Archives for posts with tag: Daniel Kahneman

The state of being calm and not easily worried or excited.

Many human beings praise themselves for being able to ignore emotion when trying to make decisions. And the more important a decision is, the harder they try to ignore their own feelings about the matter.

People with antisocial personality disorder (ASPD) can be witty, charming, and fun to be around — but they also lie and exploit others. ASPD makes people uncaring. Someone with the disorder may act rashly, destructively, and unsafely without feeling guilty when their actions hurt other people.

Modern diagnostic systems consider ASPD to include two related but not identical conditions: A “psychopath” is someone whose hurtful actions toward others tend to reflect calculation, manipulation and cunning; they also tend not to feel emotion and mimic (rather than experience) empathy for others. They can be deceptively charismatic and charming. By contrast, “sociopaths” are somewhat more able to form attachments to others but still disregard social rules; they tend to be more impulsive, haphazard, and easily agitated than people with psychopathy. ASPD is uncommon, affecting just 0.6% of the population.

Am I the only one here baffled by how little free space is left between these two definitions? By how little leeway we have between the constant pressure to ‘act rationally’ and becoming a ASPD patient?

On a more practical level – now that I’ve noticed this, I’m even more baffled by our duplicity. As a species, I mean.
‘Concerned Citizens’ insist that ‘conflict of interests’ should be avoided at ‘all costs’ – lest it generates even higher ones, while some ‘thinkers’ consider that it is possible for humans to actually put aside their personal feelings.

Daniel Kahneman, among others, has done a brilliant job in describing many of the intricate ways of our thinking processes. Which are nothing but continuous tugs of war between emotional pulsions more or less kept in check by rational processes.
Basically, most of those concerned with human decision making have reached the conclusion that we’re not rational thinkers but rationalizing agents.

Hence my ‘nagging question’:

What keeps a cool-headed rationalizing agent from becoming a ASPD patient?
Specially given the constant social pressure towards ‘coolheadedness’…

OK, some people are better at rationalizing than others… but that would tend to help them at remaining undetected rather than not becoming affected…
Frans de Waals – again, among others, posits that, ‘statistically’,  altruism/empathy is an inbred feature of many animals, all primates included. Given this concept, ASPD would be rather simply explained as an ‘organic’ deficiency. Due to a ‘wiring error’, those affected by ASPD display less ‘phenotypically’ expressed altruism/empathy than the ‘average’ members of the society.


phenotype. (fē′nə-tīp′) n. The observable physical or biochemical characteristics of an organism, as determined by both genetic makeup and environmental influences. The expression of a specific trait, such as stature or blood type, based on genetic and environmental influences.

It seems that ‘what you get’ is not solely determined by the genetic information inherited from the parents but also by the specific environment in which the given genetic information gets to express itself.

For the rest of the living realm, things are relatively simple. Lady Luck is the sole ‘director’ in these matters. A really lucky organism gets to spend its life in a more suited environment than a less lucky one.

For humans… things are a tad more complicated.
Besides the fact that each of us enjoys a relative autonomy – some call it freedom of will, we also contribute enormously to the environment in which we get to live. And no, I don’t want to talk about pollution or man-made global heating.

The thing I have in mind right now is usually called ‘culture’.

Daniel Kahneman, Thinking Fast and Slow, 2013
Frans de Waal, The Bonobo and the Atheist, 2014



I’ve ended my previous post by saying that we, humans, are tempted to see almost everything as a potential tool.

And the present one by asking myself ‘to what avail?’.

What are we trying to accomplish?

I kept telling you that we, humans, haven’t invented much. That everything we do has already been experimented by our predecessors. Plants and animals…

Well, one of the things that we did invent was ‘intent’. As in ‘premeditation’.

We don’t know whether plants are driven by anything else except their ‘vital spirit’.
Same thing is valid for ‘inferior animals’ (those which don’t have brains) while the superior (a.k.a. brained) ones seem to be driven by what we call emotion.

Including us!

No matter how much we pride ourselves about our ability to reason, we’re still driven by emotion.
Actually, we’re not even close to being rational!
At best, we rationalize our emotional impulses. Before or even after we put them into practice.
Dan Ariely and Daniel Kahneman, among others, have already settled this point.

Then why am I talking about ‘premeditation’?!?

And who said ‘premeditation’ is necessarily rational?

It is planned, OK, but …

You see, the real difference between us and the rest of most other animals is our ability to ‘watch ourselves watching the world‘. As if something inside each of ourselves is able to send a probe somewhere ‘outside’ and then examine its own individuality as an outside observer. I didn’t say an impartial observer, just an outsider. However biased.

I won’t elaborate on how we got here, Maturana had already done that. Brilliantly. I’m far more interested in the consequences of each of us being able to observe their own selves ‘from outside’, keeping in mind that our rationality is heavily bounded – Simon Herbert and others, and that we’re mainly driven by emotions.

The very first thing that each of us observes about their-selves is the overwhelming fragility which defines us.

And this is why we search solace in religion. In no matter which one of them, atheism included. There is ‘safety in numbers’, you know…

Our goal, professed or not, is to find inner peace.
No matter whether you call it salvation, redemption, nirvana, self acceptance or whatever else, what you crave is peace.

The sentiment (illusion?) that you are safe.

At least for a moment.

How long is that moment going to last?

Well, that depends on how you got there!
And who accompanies you…



So. A fourteen year old builds a clock from spare parts, takes it to school and ends up in jail. And, frankly, I have some doubts about his skin color, name or even religion playing a determinant role in the process. They did set a certain framework for what had happened but I’m afraid that sooner or later this kind of harsh reaction to everything out of the bland ordinary might become a norm, involving people of all extractions. Instead of an exception.
If you don’t believe me check here:

“Here’s how a Texas school explained arresting a 14-year-old Muslim boy for making a clock”

But what’s the link to the ‘butterfly effect’?!? “the sensitive dependence on initial conditions in which a small change in one state of a deterministic nonlinear system can result in large differences in a later state”?!?

After all, a society is indeed a nonlinear system but could we consider it as being deterministic?

For short periods of time and in certain conditions, yes!. I’ll come back to this shortly.

First I’d like to give you my interpretation of the butterfly effect. You see, for a system to be sensible to such a minute influence as a butterfly landing on it, that system has to be in a very unstable configuration. A playing cards castle compared to the Golden Gate bridge.  While the second can withstand gale-force winds without even noticing them the first would indeed crumble if a butterfly landed on it.

So, what happened to the American society, as a whole, to become so sensitive? How come a teenager gets a suspension, instead of some small praise, for building a clock and bringing it to school?

Society, as a non deterministic system, was supposed to be able to overcome trauma – like the one inflicted by terrorist attacks.
Eventually it will.
Only this doesn’t happen on its own. Society is made of individual people, it can do anything only if those men and women decide to put that something in practice.
And there’s the catch.

Daniel Kahneman, Thinking, Fast and Slow, 2013, explains that our minds have two intertwined thinking systems. One which is more or less deterministic – we instinctively pull out our hand when we touch a hot stove while nobody thinks very much when riding a bike, after they got familiar with it. And a second sistem which embodies in earnest our humanity – our ability to think reasonably and to be creative.
The first system, the more or less instinctive one, has evolved to help us survive the intense moments of our lives, when we don’t have enough time to make elaborate decisions. The second one is for those times when the immediate danger has subsided, when we have the resources to evaluate what really happened and to prepare for what the future might have in store for us.
Using the information provided by Kahneman it becomes easy to understand that a society where a significant portion of its members use predominantly the first manner of reacting to the outside challenges is a deterministic, hence predictable, system, while a society where people take the time to think for themselves is a lot more flexible one.

The difference between those two situations being not only the amount of fear that exists in that society but, maybe the more important aspect, the manner in which the significant agents in that society react to that fear. If they approach it with calm and evaluate it sensibly is one thing, if they try to use that widespread emotion for their own, narrow, purposes the result is completely different.
The whole system might become so unstable as to be unsettled by a landing butterfly.
Or by a teenager bringing a makeshift clock to class.

“Science might be based on a foundation of rational thought and trial-and-error, but the roots of religion lie in something much more incalculable, and thus much harder to counter.”

I haven’t read the book so I’m not going to comment on it, yet.

What bothers me is the idea of countering ‘religion’.

Why would anyone do something like that?

If any of us sees an error in the ‘scientific’ realm that error is brought forward and fixed but nobody questions the entire realm.
Meanwhile if a religious individual does a stupid thing, like all of us have done in our lives, quite a lot of people blame it on ‘religion’ and ‘faith’.

Rather irrational – hence unscientific – don’t you think?

After all science and religion are about something different.
Science is about how the nature works while religion (‘reliegare’ in Latin means ‘connecting’) is about the ties that transform a mob into a community. Some religions use Gods to achieve this, some don’t – Buddha was a ‘mere’ teacher and Buddhism has no need for any God.

So, again, why counter ‘religion’?

The real problem produced by ‘organized religion’ is that it encourages some people to act in blind faith instead of thinking with their own heads while it offers come callous manipulators the opportunity to use religious teachings as a way to further their petty interests.
‘Faith’ can induce blindness very easily, you know.  No matter if that faith is placed in a religious hierarchy/teaching or in the power of rational thinking.
Just as reputable scientists, Herbert Simon and Daniel Kahneman  among others, have amply demonstrated the human thinking process is not at all infallible.That’s why our pride about our ability to think scientifically should not be allowed to grow into self-sufficiency. After all that was how Marx, on the footsteps of Plato, reached the conclusion that it was possible for a small number of people (the ‘enlightened’ communists) to know better than the rest of the population how things must be organized… The Soviet Union, the biggest social experiment ever, was ample proof that he was plain wrong.

On the other hand the one thing that all religions have in common is that they teach their members to respect each other – something that the ‘scientific communists’ never did. Some religions even teach that all human beings, irrespective of their creed, are to be respected. Just think about how most nomad people welcome visitors – those that come in peace, of course.

So how come there are so many ‘scientists’ are ready to counter, entirely, something as wide as ‘religion’?

Faith versus Fact, Jerry Coyne

Can Religion and Science coexist? Jeffery Tayler

Extreme fragility, dead ahead.

Just prior to the Great Depression an American accountant, Ralph Elliot, had taken Charles Dow’s insight about economic cycles a step forward and came up with the ‘Wave Theory’.
I won’t enter into details here but I have to give you some broad outlines.
Charles Dow: In any market, prices evolve in trends – sustained moves towards the main direction fragmented by ‘reactions’ that run contrary to the trend. According to Dow there are three categories/levels of trends: major, intermediary and minor. The major trends cannot be manipulated and comprises three phases: ‘accumulation/distribution’, ‘public participation’ and ‘panic’. The names are self explanatory but if you want to read some more please click here.
Ralph Elliot: (If a certain asset is traded by a large enough number of traders so that market could be considered ‘free’) Price action is fractal in nature and hence can be broken down and analyzed as such. While Dow identified 3 levels of trending Elliot uses 9 but both ‘agree’ that each action in the direction of the analyzed trend is followed by a reaction contrary to that direction.

Robert Prechter, the brain behind ‘Elliot Wave International’, ” the largest independent financial analysis and market forecasting firm in the world” – the guys from whom I borrowed the picture above – has been using successfully the ‘Elliot Wave theory’ for some 40 years now.
And here comes the really interesting part. Besides building Elliot Wave International as a market analysis company Prechter also founded The Socionomics Institute, a think tank that starts from the assumption that the markets are driven by the prevalent social mood (sentiment) that dominates at any given moment and not all the way around as it is usually believed. Prechter posits that markets go down when/because ‘people are afraid’ and not ‘people start to panic after the market has begun to go down’.
For some people this whole process is a tug of war between greed and fear. It makes a lot of sense but we still lack an explanation about why at some points the bulls are stronger than the bears and at some-other points the situation is completely turned over. Reason was supposed to take care of business at all times, wasn’t it?
Now some of you will tell me that Daniel Kahneman and others have provided ample proof that the market is far from being rational... OK, I agree with that but still, we continue to need an explanation for why the market behaves for so long as if it were reasonable only to break down exactly when everybody was so happy – as it constantly did, from the Tulip Mania in the the XVII-th century Holland to the last financial melt down.

Now please remember two things that I already mentioned.
– One of Charles Dow’s assumptions was that ‘major trends cannot be manipulated while the lesser ones might
– (If a certain asset is traded by a sufficient number of traders so that market could be considered ‘free’). Here I was presumptuous enough to introduce my own experience into the equation. After I was introduced to the Elliot Wave theory I found out that it worked (meaning that I could use it successfully – statistically, of course) for indices or other frequently traded symbols while it is completely useless for illiquid ones.

I started to understand what’s going on only after reading Nassim Taleb’s Antifragile.
The gist of this book is that for a system to remain viable, to conserve it’s chances to survive, it has to keep open as many options as it possibly can.
Does it make any sense to you?
To be alive means being able to make decisions, as freely as possible. If you are forced to make one thing or another then you are not free anymore, right? If you have at least the slightest opportunity to choose among two or more possibilities then it means that you still have a sparkle of life in you! Stephen Hawkins, tied in his wheelchair for so many years, is alive just because he choose not to be overwhelmed by his condition while so many of us are (brain) dead because we indiscriminately follow fads, fashions, habits, you name it. The moment we give up our individual autonomy and enroll into a crowd (read ‘herd’) we might have the impression of becoming safe, or at least safer, but in reality we are already headed for the slaughterhouse.

It is somewhat true though that ‘there is safety in numbers’. And no, I’m not contradicting myself. The bigger the crowd the harder it is for someone to control it (take it to the slaughterhouse, by will or by error) and the greater the chances for an individual to escape an unforeseen  predator. So you need a really big crowd if you want to have a survival situation, a reasonably viable system.

If we look back in history – no magical solution can be found there, only a long list of errors – we’ll see that empires never fail to crash, authoritarian regimes survive for considerable shorter periods than the more democratic ones and that the more powerful a fad was the least it survived. And all these situations fit perfectly Taleb’s theory: the less open options a system has the less able it is to survive. The emperor is but a single man, who inevitable ends up being ‘naked’, no matter how capable it is – and people notice it sooner or later. Also the more an authoritarian a regime the less are the ordinary people inclined to contribute to the welfare of the community.
And something else. When a fad becomes intense enough the people involved become blind to any other alternatives but those prescribed by those convinced that they have a lot to gain by keeping that fad alive. That’s why it is very hard for a social ‘vicious circle’ to be broken until enough people hit the rock bottom. No grown up will voluntarily shout ‘the emperor is naked’ because he thinks he has nothing to gain from this. As strange as it may seem it is rather hard for the regular Joe, who’s afraid of the emperor, to understand that the entire kingdom becomes a laughing stock for the rest of the world if the emperor is known to stroll naked through the public square.

Now please take a second glance at this picture.
Extreme fragility, dead ahead.

What does it suggest?
That there is a certain correlation between income being concentrated in fewer and fewer hands and the probability of a market crash?
But correlation is not causation!
No, it isn’t. Not unless we can find a reasonable story for what may ’cause’ that correlation! Explain it, that is!

By now I’m almost convinced that most of you have already ‘got’ it.
Concentration of revenue means concentration of decision power. As less and less people (proportionally) remain in ‘powerful’ positions they not only command a higher proportion of the aggregated revenue of the entire community but they also control in a greater measure the destiny of that community.

No, I don’t think that ‘they’ are ill intended. ‘They’ live here too. They are not idiots, otherwise they wouldn’t have reached/been able to retain those lofty positions. So no, I don’t think they are willingly leading us to disaster.

The problem is that they are too few! No individual human being is able to make a considerable number of decisions in a short period time. That’s the very reason why we have consultants and so on, right? The problem is that ‘consultants’ only give advice, they cannot/are not allowed to make actual decisions. And the fewer are the people wielding real power the more the rest of us become mere consultants…

And according to Taleb’s theory and to an immense number of historical occurrences the less people are involved in the decision making process the higher are the chances for a catastrophic error to ‘reset’ the entire system.

PS I. Funny for a conclusion like that to be drawn from a picture published by somebody who caters for those ‘working’ hard to get as rich as possible, isn’t it?
On the other side…if these people considered the issue to be important enough to write about it … maybe it’s worth a moment of our precious time.

PS II Never say never!
I don’t think we are necessarily facing another economic melt-down in the immediate future. It might happen, of course. It will happen – sooner or later, of course again, but there is no sure way of telling when.
What I’m trying to suggest here is that there is a very strong possibility that in the near future we’ll witness a considerable change in how we manage the economy and in the way we relate to the concept of ‘money’.

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