced he wants to increase his arsenal. What do you think more likely, that the earth's temperature will increase enough in the next 30-50 years to cause disastrous and irreversible harm to our species or that we'll use (or have an accident with) the nuclear weapons we've scattered around the world aimed at one another and housed in decaying electronic infrastructure?  There used to be an impetus on reducing those arsenals, but we still see nations (Iran, N. Korea) striving to obtain them even as we have reduced the overall amount since the 1970s. There is still plenty to blow the world up many times over.

I would say the probability and consequence of nuclear war higher than the risk of climate change, yet we're doing nothing about it. That does not come up in the conversation with Dr. Weitzman. Roberts makes the point about opportunity cost-- what if it costs us 50% of world GDP to make the change, is that really worth it? I think we've decided as a world that it's not worth even a fraction of that cost.

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