Pandemiconomics

Oops, Apocalypse

The pandemic that’s upon us is – obviously – a complete surprise, one that couldn’t be planned for. Understandably governments are reacting in real-time to an unfolding threat in the best way that they can. It’s – as they say – a Black Swan event.

Only – it isn’t. Pandemics are not unknown unknowns, they’re known unknowns. Just as in 2008 when governments had started to forget the lessons of the Great Depression so they have forgotten the lessons of the Spanish ‘flu pandemic of 1918. History will not be kind.

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Rethinking Economics: Let’s Get This Schism Started

Doctors of Doctrine

In the wake of the great crash of 2008 a lot of young people suddenly became interested in finance and signed up for university courses to learn about the detail of what went wrong. Instead, what they got was a load of nonsense dressed up as learning that bore little relation to the real world. Well, what did they expect, they chose to study economics?

Our of this was born the Rethinking Economics movement, an attempt to introduce new ideas and concepts into economic education, to adopt a pluralist approach. The problem with this, well meaning though it is, is that reforming economics is akin to Martin Luther nailing his theses to the door of All Saints' Church in Wittenberg: all it does is create a schism in a religious cult. Economics doesn't need re-thinking, it needs to be put out of its misery.

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HARKing Back: Lessons in Investing from Science

Confirm Ye Not

Here's what ought to be a really boring idea – we need scientists in general and psychologists and economists in particular to stop hypothesising after results are known (HARKing, geddit?). Instead they need to state what they're looking for before they conduct their experiments because otherwise they cherrypick the results they find to confirm hypotheses they never previously had.

The underlying problem is our old foe, confirmation bias. And the solution for scientists and social scientists alike is known as pre-registration. It would be no bad thing for investors to demand a similar process for fund managers and financial experts. Or, for that matter, to apply some of the ideas to their own investing strategies.

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Mr Popper’s Predictions

In My Experience

In my experience whenever you hear someone saying "in my experience" you're about to get an earful of incoherent nonsense justified by the observer's single perspective. It's nearly always dangerous nonsense, justified by specific examples taken from a single snapshot in time.

Well, in my experience, personal observations are typified by overconfidence, colored by hindsight bias and impervious to evidence suggesting that they're wrong. They're flung about with gay abandon, but have as much in common with objective truth as a report from an analyst.  The future is unknowable, anyone who claims special knowledge is either lying or mad. And possibly both.

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