Why Are We Suddenly So Bad At Predicting the Future?

Imagine that a monkey got into the control room of the universe and spent the year clicking random buttons. Imagine him hopping about on the ‘one musician less’ button, stomping on the ‘auto-destruct’ lever and gurgling while he thumped repeatedly on the ‘introduce chaos’ switch. Close your eyes and picture him dropping a giant poo on the bright red panel marked ‘do not touch under any circumstances’. That my friends is the only way to think about 2016 – after all, it was the year of the monkey in the Chinese zodiac. It was the year when rational thinking took a beating, when meritocracy became a bad word, when liberalism escaped from the battlefield to a cave in the mountains to lick its wounds. And not surprisingly, a year when projections, predictions and polls made as much sense in the real world as an episode of Game of Thrones on steroids.
Given much of our lives are spent in productively engaging with the future and making decisions based on big and small decisions about the possible future, this last point is more important than just the schadenfreude of laughing at pollsters and would be intellectuals. The present passes too quickly, so really every decision you’ve ever made in your life is counting on future events to turn out in ways that are favourable. Getting this wrong is therefore injurious to health, to put it mildly. And yet our ability to predict the future has never been under such a cloud in living memory. Why is this so?

Fundamentally, we’re wired to think linearly in time, space and even line of sight. We are taught compound interest but we get it intellectually rather than viscerally. When you first encounter the classic rice grains and chessboard problem, as a smart person, you know that it’ll be a big number, but hand on heart, can you say you got the order of magnitude right? i.e. the total amount of rice on the chessboard would be 10x the world’s rice production of 2010? Approximately 461,168,602,000 metric tons? This problem of compounding of effects is incredibly hard to truly appreciate, even before you start to factor in all the myriad issues that will bump the rate of change up or down, or when the curve hits a point of inflexion. The Bill Gates quote  – ‘we over-estimate the impact of technology in 2 years, and under-estimate the impact over 10’ – is a direct reframing of this inability to think in a compound manner.

Then there’s the matter of space and line of sight. The way the future unfolds is dramatically shaped by network effects. The progress of an idea depends on it’s cross fertilisation across fields, geographies and disciplines, across any number of people, networks and collaborations. These collaborations can be engineered to a point or are the result of fortuitous clustering of minds. In his book ‘Linked’ – Ablert-Lazlo Barabasi talks about the mathematician Erdos who spent his life nomadically, travelling from one associates’ home to another discussing mathematics and ironically, network theory. Not surprisingly, a lifestyle also practiced for many years by a young Bob Dylan, if you substitute mathematics for music. Or consider the story of the serial entrepreneur in Rhineland in the 1400s, as told by Steven Johnson, in ‘Where Good Ideas Come From’. Having failed with a business in mirrors, he was working in the wine industry, where the mechanical pressing of grapes had transformed the economics of winemaking. He took the wine press, and married it with a Chinese invention – movable type, to create the worlds first printing press. His name of course, was Johannes Gutenberg. This kind of leap is not easy to predict, not just for the kind of discontinuity they represent (more on that later), but also because of these networked effects. Our education system blinkers us into compartmentalised thinking which stays with us through our lives. Long ago, a student of my mothers once answered a question about the boiling point of water by saying “in Chemistry, it’s a 100 degrees Centigrade, but in Physics, I’m not sure”. We are trained to be specialists, becoming more and more narrow as we progress through our academic career, ending up more or less as stereotypes of our profession. Yet human progress is driven by thousands of these networked, collaborative, and often serendipitous examples. And we live in a world today with ever expanding connections, so it’s not surprising that we have fallen behind significantly in our ability to understand how the network effects play out.

If you want to study the way we typically make predictions, you should look no further than sport. In the UK, football is a year round sport, so there are games every weekend for 9 months and also mid week for half the year. And with gambling being legal, there is an entire industry around football gambling. Yet, the average punter, fan or journalist makes predictions which are at best wilfully lazy. There is an apocryphal story about our two favourite fictitious sardars – Santa Singh and Banta Singh, who decide to fly a plane. Santa, the pilot, asks Banta, the co-pilot to check if the indicators are working. Banta looks out over the wing and says “yes they are, no they aren’t, yes they are, no they aren’t…” – this is how a lot of predictions are made in the world of premier league football today. Any team that loses 3 games is immediately in a ‘crisis’ while a team that wins a couple of games are deemed to be on their way to glory. Alan Hansen, an otherwise insightful pundit and former great player, will always be remembered for his one comment “You can’t win anything with Kids” – which he made after watching a young Manchester United side lose to Aston Villa in the 1995-96 season. Manchester United of course went on to win the season and dominate the league for the next decade and a half. Nobody predicted a Leicester City win in 2016 of course, but win they did. The continuous and vertiginous increase in TV income for football clubs has led to a relatively more equal playing field when it comes to global scouting networks, so a great player can pop up in any team and surprise the league. Yet we find it hard to ignore all the underlying trends and often find ourselves guilty of treating incidents as trends.

The opposite, is amazingly, also true. We are so caught up with trends that we don’t factor in the kinks in the curve. Or to use Steve Jobs’ phrase – the ding in the universe. You can say that an iPhone like device was sure to come along sooner or later. But given the state of the market – with Nokia’s dominance and 40% global market share, you would have bet your house on Nokia producing the next breakthrough device eventually. Nobody saw the iPhone coming, but when it did it created a discontinuous change that rippled across almost every industry over the next decade. The thing is, we like trends. Trends are rational and they form a kind of reassuring continuity so that events can fit our narratives, which in turn reaffirm our world view. And unless we’re close to the event, or perennial change seekers and nomads ourselves, it’s hard to think of countercyclical events. It’s now easy to see how in 2016 we were so caught up in the narrative of progressive liberalisation and unstoppable path to globalisation, we failed to spot those counter-cyclical events and cues that were right there in our path.

In fact there are any number of cognitive biases we are guilty of – on an everyday basis. This article just lists a dozen of them. My favourites in this list are the confirmation bias and the negativity bias. Both of these are exacerbated by social media and digital media. While social media has led us to the echo-chambers – the hallmarks of 2016, our projection bias is also accentuated by our ability to choose any media we want to consume, in the digital world, where access is the easy part. Similarly, bad news spreads faster on social networks and digital media today than at any time before in history. Is it possible that despite knowing and guarding against these biases in the past, we’ve been caught out by the spikes in the impact and incidence of a couple of these, in the digital environment we live in today?
To be fair, not everybody got everything wrong. Plenty of people I know called the Donald Trump victory early in the game. And amongst others, John Batelle got more than his share of predictions right. There is no reason to believe that 2017 will be any less volatile or unpredictable than 2016, but will our ability to deal with that volatility improve? One of the more cynical tricks of the prediction game is to make lots of predictions at many different occasions. People won’t remember all your bad calls, but you can pick out the ones you got right, at leisure! This is your chance, then, to make your predictions for 2017. Be bold, be counter-cyclical. And shout it out! Don’t be demure. The monkey is history, after all. This is the year of the rooster!

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