At least in terms of Expected Value it is far better to be a dentist than a rock star, because dentists earn consistently large salaries while the majority of rock stars earn very little, and even those that do become successful and make millions don’t swing the profession’s average salary to the level of dentists.
And if lack of variance is valuable to you, than being a dentist becomes even more attractive!
Statistical example of the lack of variance in the long-term relative to the short-term: “A 15% return with 10% volatility (or certainty) per annum translates into a 93% probability of success in any given year. But seen at a narrow time scale, this translates into a mere 50.02% probability of success over any given second” (65)
“(T)here are Monte Carlo generators designed to structure such texts and write entire papers. Fed with ‘postmodernist’ texts, they can randomize phrases under a method called recursive grammar, and produce grammatically sound but entirely meaningless sentences that sound like Jacques Derrida, Camille Paglia, and such a crown.” (73)
If you let an infinite amount of monkeys type on typewriters, it is 100% certain that one will type a word-for-word copy of The Iliad.
“The following inductive statement illustrates the problem of interpreting past data literally, without methodology or logic:” (120)
I have just completed a thorough statistical examination of the life of President Bush. For fifty-eight years, close to 21,000 observations, he did not die once. I can hence pronounce him as immortal, with a high degree of statistical significance.
It’s easier to remember a logically linked story than an assortment of unrelated facts. Causality is easier to commit to memory, so sometimes we create it where it doesn’t exist.
“If you meet someone randomly, there is a one in 362.25 chance of your sharing their birthday…Now let us look at a situation where there are 23 people in a room. What is the chance of there being 2 people with the same birthday? About 50%. For we are not specifying which two people need to share a birthday; any pair works.” (159 – The Birthday Paradox)
“When the statistician looks at the data to test a given relationship…odds are that the results can be taken seriously. But when one throws the computer at data, looking for just about any relationship, it is certain that a spurious connection will emerge, such as the fate of the stock market being linked to the length of women’s skirts. And just like the birthday coincidences, it will amaze people.” (160)
“Data that is perfectly patternless would be extremely suspicious and appear to be man-made. A single random run is bound to exhibit some pattern – if one looks hard enough.” (169)
“Our brain is not cut out for nonlinearities…Our emotional apparatus is designed for linear causality.” (179)
Studies have shown that people are almost incapable of making the simplest decisions without emotions (Tested by surgical ablation on a piece of the brain to suspend the ability to register emotion, isolating logic. Subjects couldn’t get out of bed in the morning and wasted entire days weighing various decisions.) This is why psychologists call emotions “lubricants of reason.”
“No matter how sophisticated our choices, how good we are at dominating the odds, randomness will have the last word. We are left only with dignity as a solution – dignity defined as the execution of a protocol of behavior that does not depend on the immediate circumstance.” (246)
“There developed a social model for a stoic person, like the gentlemen in Victorian England. Its tenets can be summarized as follows: The stoic is a person who combines the qualities of wisdom, upright dealing, and courage. The stoic will thus be immune from life’s gyrations as he will be superior to the wounds from some of life’s dirty tricks.” (248)
“(E)conomics is a narrative discipline, and explanations are easy to fit retrospectively.” (257)
“It took me an entire lifetime to find out what my (core framework) is. It is: We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract. Everything good (aesthetics, ethics) and wrong with us (Fooled by Randomness) with us seems to flow from it.” (262)