I’ve seen this line throughout my schooling and professional life. Is it anything more than bullshit? Would we be more accurate to use the latest language of cognitive science and say “as much system 1 intelligence as system 2 intelligence”? Or alternatively, is what a line like this really means “as much bullshit as science”? Where, and what, is the non-science art that helps increase predictive accuracy?

For forecast based selection to be accurate we would need forecasts over a long period to see if they’re valid or just statistical anomalies in the way of the monkey-Shakespeare problem. This method still has same problems, but lesser of them because now the bubbles might be a ten year event instead of a five year one. What is needed is multiple opinions, some necessarily contrarian, with constant debate about the viability of any policy and continuation of a course of action.

That being said, I am an economist and a portfolio manager – that information might be relevant in overcoming my personal bias.

the updated but still interesting list of PhD economists who have appeared on recent chat shows is here.

“Who is supposed to be the parents here?”

Dick Fuld. John Thain. And those other guys with the legal fiduciary responsibility – I believe they are sometimes known as “Directors?” They are supposed to be, you know, the grown-ups here?

“we can and should still blame him for not warning often enough, and loud enough”

What would have been the amount of warning that would, without hindsight, have been “enough?”

When Li had returned to China, Wilmott and several other well-known quants and even quant critics such as Taleb picked up this role, shouting from the rooftops (or in the case of Wilmott, from the pages of his glossy quant magazine), on the need to use the model responsibly, to be aware of its dangers? This wasn’t enough?

With all due respect, Wei Dai, what did you want? A personal letter to your house? All the quants knew the issues, they weren’t a secret.

Who is supposed to be the parents here? The government? In that case it’s more like handing a gun to a kid playing in the street plainly without adult supervision.

Although Li did warn against misuse of his research, we can and should still blame him for not warning often enough, and loud enough. Even if that isn’t fair, it’s good if it decreases the probability of the next crisis by even a small amount (by teaching other researchers to give more and louder warnings in similar situations).

To Robin Hanson: selection of “Harvard” faculty is chance insofar as experts are unable to rate the level of expertise of their colleagues, while forecasting economics is chance insofar as experts are unable to understand the world to make forecasts. It seems straightforward to me that experts can, in principle, rate the expertise of their colleagues, while at the same time not be able to make forecasts. I guess this draws the question what is valued as “expertise,” when it doesn’t involve forecasts. But I think we have a good sense of a person’s creativity, aptitude, and knowledge — in deep theoretical physics there are few predictions too, but still it is very clear who are the best physicists.

Zac, persistence of stupidity is a problem for most any consensus institution; I can’t see why it would be more a problem with decision markets than with other such institutions.

“interesting micro issues”

Indeed, there are some issues of incentives, policy design and signaling that Robin could discuss. But I’m impressed by Robin’s willingness to admit he doesn’t know very much about banking practice and so is slow to discuss them. I am unimpressed by over-frequent authors whose repeated writings display a terrible ignorance of banking practice. And so while their “economic discussions” may have meaning in some abstract realm, they are fundamentally laughable from an actual banking perspective.

As for the article against David X. Li, wow, what a hater. Li is a genius. The article is wrong to attempt to contrast him with Paul Wilmott. Altho’ there is one quote saying it’s not Li’s fault, the overall article is certainly biased against Li. Wilmott, the father of all quant basically, said long ago these models weren’t perfect and shouldn’t be the end-all. Li’s model was meant to be one tool to help make rating issues more tractable – it was never meant to be used alone, without other metrics, it was never meant to rate a billion-dollar deal in 20 minutes, and Li always said so.

When children play with handguns it’s the parents’ fault, not Eli Whitney’s.