The Web of Causation

...complex systems, such as financial markets or the Earth’s biosphere, do not seem to obey causality. For every event that occurs, there are a multitude of possible causes, and the extent to which each contributes to the event is not clear, not even after the fact! One might say that there is a web of causation. For example, on a typical day, the stock market might go up or down by some fraction of a percentage point. The Wall Street Journal might blithely report that the stock market move w...

 The Pareto Distribution

The Pareto distribution shows up in a remarkably wide array of complex systems. Together, “the” and “of” account for 10 percent of all words used in English. The most volatile day in the history of a stock market will typically be twice as volatile as that of the second-most volatile and ten times the tenth-most. Tag frequency on Flickr photos obeys a Pareto distribution, as does the magnitude of earthquakes, the popularity of books, the size of asteroids, and the social connectedness of your...

 Bayes' Theorem Means Scientific Consensus Should Converge

One property of Bayes’s theorem, in fact, is that our beliefs should converge toward one another—and toward the truth—as we are presented with more evidence over time. In figure 8-8, I’ve worked out an example wherein three investors are trying to determine whether they are in a bull market or a bear market. They start out with very different beliefs about this—one of them is optimistic, and believes there’s a 90 percent chance of a bull market from the outset, while another one is bearish an...

 Preschool Social Programs Demonstrate the Importance of a...

In 1962, researchers wanted to test the effects of an early-childhood preschool training program they had designed. Kids in Ypsilanti, Michigan, were randomly assigned to one of two groups. The first attended the preschool program (which eventually became a model for other preschool programs nationwide, including Head Start). The second group did not. The differences powerfully illustrate the importance of a child’s early years. The kids in the program academically outperformed the controls...

 Logical Fallacies

In addition to teaching us what to do when evaluating a claim to knowledge, any good baloney detection kit must also teach us what not to do. It helps us recognize the most common and perilous fallacies of logic and rhetoric. Many good examples can be found in religion and politics, because their practitioners are so often obliged to justify two contradictory propositions. Among these fallacies are: Ad hominem - Latin for 'to the man', attacking the arguer and not the argument (e.g., the Reve...