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Tuesday, October 25, 2011

Missing the Forest for The Trees

Bryan Caplan nitpicks over a mathematical error in Kahneman's new book, and misses the much larger error. Interesting, it seems social scientists, by their training, lose the ability to think about this topic. Here is the quote from Kahneman:
The idea that large historical events are determined by luck is profoundly shocking, although it is demonstrably true.  It is hard to think of the history of the twentieth century, including its large social movements, without bringing in the role of Hitler, Stalin, and Mao Zedong.  But there was a moment in time, just before an egg was fertilized, when there was a fifty-fifty chance that the embryo that became Hitler could have been a female.  Compounding the three events, there was a probability of one-eighth of a twentieth century without any of the three great villains and it is impossible to argue that history would have been roughly the same in their absence.
The problem is that Kahneman is bringing in concepts that are categorically excluded from history. History is about the way things were, not about how they might have been. The concepts of luck and odds do not apply to history at all: they are forward-looking concepts that we use in practical life to deal with ignorance. If we want to know the chance that our forthcoming child will be a girl, before we can do a sonogram, we should be thinking "About half." But once we know, we know, and there are no more odds involved. The right statement, historically speaking, is not "there was a fifty-fifty chance that the embryo that became Hitler could have been a female" but "there is a one hundred percent chance that the embryo that became Hitler became Hitler."

What is amazing is that these folks believe they are being sophisticated social scientists who alone really get the importance of "luck" (as if "luck" is a scientific concept!), while there actually discourse is like a couple of people discussing what the "odds" are that 2 + 2 was going to equal 4. (Just think of all the other numbers it could have equaled!)

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