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The Signal and The Noise

 

This is a wonderful book.  This is another book I believe should be required reading for everyone. The author weaves a story about prediction/forecasting and its limitations with a  somewhat autobiographical journey  which provides  detailed explorations of politics, economics,  sport (baseball), weather,  earthquakes, gambling (poker), climate change and more.

The writing style is engaging, forthright, humorous as well as instructive. The  book covers the limitations of models predictive power and how deeply human the endeavour of predicting and forecasting is. It requires both deep understanding as well as statistical modelling. It is an iterative  process and needs to be open and driven by pursuit of truth.

The insights from Nobel Laureate Daniel Kahneman with respect to limitations of human reason (see Thinking Fast and Slow),  the problems of assumptions (linearity for non-linear phenomena, independence in highly dependent environments, power law distributions) and  a number of forms of biases including human propensity to overconfidence, distortion of risks and closed attitude (attachment to pre-conceived notions) are discussed.  The book is not a dry technical exploration but a clear entertaining  exploration. The graphics used powerfully reinforce the narrative.

There is overlap with the themes of Black Swan. I must admit that I prefer Nate Silver’s exploration. I found the story telling more enjoyable, the arguments clearer and more convincing and the witticisms more amusing.  I did not know anything about American Baseball but enjoyed the author’s passion. The perspective on Moneyball provided an insight into this complex world that was better than the somewhat simplistic movie version (I have not read the book). Similarly, I have not played poker but the chapter devoted to this was interesting both within the context of forecasting as well as an object lesson for the important theme of the deeply human endeavour of trying to understand the world and its uncertainty.

I am inspired after reading this book to understand more about modelling, despite an emphasis on its pitfalls.  If nothing else, I hope I am more analytical and open to information presented to me and more insightful and reflective enough to learn from my failures as well as more realistically appraise my apparent successes.

 

 

 

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