A Measurement Challenge

Today I postet the following comment to Douglas Hubbards forum:

Mr. Hubbard,

I’ m a Software Developer from Italy with a passion for the ‘uncertainty sciences’ last century gave us so plentiful. I’ve read both your books and I am about to order the second edition of HTMA. In fact I am so intrigued by AIE methodology that I convinced some quantitatively skilled colleagues to set up a workgroup to apply AIE on some relevant problems to us.

I want to say it’s an honor to confront you with a measurement challenge. Let’s start:

The Swiss bank UBS published an article in its ‘UBS investor’s guide’, special edition April 2010, predicting the outcome of the FIFA 2010 Soccer World Cup. http://www.ubs.com/1/e/bank_for_banks/news/topical_stories/edition_10.html

You will agree this is a relevant problem, as the 'uncertainty reduction' on the game’s outcome will give an advantage in sports-betting.

With hindsight, they failed the prediction miserably, claiming:

(1) Brazil is most probable winner – didn’t reach the semis

(2) Germany and Italy likely to go far – true for Germany (3th in Rank) but Italy didn’t survive the first round.

(3) “Spain – favored by many – will likely not do well, and could exit before the semi-final stage” – Spain won the World Cup.

UBS has now an inglorious record of 1 success in 3 attempts - Wordcup 2006 went good, but European Championship 2008 and Wordcup 2010 failed.

I am inclined to argue that you can’t predict the outcome of the game a priori.

1. UBS likely has built a state of the art econometric model but the conclusive verdict about the rightness of the model can only be “it works”. This show: you certainly can make a sound argument about how you measure it, but still failing miserably.

2. But you cannot know if your model is right or you had luck. This is so because the experiment is not repeatable well. The basic dilemma of social sciences: social systems are complex and adaptive. Using a model: the stochastic process is itself complex, if not random. When we cope with induction we can only believe in the stable nature of the stochastic generator. What UBS’ case tells me: there is anecdotal evidence that the underlying principles of “who wins” are not stable. You cannot say if it will work for the next FIFA world championship or not, making it useless.

3. But probably even if you would know the exogenous factors that influence the game, I suspect the endogenous factors in the system are much more important. Making any reasonable forecast before the games started futile.

Mr. Hubbard: can you measure it?

Sincere Regards,

Roland Kofler

Don't have an opinion, build a model

In medicine as in life we have to distinguish emotions and ratio. This is the hardest task ever. Metaphysics succeeds because it simply discounts the problem. So does post-modernism.

But Paul Meehls does not look away.

The machine decides same or better than the intuition. A well ignored secret since 50 years.

http://www.tc.umn.edu/~pemeehl/167GroveMeehlClinstix.pdf

Wieviele Friseursalons gibt es in Wien?

Der berühmte Physiker Enrico Fermi war dafür bekannt, dass er aus einfachen Beobachtungen präzise Abschätzungen (nicht nur) physikalischer Phänomene herleiten konnte. So soll er durch wehende Papierschnipsel die Detonationsenergie des ersten Atomversuchs abgeleitet haben. Seine Studenten mussten knifflige Schätzprobleme lösen, wie durch Gedankenexperiment die Anzahl der Klavierstimmer in Chicago ermitteln.

Fasziniert von der Methodik habe ich mich darangemacht mein eigenes "Fermi Problem" zu stellen und zu lösen:

Wieviele Friseursalons gibt es in Wien?

Ich stellte folgende Überlegung an:

1. Es gibt ca. 1,8 mio Wiener
2. Fast alle haben genügend Haare und fast alle schneiden sie nicht privat
3. Sie schneiden sie alle ein bis zwei Monate
4. Die Friseure arbeiten ca. 220 Tage im Jahr, aber einige Teilzeit
5. Pro Salon arbeiten 1 bis 4 Friseure
6. Ein Friseur braucht 20min bis 1h für eine Frisur

Daraus errechne ich mir nicht die minimale mögliche und maximale Anzahl der Salons, denn die Rechnung besteht nicht nur aus simplen aufaddieren, sondern aus mehreren sich beeinflussenden Variablen. Ich mache eine Monte Carlo Simulation.

Der wahrscheinlichste Anzahl der Friseure liegt immer zwischen 1000 und 2000.

Ich schlage im Herold nach und es gibt 1136 eingetragene Friseursalons in Wien.

Zum nachvollziehen habe ich die ganze Simulation auf Google Docs hochgeladen.

Würde mich freuen wenn jemand Fehler findet.

Unterdurchschnittliche F&E Ausgaben in Suedtirol

Prozentueller Abstand wie folgeneder:

Oesterreich 2x soviel wie Italien, 2x soviel wie Trentino, 2x soviel wie Suedtirol

Aber die Suedtiroler Unternehmen realisieren anteilmaessig das Beduerfniss nach Forschung ueberdurchschnittlich

Bericht Astat

Technologies as a infinite combination of themself

If new technologies were constructed from existing ones, then considered collectively, technology created ifself.

I also began to see that the economy was not so much a container for its technologies, as I had been implicitly taught. The economy arose from its technologies. It arose from its productive methods and legal and organizational arrangements that we use to satisfy our needs.

W. Brian Arthur - The Nature of Technology

Privacy under Pressure

Friday night I had an interesting discussion regarding the future of privacy. My feeling was that peoples privacy in the web came under strong pressure the last five years, certainly due the success of social networks. Two days later I read a ReadWriteWeb article where Facebook’s Mark Zuckerberg sees a shift in social norms that deprecates personal privacy in the web. This article will try an inquiry about how privacy came under pressure. First word to Mr. Zuckerberg:

People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people. That social norm is just something that has evolved over time […]

We view it as our role in the system to constantly be innovating and be updating what our system is to reflect what the current social norms are.

Doing a privacy change for 350 million users is not the kind of thing that a lot of companies would do. But […] what would we do if we were starting the company now and we decided that these would be the social norms now and we just went for it”

Zuckerberg talks about the perceived shift of social norms as an opportunity to innovate. Indeed Management Thinker Peter Drucker named Changes in public perception as one of seven sources of innovation.
Assuming Zuckerberg is right, how comes that we experience a shift in culture where privacy is valued less? If the social network is the reason we have to take a look at the actors involved in their social affair. I identify four roles in there:

1. The consuming viewer, who in his pure role only consumes the information created by self publishers. In reality processes the information and interchanges it with the publisher. He has no interest in privacy, as he wants to perceive as much as possible from the publishers output
   
   
2. The network owner, who provides the tools for interchange. She has a genuine interest in maximizing the networks value. Privacy is working against her value maximization endeavor.
   
   
3. Third party businesses. They want as much as information as they can get and are against privacy.
   
   
4. The self publishing person that creates information about herself. She gains value in feedback from peers. She can increase potential value by becoming a public persona. But has an interest in controlling who knows what about herself.
   

We have obviously a single role with interest in privacy and this role is not so sure about it anymore, maybe because:

1. Strong communicators showed how their value increases with giving away their data. More cautious People follow as they experience nothing awful happens.
   
   
2. People are more comfortable with internet in general. Old fears and power abuse fantasies are gone.
   
   
3. Privacy concerns exist, but many see the control in how you present yourself - not in whom you allow to view your profile
   

We have seen that social network privacy encounters strong interests against from all the network actors and since it decreases the benefit of everyone involved, its crisis is reasonable. Only to become again vital if a major abuse occurs.

What the heck is a tool?

A broad definition of a tool is an entity used to interface between two or more domains that facilitates more effective action of one domain upon the other. The most basic tools are simple machines. For example, a crowbar simply functions as a lever. The further out from the pivot point, the more force is transmitted along the lever. A hammer typically interfaces between the operator's hand and the nail the operator wishes to strike.

http://en.wikipedia.org/wiki/Tool