Fake news and beliefs

Much has been written of the role of fake news in the US presidential election. While we will never know how much it actually contributed to the outcome, as I will show below, it could certainly affect people’s beliefs. Psychology experiments have found that humans often follow Bayesian inference – the probability we assign to an event or action is updated according to Bayes rule. For example, suppose P(T) is the probability we assign to whether climate change is real; P(F) = 1-P(T) is our probability that climate change is false. In the Bayesian interpretation of probability, this would represent our level of belief in climate change. Given new data D (e.g. news), we will update our beliefs according to

P(T|D) = \frac{P(D|T) P(T)}{P(D)}

What this means is that our posterior probability or belief that climate change is true given the new data, P(T|D), is equal to the probability that the new data came from our internal model of a world with climate change (i.e. our likelihood), P(D|T), multiplied by our prior probability that climate change is real, P(T), divided by the probability of obtaining such data in all possible worlds, P(D). According to the rules of probability, the latter is given by P(D) = P(D|T)P(T) + P(D|F)P(F), which is the sum of the probability the data came from a world with climate change and that from one without.

This update rule can reveal what will happen in the presence of new data including fake news. The first thing to notice is that if P(T) is zero, then there is no update. In this binary case, this means that if we believe that climate change is absolutely false or true then no data will change our mind. In the case of multiple outcomes, any outcome with zero prior (has no support) will never change. So if we have very specific priors, fake news is not having an impact because no news is having an impact. If we have nonzero priors for both true and false then if the data is more likely from our true model then our posterior for true will increase and vice versa. Our posteriors will tend towards the direction of the data and thus fake news could have a real impact.

For example, suppose we have an internal model where we expect the mean annual temperature to be 10 degrees Celsius with a standard deviation of 3 degrees if there is no climate change and a mean of 13 degrees with climate change. Thus if the reported data is mostly centered around 13 degrees then our belief of climate change will increase and if it is mostly centered around 10 degrees then it will decrease. However, if we get data that is spread uniformly over a wide range then both models could be equally likely and we would get no update. Mathematically, this is expressed as – if P(D|T)=P(D|F) then P(D) = P(D|T)(P(T)+P(F))= P(D|T). From the Bayesian update rule, the posterior will be identical to the prior. In a world of lots of misleading data, there is no update. Thus, obfuscation and sowing confusion is a very good strategy for preventing updates of priors. You don’t need to refute data, just provide fake examples and bury the data in a sea of noise.


Fun with zero gravity

Here is the video of the band OK Go filmed on a plane doing parabolic arcs. OK Go is famous for having the most creative videos, which combine Rube Goldberg contraptions with extreme synchronized choreography. The video of Upside Down and Inside Out is a single shot. Each zero gravity arc is about 30 seconds long. The intervening hyper gravity arcs are compressed in the video although it is very hard to detect in the first viewing.


CO2 and the return of the dinosaurs

The dinosaurs lived during the Mesozoic Era, which was divided into the Triassic, Jurassic, and Cretaceous Periods. Many of the iconic dinosaurs that we know and love such as Tyrannosaurus rex and Triceratops lived at the end of the Cretaceous while others such as Stegosaurus and Apatosaurus (formerly known as Brontosaurus) lived 80 or so million years earlier in the Jurassic. I used to picture all the dinosaurs co-existing simultaneously but the time span separating Stegosaurus from T. rex is larger than that between T. rex and the present! Dinosaurs also weren’t the only creatures alive at that time, just the most dominant ones. Technically, the term dinosaur only applies to land-based reptiles with certain features. The avian reptiles, such as Pteranodon, or the marine ones, such as Plesiosaurs, resembled dinosaurs but were not classified as such. Aside from those dinosaur-like animals, there were also invertebrates, fish, sharks, and a class of animals called Synapsids, defined by an opening in the skull behind the eyes, from which all mammals are descended.

Synapsids were small marginal creatures during the Mesozoic but came to dominate the land after the dinosaurs went extinct at the end of the Cretaceous (the KT extinction event). The consensus theory is that a large asteroid or comet strike in the Yucatan set off fire storms, seismic events and a cloud that blocked sunlight for up to a year. This caused plants to die globally, which collapsed the food chain.The only survivors were creatures that could go deep underwater or bury underground and survive long periods with little or no food. Survivors of the KT extinction include some fish, small sharks, small crocodiles and other cold blooded reptiles, small bipedal theropod dinosaurs, of which T-Rex is a member, and small rodent-like synapsids.

If the KT extinction event was a transient perturbation then it is reasonable to expect that whatever it was that allowed dinosaurs to become dominant would remain and the surviving theropods would come to dominate again. But that is not what happened. Theropods did survive to become modern birds but aside from a few exceptions, most are small and almost all are avian. Instead, the Synapsids came to dominate and the largest creature to ever live, namely the Blue Whale, is a Synapsid. Now this could be purely due to random chance and if we played out the KT event over and over there would be some distribution where either Synapsids or dinosaurs become dominant. However, it could also be that global conditions after the Cretaceous changed to favour Synapsids over dinosaurs.

One possible change is the atmospheric level of carbon dioxide. CO2 levels were higher than they are today for much of the past 500 million years, even with the recent rapid increase. The levels were particularly high in the Triassic and Jurassic but began to decline during the Cretaceous (e.g. see here) and have continued to decrease until the industrial revolution when it turned upwards again. Average global temperatures were also higher in the Mesozoic. The only other time that C02 levels and global temperatures have been as low as they are now was in the Permian before the Great Dying. During the Permian, the ancestor to dinosaurs was a small insectivore that had the ability to run on two legs while the dominant creatures were none other than the Synapsids! So, mammal-like creatures were dominant before and after the dinosaurs when CO2 levels and temperatures were low.

Perhaps this is just a coincidence but there is one more interesting fact to this story and that is the amount of stored carbon (i.e. fossil fuels) has been very high twice over the past 500 million years – the Permian and now. It had been believed that the rise in CO2 at the end of the Permian was due to increased volcanism but a paper from 2014, (see here), speculated that a horizontal gene transfer event allowed an archaea microbe to become efficient in exploiting the buried carbon and this led to an exponential increase in methane and CO2 production. The active volcanos provided the necessary nickel to catalyze the reactions. Maybe it was simply a matter of time before some creature would find a way to exploit all the stored energy conveniently buried underground and release the carbon back into the atmosphere. The accompanying rise in temperatures and increased acidification of the oceans may also spell the end of this current reign of Synapsids and start a new era. While the smart (rich?) money seems to be on some sort of trans-human cyborg being the future, I am betting that some insignificant bird out there will be the progenitor of the next dominant age of dinosaurs.

Are humans successful because they are cruel?

According to Wikipedia, the class Mammalia has 29 orders (e.g. Carnivora), 156 families (e.g. Ursidae), 1258 Genera (e.g. Ursus), and nearly 6000 species (e.g. Polar Bear). Some orders like Chiroptera (bats) and Rodentia are very large with many families, genera, and species. Some are really small like Orycteropodidae, which has only one species – the aardvark. Humans are in the order Primates, of which there are quite a few families and genera. Almost all of them live in tropical or subtropical areas and almost all of them have small populations, many of them endangered. The exception of course is humans who is the only species remaining of the genus homo. The other genera in the great ape family hominidae – gorillas, orangutans, chimpanzees, and bonobos – are all in big trouble.

I think most people would attribute the incomparable success of humans to their resilience, intelligence, and ingenuity. However, another important factor could be their bottomless capacity for intentional cruelty. Although there seems to be a decline in violence throughout history as documented in Steven Pinker’s recent book, there are still no shortages of examples. Take a listen to this recent Econtalk podcast with Mike Munger on how the South rationalized slavery. It could very well be that what made modern humans dominate earth and wipe out all the other homo species along the way was not that they were more intelligent but that they were more cruel and rapacious. Neanderthals and Denisovans may have been happy sitting around the campfire after a hunt, while humans needed to raid every nearby tribe and kill them.

A musical selection

Since I gave up posting a musical selection every week, I changed the title. I still intend to post selections occasionally. Here is Joseph Haydn’s Quartet in E-flat major, Op. 33, No. 2, nicknamed “The Joke”, played by the Ariel Quartet. Make sure you listen to the end. I could think of nothing more appropriate for our times.


Insider trading

I think one of the main things that has fueled a backlash against the global elites is the (correct) perception that they play by different rules. When they make financial mistakes, they get bailed out with taxpayer dollars with no consequences. Gains are privatized and losses are socialized. Another example is insider trading where people profit from securities transactions using nonpublic information. While there have been several high profile cases in recent years (e.g. here is a Baltimore example), my guess is that insider trading is rampant since it is so easy to do and so hard to detect. The conventional wisdom for combating insider trading is stronger enforcement and penalties. However, my take is that this will just lead to a situation where small time insider traders get squeezed out while the sophisticated ones who have more resources will continue. This is an example where a regulation creates a monopoly or economic rent opportunity.

Aside from the collapse of morality that may come with extreme wealth and power (e.g. listen here), I also think that insider traders rationalize their activities because they don’t think that it hurts anyone even though there is an obvious victim. For example, if someone gets inside information that a highly touted drug has failed to win approval from the FDA then they can short the stock (or buy put options), which is an agreement or opportunity to sell the stock at the current price in the future. When the stock decreases in value after the announcement, they just buy the stock at the lower price, resell at the higher price, and reap the profits. The victim is the counter party to the trade who could be a rich trader but could also be someone’s pension fund or employees of the company.

Now the losing party or a regulatory agency could suspect a case of insider trading but to prove it would require someone confessing or finding an email or phone recording of the information passed. They could also try to set up a sting operation to try to catch serial violators. All of these things are difficult and costly. The alternative may seem ridiculous but I think the best solution may be to make insider trading legal. If it were legal then several things would happen. More people would do it which would drive down the prices for the trades, the information would more likely be leaked to the public since people would not be afraid of sharing it, and people would be more careful in making trades prior to big decisions because the other party may have more information than they do. Companies would be responsible for policing people in their firms that leak information. By making insider information legal, the rent created by regulations would be reduced.