The future belongs to the Swiss Federal Institute of Technology

The Swiss Federal Institute of Technology in Zurich has a plan to simulate the entire world. According to this report the plan is to "gather data about the planet in unheard of detail, use it to simulate the behaviour of entire economies and then to predict and prevent crises from emerging."

Back when I was being trained in research, this type of project was always held up to us as an example of what not to do. Unfortunately, many people today believe that if you collect massive amounts of data the Truth will emerge from it. Dream on.

There are may problems with this approach. One of the chief ones is that the process is entirely inductive. Relations are identified in data from the past, and then extrapolated to the future. These relationships may hold in the future, or they may not. And if they do hold in the future, they may not hold forever.

I often think that it would help decision-makers if they spent some time handicapping horse races. Believe me, if you see that horses on the rail have been winning all week, that is no guarantee that they are going to win for you today. There is no reason they should.

The basic problem here is the lack of a theoretical approach. Ordinarily you start with a theory, or at least a hypothesis, about how something in the world works and then you collect the data necessary to establish whether your theory or hypothesis stands up to empirical test. If you confirm the theory you then try to modify it to increase its explanatory power. What the Swiss Federal Institute of Technology is trying to do is to get the data to think up the theory for them. But data don't have brains. The theories they come up with are going to lead you down a lot of paths that go nowhere. Any dataset is full of relationships, many — and sometimes all — of which are spurious, products of random variation or of systematic bias. Spurious relationships are not a foundation of successful forecasting.

Another important problem is that typically the relationships you find between the variables of the type that are going to be collected for this project are weak. Most of the variation in them is due to the effects of other variables that you usually don't have measures of. That means that predictions from your model will be at best only grossly approximate. Among other things, the developers of this model of everything want to predict economic bubbles and collapses. However, since these predictions are almost certain to be only grossly approximate, they will offer little guide to policy. If you remember last winter, you remember the extremes governments went to after an H1N1 pandemic was predicted, and how unnecessarily expensive (and ineffective) they were.

But the European Union is sinking a billion euros into this venture. I'd wish them good luck, but I'm confident that even with the best luck possible this project is going to fail, and fail miserably.

Link to the first in a series of related articles at the main site

The future belongs to the Swiss Federal Institute of Technology © 2010, John FitzGerald

Gross national happiness

Canada is apparently considering joining the group of countries that assess their gross national happiness. Happiness is one of those concepts that has always interested me because a) so many people think it's extremely important, and b) so few people even attempt to define it. Love is a similar concept.

In fact the definition of gross national happiness is vague. The project seems chiefly to be an attempt to link population characteristics to feelings of well-being. Why you'd want to do that is a mystery to me. Sure, they've found that countries with low rates of infant mortality have happier citizens, but surely we don't justify fighting infant mortality as necessary to keep the public happy.

Similarly, an assessment of the adequacy of a country's economy has been proposed as an indicator of happiness, but if people are happy with an unsound economy are we to take that as a Good Thing? That approach doesn't seem to have worked too well in the United States, where many people were astonishingly proud of their economy until it came crashing down a few years ago.

I'm certain — or at least I'd like to be certain — that our government doesn't intend the assessment of happiness to be a guide to policy. If that's their intent, they should logically end up doing things like legalizing marijuana — that makes lots of people happy. If they don't intend it to be a guide to policy (and there's no good reason they should), there's no good reason to assess national happiness at all.

Gross national happiness © 2010, John FitzGerald
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