Things that Cannot be Modeled, Should be Modeled Over and Over
I read a post titled “Things that Cannot be Modelled Should not be Modelled” [sic], and to say I’m irritated is an understatement. The post itself is riddled with inconsistencies and leaps of logic, but there is an underlying concept that I struggle with, this notion of “why try?” This concept that we’ve somehow failed, so pack up and head home. I cannot understand this mentality. If there is one thing that history teaches over and over and over, it’s that humans are capable of amazing and astonishing feats and progress, many of which appeared to go against the prevailing concepts of logic or nature at the time.
Precisely Predicting versus Playing the odds
Nobody believes that modeling risk is an attempt to predict an exact future, it’s about probability and laying odds. As Peter L. Bernstein points out in “Against the Gods”, way back in history, the thought of laying odds to rolling dice was thought to be ridiculous. Of course the Gods controlled our fate, so of course, attempting to forecast the throw of dice (quantify risk) was absurd. I’m sure the first few folks who understood odds profited nicely. The concept of probability itself is relatively young in our history and attempting to quantify and model risk is even younger. Of course we’re going to make mistakes. And history shows us that people throughout time have considered these mistakes and acts of progress an affront to the laws of “nature”. I read that post by Jacek Marczyk in that light.
Fact is, every crazy pursuit by humankind has had critics and for good reason. Just focusing on the field of medicine can yield thousands of insanely beneficial and insanely insane acts of science. Books like “Elephants on Acid” show us that people do a lot of weird things and every once in a while, truly amazing things occur. We have the right to question, it’s our duty to challenge, but it is never an option to say don’t try. The whole point is we don’t give up. We plow forward and once we’ve reached a dead-end, we take a step back and try to move forward in another direction.
But back to the article. The articles lists things like “human nature” and “feelings” as “impossible to model”. I’m sure fields like Behavioral Economics and most every part of psychology would argue against that. Just reading through books like “Predictably Irrational” or “How We Know What isn’t So” we can see that human nature and even human feelings have been modeled and benefit has been found in that modeling. How prices get set and advertising campaigns are shaped have both benefitted from attempts in modeling human behavior and feelings. I’d also like to point out that the road to modeling those things is probably filled with a few set backs and failures, but that doesn’t make it not worth the effort.
Enough predication, let me get to my point. Being able to quantify or model risk is not a prize unto itself. The purpose of studying, researching and modeling risk is not to simply reach a pinnacle of holy-riskness. The pursuit of risk exists for one simple reason: to support the decision process. Let’s be honest here, those decisions are being made whether or not formal analysis is performed. The true benefit of risk management is to make better, more informed (and hopefully profitable) decisions. Saying that we should not attempt to model or quantify risk is like saying we should not try to make better decisions.
Going back to a flight example, when the Wright brothers made their first flight, did folks say “that flight didn’t make from New York to Chicago, so shut this whole flight concept down.” Perhaps they did, but those people would now be labeled naysayers, simpletons, perhaps even idiots.
One of the first things taught to furniture makers is to build a model first. Building models allows them to play out different ideas and see problems before they build. It allows them to try out different decisions before they actually make a decision. Even experienced designers wouldn’t fathom squaring up their first piece of wood without a model to educate themselves on the world they are about to construct. Hundreds of years of furniture makers have learned that the cost of not modeling outweighs the investment to model an idea. Models exists to support decisions, they attempt to answer questions around “what if.”
Without models of weather, we wouldn’t have any indication about storms or severe whether short of looking at the sky. We would not be able to accurately fly planes, nor navigate them accurately without models. We cannot argue that attempting to model our world to support the decision process is a waste of time. History has taught us that the only true failure is not trying in the first place.
To say that we shouldn’t try something based on some perception of the “laws of nature” or pure semantics is insulting. Now if someone wants to argue that our current set of risk models are broken, then bring that on. Step right up and let’s discuss those findings, let’s talk about better decisions and let’s alter the models. Perhaps we even toss our current models aside and start from scratch, but saying that we shouldn’t model at all is self-defeating and creates nothing but noise distracting from the real work. Not attempting to improve our decision process is not an option, attempting new approaches or identifying alterations is not only an option, it should be expected.