Category: Philosophy
Bets, beliefs, and portfolios: some further observations on the theses of Bryan Caplan
Bryan Caplan thinks that portfolios don’t reveal much about actual beliefs,. Here is one of his arguments:
Even prominent Nobel prize-winning economists admit they follow simple rules of thumb when they invest. So unless people’s beliefs are carved in stone, how could portfolios possibly reveal much about their beliefs? Tyler is a case in point: He changes his mind a hundred times a day, but he follows a simple financial strategy that hasn’t varied in years.
I view it differently. I don’t trade in public markets but I vary my allocations by changing how much money I spend and how to allocate my time. Perhaps not coincidentally, this puts me square into the world of classical finance theory as represented by “the mutual fund theorem,” with a static equity portfolio of fixed proportions and some unique covariances on my human capital. I call that rationality not inertia.
Bryan, you will note, is a founder of the theory of rational irrationality, which suggests you become more rational as the private stakes from your decisions go up. These days he is wishing to argue that the truly small stakes reflect what you really think, through the lens of mental accounting and compartmentalization. Of course that would undercut or at least drastically relativize his earlier theory. I say he has made a large and successful career bet — much bigger than any of his piddly ante monetary bets — on the theory of rational irrationality, so he must really agree with me after all.
It also happens that Bryan’s emphasis on simple rules of thumb will work against his interest in person-to-person bets as a metric of authenticity. If you don’t change or examine your overall portfolio very often, that means some reasonably wide range of portfolios is a matter of indifference or near indifference to you, if only because fine-tuned improvements are hard to find. (Do you really give matters a re-ponder when a firm in your portfolio pays dividends?) In that case, however, the small bets won’t be authentic either. One could compartmentalize one’s personal bets quite easily and say to oneself — whether consciously or not — “I can make this small bet: it still keeps my overall portfolio within that broad range of indifference.” Which indeed it does. The bet is then undertaken for expressive reasons, which is fine, nothing against that, but for me it is more fun to cheer for Tony Parker (without betting on him). I think of these small personal bets as akin to sports loyalties most of all and not as a unique window into our real beliefs.
The small person-to-person bets pay off (or not) in terms of pride, including for some people the pride in betting itself. One relevant substitute is to attempt to produce pride using your own internal mental accounting of your own predictions and so we must make the broader portfolio comparison. What the $$ betters are signaling is a lack of vividness for their own internal mental worlds. In my mind, I’m already betting an optimal amount of pride through my own mental accounting. Maybe some of us are already betting too much internal pride on external events; after all, the variance of pride introduces some new exogenous risk into life and perhaps we should be trying to move in the opposite direction toward greater pride indifference to external events. That is what the Stoics thought.
Most of all, I fear that Bryan’s results are coming from an asymmetric approach where he applies positive observation to large portfolios and normative recommendations to small bets. Bryan could go for a “positive vs. positive” comparison, in which case he would point out that people trade and adjust their large portfolios all the time, but don’t make small bets on public policy nearly as much. Alternatively, he could try a “normative vs. normative” comparison, in which case would you sooner recommend that people drop their inertia for their large portfolios or for their small ones? To even raise such a question is to answer it.
Do you want to find out “what a person really thinks”? Look at whom they married, how much money they spend, and how they devote their time. That is the most important portfolio of them all.
Just don’t bet that Bryan and I are going to agree anytime soon.
Cash Transfers to the Poor
Chris Blattman, author of one of the key papers on cash transfers to the poor, takes a page from Albert Hirschman’s book and practices a bit of self-subversion.
First, the message can be misunderstood. It is not, “Cash transfers to the poor are a panacea.” More like, “They probably suck less than most of the other things we are doing.” This is not a high bar.
Second, cash transfers work in some cases not others. If a poor person is enterprising, and their main problem is insufficient capital, terrific. If that’s not their problem, throwing cash will not do much to help. I recommend the paper for details….
Third, a cash transfer to help the poor build business is like aspirin to a flesh wound. It helps, but not for long. The real problem is the absence of firms small and large to employ people productively. The root of the problem is political instability, economic uncertainty, and a country’s high cost structure, among other things. A government’s attention is properly on these bigger issues.
If I were an enterprising young researcher looking for an idea and experiments that will prove powerful in five years, I would try to find the stake I can drive into the heart of the cash transfer movement.
…That is not depressing. That is science. We should welcome it.
In that spirit: I look forward to the stake-wielders.
*World War Z*
I was surprised how serious a movie it is and also by how deeply politically incorrect it is, including on “third rail” issues such as immigration, ethnic conflict, North Korean totalitarianism, American urban decay as exemplified by Newark, gun control, Latino-Black relations, songs of peace, and the Middle East. Here is one (incomplete) discussion of the Middle East angle, from the AP, republished in el-Arabiya (here is a more detailed but less responsible take on the matter, by a sociology professor and Israeli, spoilers throughout).
The movie is set up to show sympathy for the “Spartan” regimes and to have a message which is deeply historically pessimistic and might broadly be called Old School Conservative, informed by the debates on martial virtue from pre-Christian antiquity. But they recut the final segment of the movie and changed the ending altogether, presumably because post-Christian test audiences and film executives didn’t like it. Here is one discussion of the originally planned finale. It sounds good to me. The actual movie as it was released reverts to a Christian ending of sorts. My preferred denouement would have relied on the idea of an asymptomatic carrier or two, go see it and figure out the rest yourself.
By the way, for all the chances taken by the film makers, they were unwilling to offend the government of China (see the first link), in part because you cannot trick them easily with subtle, veiled references. Such tomfoolery works only on Americans — critics included — which I suppose suggests a lesson of its own.
Here is a Times of Israel review of the movie, interesting throughout, and it notes that the Israel scenes are simply translated to “the Middle East” for Turkish audiences.
A good film, I liked it. How many other movies offer commentary on Thucydides, Exodus, Gush-Shalom, Lawrence Dennis, and George Romero, all rolled into one?
Let’s detect and undo one of the most popular intellectual fallacies ever
As a case in point, consider my recent post arguing that Andrew Sullivan is the most influential public intellectual of the last twenty-five years. Such a claim will raise the status of Sullivan. While I am happy to see his status raised, that is not my point. My point is merely that he has been very influential, and in the sense of changing actual real world outcomes, a claim which most other public intellectuals of high status cannot even begin to make. The comments on the post are mostly weak, especially those comments critical of Sullivan. Some people are arguing that Sullivan does not in fact deserve higher status. And that in turn is causing them to misjudge, or fail to judge at all, the claim about his influence.
If you can avoid this fallacy consistently, and unpack the positive claim from any and all implications about changes in status, you will think much better and learn much more. I find also that very smart people are not necessarily more protected against this mode of fallacious reasoning.
Many blogs of course pander to this very fallacy. Why not be more explicit? One could put a post up with the person’s name and photo and simply write: “OK people, let’s argue in the comments whether this person deserves a higher or lower status.” But that would be too explicit, and it would lower the status of the blogger and commentator, so something else is written and the same debate ensues.
Claims about the United Kingdom
It is not the state that the British object to, but other people.
That is from Terry Eagleton’s Across the Pond: An Englishman’s View of America, which is sometimes amusing.
My new favorite question to ask over lunch
“So, are you a regional thinker?”
If they say no, fail them. If they say yes, ask them to explain. Here is my old favorite question to ask, and therein you find links to the very first question of this kind.
On the Hayek-Pinochet connection
Corey Robin has a long post on this, here is one part:
Hayek complied with the dictator’s request. He had his secretary send a draft of what eventually became chapter 17—“A Model Constitution”—of the third volume of Law, Legislation and Liberty. That chapter includes a section on “Emergency Powers,” which defends temporary dictatorships when “the long-run preservation” of a free society is threatened. “Long run” is an elastic phrase, and by free society Hayek doesn’t mean liberal democracy. He has something more particular and peculiar in mind: “that the coercive powers of government are restricted to the enforcement of universal rules of just conduct, and cannot be used for the achievement of particular purposes.” That last phrase is doing a lot of the work here: Hayek believed, for example, that the effort to secure a specific distribution of wealth constituted the pursuit of a particular purpose. So the threats to a free society might not simply come from international or civil war. Nor must they be imminent. As other parts of the text make clear, those threats could just as likely come from creeping social democracy at home. If the visions of Gunnar Myrdal and John Kenneth Galbraith were realized, Hayek writes, it would produce “a wholly rigid economic structure which…only the force of some dictatorial power could break.”
Hayek came away from Chile convinced that an international propaganda campaign had been unfairly waged against the Pinochet regime (and made explicit comparison to the campaign being waged against South Africa’s apartheid regime). He set about to counter that campaign.
He immediately wrote a report lambasting human rights critics of the regime and sought to have it published in the Frankfurter Allgemeine Zeitung. The editor of this market-friendly newspaper refused, fearing that it would brand Hayek as “a second Chile-Strauss.” (Franz Josef Strauss was a right-wing German politician who had visited Chile in 1977 and met with Pinochet. His views were roundly repudiated by both the Social Democrats and the Christian Democrats in Germany.) Hayek was incensed. He broke off all relations with the paper, explaining that if Strauss had indeed been “attacked for his support for Chile he deserves to be congratulated for his courage.”
There is much more at the link.
The ambivalence manifesto
We are the Ambivalents, unable not to see both sides of the argument, frozen in the no-man’s land between armies of true believers. We cannot speak our name, because there is no respectable way to confess that you believe two opposing propositions, no ballot that allows you to vote for competing candidates, no questionnaire in which you can tick the box, “I agree with both of these conflicting views.” So the Ambivalents avoid the question, or check “I don’t know,” or grit their teeth and pick a side. Consequently, our ambivalence doesn’t leave a trace. But that doesn’t mean it doesn’t exist.
Ambivalence refers to the state of experiencing conflicting beliefs or feelings simultaneously. The prefix ambi means both; the suffix valence derives from the Latin for vigor and refers to the attraction or aversion felt toward something. Someone can feel a positive or negative valence. Or both.
Ambivalence is not the same as indifference, with which it is often confused. Someone in an ambivalent state of mind is experiencing an excess of opinion, not an absence of it. An ambivalent person may feel very strongly about the subject at hand without reaching anything like a coherent point of view on it.
That is from Ian Leslie, here is more.
*Confessions of a Sociopath*
I suspect nothing in this book can be trusted. Still, it is one of the more stimulating reads of the year, though I have to be careful not to draw serious inferences from it. Does its possible fictionality make it easier to create so many interesting passages?:
I can seem amazingly prescient and insightful, to the point that people proclaim that no one else has ever understood them as well as I do. But the truth is far more complex and hinges on the meaning of understanding. In a way, I don’t understand them at all. I can only make predictions based on the past behavior they’ve exhibited to me, the same way computers determine whether you’re a bad credit risk based on millions of data points. I am the ultimate empiricist, and not by choice.
The author argues that sociopaths are often very smart, have a lot of natural cognitive advantages in manipulating data, and are frequently sought out as friends for their ability to appeal to others. It is claimed that, ceteris paribus, we will stick with the sociopath buddies, as we are quite ready to use sociopaths to suit our own ends, justly or not. It is claimed that for all of their flaws, many but not all sociopaths are capable of understanding what is in essence the contractarian case for being moral — rational self-interest — and sticking with it. Citing some research in the area (pdf), the author speculates that sociopaths may have an “attention bottleneck,” so they do not receive the cognitive emotional and moral feedback which others do, unless they decide very consciously to focus on a potential emotion. For sociopaths, top down processing of emotions is not automatic.
We even learn that (supposedly) sociopaths are often infovores. It seems many but not all sociopaths are relatively conscientious, and the author of this book (supposedly) teaches Sunday school and tithes ten percent to the church. It just so happens sociopaths sometimes think about killing or destroying other people, without feeling much in the way of remorse.
I can also recommend this book as an absorbing memoir of a law professor and also of a Mormon outlier. It is written at a high level of intelligence, and it details how to get good legal teaching evaluations, how to please colleagues, how to evade Mormon proscriptions on sex before marriage, and it offers an interesting hypothesis as to why sociopaths tend to be more sexually flexible than the average person (hint: think more systematically about what abnormal or weakened top-down processing of emotions might mean in other spheres of life).
The author argues that sociopaths can do what two generations of econometricians have only barely managed, namely to defeat the efficient markets hypothesis and earn systematically super-normal returns. What does it say about me that I find this the least plausible claim in the entire book?
Here is a useful New York Times review. Here is the author’s blog, which is about being a sociopath, or about pretending to be a sociopath, or perhaps both. Here is the book on Amazon and note how many readers hated it. I say they just don’t like sociopaths.
One hypothesis is that this book is a stunt, designed as an experiment in one’s ability to erase or conceal an on-line identity, although I would think a major publisher (Crown) is not up for such tricks these days. An alternative is that a sociopath — not the one portrayed in the book — is trying to frame an innocent person as the author of the book (some trackable identity clues are left), noting that the book itself discusses at length plans to destroy others for various (non-justified) reasons. Or is it a Straussian critique of the Mormon Church for (supposedly) encouraging sociopathic-related character traits in its non-sociopath members? Or all of the above?
You will note that the book’s opening diagnosis comes from an actual clinical psychologist in the area, and the Crown legal department would have no interest in misrepresenting him in this manner. So the default hypothesis has to be that this book represents some version of the truth, at least as seen through the author’s eyes.
Some version of the author, wearing a blonde wig it seems, appeared on the Dr. Phil show, to the scorn of Phil I might add.
I cannot evaluate the scientific claims in this book, and would I trust the literature on sociopaths anyway, given that the author claims it is subject to the severe selection bias of having more access to the sociopathic losers and criminals? (I buy this argument, by the way.) It did occur to me however, that for the rehabilitation of sociopaths, whether through books or other means, perhaps they should consider…a rebranding exercise? But wait, “Sorry, I could not find synonyms for ‘sociopath’.”
If nothing else, this book will wake you up as to how little you (probably) know about sociopaths.
I am proud of the Dotchka
Yana flew yesterday from Newark airport and will be arriving in Mumbai shortly, heading in a few days to live in Bangalore. She will be working with Forus Health to decrease preventable blindness among India’s poor, in part by aiding with their distribution of an affordable screening device.
Her indiegogo project is here, which also describes her trip and mission. I hope to visit later in the year. And I expect her to come back knowing three or four more languages.
How depressing is the moral regression of Syria?
Syria is undergoing moral regression (one NYT update here), just as Lebanon did in the 1970s or the former Yugoslavia did in the 1990s or for that matter Germany in the 1930s. The behavior of the government is far more evil and oppressive than before, while the moral quality of the opposition is worse than what we might have expected several decades ago.
That said, most of the world is not regressing morally and arguably can be seen as advancing morally, at least on the fronts of general tolerance, democracy, and the moral virtues which are encouraged by prosperity and market exchange.
Syria is only a small percentage of the broader world and there are only a few other places which count as (possibly) morally regressing. In total they will not sum to a billion people. Just for purposes of argument, if you toss in DRC and parts of Pakistan and Egypt, along with a few other areas, let us say it runs at five percent of the world’s population which is morally regressing (though DRC has made some very recent progress and is arguably the new undervalued nation).
One worry is that observed regression draws our attention to the contingency of moral progress. It can be argued whether Syria is one data point or millions of data points. I don’t understand very well what observed moral progress is contingent upon, and the histories of Germany and Yugoslavia make this especially tough. Both locales seemed to have bright futures when they fell apart, morally speaking that is. So I am not all cocky about moral progress continuing indefinitely.
Is it possible there is more moral regression in the world today than say five years ago? Does moral regression have a unit root? Serial autocorrelation? Do we understand the causes of moral regression better as time passes? I don’t see that.
Another worry is how well the rest of the world can cope with five (?) percent of its citizens undergoing moral regression. “Quite fine” it seems so far, although this may be contingent on technology and furthermore Israel and Lebanon may not feel the same way. In any case the moral regression of Syria may be a more serious problem when insect-sized drones can enable strategic assassinations, including outside of Syria.
The technologies and prices of fifty years from now may require much higher moral standards of us — “every man a Denmark” — than the world of today. More generally, we dismiss the possibility of moral regression at our peril.
For a useful conversation on this topic I am indebted to SL.
Deirdre McCloskey’s *Crossing*
From an email I received, I believe you can get a free e-copy of the book here.
Micah Tillman defends Edmund Husserl
I allowed him three paragraphs, and he emails me the following:
Husserl was a mathematician whose desire to understand how (and why) mathematics actually works turned him into a philosopher of logic, science, language, and mind. Without the movement he inaugurated, Heidegger (and therefore everyone who followed Heidegger), Merleau-Ponty, Sartre, Levinas, and Derrida (and even John Paul II) would not have become the philosophers we know them as today.
Husserl was inspired by Hume and Kant, but believed both made a fundamental mistake. Empiricists like Hume became skeptics after concluding that all we truly know are our own sensations; we never experience the “real things” we think we do. Idealists like Kant essentially agreed (we experience only phenomena, never noumena) but believed that at least we could discover the universal rules of the human mind.
Husserl argued that the “things themselves” actually show up for us through our experiences and therefore we can learn about the real world through a study of the structures (patterns, types, and forms) of human experience. In the process, he reconciled empiricism and idealism. The empiricist insistence on experience over speculation is central to phenomenology, as is the idealist claim that the study of the mind is the path to knowledge of ultimate reality. With the combination of the two, every area of the world, and every part of life, became a subject for philosophical investigation, and philosophy experienced a kind of second birth.
Earlier I had named Husserl as “the worst philosopher.” But of course I am delighted to present a contrasting view. Micah is a professional philosopher and an adherent of phenomenology, his web page is here. His recently completed dissertation was “Empty and Filled Intentions in Husserl’s Early Work.” He describes the “things themselves” — in less than 140 characters — here.
How to save the world — earn more and give it away
Dylan Matthews reports:
Jason Trigg went into finance because he is after money — as much as he can earn.
The 25-year-old certainly had other career options. An MIT computer science graduate, he could be writing software for the next tech giant. Or he might have gone into academia in computing or applied math or even biology. He could literally be working to cure cancer.
Instead, he goes to work each morning for a high-frequency trading firm. It’s a hedge fund on steroids. He writes software that turns a lot of money into even more money. For his labors, he reaps an uptown salary — and over time his earning potential is unbounded. It’s all part of the plan.
Why this compulsion? It’s not for fast cars or fancy houses. Trigg makes money just to give it away. His logic is simple: The more he makes, the more good he can do.
He’s figured out just how to take measure of his contribution. His outlet of choice is the Against Malaria Foundation, considered one of the world’s most effective charities. It estimates that a $2,500 donation can save one life. A quantitative analyst at Trigg’s hedge fund can earn well more than $100,000 a year. By giving away half of a high finance salary, Trigg says, he can save many more lives than he could on an academic’s salary.
…In many ways, his life still resembles that of a graduate student. He lives with three roommates. He walks to work. And he doesn’t feel in any way deprived. “I wouldn’t know how to spend a large amount of money,” he says.
The full story is here. Here is commentary from Salam and Sanchez. And I have just received the new book by Michael M. Weinstein and Ralph M. Bradburd, The Robin Hood Rules for Smart Giving, an analytical treatment written by two economists.
Who is the worst philosopher?
That was one of the questions I was asked at my Jane St. Capital talk on Wednesday night.
My answer was Edmund Husserl, at least if we restrict the question to philosophers of renown. I believe his work is a waste of time and I write that as someone who does not believe Heidegger is a (total) waste of time, especially in the essays. As for Husserl, we can pull this bit off Wikipedia:
Therein, Husserl in 1931 refers to “Transcendental Subjectivity” being “a new field of experience” opened as a result of practicing phenomenological reduction, and giving rise to an a priori science not empirically based but somewhat similar to mathematics. By such practice the individual becomes the “transcendental Ego”, although Husserl acknowledges the problem of solipsism. Later he emphasizes “the necessary stressing of the difference between transcendental and psychological subjectivity, the repeated declaration that transcendental phenomenology is not in any sense psychology… ” but rather (in contrast to naturalistic psychology) by the phenomenological reduction “the life of the soul is made intelligible in its most intimate and originally intuitional essence” and whereby “objects of the most varied grades right up to the level of the objective world are there for the Ego… .” Ibid. at 5-7, 11-12, 18.
The Stanford Encyclopedia gives you more detail on his philosophy. Here is Husserl presented on YouTube, in his own words as they say.
I suggested both Aristotle and Nietzsche as overrated philosophers, although clearly both are still great philosophers, worthy of major reputations. But neither should be considered a real candidate for “greatest philosopher ever,” which is what you sometimes hear. I’ll reserve that for Plato and Hume.