Archive for the 'Forecasting' Category

Straitjackets of Standards

Published
by
peter
on 2009-09-23
in Computer Science, Computer technology, Creativity and Forecasting
. Closed

This week I was invited to participate as an expert in a Delphi study of The Future Internet, being undertaken by an EC-funded research project.   One of the aims of the project is to identify multiple plausible future scenarios for the socio-economic role(s) of the Internet and related technologies, after which the project aim to reach a consensus on a small number of these scenarios.  Although the documents I saw were unclear as to exactly which population this consensus was to be reached among, I presume it was intended to be a consensus of the participants in the Delphi Study.

I have a profound philosophical disagreement with this objective, and indeed with most of the EC’s many efforts in standardization.   Tim Berners-Lee invented Hyper-Text Transfer Protocol (HTTP), for example, in order to enable physicists to publish their research documents to one another in a manner which enabled author-control of document appearance.    Like most new technologies. HTTP was not invented for the many other uses to which it has since been put; indeed, many of these other applications have required hacks or fudges to HTTP in order to work.  For example, because HTTP does not keep track of the state of a request, fudges such as cookies are needed.  If we had all been in consensual agreement with The Greatest Living Briton about the purposes of HTTP, we would have no e-commerce, no blogging, no social networking, no easy remote access to databases, no large-scale distributed collaborations, no easy action-at-a-distance, in short no transformation of our society and life these last two decades, just the broadcast publishing of text documents. 

Let us put aside this childish, warm-and-fuzzy, touchy-feely seeking after consensus.  Our society benefits most from a diversity of opinions and strong disagreements, a hundred flowers blooming, a cacophony of voices in the words of Oliver Wendell Holmes.  This is particularly true of opinions regarding the uses and applications of innovations.   Yet the EC persists, in some recalcitrant chasing after illusive certainty, in trying to force us all into straitjackets of standards and equal practice.    These efforts are misguided and wrong-headed, and deserve to fail.

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Myopic utilitarianism

Published
by
peter
on 2009-09-23
in Computer Science, Computer technology, Forecasting, History, Logic, Mathematics and Rhetoric
. Closed

What are the odds, eh?  On the same day that the Guardian publishes an obituary of theoretical computer scientist, Peter Landin (1930-2009), pioneer of the use of Alonzo Church’s lambda calculus as a formal semantics for computer programs, they also report that the Government is planning only to fund research which has relevance  to the real-world.  This is GREAT NEWS for philosophers and pure mathematicians! 

What might have seemed, for example,  mere pointless musings on the correct way to undertake reasoning – by Aristotle, by Islamic and Roman Catholic medieval theologians, by numerous English, Irish and American abstract mathematicians in the 19th century, by an entire generation of Polish logicians before World War II, and by those real-world men-of-action Gottlob Frege, Bertrand Russell, Ludwig Wittgenstein and Alonzo Church – turned out to be EXTREMELY USEFUL for the design and engineering of electronic computers.   Despite Russell’s Zen-influenced personal motto – “Just do!  Don’t think!” (later adopted by IBM) – his work turned out to be useful after all.   I can see the British research funding agencies right now, using their sophisticated and proven prognostication procedures to calculate the society-wide economic and social benefits we should expect to see from our current research efforts over the next 2300 years  – ie, the length of time that Aristotle’s research on logic took to be implemented in technology.   Thank goodness our politicians have shown no myopic utilitarianism this last couple of centuries, eh what?!

All while this man apparently received no direct state or commercial research funding for his efforts as a computer pioneer, playing with “pointless” abstractions like the lambda calculus.

And Normblog also comments.

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Bonuses yet again

Published
by
peter
on 2009-09-09
in Africa, Corporate culture, Decision theory, Forecasting, Planning, Project Management and market planning
. Closed

Alex Goodall, over at A Swift Blow to the Head, has written another angry post about the bonuses paid to financial sector staff. I’ve been in several minds about responding, since my views seem to be decidedly minority ones in our present environment, and because there seems to be so much anger abroad on this topic.  But so much that is written and said, including by intelligent, reasonable people such as Alex, mis-understands the topic, that I feel a response is again needed.  It behooves none of us to make policy on the basis of anger and ignorance.

Continue reading ‘Bonuses yet again’




Social forecasting: Doppio Software

Published
by
peter
on 2009-09-08
in Decision theory, Forecasting, Manufacturing, Prophecy and market planning
. 1 Comment

Five years ago, back in the antediluvian era of Web 2.0 (the web as enabler and facilitator of social networks), we had the idea of  social-network forecasting.  We developed a product to enable a group of people to share and aggregate their forecasts of something, via the web.  Because reducing greenhouse gases were also becoming flavour-du-jour, we applied these ideas to social forecasts of the price for the European Union’s carbon emission permits, in a nifty product we called Prophets-360.  Sadly, due mainly to poor regulatory design of the European carbon emission market, supply greatly outstripped demand for emissions permits, and the price of permits fell quickly and has mostly stayed fallen.  A flat curve is not difficult to predict, and certainly there was little value in comparing one person’s forecast with that of another.  Our venture was also felled.

But now the second generation of social networking forecasting tools has arrived.  I see that a French start-up, Doppio Software, has recently launched publicly.   They appear to have a product which has several advantages over ours:

  • Doppio Software is focused on forecasting demand along a supply chain.  This means the forecasting objective is very tactical, not the long-term strategic forecasting that CO2 emission permit prices became.   In the present economic climate, short-term tactical success is certainly more compelling to business customers than even looking five years hence.
  • The relevant social network for a supply chain is a much stronger community of interest than the amorphous groups we had in mind for Prophets-360.  Firstly, this community already exists (for each chain), and does not need to be created.  Secondly, the members of the community by definition have differential access to information, on the basis of their different positions up and down the chain.  Thirdly, although the interests of the partners in a supply chain are not identical, these interests are mutually-reinforcing:  everyone in the chain benefits if the chain itself is more successful at forecasting throughput.
  • In addition, Team Doppio (the Doppiogangers?) appear to have included a very compelling value-add:  their own automated modeling of causal relationships between the target demand variables of each client and general macro-economic variables, using  semantic-web data and qualitative modeling technologies from AI.  Only the largest manufacturing companies can afford their own econometricians, and such people will normally only be able to hand-craft models for the most important variables.  There are few companies IMO who would not benefit from Doppio’s offer here. 

Of course, I’ve not seen the Doppio interface and a lot will hinge on its ease-of-use (as with all software aimed at business users).  But this offer appears to be very sophisticated, well-crafted and compelling, combining social network forecasting, intelligent causal modeling and semantic web technologies.   

Well done, Team Doppio!  I wish you every success with this product!

PS:  I have just learnt that “doppio” means “double”, which makes it a very apposite name for this application – forecasts considered by many people, across their human network.  Neat!  (2009-09-16)

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The future is not what it was

Published
by
peter
on 2009-06-07
in Computer technology, Consumer Behaviour, Culture, Forecasting, Prophecy and Telecommunications
. Closed

The Internet, as imagined in 1969, complete with free sexism. (Hat tip:  SW).




Black swans of trespass

Published
by
peter
on 2009-04-08
in Decision theory, Forecasting, Uncertainty and economics
. Closed

gould-blackswan

Nassim Taleb has an article in the FinTimes presenting ten principles he believes would reduce the occurrence of rare, catastrophic events (events he has taken to calling black swans).  Many of his principles are not actionable, and several are ill-advised.  Take, for instance, # 3:

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus.

If this principle was applied, the bus would have no drivers at all.   All of us are driving blindfolded, with our only guide to the road ahead being what we can apprehend from the rear-view mirror.  Past performance, as they say, is no guide to the future direction of the road.

Or take #6:

6. Do not give children sticks of dynamite, even if they come with a warning.  Complex derivatives need to be banned because nobody understands them and few are rational enough to know it. Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.

Well, what precisely is “complex”?  Surely, Dr Taleb is not suggesting the banning of plain futures and options, as these serve a valuable function in our economy (enabling the parceling and trading of risk).  But even these are too complex for some people (such as those farmers, dentists, and local government officials currently with burnt fingers), and surely such people need protection from themselves much more so than the quant-jocks and their masters on Wall Street.  So, where would one draw the line between allowed derivative and disallowed? 

Once again, it appears there has been a mis-understanding of the cause of the recent problems.  It is not complex derivatives per se that are the problem, but the fact that many of these financial instruments have, unusually, been highly-correlated.  Thus, the failure of one instrument (and subsequently, one bank) brings down all the others with it — there is a systemic risk as well as a participant risk involved in their use.   Dr Taleb, who has long been a critic of the unthinking use of Gaussian models in finance, I am sure realises this.

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The Better Angels

Published
by
peter
on 2009-01-24
in Forecasting and Prophecy
. 1 Comment

Prediction, particularly of the future, is difficult, as we know.  We notice a good example of the difficulties reading Charles McCarry’s riveting political/spy thriller, The Better Angels.  Published in 1979 but set during the final US Presidential election campaign of the 20th Century (2000? 1996?), McCarry gets some of the big predictions spot on: suicide bombers, Islamic terrorism, oil-company malfeasance, an extreme right-wing US President, computer voting machines, a Greek-American in charge of the US foreign intelligence agency, uncollected garbage and wild animals in Manhattan’s streets, and, of course, the manned space mission to Jupiter’s moon, Ganymede, for instance.  But he makes a real howler with the telephone system:  a brief mention (p. 154) of “the Bell System” indicates he had no anticipation of the 1982 Modified Final Judgement of Judge Harold H Greene.  How could he have failed to see that coming, when AT&T’s managers were preparing for decades for the competition which would follow, evident in the masterful way these managers and their companies have prospered since?!  A future with a unified Bell system was so weird, I was barely able to concentrate on the other events in the novel after this.  

Reference:

Charles McCarry [1979]: The Better Angels. London, UK:  Arrow Books.

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Evaluating prophecy

Published
by
peter
on 2009-01-19
in Argumentation, Computer technology, Decision theory, Forecasting, Prophecy and Uncertainty
. 1 Comment

With the mostly-unforeseen global financial crisis uppermost in our minds, I am led to consider a question that I have pondered for some time:   How should we assess forecasts and prophecies?   Within the branch of philosophy known as argumentation, a lot of attention has been paid to the conditions under which a rational decision-maker would accept particular types of argument. 

meteor

 For example, although it is logically invalid to accept an argument only on the grounds that the person making it is an authority on the subject, our legal system does this all the time.  Indeed,  the philosopher Charles Willard has argued that modern society could not function without most of us accepting arguments-from-authority most of the time, and it is usually rational to do so.  Accordingly, philosophers of argumentation have investigated the conditions under which a rational person would accept or reject such arguments.   Douglas Walton (1996, pp. 64-67) presents an argumentation scheme for such acceptance/rejection decisions, the Argument Scheme for Arguments from Expert Opinion, as follows:

  • Assume E is an expert in domain D.
  • E asserts that statement A is known to be true.
  • A is within D.

Therefore, a decision-maker may plausibly take A to be true, unless one or more of the following Critical Questons (CQ) is answered in the negative:

  • CQ1:  Is E a genuine expert in D?
  • CQ2:  Did E really assert A?
  • CQ3:  Is A relevant to domain D?
  • CQ4:  Is A consistent with what other experts in D say?
  • CQ5:  Is A consistent with known evidence in D?

One could add further questions to this list, for example:

  • CQ6:  Is E’s opinion offered without regard to any reward or benefit upon statement A being taken to be true by the decision-maker?

Walton himself presents some further critical questions first proposed by Augustus DeMorgan in 1847 to deal with cases under CQ2 where the expert’s opinion is presented second-hand, or in edited form, or along with the opinions of others.

 Clearly, some of these questions are also pertinent to assessing forecasts and prophecies.  But the special nature of forecasts and prophecies may enable us to make some of these questions more precise.  Here is my  Argument Scheme for Arguments from Prophecy:

  • Assume E is a forecaster for domain D.
  • E asserts that statement A will be true of domain D at time T in the future.
  • A is within D.

Therefore, a decision-maker may plausibly take A to be true at time T, unless one or more of the following Critical Questons (CQ) is answered in the negative:

  • CQ1:  Is E a genuine expert in forecasting domain D?
  • CQ2:  Did E really assert that A will be true at T?
  • CQ3:  Is A relevant to, and within the scope of, domain D?
  • CQ4:  Is A consistent with what is said by other forecasters with expertise in D?
  • CQ5:  Is A consistent with known evidence of current conditions and trends in D?
  • CQ6:  Is E’s opinion offered without regard to any reward or benefit upon statement A being adopted by the decision-maker as a forecast?
  • CQ7:  Do the benefits of adopting A being true at time T in D outweigh the costs of doing so, to the decision-maker?

In attempting to answer these questions, we may explore more detailed questions:

  • CQ1-1:  What is E’s experience as forecaster in domain D? 
  • CQ1-2: What is E’s track record as a forecaster in domain D?
  • CQ2-1: Did E articulate conditions or assumptions under which A will become true at T, or under which it will not become true?  If so, what are these?
  • CQ2-2:  How sensitive is the forecast of A being true at T to the conditions and assumptions made by E?
  • CQ2-3:  When forecasting that A would become true at T, did E assert a more general statement than A?
  • CQ2-4:  When forecasting that A would become true at T, did E assert a more general time than T?
  • CQ2-5:  Is E able to provide a rational justification (for example, a computer simulation model) for the forecast that A would be true at T?
  • CQ2-6:  Did E present the forecast of A being true at time T qualified by modalities, such as possibly, probably, almost surely, certainly, etc.
  • CQ4-1:  If this forecast is not consistent with those of other forecasters in domain D, to what extent are they inconsistent?   Can these inconsistencies be rationally justified or explained?
  • CQ5-1: What are the implications of A being true at time T in domain D?  Are these plausible?  Do they contradict any known facts or trends?
  • CQ6-1:  Will E benefit if the decision-maker adopts A being true at time T as his/her forecast for domain D? 
  • CQ6-2:  Will E benefit if the decision-maker does not adopt A being true at time T as his/her forecast for domain D? 
  • CQ6-3:  Will E benefit if many decision-makers adopt A being true at time T as their forecast for domain D?
  • CQ6-4:  Will E benefit if few decision-makers adopt A being true at time T as their forecast for domain D?
  • CQ6-5:  Has E acted in such a way as to indicate that E had adopted A being true at time T as their forecast for domain D (eg, by making an investment betting that A will be true at T)?
  • CQ7-1:  What are the costs and benefits to the decision-maker for adopting statement A being true at time T in domain D as his or her forecast of domain D? 
  • CQ7-2:  How might these costs and benefits be compared?  Can a net benefit/cost for the decision-maker be determined?

Automating these questions and the process of answering them is on my list of next steps, because automation is needed to design machines able to reason rationally about the future.   And rational reasoning about the future is needed if  we want machines to make decisions about actions.

References:

Augustus DeMorgan [1847]: Formal Logic.  London, UK:  Taylor and Walton.

Douglas N. Walton [1996]:  Argument Schemes for Presumptive Reasoning. Mahwah, NJ, USA: Lawrence Erlbaum.

Charles A. Willard [1990]: Authority.  Informal Logic, 12: 11-22.

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The second time as farce

Published
by
peter
on 2008-10-15
in Forecasting and economics
. Closed

Karl Marx was correct, it seems, in predicting that capitalism would suffer recurring crises.  What he seems to have overlooked is the impact of his own predictions (with companies and governments taking steps to eliminate or ameliorate the worst effects of the system), and capitalism’s adaptability.  With the socialization of the means of exchange taking place in much of the western world this month, capitalism has shown that it is even willing to adopt its own antithesis in order to survive.

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Knit one, purl one

Published
by
peter
on 2008-08-15
in Culture, Forecasting and Lead users
. Closed

A key problem for forecasting demand for new products is that people keep thinking up new uses for technologies.  Who would have thought, for example, that mobile phones could be used by knitters.

 

 

 

 

 

 

 

(Photo thanks to Not Martha)




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