Ironick

A great article on modeling risk

I finally got around to reading Risk Management in the New York Times Magazine. It is one of the best articles on

• Wall Street
• Modeling
• Risk
• How people game models
• How all models eventually fail

that I have ever read. It is must reading.

All risk management systems, all (complex) models for that matter, are examples of robust yet fragile systems: robust in the face of expected events, yet extremely fragile in the face of unexpected events. Of course we will "fix" our models and rebuild. But remember Hawkins Law:

Progress does not involve replacing one theory that is wrong with one that is right, rather it involves replacing one theory that is wrong with one that is more subtly wrong.

And that more subtle error will one day cause the edifice built upon it to come crashing down. And so it shall always be, since there's no such thing as a free lunch.

Balancing the accumulated knowledge of past generations and the stifling burden of past institutions

In his paean to the great 1962 movie The Manchurian Candidate, David McCoy asks the following:

Are we so focused on tomorrow that we deny today and desecrate the past?  Yeah…  we are.  Not everything worth having was just discovered in the past two weeks, in some garage in Palo Alto, by a few kids in Stanford t-shirts.  Not everything…

Yes, we shed the past -- we must shed it in order to embrace the future. The hard part is deciding which things to shed and which things to keep. Reasonable people disagree. I'm with David on keeping The Manchurian Candidate, so I'll do what I can to get others to watch it, so they'll want to keep it to.

My favorite quotation on the subject is the following:

[The dynamic forces of technology and the conservative forces of ceremony and ritual] oppose each other in dialectical fashion, and what is required for technological creativity is the right blend of accumulated knowledge of past generations and the ability to shed the stifling burden of past institutions.
Joel Mokyr, The Lever of Riches: Technological Creativity and Economic Progress, p.190

I just love the phrase "shed the stifling burdens of past institutions". The book overall is very good as well.

Ehrlich's Law: People always pay too much attention to things that are easy to quantify

Confused of Calcutta blogged about stumbling upon Ehrlich's Law in Wikipedia (I presume in the entry on Ehrlich): "People pay way too much attention to things that are easily quantified." He (and subsequently I) wondered where it came from. Of course I couldn't resist trying to track it down.

Here's what I found at Life's Rules of Thumb:

People always pay too much attention to things that are easy to quantify.  Examples: money vs. happiness, blood pressure vs. fitness, grades vs. competency. Corollary: If you want people to pay attention, make it quantifiable.
Jim Ehrlich, jehrlich@dairyvets.com

I did a search for jehrlich@dairyvet.com and not only does he appear to exist, he participated in an email thread on Java RMI! I'm going to email him about his Wikipedia fame right away.

The Matthew Effect is a Primary Cause of the Anatopic or Palimpsestic Syndrome

I came across two interesting citation concepts today (via Alex Wright): obliteration phenomenon and anatopic or palimpsestic syndrome.

What's odd is that Garfield (who coined OP) didn't mention a primary cause of the obliteration phenomenon--the Matthew Effect--in his 1975 article, since Merton wrote about the Matthew Effect in 1968.

Perhaps the reason Garfield didn't mention it is that Garfield seems to use the "obliteration phenomenon" label in two different ways. First, he uses it to mean the permanent obliteration of any citation at all. This would be an apt description. Second, he uses it as a synonym for Merton's "anatopic or palimpsestic syndrome". But Merton used his term(s), not to refer to complete obliteration, but to the temporary omission of any citation and the subsequent mis-citation to the most recent author to mention the uncited concept or aphorism. I checked Merton's book by using Amazon's Look Inside the Book feature.

Thus, Merton's "Matthew Effect" would be a primary cause of "anatopic or palimpsestic syndrome" [Garfield's 2nd use], but not a cause of the permanent obliteration phenomenon [Garfield's 1st use].

It turns out the Wikipedia entry for obliteration phenomenon reflects the conflation of Merton's discussion with Garfield's article, but I pointed this out on the discussion page.