The Awesome Science of Chinonomics

It's practically impossible to avoid the news of ecological crises (plural) these days. I'm not talking about Russia strangling Europe this winter by cutting gas flows. That will be a politically-made crisis. I'm talking about the epochal droughts afflicting the entire planet. You know it's bad when river flows in Europe are so low that the Rhine can't sustain commercial traffic; when the Tiber water levels in Rome are so low that the foundations of Roman bridges from the times of Nero are exposed.  Resurfaced remains of a bridge in Rome’s River Tiber, in July. Photographer: Alessia Pierdomenico/Bloomberg But you know it's next level bad when the literal "hunger stone" appears in the Czech Republic --an inscription from 1619 at the bottom of the Elbe river that says " If you see me, then weep " Hunger stone on the Elbe in Decin, Czech Republic (AFP/Getty) I wish it was only Europe. The Western US is going through the worst drought in 1200 yea...

Nobody can really  take credit for having solved a problem that never happened. Any attempt at it drags you into the realm of non-existent hypotheticals and becomes moot the moment you open your mouth. This is the position leaders around the world find themselves in when trying to fight this pandemic. It doesn't matter how informed, intelligent, prescient our leaders might (or might not) be, they face the same fog of uncertainty when trying to predict the future while making decisions to fix a problem this complex. For better and worse, we're equipped with minds that can only draw on history to construct patterns when trying to face the future. And in a Bayesian dance , all we can aspire to do is to  tinker with our course of action as that fog of uncertainty chooses to spit the next piece of evidence at us. There is no other way. Leaders (simple humans* that they are) fall prey to the same  Law of Small Numbers ; forced to take action in the face of clouded, sm...

As inhabitants of this universe, we have always evolved within a time continuum. Entropy is inexorable . Time inevitably advances in a single direction. As a consequence, our development as living beings in this planet has always been ruled by the perception of causality. One event happens, and it influences a subsequent event. A linkage between past and present can be drawn. And it can be drawn because this trial-and-error mechanism called evolution settled in our brains after thousands of iterations --in a masterfully choreographed case of survivorship bias -- this form of knowledge acquisition. The linkages have a mundane name: rules. Or what evolutionary psychologists like to fancily call  heuristics . And they have a simple reason to exist: so the brain processes information in the most energy-efficient manner . These have always been the rules of engagement --and we can't consciously process reality any other way. They shaped --nay,  created--  us E...

We live in an unstable world. The probability of what used to be thought as improbable is becoming more and more likely. The old definition of a statistical outlier as a "1 in a 100 years" event has morphed into the now famous " Black Swan " event. Using Didier Sornette 's term, " Dragon Kings " are now becoming more likely. Put it probability distribution terms, the distribution of all possible outcomes is becoming more bimodal (tails are "fatter", as shown in the graph below). It appears that reality is abandoning the familiar Normal probability distribution shape, depriving us of the standard tools we used to rely on to estimate the future. The comfort of saying that there is a 95% probability that an event will be within 2 standard deviations from its mean is gone, leaving analysts and futurologists clueless. Sornette (2011): Scaled Distribution of Runs of Gains (Right) / Losses (Losses) for 30 major US stocks.  Notice the f...