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Posts Tagged ‘Causal Density’

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.

There is a correct answer to that question, but it’s unlikely we’ll ever know what it was.

From Why Do Education and Health Care Cost So Much? by Megan McArdle.  A great example of the challenges related to causal density.  We may accurately identify all the causes of an outcome but still not be able, because of poor understanding of the relationships between root causes, to predict outcomes.  Absent accurate prediction, we don’t really understand the nature of a problem at all.

So how do we explain health care and college cost inflation? Well, health care economist David Cutler once offered me the following observation: In health care, as in education, the output is very important, and impossible to measure accurately. Two 65-year-olds check into two hospitals with pneumonia; one lives, one dies. Was the difference in the medical care, or their constitutions, or the bacteria that infected them? There is a correct answer to that question, but it’s unlikely we’ll ever know what it was.

Similarly, two students go to different colleges; one flunks out, while the other gets a Rhodes Scholarship. Is one school better, or is one student? You can’t even answer these questions by aggregating data; better schools may attract better students. Even when you control for income and parental education, you’re left with what researchers call “omitted variable bias” — a better school may attract more motivated and education-oriented parents to enroll their kids there.

So on the one hand, we have two inelastic goods with a high perceived need; and on the other hand, you have no way to measure quality of output. The result is that we keep increasing the inputs: the expensive professors and doctors and research and facilities.

I would quibble with McArdle.  There are actually two problems.  It is true that it is hard to measure education and health outcomes and that is a challenge.  But even if we were able to measure with great precision and accuracy, that is still not the same as forecasting.  Measuring is a predicate to forecasting.

If we precisely and accurately measure our initiating action X, we want to know with some level of accuracy and certainty that X will lead to Y, the outcome we desire.  If we cannot predict the outcome, it means we don’t understand the relationship between and among the various causes.

Almost all Americans devoutly believe, the liberal, market principles on which our country is built will triumph around the world.

From Bambi Meets Godzilla In The Middle East by Walter Russell Mead.  Read the whole thing.

The end of history, which AI founder Francis Fukuyama used to describe the historical implications of the Cold War, is to American political philosophy what the Second Coming is to Christians. In the end, almost all Americans devoutly believe, the liberal, market principles on which our country is built will triumph around the world. Asia, Africa, South America, the Middle East and even Russia will some day become democratic societies with market economies softened by welfare states and social safety nets. As a nation, we believe that democracy is both morally better and more practical than other forms of government, and that a regulated market economy offers the only long term path to national prosperity. As democracy and capitalism spread their wonder-working wings across the world, peace will descend on suffering humanity and history as we’ve known it will be at an end.

[snip]

It seems misanthropic to doubt that a particular country isn’t on the road to freedom and prosperity, and it also seems like heresy against our national creed. That tendency is reinforced among our policy elite and chattering classes. The “experts” ought to know better and be more skeptical, but they are often more naive and more dogmatic than the American people at large. It is often the best educated and connected who are most confident, for example, that political science maxims work better than historical knowledge and reflection when it comes to analyzing events and predicting developments. When democratic peace theory or some other beautiful intellectual system (backed with regressions and statistically significant correlations in all their austere beauty) adds its weight to the national political religion, a reasonable faith can morph into blind zeal. Bad things often follow.

What Americans often miss is that while democratic liberal capitalism may be where humanity is heading, not everybody is going to get there tomorrow. This is not simply because some leaders selfishly seek their own power or because evil ideologies take root in unhappy lands. It is also because while liberal capitalist democracy may well be the best way to order human societies from an abstract point of view, not every human society is ready and able to do walk that road now. Some aren’t ready because like Haiti they face such crippling problems that having a government, any government, that effectively enforces the law and provides basic services across the country is beyond their grasp. Some aren’t ready because religious or ethnic tensions would rip a particular country apart and cause civil war. Some aren’t ready because the gap between the values, social structures and culture of a particular society make various aspects of liberal capitalism either distasteful or impractical. In many places, the fact that liberal democratic capitalism is historically associated with western imperialism and arrogance has poisoned the well. People simply do not believe that this foreign system will work for them, and they blame many of the problems they face on the countries in Europe and North America who so loudly proclaim the superiority of a system they feel has victimized them.

[snip]

Americans need to face an unpleasant fact: while American values may be the answer long term to the Middle East’s problems, they are largely irrelevant to much that is happening there now. We are not going to stop terrorism, at least not in the short or middle term, by building prosperous democratic societies in the Middle East. We can’t fix Pakistan, we can’t fix Egypt, we can’t fix Iraq, we can’t fix Saudi Arabia and we can’t fix Syria. Not even the people who live in those countries can fix them at this point; what has gone wrong is so deeply rooted and so multifaceted that nothing anybody can do will turn them into good candidates for membership in the European Union anytime soon. If we could turn Pakistan into Denmark, the terrorists there would probably settle down—but that isn’t going to happen on any policy-relevant timetable. We must deal with terrorism (and our other interests in the region) in a world in which the basic conditions that breed terrorists aren’t going away.

All this should challenge the application of the antismoking model to obesity.

In The Making of the Obesity Epidemic: How Food Activism Led Public Health Astray  by Helen Lee, the author makes the argument that the nature of obesity is misunderstood, that the evidence of the ill-effects of obesity are poorly understood, and that public policy has been ineffective.  In addition, the author makes the claim that a significant part of policy ineffectiveness arises because the public health community mistook the lessons of the campaign against smoking and attempted to apply the same approaches in the smoking campaign to the campaign against obesity, expecting similar results when in fact the two issues were different and the approaches to one could not be extrapolated to the other.

All this should challenge the application of the antismoking model to obesity. Where smoking can be banned, overeating cannot be. The two behaviors are similar only in that they, like much else we do, are factors in health. There is no secondhand eating. Nor can there be “no overeating” sections of restaurants and airplanes. Overeating and unhealthy foods are fuzzily, subjectively, and variously defined, whereas we can all agree on what smoking and cigarettes are. What that means is that unhealthy foods will remain widely available — even more available than cigarettes, which can still be found at any corner store. If history is any guide, food availability and diversity are likely to increase, not decrease.

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