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A Quantitative Analysis Manifesto?
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
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:
- War is a human endeavor. I recognize that it is a phenomenon that does not conform to neat mathematical equations.
- I will use quantitative analysis in conjunction with theory and qualitative analysis to describe what I see as phenomena in war and peace. I will be honest about the limits of both my theory and my analysis.
- In war and peace, the variables are infinite, and not everything can be measured or assigned a numerical value.
- I will not use numbers to signify what are fundamentally qualitative assessments without acknowledging to my reader that I have done so in order to satisfy a departmental requirement, gain tenure, or get published in the APSR. Or because I have been in graduate school for so long that I have forgotten how to effectively write in prose.
- I recognize there are no mathematical equations in Vom Kriege and that it is nonetheless unlikely that my legacy will transcend that of Clausewitz.
- I recognize that very few squad leaders in the 10th Mountain Division have ever taken a course in statistics yet probably know more about the conduct and realities of war than I do.
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 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 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.com/posts/2010/02/15/a_response_to_kilcullen_...
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.
AM:
I recognize most if not all of your manifesto is tongue in cheek. Three thoughts, though:
1) The trend in the field, so far as I can ascertain, is to utilize mixed methods: ie, perform quantitative analysis of one form or another (a "game," or data analysis"), *combined with* qualitative case studies (the Lyall-Wilson article does this, for example). The people who do this are the people who are getting, or hold, the top jobs (or, at least, some of the jobs).
2) While I recognize that this is, indeed, tongue-in-cheek, try getting someone to admit they're publishing what they're publishing for the sake of tenure or other requirements! This article might also be interesting to you, in the wake of bats*t crazy Amy Bishop: http://chronicle.com/article/Reactions-Is-Tenure-a-Matter/64321/.
3) Your comment about the squad leader made me laugh, for three reasons. First, I have never served, but I met and worked with an E-7 and former E-4 last year, the former a high dropout, I believe, the other who had yet to complete his college degree. Both were far more savvy and astute and intelligent than I could ever hope to be (hopefully that does not sound patronizing - I sincerely hold both in the highest regard). Second, I'm reminded of Samuel Johnson's comment, which I cannot recall in anything resembling its true glory, that he would take the wisdom of any common plowman over that of a _ anyday. Third, and similarly, is the quote by William F. Buckley that he would rather be governed by the first 300 names in the Boston phone book than by the Harvard faculty.
ADTS
that's a bit of an unfortunate, and in many ways uncomprehending, take on quantitative and formal methods.
War is a human endeavor. I recognize that it is a phenomenon that does not conform to neat mathematical equations. … there are no mathematical equations in Vom Kriege and that it is nonetheless unlikely that my legacy will transcend that of Clausewitz.
Clausewitz is not the model for clear thought on gambling, war, and qualitative analysis, as he contradicts himself with some confused paragraphs about these subjects in Book One, Chapter One:
If war closely resembles a game of chance like cards, then probability theory certainly has a role to play, which indeed provides a basis for military calculations. We cannot blame Clausewitz for confusing "absolute, so-called mathematical, factors" as distinct from "assessing probabilities." Clausewitz, wrote On War beginning in 1816, just a few years after Laplace published his Analytic Theory of Probabilities, which introduced such basic concepts as the normal distribution, exp(–(x–μ)^2/2σ)/(√(2π)σ). (Gauss said that he did it all before twenty years earlier, and he's probably telling the truth, but that's a different story.) Probability theory has come a long way since Clausewitz wrote as if this were somehow less "absolute, so-called mathematical" than the quantitative knowledge of his day.
You're correct to criticize the attempt to compute things that cannot be easily computed, and not to use stupid models, but because you have access to tools that Clausewitz did not, you don't have the excuse of making Clausewitz's forgivable mistake of dismissing potentially useful quantitative results.
As for actual gambling, I haven't yet read Patterson's book, but I hope that he doesn't lay the crash at the feet of quantitative analysis rather than, say, an unregulated financial industry whose players are very strongly incentivized to make large, leveraged, and destabilzing bets on the creditworthiness of their clients (read: AIG, Iceland, Greece). Quantitative analysts who recognized the bubble for the Ponzi scheme that it was and bet accordingly made out very well. You'd do well to follow this book with Michael Lewis's still-relevant Liar's Poker and Frank Partnoy's Fiasco on the derivatives market. Speaking of derivative, I heard that some other guy ripped off Partnoy's title.
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.
AM....why all the fuss over quants?
Should add one more line....you should never say never.
What about parallel realities? Just never know.
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 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, you made Steve Walt's blog:
http://walt.foreignpolicy.com/posts/2010/03/01/numbers_strategy_and_war
ADTS
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, 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, 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 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 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.
As one commented " War is a human endeavor. I recognize that it is a phenomenon that does not conform to neat mathematical equations. … there are no mathematical equations in Vom Kriege and that it is nonetheless unlikely that my legacy will transcend that of Clausewitz.." That was true. Find more world political news
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As commented above "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. " True. Find more current events news
I am glad to see that you have finished the Wall Street Journal reporter Scott Patterson's book on how quantitative hedge funds. I admit that I don't know much about the issues discussed in this well written article, so I thank you for writing the post and helping us learn. It makes me love the internet even more, after I searched for news, electric griddle reviews, movies and other things that I probably forgot. I might as well check other sections on this site, since I like it so far.
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The only thing I’ll add is that Clausewitz was, actually, directly attacking an empirical tradition among military writers of his era. These writers, like Jomini, used which used mathematical equations (in the form of strategic lines) to demonstrate flanking manouevers that would allow generals htp company to outwit their enemies before they really had a chance to fight. I don’t speak math, so I won’t comment. But I do feel that there is an important lists place for quants. Exum sounds like a bit of a dork here.
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Mutterwitze
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. Mutterwitze
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