The Wisdom of Forecasters (and their Critics)

We’re publishing a (sort of) review of a book today called Applied Wisdom: 700 Witticisms to Save Your Ass(ets) by Alexander Ineichen, a Swiss financial analyst. The review is by Edward Chancellor, a financial journalist and author of Devil Take the Hindmost: A History of Financial Speculation (2000). The book consists of a collection of aphorisms that Ineichen has collected over the years and even though they’re intended to apply to the business of investing, most of them are applicable to speculation about the virus and its impacts. As Chancellor explains: “Both economists and epidemiologists attempt to forecast an immensely complex system, namely human society, equipped with models and data inputs that are not up to the task.” Here is an extract:

Ineichen says that markets are governed by Gump’s Law, (derived from a line in the movie Forrest Gump), which states that life is a box of chocolates because you don’t know what you’re going to get. When you next encounter someone who confidently predicts the course of the pandemic, some of the following responses might be apposite:

“Forecasting is not a respectable human activity, and not worthwhile beyond the shortest of periods.” – Peter Drucker

“The herd instinct among forecasters makes sheep look like independent thinkers.” – Edgar Fielder

“Anyone who causes harm by forecasting should be treated as either a fool or a liar. Some forecasters cause more damage to society than criminals.” – Nassim Nicholas Taleb

“Many of us smile at old-fashioned fortune-tellers. But when the soothsayers work with computer algorithms rather than tarot cards, we take their predictions seriously and are prepared to pay for them.” – Gerd Gigerenzer

Worth reading in full.

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