Re: OT: interesting global warming quote found elsewhwere

Eeyore wrote:

John Popelish wrote:

You just summed up the fallacy that the book, "The Black
Swan" is all about.

Can you elaborate ?

I'll try. The book is all about how we pretend to be able to predict the future based on inductive logic (extrapolating from past experience), and how this falls down in the presence of rare exceptions or "black swans" (with rare being defined as outside recent memory or education). It doesn't explain how to predict the unpredictable, but how to avoid being a sucker by mistakenly thinking you have predicted (quantified) risk but have not.

One of the common ways that people fool themselves into thinking they have a grasp of future risk is to model the past as a Gaussian process. But many processes, including the stock market and business in general (the big exception being gambling casinos), are more chaotic, or Mandelbrotian rather than Gaussian. But you can perform Gaussian modeling on long stretches of Mandelbrotian data between the explosive exception parts and it looks like a good fit... until the next blow up happens.

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Regards,

John Popelish
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