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NewEconomicThinking
NewEconomicThinking·August 23, 2020

Margaret Heffernan on Embracing Uncertainty and Preparedness in an Uncharted Future

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Summary

Margaret Heffernan, author of "Uncharted," discusses the pervasive human addiction to prediction and certainty, especially in the wake of the 2020 pandemic which served as a "crash course in uncertainty." She argues that society, particularly in economics and big tech, has developed a "magical belief" in the ability to know the future, despite the inherent unknowability of complex systems. This addiction stems from an inability to tolerate ambiguity, leading to a reliance on "palliative delusions" from pundits, data, or technology, rather than confronting the reality that the future hasn't happened yet.

Heffernan critiques the "physics envy" prevalent in economics, where there's a desire to create laws with the predictability of gravity, ignoring that even scientific laws are provisional. She distinguishes between "sins of omission" (willful blindness to what's present) and "sins of commission" (false assertions of knowing what isn't there). A significant concern is the evolution of big tech, which has shifted from attempting to predict behavior with data to actively driving and dictating it, cloaking this control under the guise of prediction. This implicitly authoritarian approach erodes individual agency and exploits the societal "lust for certainty."

To navigate this uncertain landscape, Heffernan advocates for a shift from rigid planning to robust preparedness. She champions scenario planning, not as a predictive tool, but as a method for imaginatively exploring a range of possible futures without assigning probabilities. This process requires radically diverse teams, integrating both "soft data" (social mores, transparency trends) and hard data. A key insight is the necessity of accepting inefficiency and building significant margins for surprise, moving beyond mere resilience (recovering from shocks) to achieving robustness (withstanding shocks).

The broader implications of this discussion touch on the societal yearning for certainty, which makes people vulnerable to false prophets and the "enchantments of mammon" where capitalism becomes a religion. Heffernan suggests learning from artists, who are exceptionally comfortable with ambiguity, observing and absorbing without immediate purpose, and understanding that "nothing happening is something happening." This artistic mindset fosters awareness and alertness, crucial for leaders and organizations to reckon with the intellectual flakiness of many widely used management tools and to cultivate a genuine capacity for adaptability in a truly uncharted world.

Key Quotes

"we have a lot of ways of thinking about the future which to put it bluntly none of them really works but we believe in them because we can't tolerate the idea that we don't know the future"
"I'm taking one of people's most comforting fantasies namely the idea that we can know the future and I'm taking it away from them and they're not going to like me for this"
"economics has always suffered from physics envy, you know this desire to be able to come up with laws that work with the same degree of predictability as the law of gravity"
"Loss of faith in a given religion does not by any means imply the eradication of the religious instinct it really it merely means that the instinct temporarily repressed will seek an object elsewhere"
"now instead of trying to predict our behavior now what you find is technology is trying to drive and dictate our behavior and cloak that under the guise of prediction"
"if you can't know everything if you're too efficient you erode all your capacity to respond and adapt you need margins you need quite significant margins for the surprises which you understand you cannot predict with the accuracy that you need"
"the whole point of scenario planning is that soft data and hard data have sort of equal status"
"resilience is about the capacity to recover from shocks and surprises I think if you do preparedness really well and if you do scenario planning really well you get something better which is what engineers call robustness"

Concepts

Themes

  • The illusion of certainty
  • Critique of economic forecasting and models
  • The role of technology in shaping perceptions of the future
  • The importance of embracing ambiguity
  • Organizational preparedness and resilience
  • The value of diverse perspectives in problem-solving
  • The artistic approach to understanding the unknown
  • Societal yearning for authoritative answers

Related to:

Economics Insights

Market Implications

  • The need for businesses to move beyond rigid long-term forecasts and embrace preparedness for unpredictable market shifts, accepting that efficiency must sometimes be sacrificed for robustness.

Key Concepts

  • Physics envy, efficiency vs. robustness, scenario planning, prediction addiction, sins of commission, sins of omission, ergodic stability.

Data Cited

  • Philip Tetlock's work on forecasting reliability, suggesting a maximum reliable forecast horizon of 400 days for experts and 150 days for others.

Practical Applications

  • Implementing diverse scenario planning teams, building organizational margins for surprise, adopting an 'artistic' mindset for observation and ambiguity tolerance, challenging the intellectual flakiness of widely used management tools.

Risks Mentioned

  • Over-reliance on big data for prediction, authoritarian tendencies of tech companies, erosion of individual agency, intellectual flakiness of management tools (e.g., Myers-Briggs), false gratification from dogmatic assertions of certainty.

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