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Publishing

May 24, 2005 02:34 PM

Keith pointed out the changes his publisher forced on Loren Cordain's Paleo Diet book.

You would think the editors know something, but they don't. They are at least as bad as studio executives who pick movies; they don't know anything. Nassim Taleb has written a nice paper showing how literature can be modeled as luck. It is available as a pdf file on his web site Taleb. Look over this interesting page and then click on "The Roots of Unfairness: the Black Swan in Arts and Literature."

Yours truly is cited in the paper and Nassim and I have had many phone and email exchanges. We shall meet when he comes out to Las Vegas to interview me for his new book. I used Nassim's Fooled by Randomness as a kind of text for my Economics of Extreme Events course at UCI. We are supposedly writing a paper together on how to use financial instruments to reduce the huge uncertainty actors face.

His work is wonderfully out of the box and deep. His Empirica hedge fund may have the most sophisticated approach to arbitrage of any. Many funds work on leverage more than on the underlying prices and probability distributions (if we even know them). This was clearly shown in the collapse of Long Term Capital Management nicely documented in Lowenstein's, When Genius Failed: The Rise and Fall of Long Term Capital Management. One of our readers, Mark, tells me that most hedge funds use the Sharpe Ratio, which is problematic because the probability distribution of stock returns has a volatile and possibly non-existent variance and the ratio fails to detect skew in returns. Since about 80% of returns are in about 5% of trading periods, owing to large moves in the stocks, the Sharpe Ratio, in its ignorance of skew, fails as a decision criterion.

Nassim tells me there are only three of us doing this sort of thing: Mandelbrot, Taleb his ownself (as Dan Jenkins would say), and me.

Black Swan is the name Taleb gives to kurtosis, the large impact of improbable events. In literature, the outliers are taken there by chance and non-linear dynamics. I have shown this in detail for the movies. A combination of chance and an expansive non-linear feedback where audience growth relates positively to size takes movies to extreme outcomes. In this dynamic, the statistical attractor is approached through bifurcations onto hit and bomb paths and the Stable-Levy distribution is the attractor. This results in a winner take all outcome, something we see in the internet, the movies, and in so much of life. The distribution also has an infinite variance, so anything can happen.

Fractals and scaling...

Nassim has a nice description of the so-called scaling property of a fractal (Levy-Stable) distribution. It applies to the fractal aesthetics I always mention when I discuss my wife's interior design. I quote, with interjections in []:

"The sociologist of science Robert K. Merton’s discusses “Matthew effects”: the rich getting richer, the famous getting more famous. These scalable laws were already discussed in the scriptures!

The modern formulation is now called the Pareto-Lévy-Mandelbrot processes, providing their own class of statistical modeling. Consider wealth in America. The number of people with assets worth more than $2 million will be around a quarter of those with more than one million. Likewise the number of persons with wealth in excess of $20 million will be approximately the same [that is, about a quarter of] in relation to those with more than $10 million. This relation is called a scaling law [or ratio scale] because it is retained at all levels, no matter how large the number becomes (say two billion in relation to one billion). Now think of waves of one meter tall in relation to waves of 2 meters tall. The same law applies."

Imagine, since this site is devoted to high technology training, that you practice the scaling property in your activities. For each doubling of intensity there is a corresponding decline of frequency of, say, 50%. This is just an example, I have modeled paleolithic energy expenditures and will give the exact solution (from a model of course, which may be right or wrong) in the book, along with the corresponding intervals of intermittent fasting that our ancestors experienced.

· Uncertainty

Comments

Posted by: Flower Online [TypeKey Profile Page] at September 12, 2006 7:06 AM

In your book's suggested contents list you refer to 'diet and eating patterns' and to an 'activity model'. This is in contrast to the expectations of some of the people who responded to the chapter headings. One thought it would need scientific references to convince skeptics, another wanted recipes and gym routines. Another contrast: your posts refer frequently to complex, adaptive and self-organized systems, convergent dynamics, power law distributions, linear and non-linear processes while these concepts are almost absent in the posts of others. And a third contrast: some of your posters focus on exercise and some on diet; few on the life that integrates them. There is even – surprisingly to me – less discussion of hunter-gatherer lifestyles from posters than from you.

Observing this, I feel you'll need to lay out some principles about uncertainty, variation, variety on the one hand (a sort of 'Uncertainty for Dummies') and, in the chapter on evolution and the human lifeway, keep reinforcing the way the two are not only linked, but integral to each other. And, as you do in the essay, you'll need to weave this integration into text throughout. You'll need to be brutal here, pointing out that those who don't embrace this 'just don't get it'.

Recipes like the one of yours in the Cross Fit publication with just ingredients, no measures or instructions of pharmaceutical-type precision are going to annoy the heck out of readers unless you can lift their sights.

I see this as a big challenges for you as an author. Your essay is mercifully free of recipes, detailed workout routines and references; it provides readers with the inspiration of a holistic overview they can draw upon to devise their own. The danger is that they will try to construct their own evolutionary fitness routines by mimicking your examples, rather than understanding the principles so they can live in accord with those principles. If readers accept the principles and premises, references and recipes are redundant.

Well, you've been a teacher for many years and you probably thought that, on retirement, you'd never have to deal with rote-learning students again. This could be your biggest challenge!

(PS - I'm using an Apple computer so can't insert paragraph breaks where I'd like to place them - sorry.)

Posted by: Keith Thomas at June 9, 2005 2:49 PM

Fooled by Randomness is the best book on trading. When reading Dawkins' Selfish Gene I always thought of his "replicator" as being the proverbial black swan of the primordial soup.

Up until now I have spent my time reading your writings on evolutionary fitness but now seeing your interest and expertise in kurtosis and fractal scaling, it looks like I will be spending more time with your blog. Thanks!

Posted by: Kevin Mullins at May 24, 2005 7:12 PM

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