Monday, April 8, 2013

The Signal and the Noise

Question: A single die has been rolled 4 times in a row and 4 heads have come up. Would you bet $100 that a tails will come up on the next roll?

Question: A new study has been published which shows a strong positive effect for the use of chiropractic adjusting to treat a specific orthopedic problem. The consensus is that this is methodologically a very strong and sound paper. Would this paper lead to you to change your behavior if you are a chiropractor who treats people with that condition?
Question: A new study has been published which demonstrates, using very stringent and rigorous methods that by consensus leads people to say this is a methodologically  very strong and sound paper, that there is no link between vaccination and autism. Would this paper lead you to change your behavior with regard to vaccinating your children?

I ask these questions as a form of mind exercise. I recently completed reading a new book by Nate Silver, titled “The Signal and the Noise: Why So Many Predictions Fail and Some Don’t.” Silver is the author of the 538 Blog, and he came to fame for his predications related to the past 2 presidential elections as well as the recent senatorial contests- he predicted Obama’s win and by the percentage he won, as well as 49 out of 50 senate contests. His book looks at how Americans have difficulty understanding prediction, whether in economics, earthquake forecasting, weather, health care or politics. He proposes a model for prediction that is based on just a few principles: (1) Think probabilistically, (2) Today’s forecast is the first forecast of the rest of your life, and (3) Look for consensus. And some of the book looks at how our personal beliefs and biases color how we look at data. We can see this perhaps most clearly in the echo chambers of politics and political news casting- where one can go to either Fox news or MSNBC to hear information that is already in accord with what you believe, so that you can filter out anything that is not in tune with your fundamental beliefs. You are not exposed to differing viewpoints.
All Silver asks that we do is to acknowledge the uncertainty in our predictions, update our forecasts as facts change, and see the wisdom of looking at the world from different viewpoints. For example, I try very hard not to read books that tell me what I already believe. Let’s get rid do the biases that color our thinking. This is a great book and I highly recommend it.

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