Daniel Davies’ Insights About Predictions By Experts

  • Date: 01/01/16
  • Fabius Maximus

Summary: Here are three powerful insights by Daniel Davies about predictions by experts. He used them to predict the outcome of the Iraq War. This post applies them to the public policy debate about climate change; you can use them to provide insights on other intractable problems.

“Confirmations should count only if they are the result of risky predictions; that is to say, if, unenlightened by the theory in question, we should have expected an event which was incompatible with the theory — an event which would have refuted the theory.”– Karl Popper in Conjectures and Refutations: The Growth of Scientific Knowledge (1963).

Daniel Davies is a London-based analyst and stockbroker; he writes at his blog and the Leftist website Crooked Timber. Here he explains how he was able to accurately predict the disastrous outcome of our invasion of Iraq (different entirely from the theory-based predictions of those using history and 4GW). It is well-worth reading in full. His insights have great power and apply to many business and public policy issues — such as climate change.

Excerpt…

… Here’s a few of the ones I learned {at business school} which I considered relevant to judging the advisability of the Second Iraq War.

Good ideas do not need lots of lies told about them in order to gain public acceptance.

I was first made aware of this during an accounting class. …

Fibbers’ forecasts are worthless.

Case after miserable case after bloody case we went through, I tell you, all of which had this moral. … If you have doubts about the integrity of a forecaster, you can’t use their forecasts at all. Not even as a “starting point”. …

The Vital Importance of Audit.

Emphasised over and over again. Brealey & Myers on Corporate Finance has a section on this, in which they remind callow students that like backing-up one’s computer files, this is a lesson that everyone seems to have to learn the hard way.

Basically, it’s been shown time and again and again; companies which do not audit completed projects in order to see how accurate the original projections were, tend to get exactly the forecasts and projects that they deserve. Companies which have a culture where there are no consequences for making dishonest forecasts, get the projects they deserve. Companies which allocate blank cheques to management teams with a proven record of failure and mendacity, get what they deserve.

There are two distinct insights here. The first concerns our personal reasoning. The second concerns the information processing systems built by organizations. Both are essential flaws making modern propaganda so effective.

(1)  The importance of credibility

“Yet in our world everybody thinks of changing humanity, and nobody thinks of changing himself.”
— Leo Tolstoy, “Three Methods Of Reform” (1900).

Both Left and Right in America have learned that their followers lack skepticism; they’ll happily believe stories so long as they fit their world view — stories that are ideologically pleasing, with proper roles for the good and bad guys. Each side clearly sees this behavior in their foes, but not in themselves (i.e., fact-checking has become a partisan game). For example, countless posts at Crooked Timber document the Right’s denial of reality (as have I). Do any document the Left’s similar misrepresentation of climate science?

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