Objective & Subjective Risk

Note:  I started this response in 2012 abandoned it and decided today to finish it.

I wrote a post on whether risk can be measured objectively in the summer 2012.  It was not particularly rigorous.  This is the by product of writing hastily.   It was tweeted by Matt Flynn who has is own blog on identity and access management.  Following Matt’s tweet it received three separate tweets critical of the substance by Alex Hutton.  I would like to note the broader point of the article was lost in my haste, to wit, panels of experts are subject to the same errors, weaknesses in reasoning as the rest of us so large top down proscriptions from experts are dangerous. When they are done by your local government, it impacts few people.  When done at a national level it impacts millions and is difficult to reverse.

These are his Tweets verbatim.
alex1 alex2 alex3

Twitter works poorly for substantive criticism so if I have mis-categorized anything I am open to correction.   At the time I responded on Twitter but I wanted to do so more thoroughly.

Let me first note that Mr. Hutton is suspicious of the categories I used (objective/subjective) but hesitates not in specifying his own, of course, but we don’t really know and he doesn’t say how he arrived at those (uncertainty/intersubjectivity).  Categories follow some level of reasoning, the purpose they serve is to help us make sense of reality because experience taught us long ago like kinds of things behave in a similar fashion.   Equally fundamental, we need to make sure that the words we use in a discussion have been defined to the satisfaction of both parties.  In this way, the post was sloppy.  When I stated the terms objective and subjective, I was thinking in terms of a simple dictionary definitions.  Subjective being influenced by personal feelings, tastes, opinion etc. and objective not influenced and hence true.  What I did not mean is that when something is subjective it is devoid of reason and something objective is purely fact based devoid entirely of emotion.  I am not dealing in ideal forms.

Let’s take the word “risk” next.  When I say risk I mean an exposure to danger or something undesirable and that we can to certain degree ancticipate it but not necessarily precisely predict it or  measure it.  On the other hand when I use the term uncertainty, I mean something which cannot be measured.

With that out of the way let us take his first prescription that Objective / Subjective is the wrong fight. I don’t really consider them to be a “fight.”  The broader point is in the realm of civilization, so called experts are subject to the same weaknesses as everyone else so you get unwelcome corporate behaviour like an “availability cascade” whose impact on national scale is more misery than the misery they attempted to avoid.

Western civilization has found it useful to examine things in light of objective and subjective terms for two millennia but apparently they have been wrong.  They should have been using uncertainty and intersubjectivity.  If  the reader is not familiar with intersubjectivity, he should start with Edmund Hussrl.  It has influenced philosophy, anthropology, sociology, psychology and so on.  Unfortunately it comes with its own set of  baggage.  If we are going to use intersubjectivity whose conception are we to use? Hussrl’s? Heidegger’s? Or all the other academics who have weighed in on it since the 1950s?  I would like to add that many of these conceptions conflict with each other so Mr. Hutton’s prescription is incoherent as stated and in need of clarification.  One last point on intersubjectivity, depending on who you ask, it is either dangerously close to solipsism or it is solipsism.  I think it is the latter and hence worthless.

In his second tweet he states that I am positing neither an actuarial or epistemological conundrum but rather a semantic one.  This is incorrect; if the problem is semantic then one need only to alter, define or find a better statement of the problem and the adverse effect would go away.  That is not the case.  My point is the limits of our knowledge, combined with simple errors, undo outside influence, prior experiences, emotional amplification etc. demonstrates that risk (again defined as an exposure to danger or something undesirable) is subjective in the social domain. It does not mean that all such effort is useless or calling something a risk is “just your opinion.”

His final comment is “I’d stop using the word ‘risk’ & be particular about describing the phenomenon as meta data around risk determinants.” I know he doesn’t like the word risk used indiscriminately because he mentioned that in a talk once stating that the Japanese didn’t have a word for it in their language until they were influenced by the West.  I do see one problem with this prescription which is, are there any risk determinants in the kind of risk under consideration to begin with?  Are there not cases of disaster, which were only obvious in retrospect and discussions of determinants useless?  What are the risk determinants for war?  The use of the term implies a factor that decides the outcome.  We don’t always know that.

Vindication for Nate Silver?

This article at CNet is risible.    This breathless quote at the end, “Score one for the quants, especially the most famous one of them of all, a statistician who is now, unquestionably not a one term celebrity, but a political prediction machine to be taken very, very seriously.”

Given that this was an either or decision, state by state coin tosses with weighted coin for past predilections would have been equally effective in forecasting the final result.  The aggregation of state wide poll data will be effective until it no longer is.  This is the problem with “big data” it can’t see the missing information; it suffers from the problem of induction.  When shifts occur and it makes a big miss, it will garner press and pretty soon everyone will forget the model.  They will jump on the next model and next ad nauseum.  Who was the best economic prognosticator of the late 90’s.  I guarantee he or she is not even in the top ten today.  Journalists are story tellers and most of them have no command of history.  They appear to live in an eternal present spinning theories and explanations like spiders building webs.  But unlike spiders they do not eat what they spin, that is reserved for the people who believe them.