Friday, January 15, 2016

Superforecasting (Podcasts of the Week 1/10 - 1/16, 2016)

I just finished the book Superforecasting: The Art and Science of Prediction (it will be at least a month before I get a review up because I'm that far behind). That book is basically the application of insights found in other books that influenced me greatly -- Kahneman's Thinking Fast and Slow and Nassim Taleb's Fooled by Randomness (and The Black Swan and Antifragile), as well as Benoit Mandelbroit's work the Misbehavior of Markets, and some works on chaos theory. This book basically describes my thinking process and how I try to approach my job (as a forecaster). As such, I found it very satisfying-- I try to be a "superforecaster." How you make decisions and how you view the world is important. How aware you are of your own and others' luck (ie: not mistaking randomness for actual skill) is also important.

Co-author Dr. Phillip Tetlock was on a couple economics podcasts discussing the book. The Freakonomics interview gives a good summary of the book's main points. The Econtalk interview pushes a bit deeper as Russ Roberts tries to ask tough questions. Both Freakonomics and Russ Roberts also pick bad examples, like NFL games, where n=1 and variance is huge. (I can't even talk to people about March Madness anymore.)

Tetlock and Gardner admit that it's hard to determine "super" from randomness. Bill Miller beat the S&P 500 for 15 consecutive years, but there are tens of thousands out there so you'd expect someone to do that by chance. But their experiments to see what happen when you form groups of superforecasters together and then analyze the results (they got even better) suggest they might be onto something.

One key finding is that those who chalk up events to God or fate tend to make worse forecasters; perhaps partly because they are trying to find a "why?" for every event that occurs. How you think about randomness and time are huge for your theology. Much of the debate in cosmology and philosophy, for example, revolves around time. I've gotten to where I won't even discuss Gen. 1-2 with someone if they've never gotten a handle on whether they have an A theory or B theory of time. Several books on time and chance written by theologians and philosophers like William Lane Craig and RC Sproul that I would love to get to this year.

Anyway, the podcasts and book are not that deep, so enjoy.

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