Complexity Wins Again

Assumptions and Guesswork
“The Tiniest Inconsistency”
Moving Parts
The Bias in Models
Retirement Meltdown
AI to the Rescue?
Puerto Rico and Dallas

Here in Puerto Rico we are now an hour ahead of Eastern Time, as we don’t do daylight savings time. I stayed up much later than normal on election night to watch the returns. I knew fairly early, when Florida and North Carolina looked so close, we weren’t going to see a “blue wave.” But beyond that, it was clear the presidency would not be settled that night.

We did learn one thing with high confidence, though. The political polls were seriously, dreadfully wrong. Biden’s comfortable lead both nationally and in swing states bore very little resemblance to actual voting. This follows a similar miss in 2016.

It will take time to nail down the precise error, but we will be told, “Something was different this time.” Well, of course. “Something” is always different. The polling industry’s conceit is that it knows how to collect meaningful samples and then adjust them to resemble the pollsters’ assumed reality. The assumption can be wrong, and often is.

Understand, pollsters are paid to try to get things right. The true professional pollsters try to get it right and most still missed it.

In that regard, the political polling profession resembles the economics profession, which believes its elaborate models can reveal the future. Both fail because they try to measure incredibly complex systems that change in ever-changing ways. Similarly, professional epidemiologists try to create virus models. They’ve done better than political pollsters and economists, but they also must make assumptions.

Today I want to use the election to illustrate just how complex a seemingly simple situation can be. This matters not just politically, but economically as well.