Chance News 82

Quotations

"I focus on the most important form of innumeracy in everyday life, statistical innumeracy--that is, the inability to reason about uncertainties and risk."

--Gerd Gigerenzer

Submitted by Bill Peterson

Forsooth

“[The] ballad ‘Someone Like you’ … has risen to near-iconic status recently, due in large part to its uncanny power to elicit tears and chills from listeners. …. Last year, [scientists] at McGill University reported that emotionally intense music releases dopamine in the pleasure and reward centers of the brain, similar to the effects of food, sex and drugs. …. Measuring listeners' responses, [the] team found that the number of goose bumps observed correlated with the amount of dopamine released, even when the music was extremely sad.”

“Anatomy of a Tear-Jerker”
The Wall Street Journal, February 11, 2012

Submitted by Margaret Cibes

Predictioneering

Bruce Bueno de Mesquita has written a fascinating, readable book, The Predictioneer’s Game: Using the Logic of Brazen Self-Interest to See and Shape the Future. A lengthy and generally positive review of Bueno de Mesquita’s views may be found in a NYT article, Can game theory predict when Iran will get the bomb?, by Clive Thompson (12 August 2009).

His game-theory-based track record is indicated by:

For 29 years, Bueno de Mesquita has been developing and honing a computer model that predicts the outcome of any situation in which parties can be described as trying to persuade or coerce one another. Since the early 1980s, C.I.A. officials have hired him to perform more than a thousand predictions; a study by the C.I.A., now declassified, found that Bueno de Mesquita’s predictions “hit the bull’s-eye” twice as often as its own analysts did.

In the introduction to his book, Bueno de Mesquita says, “I have been predicting future events for three decades, often in print before the fact, and mostly getting them right.” Furthermore, “In my experience, government and private business want firm answers. They get plenty of wishy-washy predictions from their staff. They are looking for more than ‘On the one hand this, but on the other hand that’--and I give it to them.”

Discussion

1. In that NYT article may be found a statement shocking to the world of statistics and probability:

   Bueno de Mesquita does not express his forecasts in probabilistic terms; he says an event will transpire or it won’t.

   Why is this a shocking statement to statisticians and probabilists?

2. In the NYT article is found the following criticism by Stephen Walt, a professor of international affairs at Harvard:

   While Bueno de Mesquita has published many predictions in academic journals, the vast majority of his forecasts have been done in secret for corporate or government clients, where no independent academics can verify them. “We have no idea if he’s right 9 times out of 10, or 9 times out of a hundred, or 9 times out of a thousand,” Walt says. Walt also isn’t impressed by Stanley Feder’s C.I.A. study showing Bueno de Mesquita’s 90 percent hit rate. “It’s one midlevel C.I.A. bureaucrat saying, ‘This was a useful tool,’ ” Walt says.

   Along these lines, suppose someone avers his hit rate is 100% when it involves forecasting a male birth, that is Prob (male predicted|male) = 1. Why might this be less than impressive?

3. Another critic may be found here regarding a prediction about Libya.

   In February 2011 Bueno de Mesquita predicted that the unrest in the Arab world will not spread to such places as Saudia Arabia and ... Libya. Yes, Libya. Watch and listen carefully to the segment starting at 1:51 min into the interview.

   Other incorrect predictions made by Bueno de Mesquita are also noted on this web site, including what this author calls “The n factorial debacle” whereby Bueno de Mesquita misconstrues the number of possible interactions between n individuals (game participants). This web site also brings up the issue of the so-called “black swans” when it comes to predicting outcomes of the game. What is a black swan and why does a black swan have an impact on prediction?

4. Brazen Self-Interest and its mathematical logic rest on game theory which asserts that morality or any other nicety is counter productive to achieving success. Bueno de Mesquita’s particular computer model starts with data of expert opinion and then somehow via simulation iterates to a conclusion. Comment on the problem of local minimums/maximums.
5. Health care is in the news today as it was back in the 1990s. The NYT article notes that “In early 1993, a corporate client asked him to forecast whether the Clinton administration’s health care plan would pass, and he said it would.” The black swan in this instance was Congressman Daniel Rostenkowski who [page 125] “was the key to getting health care legislation through Congress.” Google Daniel Rostenkowski to see why Rostenkowski was a black swan and “contrary to my expectations, nothing passed through Congress.”

Submitted by Paul Alper

Flood of data means flood of job opportunities

The Age of Big Data, Steve Lohr, The New York Times, February 11, 2012.

We are seeing an

an explosion of data, Web traffic and social network comments, as well as software and sensors that monitor shipments, suppliers and customer

This means a big deal for the job market.

A report last year by the McKinsey Global Institute, the research arm of the consulting firm, projected that the United States needs 140,000 to 190,000 more workers with “deep analytical” expertise and 1.5 million more data-literate managers, whether retrained or hired.

It is a trend that occurs in more than business. This article cites major changes in Political Science and Public Health. The article introduces a term "big data" which it defines as

shorthand for advancing trends in technology that open the door to a new approach to understanding the world and making decisions.