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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2527

The Battle of Silicon Siblings – Computer Model VS Crystal Ball

Hemantha Abeywardena writes from London……

A few years ago, I lost some money while staying at a place in Colombo, when I was a sworn rationalist. Two professional friends of mine, strictly speaking, 'kidnapped' me to a place in a suburb of Colombo, against my feeble will, raising the hopes of finding both the culprit and what I lost. They took me to the particular place where a woman went into a trance and coughed up the information that the victims were longing for. I was forced to stand in a queue along with the two friends until my turn came, keeping the mild embarrassment, that inevitably shoots up in the given surroundings, at bay – for being at a strange place for an equally strange reason.

When my time was up, I was taken in. The woman in her early twenties listened to my plea through my friends in - my presence, of course. A few rituals were followed in quick succession which ended with hitting a coconut really hard on the floor: I got into a state of shock; the woman went into the trance; spoke in a language that neither my friends nor I understood; sweat profusely as if she had a sun stroke; in the end, much to our amazement, she divulged what we were really looking for. The initials of the name of the culprit were said along with the amount of money that was missing. She wound up her session with us giving us the assurance the money will be returned before a certain time by the man himself along with a confession. The events turned out to be exactly like that.

This small personal incident did not convert a rationalist – in this case, me - who used to insist upon reasons for everything I see or hear due to my scientific background, into a believer in supernatural - overnight. Nor did it make me pursue these things in an ambitious manner just for the sake of it. However, I learnt my lesson: not to ‘rubbish’ things out of hand just because something is not scientific enough to be sensed through our known finite five senses - to be subjected to the nutcracker of detailed analysis.

Time and again, my known five senses have fooled me and even deceived me. A few years ago, I went inside a massive flight simulator in an exhibition in Earl’s Court, London. I shrieked along with the fellow ‘passengers’ when the ‘flight’ took us over glaciers, tall mountains, shark-infested oceans and very long rivers with gut-wrenching dives and manoeuvres, when the capsule we were in just moved through a small angle from side to side.

The apparent movement of trees and bushes in the opposite direction when you are on a fast moving train is another instance where you get fooled by the senses. The birth of well-hackneyed phrase – beauty lies in the eyes of the beholder – is also the acceptance of the limits of our sense of vision; habitual stalkers cause headaches for even ordinary women for this reason.

The encouraging news is that I am not the only one who has been fooled as a result of relying too much on reason. The present unprecedented economic turmoil is now blamed on a close cousin of reason – the computer modelling.

Alan Greenspan, the former chairman of Federal Reserve did not mince his words while putting the blame for the whole fiasco on computer models; he said last year, that it is a classic case of GIGO – garbage in; garbage out.

Computer modelling has become an integral part of any modern business. Based on data collected in the past few years or even decades, patterns are observed in variables by clever mathematicians to come up with certain formulae to quantify the relationships, if any. Then comes the prediction, the forecast, based on this model, with the convenient assumption that factors which determined the things, will stay as they are for the next century or so, exactly as they used to play their part in the past – the period they observed with meticulous attention.

Alan Greenspan refereed to this period where the data was collected as the period of euphoria – the good times. So, here we go: collect the data from good times, come up with a formula, sketch the curve, use linear interpolation or whatever, and make your brilliant forecast for the next five years: the house price will go up exponentially for ever; people will keep spending; there will be more cars on the road and the demand for oil will go through the roof.

The difference between this models and a sand castle is, at least the latter has something to stand on no matter how unstable it is, whereas computer models do exit even in the imagination of the creator; it is the user who ultimately pay the heavy price.

When none of the crucial factors turned out to be the way they should be, the forecast started vanishing into thin air making the torrents of gloom shower the whole globe.

The fiscal problems at the Golden Key investments, a subsidiary of Ceylinco Group in Sri Lanka, in all probability, may have arisen due to these business forecast based on computer models going horribly wrong as well. For instance, the brand new ENT hospital it owns in Rajagiriya, may have built on someone’s idea that the Sri Lankan economy would keep growing for ever to keep places like that busy. Unfortunately, the unthinkable – global meltdown – happened, caught up in it, and the company was not strong enough to weather the storm, despite the physique of its beloved chairman.

It is sad that no economist came up with the model that forecast the slow emergence of investors like Sakvithi and Danduwam Mudalali from the south and their sudden disappearance, even without telling their next of kin, after being intoxicated by nectar of capitalism.

It is not just the business that had been let down by mathematical modelling. We hear about complaints – even amongst the scientific folks – that a similar approach has been made in weather forecasting too. There is clear evidence that the Global Warming is also hyped up by either tampering with data or choosing the figures that favours the dreadful outcome.

Despite very bad economic circumstance that we live in, there are still people who take risks while running businesses. They may get the guidance from Crystal Balls, something you can’t look down on any more, especially in the present crisis. Both have a few things in common: chance encounters; risks; the ability to attract thousands; charge a phenomenon fee for services, to name but a few.

Human beings has the inherent weakness of going from one extreme to the other, especially one of them beats them very hard. So, if they are being let down by science-based computer models, they run towards the other end – the non-science.

Statistics project a picture of people seeking help and advice from Crystal Balls and Clairvoyance as never before. Who can blame them, when science and reason collectively make commonsense impotent and irrelevant?

- Asian Tribune -

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