Hume, Causation, Science and the Big Lie

Ritholtz has an interesting post.  Here's the beginning:

Interesting article in Wired this month, ostensibly about the tribulations of the modern scientific method, big pharma drug development, etc. But within the article is an excellent digression about the complexities of causation:

“Causes are a strange kind of knowledge. This was first pointed out by David Hume, the 18th-century Scottish philosopher. Hume realized that, although people talk about causes as if they are real facts—tangible things that can be discovered—they’re actually not at all factual. Instead, Hume said, every cause is just a slippery story, a catchy conjecture, a “lively conception produced by habit.” When an apple falls from a tree, the cause is obvious: gravity. Hume’s skeptical insight was that we don’t see gravity—we see only an object tugged toward the earth. We look at X and then at Y, and invent a story about what happened in between. We can measure facts, but a cause is not a fact—it’s a fiction that helps us make sense of facts.”

Thus, we humans love a grossly over-simplified narrative. This is simply a function of using effective shortcuts to make snap decisions in the wild:

“The truth is, our stories about causation are shadowed by all sorts of mental shortcuts. Most of the time, these shortcuts work well enough. They allow us to hit fastballs, discover the law of gravity, and design wondrous technologies. However, when it comes to reasoning about complex systems—say, the human body—these shortcuts go from being slickly efficient to outright misleading.

The whole post is worth reading.  He goes on to deal with modern effects of the phenomenon, showing how our simplified narrative can be straight-up misleading, especially when it comes to complicated systems.  Here's where I have a problem:

This has come up repeatedly over the years — especially with regard to the financial crisis and the Big Lie. Its not that these folks are evil, they merely carry the vestiges of evolution — a flawed analytical engine of which they seem wholly unaware of.
For the rest of us, if we develop some awareness of these analytical errors, we can at least stand a fighting chance to go beyond erroneous perceptions towards true understanding:

“The good news is that, in the centuries since Hume, scientists have mostly managed to work around this mismatch as they’ve continued to discover new cause-and-effect relationships at a blistering pace. This success is largely a tribute to the power of statistical correlation, which has allowed researchers to pirouette around the problem of causation. Though scientists constantly remind themselves that mere correlation is not causation, if a correlation is clear and consistent, then they typically assume a cause has been found—that there really is some invisible association between the measurements.”

In other words, we can figure out actual causation. But to do so, we need to avoid the over simplifications, the correlation errors, and recognize the complexity of causation in the world of finance.

 Ritholtz is allowing here (normally this isn't the case for him) that perpetrators of The Big Lie are doing so under a mistaken simplification of a complex system.  I call shenanigans on that.  That may be somewhat true of the mass followers of the reactionary movement which sees government as the root of all problems, but I don't even think that holds there.  For the followers, this is another case of ignoring uncomfortable facts which conflict with their belief system.  They do the same with science and evolution, and their belief system now encompasses capitalism and politics.  They believe that all the things they hold dear are right, just and infallible.  Any fact to the contrary is ignored.

As for the perpetrators of The Big Lie, they know better, and their incantation of The Big Lie is evil.  They are directly manipulating their followers for their own personal gain and undermining the only other system which has the power to stop their looting, the government.  They know exactly what happened in the financial system, and they want to allow such abuses to continue.  There is no earthly way that Peter Wallison is so ignorant as to not know that mortgage brokers, large commercial banks and investment banks were at the heart of the financial crisis.  He is manipulating the rubes to continue the grift.  That is evil.

On a side not note, Hume has been on my To Read list for far too long.  His is a case of a man way too far ahead of his time.