The use of the words "risk" and "uncertainty" in vernacular English leaves the relationship between the words imprecise. That is, if I were to ask you, dear reader, what is the difference between risk and uncertainty, there would be no univocal "right" answer, though the words clearly are not synonyms. In general, we think of risk as a less-than-certain loss, so uncertainty figures into it, but uncertainty figures into a lot of other words too (such as "hope," which we think of as a less-than-certain gain). In finance, and in other areas as well, there has been some movement toward using the two words in a rigorously paired way, such that, to borrow a formulation from the George W. administration, "risk" represents the known unknowns of a situation, "uncertainty" represents the unknown unknowns. Here's a straightforward example: I know that a certain stock is interest-rate sensitive. I know that the Federal Reserv...
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Investors in the spring of 2016 could have gotten ahead of events by aligning their portfolios to “a world of lower expected capital market returns and higher forward volatility.” That, at any rate, was the upshot of a thoughtful analysis by Eric J. Wiegel of Global Focus Capital, a Boston based asset allocation advisor. Why does Wiegel think so? Because the market’s inflationary expectations are/were too low. With the benefit of a year of hindsight ... was Wiegel right? So far as I can tell ... no. In particular, the market's inflationary expectations as of the spring of 2016 for the following year were accurate, and following Wiegel's effort to outguess the market would nought have availed. There was no upsurge in inflation numbers in the months after Wiegel wrote, and in fact investors have since then benefitted by higher than expected capital market returns. In the five months before and contemporaneous with Wiegel's article, the inflation rate (annualized, th...
Donald Trump's election as President of the United States in November 2016 may have changed the nature of the political game in several ways, not least by its demotion of the importance of Big Money. Big Money is receding from the scene, leaving a vacuum, and Big Data is poised to fill that space. The people who worry about Big Money in politics - as well as the people who shrug and accept it - have agreed in recent decades that the key connection between such money on the one hand and electoral success on the other is advertising: especially broadcast advertising Yet the Hillary Clinton campaign spent a good deal more than Trump's campaign did on advertising. In the first two months of general election political advertising (mid-June to mid-August), her campaign spent $61 million on broadcast ads, while allied independent groups spent another $43 million in her cause. Trump's campaign didn't spend a dime on broadcast ads during that period, and its independent...
I'm torn on the value of Bayesianism in the philosophy-of-science context. I won't discuss my own conflicted position, but I will say that Michael Strevens covers the field pretty well in this article: http://www.strevens.org/research/simplexuality/Bayes.pdf There are, on Strevens' telling, three big points: 1) that a scientist's "epistemic attitude to any scientifically significant proposition is, or ought to be, exhausted by the subjective probability the scientist assigns to the proposition;" 2) that this subjective probability conforms to the standard mathematics of probability; and 3) that Bayes' conditionalization rule is an instruction as to how one ought to update one' subjective probabilities as new evidence arises. And, by the way, yes the "r" does appear where I've put it in Strevens' name. That isn't a typo.
President Trump recently stumbled, in his usual word-salad way, into a subject to which I have given a good deal of thought over a period of decades (I once tried to write a book about it.) On May 1, on Sirius XM radio, Trump said: "People don't realize, you know, the Civil War, if you think about it, why?" Trump said in an interview with The Washington Examiner that also aired on Sirius XM radio. "People don't ask that question, but why was there the Civil War? Why could that one not have been worked out?" This much already is confusing. "People" in general "don't ask" that question? Sorry, but a lot of people do ask, and a lot of people, of varying levels of well-informed to ignoramus, have sought to answer it and have argued with one another's answers. I can only understand Trump here if he is saying, "People in my circles generally don't ask it, or haven't until quite recently, or I haven't paid attenti...
Economist William Baumol, a professor emeritus at Princeton University, passed away on May 4. I imagine he couldn't bear the thought of witnessing one more silly pseudo holiday where Yankees pretend we care about Mexican history in order to drink tequila. In that case, his timing was perfect. Baumol is one of the two gentlemen immortalized in the name of the Baumol-Tobin model of the transactions demand for money. (The other, of course, is James Tobin who passed away 15 years ago.) Baumol's paper outlining this theory preceded Tobin's by four years, but the model seems to have languished in obscurity until Tobin's revival. Baumol did much else, too, but I'd like to write about transactions demand today. Indeed, I'm going to criticize its role in subsequent developments. This may seem a violation of the old rule "speak no ill of the dead." So I should preface it by saying the following: I'm certain Baumol made many other contributions more ...
An odd controversy has popped up in what one might imagine is the sedate world of academic philosophy publishing. In March Hypatia , a quarterly peer-reviewed journal of feminist philosophy, published an article by Prof. Rebecca Tuvel, "In Defense of Trans-Racialism." The gist of it was this: when someone changes his/her mind about racial self-identification, as seems to have been the case with Rachel Dolezal, then she is generally perceived by the public as a fraud. But when the change of self identification is about sexual identity, as with Kaitlyn Jenner, there has been at least some movement of late toward recognition of and respect for that decision. Why the difference? If both sorts of classification are socially constructed, that is if biology is not destiny in either case, then the search for a pertinent principled distinction is not an easy one. So far so good. Philosophy is about pressing questions. The real controversy arose after the editors of Hyp...
Henry brought up a good point in the comment section of a post a couple of weeks ago. What do we know about the historical Socrates? Should he even be included on "greatest philosophers" lists independent of Plato? As I said in a responsive comment at the time, we know there WAS a historical Socrates, that he wasn't simply a figment of Plato's imagination serving as mouthpiece. The other sources include: Xenophon, another of Socrates' students, who wrote his own account of Socrates' trial and condemnation; Aristophanes, the playwright who wrote a comedy with Socrates as its comic butt; and Aristotle, who referenced Socrates in ways that suggest that he was writing for an audience that still remembered the guy. From all of this, scholars have tried to tease out what was S., what was merely the mouthpiece for P. of the same name. The case of the Aristophanes/Socrates/Plato triangle fascinates me. If one reads THE CLOUDS, one gets a vivid picture of wh...
The title of this blog entry is the title of a 2015 book by Marc O. DeGirolami, which takes an Isaiah Berlin-inspired approach to the issues of interpretation raised by the religion clauses of the first amendment to the U.S. Constitution. Berlin famously critiqued the hedgehog-like view that, in his words, "there must exist a path which leads clear thinkers to the correct answers to these questions." The tragedy of life is that there is no such path, that good clashes not only with evil but with itself; good clashes with good, and some goods will of necessity be lost. Any effort to avoid this tragedy through a Grand Scheme produces a far greater tragedy, planners who try to force humanity to fit their scheme, at any cost necessary. DeGirolami, in much the same spirit, criticizes the "monists" who have a grand scheme in the world of first amendment litigation or, more so, scholarship. Among the first-amendment hedgehogs whom he critiques, the writing duo of C...
My own disposition, in regard to the philosophy of time, is toward the "growing block" theory. This is the view that past events remain realities, that present-moment events are also realities, but that future events are not yet real. The image is of the universe as a block with an edge on (say) the right-hand side. The block is expanding because that edge is moving ever further right, and that edge is what we call the present, or, simply, "now." Everything to the left of that edge is both static (the past is complete) and, still and forever, real. Think of the phrase "the moving finger writes." The chief alternatives to the growing-block theory are "presentism" (only the now-edge itself is real) and "eternalism" (past, present, and future are all real." I believe that time is a growing block because (1) that's what it feels like, (2) we should stick with the introspective phenomenon unless we have good reason to abandon ...
Dan Zahavi resumes an old debate about whether the human self discloses itself in thought -- whether I know myself (and so can be sure of my own existence) because of cogito. In its origin, this argument is Descartes vs Hume. In more recent decades, Jesse Prinz (portrayed above) has argued that there is no "experiential quality" that discloses self to self, BUT that consciousness is thoroughly permeated by selfhood. If I understand Prinz, he means that we know our self by a sort of inference, not as directly as Descartes' concise language suggests but more genuinely that Hume's bundle theory can accommodate. Zahavi says that Prinz has rediscovered an element in Kantianism. As Kant put it, "I cannot cognize as an object itself that which I must presuppose in order to cognize an object at all." Zahavi's own view is that self-consciousness, the sort of conscious event that reveals a self, is a particular sort of event, not any-old event and not t...