Cathy goes off on Nate Silver today, calling naive his account of well-meaning people saying false things because they’ve made math mistakes. In Cathy’s view, people say false things because they’re not well-meaning and are trying to screw you — or, sometimes, because they’re well-meaning but their incentives are pointed at something other than accuracy. Read the whole thing, it’s more complicated than this paraphrase suggests.
Cathy, a fan of and participant in mass movements, takes special exception to Silver saying:
This is neither the time nor the place for mass movements — this is the time for expert opinion. Once the experts (and I’m not one of them) have reached some kind of a consensus about what the best course of action is (and they haven’t yet), then figure out who is impeding that action for political or other disingenuous reasons and tackle them — do whatever you can to remove them from the playing field. But we’re not at that stage yet.
…I have less faith in the experts than Nate Silver: I don’t want to trust the very people who got us into this mess, while benefitting from it, to also be in charge of cleaning it up. And, being part of the Occupy movement, I obviously think that this is the time for mass movements.
From my experience working first in finance at the hedge fund D.E. Shaw during the credit crisis and afterwards at the risk firm Riskmetrics, and my subsequent experience working in the internet advertising space (a wild west of unregulated personal information warehousing and sales) my conclusion is simple: Distrust the experts.
I think Cathy’s distrust is warranted, but I think Silver shares it. The central concern of his chapter on weather prediction is the vast difference in accuracy between federal hurricane forecasters, whose only job is to get the hurricane track right, and TV meteorologists, whose very different incentive structure leads them to get the weather wrong on purpose. He’s just as hard on political pundits and their terrible, terrible predictions, which are designed to be interesting, not correct.
Cathy wishes Silver would put more weight on this stuff, and she may be right, but it’s not fair to paint him as a naif who doesn’t know there’s more to life than math. (For my full take on Silver’s book, see my review in the Globe.)
As for experts: I think in many or even most cases deferring to people with extensive domain knowledge is a pretty good default. Maybe this comes from seeing so many preprints by mathematicians, physicists, and economists flushed with confidence that they can do biology, sociology, and literary study (!) better than the biologists, sociologists, or scholars of literature. Domain knowledge matters. Marilyn vos Savant’s opinion about Wiles’s proof of Fermat doesn’t matter.
But what do you do with cases like finance, where the only people with deep domain knowledge are the ones whose incentive structure is socially suboptimal? (Cathy would use saltier language here.) I guess you have to count on mavericks like Cathy, who’ve developed the domain knowledge by working in the financial industry, but who are now separated from the incentives that bind the insiders.
But why do I trust what Cathy says about finance?
Because she’s an expert.
Is Cathy OK with this?