Crystal Ball Readers, Prognosticators, High Priests, Entrail Readers and Charlatans

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Provoked by the piece below, it's necessary for me to give voice to one of the banes of my existence and a pet peeve.

It's obvious that H. sapiens has a deepseated desire to know the future. As usual, demand is supplied. Unfortunately, that makes them susceptible to all kinds of buncombe artists and flim-flammers. History is replete with examples of confidence men. Emotions override logic and experience which, as Mr. Dillow explains below allows for money-making opportunities.

The title of Messrs. Powdthavee and Riyanto's referenced paper?
Why Do People Pay for Useless Advice? Implications of Gambler’s and Hot-Hand Fallacies in False-Expert Setting






The strong demand for charlatans
by Chris Dillow
http://stumblingandmumbling.typepad...2012/05/the-strong-demand-for-charlatans.html
May 27, 2012

In the improbable event of ever being invited to give a commencement address, my advice to graduates wanting a lucrative career would be: become a charlatan. There has always been a strong demand for witchdoctors, seers, quacks, pundits, mediums, tipsters and forecasters. A nice new paper ( http://www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=6557 ) by Nattavudh Powdthavee ( http://www.powdthavee.co.uk/ ) and Yohanes Riyanto ( http://www.expernomics.com/yer/index.htm ) shows how quickly such demand arises.

They got students in Thailand and Singapore to bet upon a series of five tosses of a fair coin. They were given five numbered envelopes, each of which contained a prediction for the numbered toss. Before the relevant toss, they could pay to see the prediction. After the toss, they could freely see the prediction.

The predictions were organized in such a way that after the first toss half the subjects saw an incorrect prediction and half a correct one, after the second toss a quarter saw two correct predictions, and so on. The set-up is similar to Derren Brown's The System, which gave people randomly-generated tips on horses, with a few people receiving a series of correct tips.

And here's the thing. Subjects who saw just two correct predictions were 15 percentage points more likely to buy a prediction for the third toss than subjects who got a right and wrong prediction in the earlier rounds. Subjects who saw four successive correct tips were 28 percentage points more likely to buy the prediction for the fifth round.

This tells us that even intelligent and numerate people are quick to misperceive randomness and to pay for an expertise that doesn't exist; the subjects included students of sciences, engineering and accounting. The authors say:

Observations of a short streak of successful predictions of a truly random event are sufficient to generate a significant belief in the hot hand.​

It's easy to believe that this happens in real life. For example, the people who are thought to have predicted the financial crisis of 2008 are invested with an expertise which they might not really have.

Of course, there are other reasons why people might want to pay for forecasts; maybe they want a false sense of security of a predictable world, or they want someone to blame if things go wrong. This paper, however, suggests that these are not the only motives. Instead, people are too quick to perceive skill and thus to pay for something that doesn't exist. The demand for forecasters and tipsters substantially exceeds the real ability such pundits actually have.

About the author
http://normblog.typepad.com/normblog/2005/11/the_normblog_pr_1.html

 

[trysail]

Rising Gas Prices Could Put Sting On Summer

February 19, 2012
The national average for unleaded gas has risen to $3.50 a gallon only three times in history. This year's rise to that threshold is the earliest ever, and the Department of Energy suggests that prices could near $5 a gallon by the start of the summer driving season. Weekend Edition Sunday host Rachel Martin talks with Phil Flynn of the futures brokerage PFGBEST.


Copyright © 2012 National Public Radio®. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

RACHEL MARTIN, HOST:

Across the country, gas prices are hitting heights only seen three times in history and never this early in the year. This past week, the national average price for a gallon of unleaded gas shot above $3.50. Some analysts say that Americans could pay up to $5 a gallon by the start of the summer driving season. For more, we're joined by Phil Flynn, an energy analyst and vice president at the futures brokerage PFGBEST in Chicago. Welcome to the show, Phil.

PHIL FLYNN: Thanks, Rachel. It's great to be here.

MARTIN: So, Phil, we know gas prices go up and down, sometimes dramatically. What is different about this particular spike?

FLYNN: Well, I think it's because it's happening at a time when demand is weak and at a time when normally gasoline prices go down. What's happening that's different this time is that we're seeing an unprecedented geopolitical risk in the price of oil. And more and more the price of oil has been driving up gasoline prices. Add to that the risks we're seeing in places not only in Iran but in Sudan or in Syria. All of these risk factors have been keeping the price of oil elevated. And that, of course, shows up at the gas tank almost immediately.

MARTIN: And what about on the supply side? What's happening in terms of refinery capacity here in the U.S.?

FLYNN: Well, refining capacity is going the way of the dinosaur. The price of oil continues to go up. There are new regulations on these refineries as far as clean air goes. And they can't make as much of a profit and they can't stay in business. And we're seeing refineries not only in this country but in Europe go bankrupt and just walk away from the refineries as opposed to put up with what has been not a very profitable business.

MARTIN: OK. So, what does mean, Phil? Is this just gloom and doom talk? I mean, we're always hearing about the specter of $5 a gallon gas, but could we see that this summer?

 

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http://66.70.86.64/ChartServer/ch.gaschart?Country=Canada&Crude=f&Period=3&Areas=USA Average,,&Unit=US $/G​

 

[run_silent]

I'm feeling you've suffered a loss. Maybe a friend, family, loss of work or passed over for something.

 

[trysail]

Q: Why is it that people won't just say, "I don't know."

A: Because the world is (apparently) full of credulous dimbulbs who are (apparently) willing to accept the word of charlatans and frauds.

 

[Very_Bad_Man]

BUsybody's Alt?

 

[trysail]

No one can consistently and accurately predict the short run future of interest rates, earnings, petroleum prices or the stock market. When you
hear some idiot do it, you can be assured of only one thing— you are listening to a fool or a crook.

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http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=11pO




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[4est_4est_Gump]

 

[trysail]

“What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices…. Peak oil has arrived.”

- Paul Krugman
“A Finite World”
New York Times
December 26, 2010​

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[trysail]

"A genuine expert can always foretell a thing that is 500 years away easier than he can a thing that's only 500 seconds off."

-Mark Twain
A Connecticut Yankee In King Arthur's Court​

Ain't that quote a beauty?


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