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Archive for September, 2013

Trials and tribulations of evidence based decision-making

Take Back Your Pregnancy by Emily Oster.

The key to good decision making is evaluating the available information—the data—and combining it with your own estimates of pluses and minuses. As an economist, I do this every day. It turns out, however, that this kind of training isn’t really done much in medical schools. Medical school tends to focus much more, appropriately, on the mechanics of being a doctor.

When I asked my doctor about drinking wine, she said that one or two glasses a week was “probably fine.” But “probably fine” isn’t a number. In search of real answers, I combed through hundreds of studies—the ones that the recommendations were based on—to get to the good data. This is where another part of my training as an economist came in: I knew enough to read the numbers correctly. What I found was surprising.

The key problem lies in separating correlation from causation. The claim that you should stop having coffee while pregnant, for instance, is based on causal reasoning: If you change nothing else, you’ll be less likely to have a miscarriage if you drink less coffee. But what we see in the data is only a correlation—the women who drink coffee are more likely to miscarry. There are also many other differences between women who drink coffee and those who don’t, differences that could themselves be responsible for the differences in miscarriage rates.

Well worth a read.  Her experience is not dissimilar to that of the science writer Stephen Jay Gould when he was diagnosed with an uncommon malignant cancer.  He documented his exploration of the facts and statistics of his diagnosis (which was a median survival time of eight months from diagnosis) in an article, The Median Isn’t the Message.  Understanding what are the real facts is a task in itself.

On a separate note, Oster alludes to decision-making being the evaluation of available information.  That is part of it but I would suggest it is actually the iterative balance of four activities.

1)  Intentions – What are your goals, how will you measure them, what are the parameters that cannot be exceeded, and how will you know when you are successful?

2) Evidence – What does the evidence actually say?

3) Estimates – For the critical knowledge needed to make the decision and which is not available, what are the best available estimates and what risks are associated with those estimates?

4) Forecasts – Once causal analysis is completed, what are the actions necessary to achieve the desired outcomes and what are the forecasts of both required resources and effort as well as forecasts of outcomes?

Intent, Evidence, Estimates, Forecasts – that sounds better and more accurate.

If you have to forecast, forecast often.

Various quotes from economist Edgar R. Fiedler.

The herd instinct among forecasters makes sheep look like independent thinkers.
If you have to forecast, forecast often.

The things most people want to know about are usually none of their business.

A cardinal principle of Total Quality escapes too many managers: you cannot continuously improve interdependent systems and processes until you progressively perfect interdependent, interpersonal relationships.

If all the economists were laid end to end, they’d never reach a conclusion.

If you’re ever right, never let ’em forget it.

Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.

Lao Tzu, 6th Century BC Chinese Poet

Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.

Measuring expert opinion

The value and dangers of forecasting.  Everybody’s An Expert: Putting predictions to the test by Louis Menand.

Well documented and researched.


My business is to teach my aspirations to conform themselves to fact, not to try and make facts harmonize with my aspirations

From Thomas Huxley:

My business is to teach my aspirations to conform themselves to fact, not to try and make facts harmonize with my aspirations.

Facts do not cease to exist because they are ignored

Aldous Huxley, Proper Studies, 1927

Facts do not cease to exist because they are ignored.

None of those things are observable

An interesting article, The STEM Crisis Is a Myth by Robert N. Charette.

For years I have been hearing about the STEM shortage but every time I look at the employment and salary numbers, all I see is the market functioning normally. People with STEM degrees and functioning in a STEM capacity in a STEM field are always in demand and their average compensation, as the article points out, has been fairly steady.

Granted, there are emergent fields, unique circumstances, and pressing needs that will suddenly create a temporary demand for those with a very particular STEM skill set, but the market functions, more people move in or specialize in the hot area and pretty soon things are back to normal.  Also granted that the best people in any one of the STEM fields can command very high premiums over the novice.  You might not like having to pay $150,000 for an experienced ERP implementation manager and you might wish that they were cheaper but that does not necessarily mean that there is a shortage of experienced ERP implementation managers.

I think this is once again an issue arising from particular advocates wanting to use the coercive force of government to achieve individual objectives.  Engineers too expensive, issue more green cards.  Increased supply will reduce the cost.

Given all of the above, it is difficult to make a case that there has been, is, or will soon be a STEM labor shortage. “If there was really a STEM labor market crisis, you’d be seeing very different behaviors from companies,” notes Ron Hira, an associate professor of public policy at the Rochester Institute of Technology, in New York state. “You wouldn’t see companies cutting their retirement contributions, or hiring new workers and giving them worse benefits packages. Instead you would see signing bonuses, you’d see wage increases. You would see these companies really training their incumbent workers.”

“None of those things are observable,” Hira says. “In fact, they’re operating in the opposite way.”

Read the whole thing.

Disdain or with hot rage

Dialogue Concerning the Two Chief World Systems (1632) by Galileo Galilei, p. 322

In the long run my observations have convinced me that some men, reasoning preposterously, first establish some conclusion in their minds which, either because of its being their own or because of their having received it from some person who has their entire confidence, impresses them so deeply that one finds it impossible ever to get it out of their heads. Such arguments in support of their fixed idea as they hit upon themselves or hear set forth by others, no matter how simple and stupid these may be, gain their instant acceptance and applause. On the other hand whatever is brought forward against it, however ingenious and conclusive, they receive with disdain or with hot rage — if indeed it does not make them ill. Beside themselves with passion, some of them would not be backward even about scheming to suppress and silence their adversaries.

Rather bear those ills we have than fly to others that we know not of?

A classic rendition of the decision-maker’s dilemma.  From William Shakespeare’s Hamlet, Act 3 scene 1, the famous soliloquy,

To be, or not to be–that is the question:
Whether ’tis nobler in the mind to suffer
The slings and arrows of outrageous fortune
Or to take arms against a sea of troubles
And by opposing end them. To die, to sleep–
No more–and by a sleep to say we end
The heartache, and the thousand natural shocks
That flesh is heir to. ‘Tis a consummation
Devoutly to be wished. To die, to sleep–
To sleep–perchance to dream: ay, there’s the rub,
For in that sleep of death what dreams may come
When we have shuffled off this mortal coil,
Must give us pause. There’s the respect
That makes calamity of so long life.
For who would bear the whips and scorns of time,
Th’ oppressor’s wrong, the proud man’s contumely
The pangs of despised love, the law’s delay,
The insolence of office, and the spurns
That patient merit of th’ unworthy takes,
When he himself might his quietus make
With a bare bodkin? Who would fardels bear,
To grunt and sweat under a weary life,
But that the dread of something after death,
The undiscovered country, from whose bourn
No traveller returns, puzzles the will,
And makes us rather bear those ills we have
Than fly to others that we know not of?
Thus conscience does make cowards of us all,
And thus the native hue of resolution
Is sicklied o’er with the pale cast of thought,
And enterprise of great pitch and moment
With this regard their currents turn awry
And lose the name of action. — Soft you now,
The fair Ophelia! — Nymph, in thy orisons
Be all my sins remembered.

The mind is slow to unlearn what it learnt early.

The Roman Stoic Seneca left us a rich portfolio of aphorisms pertaining to decision making.

Difficulties strengthen the mind, as labor does the body.

The greater part of progress is the desire to progress.

I do not distinguish by the eye, but by the mind, which is the proper judge.

I shall never be ashamed of citing a bad author if the line is good.

If a man does not know to what port he is steering, no wind is favorable to him.

It is a great thing to know the season for speech and the season for silence.

It is a youthful failing to be unable to control one’s impulses.

It is easier to exclude harmful passions than to rule them, and to deny them admittance than to control them after they have been admitted.

It is rash to condemn where you are ignorant.

Speech is the mirror of the mind. (Imago Animi Sermo Est)

The arts are the servant; wisdom its master.

The first step towards amendment is the recognition of error.

The mind is slow to unlearn what it learnt early.

The path of precept is long, that of example short and effectual.

We most often go astray on a well trodden and much frequented road.

Where reason fails, time oft has worked a cure.

Where the speech is corrupted, the mind is also.

The best ideas are common property.

Nothing is as certain as that the vices of leisure are gotten rid of by being busy.

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