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Interesting info/Questions: Anyone Please! Thanks

Kahneman: Bias and Noise

And you find variability within individuals, depending morning, afternoon, hot, cold. A lot of things influence the way that people make judgments: whether they are full, or whether they’ve had lunch or haven’t had lunch affects the judges, and things like that.

Now, it’s hard to say what there is more of, noise or bias. But one thing is very certain — that bias has been overestimated at the expense of noise. Virtually all the literature and 	a lot of public conversation is about biases. But in fact, noise is, I think, extremely important, very prevalent.

There is an interesting fact — that noise and bias are independent sources of error, so that reducing either of them improves overall accuracy. There is room for . . . and the procedures by which you would reduce bias and reduce noise are not the same. So that’s what I’m fascinated by these days. 
      —from podcast with Tyler Cohen and Kahneman

—My observations: When networks are inferred on real-world data, they often start to look pretty gnarly: tons of nodes, tons of arrows pointing all over the place. The real world is the largest of causal networks, so it is unsurprising that most correlations are not causal, even after we clamp down our data collection to narrow domains. Everything is connective-tissue….

Question-1: Narratives obviously have direct or indirect effects and have an impact in structuring outcomes good or bad, what do you think of the above comments from D Kahneman on narratives or does it not have any effect at all?

Bens Comment: “Deflationary expectations, now 40+ years old, are becoming inflationary expectations. “

Question-2: I have read the archive I get most of Ben and Rusty’s propositions and learning more by the day…”Epsilon Appreciation”, I understand more is coming on this…I get Narrative/Common Knowledge/Zieghiest. One particular item and am watching to see real world is the chart on the Crude Oil Futures/S&P500 spread, very interesting for a novice like myself.

I am trying to break down that narrative of inflation to real world. We obviously all understand real world inflation has not been a real issue in over a decade, wage increase pretty much zero, I get the inflation narrative is in the environment, I can see it But I cannot connect it into real world terms and moving markets…any help would greatly be appreciated??

The maps most frequently used to depict the world are Mercator projections. Because it’s difficult to project a globe tilted on a 23-degree axis on a flat piece of media, certain adjustments must be made. The longitude is somewhat correct and uniform, but latitudes grom grossly large as you move from the Equator north or south. Russia looks a LOT larger than it is (is IS 9 times zones across). That is a basic distortion of reality that we learn from early childhood; however, nobody (almost) presents us with alternative views. In the days of Ptolemy, the maps used were quite different from the ones we see today with the Western Hemisphere as the focus.

We live here, don’t we, so why not put us at the focus. The word “Orient” as into orient oneself came from a time when orient, from Latin meaning east, was actually at the top of the Beatus map. Why delve into all of this? Well, it was fun and shows that some parts about our perceptions are subject to being hacked, so to speak from the information produced by other for our consumption. It goes back centuries, but our Sapiens brains can only evolve so fast, probably meaning that we can be more easily manipulated by what we read, hear and see. Poorer is richer if you think that the accumulation of things on credit make you feel successful, sexy whatever. FWIW, Bob

As-above-so-below work both ways as fractal. Everybody think and act within their local small environment is everything that matters, and yet we all pay attention to the central government and billionaires. 1000 millionaire is much better than 1 billionaire. While I was busy taking care of my W2 job and try to raise my kid right so that he will NOT be on food stamps, those small things that matters, today, Ben says the geo-political of American Empire and inflation can both kill you and give you a once in a life time opportunity. I guess I will have to stop doing my small things that matter and pay attention to the “zeitgeist” change in “BIG PICTURE”. I am tired Ben. Can I just keep working and save half and be okay? I guess NOT because the “Zeitgeist” change can be deadly. I am NOT trying to be sarcastic and Ben’s stuff is deep and wide. I am just saying we are all forced to play a game few understands and we will all got tired. Leave it to the expert? No, I can’t trust them. DIY follow youTube advice? You will be exhausted between the W2/kids and zeitgeist games.

JZ…Thanks for the help, greatly appreciate.

Couple of thoughts…Isn’t the entire meta-narrative game then just an exercise in the entire process of “prediction markets” to help one understand how we/markets are conditioned toward a particular event or emergent phenomena?

…if trying to price inflation is a difficult to impossible then all data is irrelevant and you just destroyed the entire quant industry?

…I get the zero sum game analogy but would only add this:

“All of this storytelling creates a huge amount of distracting noise for traders and investors. Narratives are seductive because they impose a sense of rationality on unexplained events; this allows us to be more easily fooled by what is probably random and meaningless activity. No one wants to admit that chance plays such a large role in events; acknowledging this truth would undermine our delusional self-image of being skilled, informed and in control” --Barry Rittholtz

Thank You for the conversation…it helps, still a Skeptic&Optimist…I am just trying to maintain a balance of reality from all of the noise, which is why I do not drink the coo-laid from any of the missionaries or tribes…always learning! Like Ben’s buddy at Demonitized stated…everyone is selling something!

Mike, I do NOT mind people sell things through story telling. I do NOT have any intention to figure out what’s real or whst’s fake. I do want to have a house to live, happy neighbors, feeling at ease for my kid to play on the steeet, going to school without a bullet proof school bag, retire, can be treated when I am sick. I want to be free and for that I need to make money. That’s what’s real for me and I have to get it done right. Initially I thought I could just work hard and save half and I will be fine. Then I discovered these rent-seeking, inflation stealing activities that enslave everybody. In stead of focus on creating wealth and save half, I need to learn this wealth transfer game to protect my earnings. Epsilon theory is gambler’s theory to me and if you want to figure out the wealth transfer game, you learn from gamblers. It is NOT about reality, it is about wealth transfer, your chips into my hand, zero sum game. What saddens me is that the system have forced people getting their attention away from wealth creation productive work and into wealth transfer games. This corrupts the morality and push the civilization backward. But it is the environment I am in and I have to survive. Epsilon theory helps a lot. In the end, we need to understand Kissinger and Huntington to understand how the transfer is done. Those kong’s in Casino pales in comparasion from these people pointing guns at the world population and transfer their wealth into the hands of the Empire.