RADICAL UNCERTAINTY – Decision-making for an unknowable future
Another fabulous guest post on Radical Uncertainty by Mr B!
The first four notes of Beethoven’s 5th Symphony are amongst the most famous in classical music. Ominous. Grim. Threatening. But then the mood lightens. Things start looking up. Before doom seemingly strikes again.
The experience of the coronavirus pandemic across the globe has been a bit like this. All of a sudden, infection and death rates in some countries soared and thousands of people lost their jobs and businesses overnight as governments were forced to act. Many countries are now seeing positive cases fall as “the curve” flattens in response to government lockdowns and restrictions. Some countries have lifted restrictions and seen numbers increase again as social interaction increases and the virus is more easily able to spread.
We know pandemics occur because they have occurred in the past. So they are not completely unexpected. It is just that we don’t know when they will occur in the future and we don’t know what their impact will be.
But things will happen in the future which we simply don’t know about today. These are black swan events or, as Donald Rumsfeld famously put it, “unknown unknowns”.
Yet individuals, households, businesses and governments have to make decisions today. How people make decisions with imperfect information is the subject of this book by John Kay and former Governor of the Bank of England, Mervyn King (who does look a bit like Beethoven……)
What is going on here?
The authors give an example in the opening chapter of Barack Obama’s decision to raid Osama bin Laden’s compound in Pakistan. The most bullish advice from the CIA team leader was 95% certainty that bin Laden was in the compound, but others present in the White House situation room were less sure. Most placed their probability estimate at about 80%. Some were as low as 30 – 40%. The authors say the President made his decision not by probabilistic reasoning, but by asking: “What is going on here?”
They say: “The question……….sounds banal, but it is not. In our careers we have seen repeatedly how people immersed in technicalities, engaged in day-to-day preoccupations, have failed to stand back and ask, ‘What is going on here?’”
But the authors don’t actually attribute this quote to Obama and nobody is quoted as hearing him say it. They don’t explain at this stage how asking this question resulted in Obama making the order that he did. The simplicity of the question appeals to me, but I am left wanting to know more.
Time for some more classical music for those of you still contemplating breaking out of coronavirus restrictions………
I have always been fascinated by the seasons. When my wife and I lived in the UK, the seasons seem to pervade daily life. From Ecclesiastes 3: “For everything there is a season, and a time for every matter under heaven…..” Perhaps the seasons are the antithesis of radical uncertainty? Summer follows spring. Then autumn. Then winter. There is comfort in knowing what comes next……..although here in Australia, the impacts of climate change make for less certainty.
I remain intrigued as to whether the authors will explain: What is going on here? There are many anecdotes throughout the book, but the authors keep coming back to Obama’s thought process to support their ideas. In Chapter 7, they apply the Bayesian dial (named after an eighteenth – century Presbyterian clergyman) to what may have happened in the White House. One can picture Obama’s opinion changing as new information becomes available to him. But in the end, Obama could not be certain.
“When we are wondering whether the man in the compound is bin Laden….., probabilities are unhelpful. Any expression of probability is a claim to knowledge of the underlying issue which, by the nature of the uncertainty surrounding these problems, the speaker cannot have. In these circumstances, it may often make sense to describe the degree of uncertainty in non-probabilistic ways. It is intelligible to say…….’this evidence made it more likely than before that bin Laden was the man in the compound’ although we know, after the decision was made, that bin Laden was the man in the compound.”
Probabilistic thinking does not eliminate uncertainty, but knowing that an event is less likely than not may not help either. Sometimes we just have to plan and be able to adapt. Obama assembled an array of experts in planning the Pakistan raid. The authors give another example of the wedding planner who checks the weather forecast, but who “relies on a robust and resilient adaptation strategy rather than a forecast.”
The selfish gene
Some people, of course, are born to deal with radical uncertainty. Harking back to the beginnings of evolutionary theory, there are people who possess attributes which help them deal with the unknown and thrive:
The authors use Richard Dawkins’ metaphor of “the selfish gene”: “It is the gene, not the individual, which is selfish in Dawkins’ metaphor and the difference is important. Obviously, the gene has no consciousness or direction, but evolution leads to the results which would be observed if the gene were able to promote itself selfishly.”
Winston Churchill in politics and Steve Jobs and Richard Branson in business “lived in a large world, not the small world in which rational behaviour can be reduced to a mathematical calculation in the context of a well-defined problem and complete knowledge of the environment.”
“When discovering the next big thing, Steve Jobs was not selecting from a menu of existing options, but using his imagination to create something completely new. That is the essence of radical uncertainty.”
Our need for narratives
We can make computers, but we are not computers. Computers lack emotion and empathy. Artificial intelligence allows computers to learn from human experience, but what about if the situation is unique? The authors refer to Obama again:
“The information to which he had access was unavoidably limited. The consequences of his decision depended on many knowns and unknowns, and there was little if any basis for attaching probabilities to them. No rulebook governed the response of the men in the compound, whoever they were, or of the Pakistani government or military. The situation was unique, and the President could not train himself by making that decision thousands of times and seeing the result.”
The authors say we acquire knowledge through communication and learning. We create stories. We write books. We challenge each other. We collaborate.
“Our actions reflect both the context within which we act and our shared narratives about that context. And it is because they lack that context that computers are not capable of negotiating with Chinese diplomats or building a strategy to defeat a terrorist insurgency. And that is why the ‘singularity’ – the time at which artificial intelligence will supersede the product of natural, cultural and social evolution in humans – is no more than a distant pipe dream. Artificial intelligence offers the prospect of ever-faster ways to solve complex puzzles, but it will not resolve mysteries.”
For the moment, human decision-making in an uncertain world requires intuition. Mathematical models can provide insights, but should not be the determining factor.
What really is going on here?
The authors go onto describe how business students, historians, anthropologists, lawyers and other professionals, financial and insurance markets and a range of other industries approach the question: What is going on here? Even when discussing the impact of luck, the authors compare the outcome of the bin Laden raid to the failed attempt to rescue the Iranian hostages in 1979. Was Obama lucky and Carter unlucky?
Because the authors use the phrase as a catch cry, I think frankly the reader deserves to know whether Obama actually articulated the words. Certainly I can imagine Obama saying it. He is a cool guy. Personally I think it suits the narrative of Kay and King. It’s almost like they thought it up before they found the example.
“What is going on here?” dumbs down concepts which might otherwise be hard to sell to your average reader flicking through books (particularly the first chapter) in an airport news agency. It is a bit like what Walt Disney called a “weenie”. Something which draws you in. Think Cinderella’s Castle in the Magic Kingdom or the Tree of Life in the Animal Kingdom.
Ultimately, the authors do not give us a decision – making model to deal with uncertainty. Narrative reasoning is as close as we get. This is not something everyone can access. Perhaps it might keep some wise old men (………like the authors) gainfully engaged as consultants in their twilight years. Most of us just have to cope.
But if you are looking for a book to read on a cold winter’s day with some great anecdotes, this could be the book. If you are mathematically challenged like me, you can probably gloss over the chapters on probability without missing much. The main thing is that it will get you thinking about making decisions for yourself in uncertain times.
More Beethoven to finish! It has been fascinating watching sports administrators jostle with uncertainty throughout the pandemic to get their sports up and running again. If you are looking forward to social footy in the local park again, here is something from (my favourite movie) Dead Poet’s Society:
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