Friday, March 27, 2009

Nassim Taleb on the History of Medicine

What's Taleb upto now;

History of medicine, anti-academic, anti-knowledge. Medicine: whenever we use knowledge as a driver instead of tinkering, we get in trouble. Examples: Our understanding of biological processes led to a decrease in cures. When just tinkering we did better than with directed research. Directed research gives us a strong bias and blinds us to things we don't know are there. In medicine, most medicines are used to cure something completely different from what the intention was. Side-effects dominate. Try to collect positive black swans. Hubris problem, overestimating our knowledge. Difficult to think rationally about uncertainty and risk. Trust the science part, ask the doctor, but the doctor has no idea about the probabilities. Each person, disease is different. Minimize the harm coming from theories. Empirical doctors were successful until eliminated after the rise of Arabic medicine. Western medicine was rationalistic after the Arabic tradition. Improvements after that came from the barbers, not from the doctors. Thinking has not helped us a lot. Evidence in option trading. People think that quants make option formulas, therefore the market uses them. Bogus. Supply and demand. Did a lot better before the Black and Scholes formula...

Religion and probability. Most people think that religion is about belief, but it is about practice. Greek Orthodox but Arabic-speaking. The way Arabs say is not "I don't know" is "God knows." Allows you to say you don't know, transfers from yourself to another entity. Allows you to be humble. History of medicine: accounts of giving a fortune to the Temple of Apollo: You saved me when my doctors failed me. Doctors gave negative contributions, particularly by bleeding; or more recently, delivered a baby after going to the morgue. Brought in religion. Error we have in believing religion is about belief, but it's about commitment, the system, living with something. We're not yet good with ideas. Can see from this crisis. Great Moderation turned out to be not so great. What does probability have to do with religion? Idea of true/false; degree of belief. May do something against the odds because the consequences or large or even without analyzing it. Probability is not opaque; and even if it were, we wouldn't use it because of the consequences. Pascal's wager: Since God might exist, I might as well be a religious person. Payoffs from being religious are much higher than negative payoffs if God doesn't exist. Had to also assume that God doesn't exist and also not know about gaming the system. Maybe actions are more important than beliefs--in some religious systems the actions count. Greek Orthodox, Easter; Judaism, Maimonides, not every Jewish sage lists belief in God as one of the commandments because there is a debate about whether you can mandate belief. In Arabic, the name for religion, din, is the same as the word for law in Hebrew. To be a law-abiding citizen, keep the rules. Hard to keep the rules if you do not keep the faith. Motivating people without faith. Losing patience about people who are skeptics about religion, and at the same time are not skeptical about economics or VAR. Solving our own problems. Hayek, lot of instinct, contributions part of philosophical thinking.


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