I am busy reading `The Black Swan' by Nassim Taleb. My introduction to reading on the London tubes, and the sequel to 'Fooled by Randomness'.
One issue that has been raised is the natural human attempt to give everything an explanation. Sometimes the same event is used as the reason for two completely different outcomes. For example, when Saddam Hussein was captured, two headlines on Bloomberg at different times of the day read:
1) Bond Markets Fall: Fear that Hussein's capture will not curb terrorism
2) Bond Markets Rally: Hussein's capture causes demand for risky assets
Trying to explain noise with a narrative makes us feel easier, but isn't really that helpful. In that case it is more obvious.
But what about the bigger events, should we still avoid (false) explanations? Maybe things just happen?
So when someone cheats on someone, is it because of something? Or maybe they just did it. When someone loses their job, is it because they did something wrong, or the company need to cut jobs and they were unlucky? When someone doesn't want to be with someone else, is it as simple as... they chose someone else, no deeper reason. When someone dies, it isn't because you are being punished for something, people just die.
Narrative does help us understand. It does make us feel better. It helps us remember. It helps us forget. And maybe a lot of the time it just covers things up, so you don't have to think about it anymore.
The danger is making up false narratives, and giving them more weight than they deserve.
1 comment:
"Narrative" is too broad an idea to pan like that. Even model type analysis requires someone to invent a narrative to explain or interpret the results. Human "understanding" in my opinion only exists in the narrative. Also it's a necessary human trait to filter information to generate narrative.
When taking in a view- the eye sees more than it can take in but we can filter it down to a narrative describing what we think are the salient details of what's around us. That description changes depending on our audience. For fellow nature lovers, we might describe the colours, prominent features. To a geographer, we might describe the elevation, river patterns etc, based on our view of the audience's need.
So who is the audience of mainstream media? Generally a world of people for whom the movements in financial markets are uninteresting at best. For them, ascribing it to some individual cause is probably the right thing to do... Not everyone wants to stare into the abyss of human understanding of randomness over breakfast.
You can be nihilist and dismiss everything that attempts to interpret anything, but I don't think that's helpful.. something I've learnt about human approaches to problems is that sometimes the most successful approach is to take a narrative line, follow it through until the narrative no longer fits and then adjust it until it does. The art then becomes recognising when the narrative doesn't fit.
Taleb for all his anti-opinion, pro-mathematical discovery rhetoric pretty much does just that.
(Fen)
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