Drinking from the Firehose

The ancient Library of Alexandria set out to collect the entirety of knowledge amassed by humanity. In modern times, Google has stated this as their core mission from the start. That makes your smartphone the most valuable library card in history. That certainly lends some propriety to the use of hedonic adjustments in calculating inflation. Some may even argue that inflation is actually overstated. Either way the point remains — information is cheaaaaap. Sand in a desert. What’s scarce in a desert? Shade. That’s what your attention is. Your attention commands a big premium, you should be aware when you sell it below market.

We have all heard the warnings. We know the media overlords’ marching orders. 24/7 news cycles: “If it bleeds it leads”. Clickbait listacles. Ego-boosting quizzes. Pull the dopamine lever like it’s 3 am at the blackjack table after a few too many $16 drinks at the Chandelier Bar. The articles pushed to our phones, trojan horses filled with snakes to charm that precious attention of ours into relaxing a little bit.

If you aren’t paying for the product, you are the product. Your data that is. The scruples of the offenders vary but we know that our attention is being mined to determine our habits, preferences, and cohorts to be consolidated and sold to the highest bidder. How is this different from the Mad Men era? After all, there was always someone trying to sell you something. The difference is that you used to pay for what you read, whether it was newspapers, magazines, books. This imposes a quality minimum. Sure you can get people to buy candy here and there but it’s hard to get people to sustain on it. Not-too-deep-inside they know it’s not good for them. There’s an ego to check that impetuous id.

Today that transaction is obscured. The restraint that comes from paying just a nickel has no slot to access. In under 20 years, we took out the legs of any mainstream standards.

I’ll reserve judgment on whether this regime is better or worse. The multi-order effects are beyond any casual glance I am affording it. But it provides the perfect setting to consider the value of different types of information. Your attention is scarce and should be budgeted. Be an informed consumer and know what you are spending it on.

  • Morgan Housel entertainingly highlights 8 different kinds of information. While their relative values can shift based on context my 2 favorite points are the distinction between permanent vs expiring and what the rarest form of information actually is.
  • Adjacent to the idea of expiring knowledge is an idea referred to as the “half-life of facts“. It might not be too encouraging to recognize that not only can news be ‘fake’ but even things we share as facts can decay in truth. Sometimes to such a degree that some engineers think their profession is a young person’s game.

Here’s a confession. I never really cared about the news. I was never into politics. I’m probably below average in caring about sports for a 40-year-old dude. There some ineffable sense of civic guilt associated with this lack of interest. I tried to make myself care, but it was always forced and I would just read the comics. So imagine the redemption I felt as I happened on articles highlighting research showing that news is bad for you.

Nassim Taleb is quoted:

“To be completely cured of newspapers, spend a year reading the previous week’s newspapers.”

This news outlet writes that giving up the news will make you happier. Talk about some professional self-dissonance for that editor. Cringe. Most of you know I make a living trading. When I was a college intern at a bank I was enamored of traders. They seemed to have broad and worldy knowledge to my naive 19-year-old mind. (Their mystique was also fanned by the fact that they would have a free lunch delivered to them daily by the bank. Again people, I was 19 and broke). Now upon becoming a trader out of college, I learned that these bank traders actually had clients so they were more like salespeople. They read the news because 20 years ago you could still make a good living weaving a bullshit market story and telling it over a liquid lunch in Midtown. But I went to work for an options trading firm that traded its own money and had no clients. The first thing your training does is obliterate your ego. No reason to read the news, you wouldn’t know what to make of it, they said. Your opinions are worthless. Your counterparty has thought about whatever you are thinking about way longer and from way more angles than you have from your sleepy reading of the WSJ on this morning’s N train from Brooklyn to lower Manhattan. Our edge came from analysis to be sure, but none of that had to do with our ability to interpret news. And if you shouldn’t have confidence in your ability to interpret news, then which of Housel’s types of information are you consuming? In a way, a prop trading career absolved me of my news embargo guilt (Fear not, this career casts enough other forms of self-doubt to ensure the prospect of mental peace shall remain mockingly elusive).

Littlewood’s Law

In the course of any normal person’s life, miracles happen at a rate of roughly one per month.

Gwern lays out the implication as it pertains to the news:

There will be enough ‘miracles’ that all media coverage of events can potentially be composed of nothing but extreme chance chances, even though it would seem like an ‘extraordinary’ claim to say that all media-reported events may be flukes. Given this, it is important to maintain extreme skepticism of any individual anecdotes or stories which are selectively reported but still claimed (often implicitly) to be representative of a general trend or fact about the world.

He maintains that you best defense remains standard techniques like critical thinking, emphasizing trends & averages, and demanding original sources can help fight the biasing effect of news.

And he makes some impractical recommendations which brings his defense case to life. Some of my favorite:

  • Perhaps in one format, discussion could be weighted similar to a meta-analytic weighting of effect sizes: you are allowed to discuss both anecdotes and studies, but the number of words about a anecdote or study must be weighted by sample size. So if you write 1 page about someone who claims X cured their dandruff, you must then write 100 pages about the study of n=100 showing that X doesn’t cure dandruff. That’s only fair, since that study is made of 100 anecdotes, so to speak, and they are as deserving of 1 page as the first anecdote.
  • A “proportional newspaper” might allocate space by geographic region populations, so there’s a giant void with a tiny little 2-line wire item for Africa, while the (much smaller) USA section requires a microscope.
  • Weight by age: If someone is rereading a 50-year-old essay, that should be given more proportionally more emphasis on a social media stream than a 5-minute old Tumblr post.

Connectivity and the existence of billions of humans will lead to news which distorts reality. Just watch Slatestarcodex raise a red flag on cardiologists. (Link)

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