91–100 of 213 posts
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Yes, this is the source of the disagreement. Silver, I think, probably gets the math. But his aim is to entertain. Taleb's aim is something like predictive rigor. God knows why he cares about Silver. I think everyone gets that Silver is doing entertainment.
A hell of a lot of people in 2016 sure as shit didn't. Funny how he's now "just entertainment" after such a public and embarrassing misfire.
Isn’t it just one big misunderstanding between them? Taleb thinks 538’s probabilities represent a binary option price on the event, in which case, yes, the probabilities should stay very close to 50% because the vol is so high. Whereas Silver’s models are actually saying “Based on current polls, if the election were held tomorrow, then the probability candidate X wins is Y%” and are thus allowed to swing more wildly.…
Silver is making a prediction based on the best model that he has.
It isn't quite arbitrage, but if you did binary option pricing then you could indeed fairly safely make money off of Silver by taking known events that you know swing polls, like conventions, and betting on the likely pricing changes.
That said, the data set that Silver is developing using his model is going to be one of the key inputs into a more sophisticated pricing model. And how to factor in those other external factors is going to require a lot of calibration between Silver's predictions and a known database of such external factors. Which means that Silver's approach is the right starting place to get there, no matter how much Taleb might wish it otherwise.
Isn’t it just one big misunderstanding between them? Taleb thinks 538’s probabilities represent a binary option price on the event, in which case, yes, the probabilities should stay very close to 50% because the vol is so high. Whereas Silver’s models are actually saying “Based on current polls, if the election were held tomorrow, then the probability candidate X wins is Y%” and are thus allowed to swing more wildly.…
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Loads of people criticized Silver for not having "predicted" Trump's electoral victory. I imagine Silver's language was trying to hand-hold people to an understanding that even 20% probability events happen 1 out of 5 times. With so many people trying to twist and spin every headline, prediction, number, I appreciate Silver's attempt to make a reasonable guess with transparent methodologies.
It is worth noting that 538 doesn't keep a historical record of their predictions, making it difficult to really see how they predict outcomes coming up to a conclusion. You can only see the latest/final prediction. 538 also predicted lower chances of victory in the weeks and months leading up to that, then adjusted it on election day vanishing away their earlier guesses. This isn't wrong on the face of it, but peopl…
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Do you have an example of a time where Nate Silver has shown a misunderstanding of probability? Everything I've read by him has seemed informed.
The best criticism I can come up with is that 538 probably doesn't do a sufficient job of explaining to its audience that their published probabilities are predictions for what would happen if the event occurred today . This seems to be one of Taleb's (and others') criticisms of their predictions: that they don't consider the probability of major unexpected events occurring between now and the event (like an athlete…
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If over time, your forecasts predictably change, then you can be arbitraged. If e.g. I know that you'll have a probability below 40% at some point in the future, and I know you'll have a number above 41% at some point in the future, then it's trivial to create a strategy over time that is guaranteed to make money. Taleb's claim, as I understand it, is that Silver is incorporating random noise into his model and so wi…
If over time, your forecasts predictably change, then they are not the best forecasts you could make with the information on hand (I take it that by "predictably change", you mean that they will change in a predictable way, not just that it is predictable that they will change somehow.) If I am not mistaken, an opportunity for arbitrage is not created merely by a certainty that they will change somehow; it would requ…
And this is precisely the complaint Taleb is making.
An arbitrage is just a strategy that's guaranteed to make money. If you know for sure that something will go up and down at different points you could make money risk free. Simply buy at any point below the current price and sell at any point above.
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Loads of people criticized Silver for not having "predicted" Trump's electoral victory. I imagine Silver's language was trying to hand-hold people to an understanding that even 20% probability events happen 1 out of 5 times. With so many people trying to twist and spin every headline, prediction, number, I appreciate Silver's attempt to make a reasonable guess with transparent methodologies.
It is worth noting that 538 doesn't keep a historical record of their predictions, making it difficult to really see how they predict outcomes coming up to a conclusion. You can only see the latest/final prediction. 538 also predicted lower chances of victory in the weeks and months leading up to that, then adjusted it on election day vanishing away their earlier guesses. This isn't wrong on the face of it, but peopl…
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can you detail your cristicism of Nate Silver? I mean he's not a researcher trying to predict the election and somehow has to explain everythong the layman. So some derivation from the mathmatical definitions of probability are expected, i think (the mathematical definitions in its full glory are suprisingly complicated). I always like FiveTheirghtyEight, mostly because the plots are so beautiful and it never struck…
In many industries if we redefined probability it would be considered malpractice or fraud. We expect our doctors not to tell us we have a good chance of surviving surgery when we only have a 20% chance of surviving. I would be fraud (I assume) for a lottery to tell someone buying a ticket that they have a good chance of winning millions (0000000.1% probability that you will win but a 75% probability that it will be…
I also think that both of your examples are not really useful, they don't violate the laws of probability. What a good chance is depends on more things than just the raw probabilities, for example i could phrase a ticket with a good chance as E(reward - price) > 0 (so its independent of its actual probability).
I don't consider "Event A and not A are both extremely likely" as P(A) != 0.5, communicating probabilities is not a mathematical problem, especially if words like "extremely" are used. Maybe P(A)=0.3 might also be extremely likely for your target audience.
Using your argument...what's a good chance of dying? It depends on the interpretation of the layperson and needs carful wording.
I remain faithful that his actual models are sound.
As I understand it, the feud in its current form started from a tweet from Dinesh D'Souza [1] in which he interpreted Nate Silver's statement that "Dems, GOP winning House are 'both extremely possible'" to mean that they had gone from an 80% chance of winning to a 50% chance. Taleb inexplicably chose this as the hill to die on [2] and wrote a lengthy and technical paper to refute, and replied (on the [2] thread) "Whe…
Really? Because financial crashes happen a lot more regularly than black swans. This seems like par for the course for Taleb; I've never read him in depth but he always seemed like a memer.
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That's not specifically a Brooklyn thing, it supposedly has more to do with the fact that most Italian families in the tri-state area came to the U.S. before Italy was a country with a standardized language. That's why e.g. in Connecticut they pronounce pizza as abeetz. For whatever reason knowing how to pronounce and spell Italian words "incorrectly" has become a point of local pride, even for people who aren't at a…
Is this related to the characters in the Sopranos dropping the final vowels in a bunch of Italian words? Madonn, gabagool, prozhut, etc.
Then there's also things like tirami-sue vs tirami-zoo, which don't even make sense since the dessert wasn't invented until recently.