Where are the Flaws in the Incerto? The Black Swan, Antifragile, Fooled by Randomness, B of Procrustes
Busting BS Artists: Economists, finance quants, risk quants, journalists, and others I have called charlatans or fragilistas been lining up from here to Cleveland to try to get me. For about 13 years now. Nothing so far, nothing of substance has emerged, for mysterious reasons, certainly not from indifference or lack of interest. There have been a lot of passion as expressed by the internet equivalent of mob lynching, other forms of obsessive harassment… that kind. But not a person stuck his neck out to produce an organized academic criticism in a reputable journal (except for some comments here and there often as with Andy Lo getting the message of TBS backwards)…(And this is not from academic neglect: the works so far have been getting 5,500 citations on Google Scholar, special issues of academic journals such as the American Statistician and Critical Review).
Until now, finally came an attack worth responding to, the first published in an academic journal representing the consensus criticism by the quant-risk management crowd mostly against ideas in The Black Swan. Finally. So here is the result:
Four Points Beginner Risk Managers Should Learn from Jeff Holman’s Mistakes in the Discussion of Antifragile
Note: I am not saying there are no minor errors in the works: these are defined as something that can be corrected without changing the argument of the page, chapter, book, or the collection. A flaw invalidates an argument; a minor error does not affect the substance, a typo so to speak. So far nothing has emerged, close to 14 years after FBR. Still nothing.
Straw Man Arguments (wiki)
People miss the point that I am not critical of quantitative methods, only of “quants”, precisely for the lack of logical and empirical rigor in the culture and their irresponsible underestimation of iatrogenics, or model error, mostly because of warped incentives for researchers. The insightful no-BS economist Robert Shiller misrepresented my ideas in his Nobel statement, saying ” Critics of “economic sciences” sometimes refer to the development of a “pseudoscience” of economics, arguing that it uses the trappings of science, like dense mathematics, but only for show. For example, in his 2004 book Fooled by Randomness, Nassim Nicholas Taleb said of economic sciences: “You can disguise charlatanism under the weight of equations, and nobody can catch you since there is no such thing as a controlled experiment.”
Then he misrepresented my ideas saying : “But all the mathematics in economics is not, as Taleb suggests, charlatanism.” But I never said it was all charlatanism, this is a logical fallacy like making one reject all medication on grounds of snake oil salesmanship. All I am saying is that one needs a much much much more no-nonsense no-BS, logically rigorous way to handle these things (which, it turned out, was Shiller’s proposal).
And, luckily, as with Holman, one can use mathematics to bust unrigorous use of mathematics.
via Where are the Flaws in My Work?.