Uncertainty
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Economic Forecasting in Alternative Universes
<dweeby econo-skepticism follows> The New York Times Magazine today has an article on the past, present and future of the Obama administration’s economic policy. It is a good if long read and chock full of inside baseball, political speaking points delivered with some repetition lest you miss them and, most entertaining, anonymous score-settling amongst the…
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Taleb on Suckers
Extraordinarily timely Taleb essay on Edge.org: Statistics can fool you. In fact it is fooling your government right now. It can even bankrupt the system (let’s face it: use of probabilistic methods for the estimation of risks did just blow up the banking system). He actually is turning his attention to generating constructive advice for…
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Toto, We’re Not in Mediocristan Any More
More on the poor applicability of financial models to the real world from the Economist: Goldman Sachs admitted as much when it said that its funds had been hit by moves that its models suggested were 25 standard deviations away from normal. In terms of probability (where 1 is a certainty and 0 an impossibility), that translates into…