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I have written a little about the utility of quantitative analysis in the field of security studies here and here. Last week, though, I finished Wall Street Journal reporter Scott Patterson's book on how quantitative hedge funds -- as opposed to "fundamental" investors like Warren Buffett -- contributed to the Wall Street collapse of 2008. Patterson ends his book with the efforts of some quants to get their analysis to abide by a code of conduct. The resulting manifesto -- written by Paul Wilmott and Emanuel Derman -- can be read here. There are some useful passages, highlighted below, which address the uncomfortable reality that elegant mathmatical formulae don't always describe messy human endeavors like the behavior of the markets -- or war, for that matter.
Physics, because of its astonishing success at predicting the future behavior of material objects from their present state, has inspired most financial modeling. Physicists study the world by repeating the same experiments over and over again to discover forces and their almost magical mathematical laws. Galileo dropped balls off the leaning tower, giant teams in Geneva collide protons on protons, over and over again. If a law is proposed and its predictions contradict experiments, it's back to the drawing board. The method works. The laws of atomic physics are accurate to more than ten decimal places.
It's a different story with finance and economics, which are concerned with the mental world of monetary value. Financial theory has tried hard to emulate the style and elegance of physics in order to discover its own laws. But markets are made of people, who are influenced by events, by their ephemeral feelings about events and by their expectations of other people's feelings. The truth is that there are no fundamental laws in finance. And even if there were, there is no way to run repeatable experiments to verify them. ...
The Modelers' Hippocratic Oath
~ I will remember that I didn't make the world, and it doesn't satisfy my equations.
~ Though I will use models boldly to estimate value, I will not be overly impressed by mathematics.
~ I will never sacrifice reality for elegance without explaining why I have done so.
~ Nor will I give the people who use my model false comfort about its accuracy. Instead, I will make explicit its assumptions and oversights.
~ I understand that my work may have enormous effects on society and the economy, many of them beyond my comprehension.
I found the humility in this manifesto to be really refreshing. What might a similar manifesto look like for those using quantitative analysis to study war? And should the U.S. graduate programs in political science (and subsets of the field, like international relations and security studies) pushing their students toward quantitative analysis be more up-front about the explanatory limits of such analysis? Anyway, borrowing liberally (read: plagiarizing) from Wilmott and Derman, here is what I think a Hippocratic Oath for Quantitative Analysis in Security Studies should look like:
Wait a minute. Are you
Wait a minute. Are you suggesting that maybe we need to rethink the magic ratio of counterinsurgents to population? Crazy talk.
That's good stuff. If
That's good stuff.
If Robert McNamara couldn't make quantitative analysis work in war, no one can. He was a certified genius.
I believe you have probably read "The Black Swan" but if you haven't do if you want some really devastating critique. He's also quite amusing in his prose.
Thanks for the plug for Squad Leaders...
Economics underwent a
Economics underwent a similar debate early in the 20th century when Austrian economists argued that human behavior makes modelling financial markets undesirable. They no doubt have a very strong point, but great strides and insights have since been made in Economics (I'm not talking about finance) that would not have been possible without mathematical tools. I get being very wary of quants, but please make sure you don't throw the baby out with the bath water.
http://ricks.foreignpolicy.co
http://ricks.foreignpolicy.com/posts/2010/02/15/a_response_to_kilcullen_...
Roger Cohen thinks we need
Roger Cohen thinks we need an EJK doctrine--originally found under the hilarious title "America needs a Drone Doctrine" over at Real Clear Politics. I was so hoping for ROE for Robots or something really geeky...
http://www.nytimes.com/2010/02/26/opinion/26iht-edcohen.html?ref=opinion
He thinks we need doctrines, laws, and accountablity for the drone hits. As you can see I love the last part most of all...I guess he thinks we've won so time to ratf*ck out the dirty workers.
For reasons much belabored already, I think we need to take care of business on the down low and do none of the above for said dirty business. The Height of Folly.
that's a bit of an
that's a bit of an unfortunate, and in many ways uncomprehending, take on quantitative and formal methods.
Rock on ADTS!! أبو
Rock on ADTS!!
أبو مقاومة - but what's the record of game theory in war, in particular the Cold War and up to now?
If people know what game you are expecting, they will change theirs.
As far as the market: the regulatory authority that will work = market discipline. In other words you are bankrupt, @ssholes. Hit the breadline as we auction off your furniture. You wanted the free market, here it is...oh and here's the Feds just in case you did engage in corruption and fraud.
You are right about their bad behavior being incentivized. A lot of that going around.
Actually, most of my ROTC
Actually, most of my ROTC class took statistics (it was that or Calculus). Whether we paid any attention is another issue entirely...
But these are just
But these are just platitudes. Why do you feel the need to produce a manifesto? Are you actually doing a lot of quant studies?
Quantitative and qualitative methods should be used wherever necessary.
Plenty of quant funds did fine in the crash. For instance: Renaissance. In fact, the mere existance of Jim Simons/Renaissance seems to render your analogy somewhat incoherent.
And presumably you have already thown your copy of Military Power in the bin?
BTW elf, Taleb is a self-obssessed moron.
If no one mentioned it yet,
If no one mentioned it yet, you made Steve Walt's blog:
http://walt.foreignpolicy.com/posts/2010/03/01/numbers_strategy_and_war
ADTS
That manifesto is just as
That manifesto is just as much a critique of qualitative work as it is of quantitative work. Over-claiming results, not understanding the limitations of the method, etc.
This is an exceptional post,
This is an exceptional post, Abu M.
As a INR student about to enter grad school for US-Middle East security studies, this sort of thing should be posted on everyone's wall in any relevant department.
In putting the final touches on my personal statement (about what I hope to accomplish and how) this post will be a guiding light for me. In trying to make a name for oneself, I'm almost positive that this level of humility about limitations and honesty is lacking when we open our word processors to type out what we're sure will be a critical masterpieces of our time.
I certainly needed this and I thank you for writing it.
Thanks for this manifesto,
Thanks for this manifesto, I've shared it with my colleagues & students in IR here in the Political Science Department at the University of Rochester. Lord knows we need some of this sensible thinking around here.
I strongly favor
I strongly favor quantitative analysis, intelligently applied. Years ago I read Trevor Dupuy's books outlining his Quantified Judgment Method, and they informed my wide reading of narrative military history. Very useful in highlighting and speculating on what variables might impact the outcome of engagements. For what it's worth, Dupuy applied QJM in a short book published before the first Gulf War, and his results -- while wildly high in estimating Coalition casualties -- subsequently proved to be closer to reality than any other published forecast by the multitude of pundits who wrote in the weeks leading up to Operation Desert Storm.
Like Jim, I'm at the
Like Jim, I'm at the University of Rochester, but I found your post jejune and sadly depressing . Yeah, let's once again fight unproductive wars over methods and let's not ask new questions or seek to provide new answers, no let's just have more of the same. Since what we had in the past could not possibly be improved upon.
I would venture to guess that our IR students here actually do more original historical research than do IR students at more traditional qualitatively oriented programs. But our students do this research to get a better understanding of the puzzles and potential answers rather than as "case studies" which supposedly "test" theories.
Speaking for myself, I do seek to obtain a basic understanding and competence in a variety of methods because I have always found that the more ways you can think about a question, the more likely you are to achieve a deeper understanding and richer answer. One "method" will push the answers of another "method" and force you to use yet another "method" to really understand what's going on.
Great blog! Thanks
Great blog! Thanks particularly for the quickstart vids, I was so excited after downloading the tools that you cannot imagine how disappointed I was to discover I couldn't get them to work! You came to my rescue and saved the day! Cheers.
Am I not surprised, yet so
Am I not surprised, yet so expect to find an interesting article. I will read more like me-thank you
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