Showing posts with label 2x2 Grid. Show all posts
Showing posts with label 2x2 Grid. Show all posts

Thursday, November 4, 2021

You're Allowed Cynical Beliefs But Not Cynical Reactions

Society rewards cynical beliefs and optimistic reactions while at the same time it punishes optimistic beliefs and cynical reactions. 

Consider that a politician is given wide latitude to sow distrust in the system and the powers that be but would be viewed as na├»ve for believing things work by and large pretty well and our default position should be charitable benefit of the doubt. Similarly a politician would be expected to embrace a development as beneficial to his side while being seen as a sour puss or exhibiting sour grapes to downplay a successful event.

This is not just a political phenomenon. CEOs must be grounded realists who only crack a smile when championing an outcome. Otherwise, they should be on the lookout for the next problem. Yet if a problem arises, they get no credit for being dismissive.

Perhaps the biggest exemplification can be found in everyday life where nobody wants to hear about the downside after a positive moment and at the same time nobody wants to hear how it will probably all be okay in the face of fear. Rather one should doubt the future and champion any moment of progress while rejecting hope and brushing aside any consideration that ulterior motives may be at play.

Social media amplifies these truths orders of magnitude due to the network and feedback-amplification effects. 

I am a bit ambivalent on this in general. I both fight and embrace my personal tendency toward cynicism. It can negatively bias one's thought process like a disease, but it can also provide healthy critical analysis. A good journalist has a proper balance in regard to cynicism. They are not a cheerleader for their beat nor a pure curmudgeon. 

We are all and always have been journalists in one way or another to greatly varying degrees of quality. Today's technology makes this more apparent, but it has always been the case. We gather facts, analyze data, and relate stories. Some are better than others and some do it for pay while others do it for pleasure (or shear necessity of living in a society). 

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2021-11-11 Addendum: As a personal example of this, I offer how as a fan of OU football any optimistic outlook I hold is seen as being a “homer”, a derisive label. At the same time a cynical take on the team’s prospects is seen as wise and level-headed. Further, if the team does well, it is widely viewed as uncouth to not give them credit for their success. Even more so, if they do poorly, one is not allowed to point out ways the opponent got lucky, etc.

I do not find these social norms to be desirable, tbs.

Wednesday, November 3, 2021

What You Think Versus How You Think

What is more important: what you think or how you think? 

To what degree is it fair to hold people accountable for what they think. Cognitive dissonance should be relative to rational ignorance. It seems unfair to hold people highly accountable for beliefs and other thoughts they shouldn't have legitimately thought much about or simply haven't had much exposure to. Further, what you think is subject to social desirability bias and group identity--factors that are so ingrained as to be a bit out of our immediate control. I think of that not as a pure get-out-of-jail card for bad thoughts (or thinking--see below) but rather as a relaxation of culpability.

How someone thinks implies an examination of reasoning, and that seems to be a much more legitimate way to evaluate thinking. What someone thinks should ultimately be governed by how they think not the other way around. Unfortunately we tend to give a very shallow evaluation of others including leaders especially politicians by getting hung up on what they think.

Consider this 2x2 analysis:


In this framework there should be high stakes if the thinking that went into an eventual thought was thorough (deep/rich), but low stakes if the thinking was not. We are rewarding good thoughts and punishing bad thoughts, but the degree to which we do so is dependent on the thinking (process) that created and supported the thought (conclusion). One implication is that more intelligent people should bear a greater burden for their thoughts. 

Another is that a bad conclusion from a thorough process should carry higher blame than would a bad conclusion from a shallow process--the bigger the inconsistency, the bigger the crime. Don't confuse that with allowing a thinker to get off easy for a bad thought when they should have thought more deeply before forming a conclusion. For that we have to change the framework.

To wit: the framework is transposed a bit when we switch from considering thought accuracy (is the thought right, correct, good, moral, etc.) to considering thought significance.


Now the framework assigns greater scrutiny to the interaction of the level of thinking and the meaningfulness of the thought rather than the level of thinking given the ultimate outcome. One obvious implication is that thoughts of trivial/minor significance deserve low stakes regardless of the reasoning level that goes into forming them. 

It is easy but false to assume all thinking should be deep/rich. That is simply not possible. It is out of our grip most of the time. We either don't have the time or the mental faculty or both. Therefore, one implication is don't hold confidently to high-significance thoughts if you did not employ deep/rich thinking in deriving them. Another implication is don't put deep/rich thinking into trivial/minor thoughts. 

How does this compare to the real world experience? I think level of reasoning is generally a non factor in most people's framework most of the time. Rather it all comes down to does it feel good and is it me or like me:


My claim is that reasoning is given very little credit for most people most of the time. Perhaps this is defensible to a degree given the vast ulterior motives we all possess. While that is an apt explanation, it is not a reasonable justification. 


Related: See Arnold Kling's review of The Mind Club.  

Monday, January 18, 2021

Understanding Investment Expected Outcomes

Winkler's Law of Investor Risk/Return Trade-Offs: Any time an investor begins a statement affirming they understand the basic risk/return trade-off (high return comes with high risk, low risk implies low return), they are invariably about to implicitly or explicitly argue against it. 



There are specific meanings of risk and return as used here. This is financial risk and return. Risk can be understood as variance or volatility of price. Return is the outcome realized (selling price plus income derived during the time held minus the price paid and costs borne). Once you realize that "high/low" return doesn't mean "good/bad" return but rather means "big/small" return, you'll be a lot closer to understanding what finance people understand about risk/return. Risk and Return are simply two names for the same thing in this framework.

If you buy a share of stock at $100, hold it for a year collecting $2 in dividends, and then sell it, the outcome is going to be high or low. If you sell it for $101 or $95, the outcome was low in either case. In this hypothetical the return and risk were both low. Selling for $10 means a $3 profit ($2 dividend plus $1 price improvement). Selling for $95 means a $3 loss ($2 dividend minus $5 price deterioration). Regardless, the outcome of an approximate 3% return (positive or negative) is a low return.*
 
When the meaning of "risk" is relaxed to include risk of individual ruin (financial or otherwise), hypothetical scenarios that do occasionally exist move from Low Risk/High Return to High Risk/High Return (extreme example: let's bet on 10 coin tosses in a row where for each one if you choose correctly, I give you $1,000,000 and if you choose incorrectly, you pay me $500,000) or from High Risk/High Return to High Risk/Low Return (fairly common example: concentrating nearly all of one's financial wealth in a single stock). 

Bad decision making can move hypothetical scenarios from High Risk/High Return to High Risk/Low Return (example: excessive amounts of slot-machine play--the repetition gives the house a greater and greater advantage . . . start with a 90% payout return, then keep playing . . . 90% times 90% times 90% means the house goes from a 10% edge keeping a dime for every dollar you wager to a 27.1% advantage keeping 27 cents for each dollar through the rewagering). 

The grid is generalized and one should think of these realms as in the extreme. There are certainly examples that would technically fall into the unrealistic realms (hence the name unrealistic rather than impossible). These opportunities (Low Risk/High Return) and pitfalls (High Risk/Low Return) are fleeting, rare, difficult to truly experience, and usually of small magnitude. To good to be true is basically a mathematical and economic fact. 


*Yes, "low" is a relative term--relative to the state of the world. Just assume with me that most returns that are 3% are "low" or change the numbers to make it so in your mind. The amount isn't critical to the point.

Thursday, January 14, 2021

Yes, Master - 2020 New Year's Resolution fulfillment

You may not remember the before times, but I do. Way back then I had a conviction in a belief, that while I still do hold it, I must admit I was wrong to hold so strongly. I fulfilled my perpetual, annual New Year's Resolution in 2020 by changing my mind on just how easily willing people are to submit to authority when in a state of fear. Let me explain.

Although I am a student of history and well aware of the many cases of a populous submitting to the king, the conqueror, or the soothsayer promising protection for only the price of precious liberty and self-determination, I foolishly and naively did not connect that reality to my view (hope) for the current world. Time and place again throughout 2020 did I find that view shaken and proven faulty. 

There were recent, stark clues that should have told me the line would not hold. 9/11 and the terrorism threat of the early 2000s was but a hint of how quickly and thoroughly people would yield liberty and self determination in the midst of fear. In that case we traded away freedom for security and as the predictive aphorism goes got neither--just theater and blunt rules with unintended consequences and predictable government excess and abuse. 

Likewise in the financial and economic challenges of the last 25 years we saw populist calls for regulation and takings. We got both repeatedly and with greater gusto in each pass. Captured interests worked hard to draft the legislation and interpret the rules to favor vested interest and the status quo. The experts gave us bailouts and promises to never again . . . allow the wealthy and the powerful to face devastating losses. 

And then came a pandemic. I expected tyrannical nations would react harshly. I expected better from the nations of the free. The Higgsian ratchet is a powerful and reliable effect. This is true because FOOL (Fear Of Others' Liberty) and FOOM (Fear Of Others' Mistakes) are dominant forces in times of great stress. 

I believed that people, not just free people but all people, would gradually and eventually strongly resist and rebel against coercive, dictatorial edicts that did not just seem but were proved to be ineffective, unjust, inconsistent, and in many cases counter productive. While resistance occurred, I was and am still shaken with how little was offered. 

Perhaps I am being too harsh on myself. To be clear I am not advocating nor saying I expected violent resistance. That is not required to stop what we have seen. The popular will alone prevents or enables power from corrupting to this degree. So maybe people are making a practical tradeoff that I am not appreciating. To make a small example, masks and mask policies are often just a wink and a nod letting us go about our lives. In this fashion they are akin to Robin Hanson's example of the public drinker's brown paper bag.

Yet my reading of my fellow man does not make me think this the case. I see people truly scared and truly allowing if not endorsing the lockdown of free lives. Acquiescence is all the permission the powerful need to take more from others. 

If I were to put it into a 2x2, it would look something like this:



Fighting for freedom is the degree to which one will actively take actions against oppression. This is offense. Resistance to coercion is the degree to which one will impede oppression. This is defense. Both play a crucial role and are interconnected in an effective and just battle for liberty. 

Coming into 2020 I put Americans in particular and people generally on the blue line. My revised belief is that the typical person is on the red line--a decided shift away from where I once thought we were.





Sunday, October 25, 2020

Justifiable Points of View

One thing I find quite frustrating and disappointing is how often people hold and cling to views that they can hardly justify. Consider:



I find that most people hold views in the bottom half of the grid with a disturbing fraction in the lower left (unwilling/strong). While they typically don't dispute the characterization of a view being strongly held, they adamantly defy the accusation they are unwilling to think hard about it. 

There are several biases at work here I'm sure. First, I think people are averse to saying their beliefs are weakly held. To many this is tantamount to admitting that they shouldn't be taken seriously. Second, admitting that one is unwilling to think hard sounds like admitting dumbness--rarely, though occasionally, a winning attribute.

Although I characterize the upper right position (willing/weak) as "completely justified", this does not imply that this is the optimal position. Rather I think people should strive for the upper left (willing/strong) but this striving should always be working to push them back towards the right as new information and arguments are revealed. 

Further, we simply don't have the opportunity to actually think hard about most things. Many are out of reach for our limited comprehension as well as our limited resources--namely time. Interestingly, this is one of the first places a lower left person will look for a defense. To wit: "While it would be great to sit around and reconsider what I have come to understand as true, who has time for that?" The second refuge is to dispute that thinking hard is necessary. To wit: "Those theoretical points are interesting, but here is what everyone knows to be true...". Both of these are simply argument from dismissiveness. "Pay no attention to the great arguments and evidence behind the curtain!"

Thinking like this is one reason I cannot take you seriously.

Consider also how this plays into the religion of voting. The moral duty to vote is a weakly justified concept

Sunday, August 25, 2019

Honesty versus Politeness in a 2x2 Grid

I have a number of things I've been thinking about in the form of a 2x2 grid for comparison and contemplation. This is the first of these: honesty against politeness.

Examples of each of the four resulting categories (one fictional character and one real-life one): 



Rude
Polite
Dishonest Bugs Bunny, Donald TrumpEddie Haskell, Barrack Obama
HonestColonel Nathan Jessup, Ayn RandAtticus Finch, Abraham Lincoln