Highness Randomness and Fakers

Humans evolved looking for patterns in everything. We see causality where none exists. Human life is a stochastic process or in simple words, a game of chance (at least a big part of it). Let us meet the architect of this game. The great genderless Highness Randomness! It is impartial and can take any form it likes. Humans usually see it as either a beautiful Lady Luck or a terrifying Grim Reaper. It is not alone and has many genderless offspring but Uncertainty is the most influential one. They always come in pairs, the master and the student (any reference to “Sith Philosophy” is entirely coincidental). They use time and illusion to control most humans and have firm grip on one particular type of humans: our type, “Da Fakers”. Who are fakers? I am glad you asked.

I think a big chunk of human population is fakers.  Of course, this statement is  entirely based on an observation with a sample size of a few thousand people. My hypothesis is that Randomness may have been the mastermind behind the creation of fakers.  Let us define fakers by their characteristics.

Fakers are overachievers, ambitious, opinionated and goal seekers. For us the end justifies the means. We care what other people think about us but vehemently deny if asked. We are in awe of Randomness but terrified of Uncertainty because we love the upside of randomness but hate the downside of uncertainty. We think we are special but Randomness creates all these internal conflicts. Simply put, we have a complex love-hate relationship with Randomness. We also suffer from different levels of ego mania. For example, most of us attribute success to our own abilities but failure to Randomness/Uncertainty (bad luck).  Height of hypocrisy!

Although some of us fakers like to believe we are from Vulcan, we fall prey to Randomness more frequently than the stoics, for example. When something does not make intuitive sense, we make stuff up.  We love deterministic models but operate in a stochastic environment. And that is not very pleasant and makes us schizophrenic.  We are very good ex post analysts. We focus on the most likely outcome and celebrate it as if we had everything to do with it. Ex ante analysis is not natural to us and we ignore probabilistic outcomes.

Fakers tend not to spend enough time thinking through the issues. Sometimes we simply don’t care and other times just don’t know how to think about an issue. Some of us argue for the sake of argument.  For example, a faker could respond to the silkworm issue by saying, “Well, we slaughter animals. So, what is the big deal in killing worms?”  I am sure the problem is a little more involved than that. I doubt silk is the only available fiber in any part of the world. We encounter a lot of issues in life with this type of discretionary choice. Some may still buy traditional silk and say it does not bother them. That is perfectly fine as long as the decision is made based on a well thought through process. The process of inquiry itself could be fulfilling!

I hope we defined fakers pretty well.

Ok then. Here is a flip-flop!  May be we should give up our fakery, at least in some aspects of life, to handle randomness better. Please don’t get me wrong, fakery is a lot of fun in a lot of aspects. Imagine blowing some serious smoke about modern art or coming up with our own interpretation of classic poems and sharing with our friends. Oh! Watching their weird reactions is priceless! Of course they know we are fakers and no harm done.

There are a plenty of tools available to manage uncertainty and a lot of books written on this topic. Please refer to the resources page if you are interested in reading some books on randomness and behavioral psychology.

Fakers claim to be data driven but interpret the data wrong sometimes. There is no reason to fear uncertainty. We can actually exploit it. With proper tools, we can protect ourselves from the downside of lady luck. Here is Niccolo Machiavelli’s view on randomness (he called it fortune) from his book, “The Prince”, Chapter 25 (one of the versions):

“Nevertheless, since our free will must not be denied, I estimate that even if fortune is the arbiter of half our actions, she still allows us to control the other half, or thereabouts.”

Let us start our mathematical journey with a simple concept of data interpretation or rather misinterpretation.  Here is an example.

Health scare:

Here is an example that summarizes the importance of proper interpretation of uncertainty. I borrowed this idea from Nassim Nicholas Taleb’s book, Fooled by Randomness.

Active residents of Shirakawa (a small village with a population of approx. 1,700 in Japan) decided to organize a blood donation drive during Sakura festival last year. It is Japan and the whole village has to be healthy 🙂 Almost all the adult residents (about 1,000 of them) signed up and as a healthy proud resident of Shirakawa so did you. Here is the process: As part of the standard process, the blood bank does a few tests to make sure you are free from certain diseases. One of the diseases they test for is Pentapox. This disease makes people turn pink and you hate turning pink. The test they use has a rate of 5% false positives (test results come out as positive but the patient does not have the disease). This also means that the test has a 95% accuracy rate. 95% is an A in any class! Normal occurrence of Pentapox is about 1 in 1,000 people.  You are a faker and a hypochondriac. Alright then.

Now, let us say your test came back positive. After screaming and eating a lot of ice cream, you finally come to your senses and ask the million dollar question, “What are the odds that I really have Pentapox?” You are waiting for your doctor to answer the question but deep down you think there is a 95% change you got it. You hate turning pink and you are worried that your friends might call you Pink Panther from now on. But you say to yourself, “I know it’s not easy being pink but Kermit does pretty well being green.  It’s not all that bad.” And put a brave face (after all you are a faker.) But is it true?

Most people come to the same conclusion as they focus only on the 95% accuracy rate data point. Apparently more than 80% of the doctors interpret the result the same way. Most of us don’t take into consideration the sample size and the true definition of false positive.

Let us analyze the problem. The disease strikes 1 in 1,000 people. So, of the 1,000 people showed up for the drive, 1 person should have the disease. But wait, the test has 5% false positive. That means that the test will most likely show positive results for 50 people (or 5% of all the people showed up for blood donation). Now, what are you are odds: 1 in 51. That is about 2%. See the difference! Your odds have dropped from 95% to 2% with the use of simple math.  Of course you could still turn into a Pink Panther – that is the randomness of life. But it is a mere 2% chance (not 95% certain).

We come across various problems with different degrees of uncertainty in our lives. The key takeaway from all of this is to focus on all the data points that are available and not just the few that we think are relevant. Another insight is that we tend to either overestimate or underestimate our odds by a lot. It is important that we pay close attention to our probabilities and not depend too much on single point “expert” opinions.