BaffledExperts by Adam Norman

The efficient markets hypothesis

The Efficient Markets Hypothesis says, if I am correct, two things:
1) All available information is priced into the components of the market
2) Outsiders cannot win.

Point 2 follows from 1; insider information is unavailable to the rest of us. It is also illegal to act upon. 2 follows because information travels fast, and people have the incentive to both research and act upon valuable information. Thus, if a company looks likely to double its profits in the coming year, early-movers will bid up the price of the stock until it is no longer a better deal than any other stock on the market. Therefore, unless you are one of the early movers (and you're not), you can't win. If you do win (or lose, for that matter) it is only because you happened to act on unavailable (or unknowable) information--in other words, because you were lucky.

There has been much discussion lately about whether the EMH is correct. The recent stock market crash is said to disprove point 1. Wild swings in the market show, supposedly, that the market is not 'rational' or 'efficient'. Why this is so is not quite clear; the EMH does not say that everyone will win or that prices will be stable. It says that all available information is priced in. Unavailable information (and information about the future is certainly unavailable) can still influence prices.

Behavioural economics is supposed to offer an alternative. By understanding how people work, we are able to better predict their actions. But, this implies two things, either of which makes the EMH, or its corollary, relevant again.

The very premise of Behavioural Economics must be this: If BE works, we can understand the collective actions of irrational actors using reason. We can predict what irrational people will do. Of course, as soon as behavioural economics gets polished up, people will use it to invest in the market. Thus, the market will again be 'rational'--although this time, in a meta way, or a meta-meta way: people will use reason to understand reasoning about the unpredictable actions of individuals. Or something like that.

Of course, there is another possibility: perhaps we will not be able to use BE to understand the market. Perhaps, fundamentally, people are unpredictable. If that's true, though, the market moves randomly, and point 2--that outsiders cannot win--is again true. Nobody can win except by luck in an unpredictable market. Placing money on the outcomes of unpredictable events is the very definition of gambling.

In the past, EMH2 followed by deduction from EMH1, but I think we have something stronger here: If EMH1 is true, then EMH2 is true. If EMH1 is false, then EMH2 remains true. If the market is rational, outsiders cannot win but from luck. If the market is irrational, outsiders cannot win but from gambling.

My Death

When I think of my death, I think two things:

1. That it is the end
2. That I should avoid it.

Unfortunately, for reasons I’ll explain below, these two ideas are incompatible, and efforts to make them compatible violate my instincts about what makes me who I am.¹

Death is the end²

Scientific, sensible people believe that we are made of meat and not much else. When we die, we are done: the self, our consciousness, or our 'me-ness' disintegrates. If the self dissolves, there is no need to fear death. Death cannot be painful (or pleasurable), since sensations need someone to do the sensing.

All this is straightforward. But, if true, it contradicts another and quite fundamental belief: that living for a long time is better than living for a short time, or that living at all is better than being dead. If we are merely meat, there is no reason to believe this for the simple reason that when we are dead, we will not care.

Being happy is better than being sad, and living pleasurably is better than living in pain. But being alive is not better than being dead; comparing life and deadness is, I think, impossible. Life is something, and death is nothing, and something is not better than nothing, for the simple reason that once you are dead, you cannot feel that nothingness.  You have no reason to prefer being alive to being dead, because you won't 'be' dead. There will be no 'you', and no 'being'.

In a famous article "Death", Nagel argued that an early death is bad, and bad for the person who dies. I believe his argument is quite simple:

1. The self is made of meat.
2. Pain and pleasure occur to a self located in time and space
3. If pain and pleasure occur to a self in time and space, and if I am made of meat, then I should not fear death
4. I should fear death
5. It's not true that (the self is made of meat and pain and pleasure occur to a self located in time and space)
6. It's not true that the self is made of meat OR it's not true that pain and pleasure occur to a self located in time and space

Stated so plainly, it's pretty clear that this is not a good argument. Neither of the disjunctions is very sensible. He seems to believe the latter one: that pain and pleasure do not occur to a self located in time and place. He is, I understand, a "comparativist", who believes that injury and benefit, good and bad, are relational properties--in other words: good and bad really mean better and worse.

But seriously, is this a sensible argument? The error is clearly in premise 4.

1. It's not at all easy to identify the 'me' that makes me 'me'. That said, I believe that I am one consciousness who changes only slowly, located in one finite body, at a particular time and place. There is nothing at all revolutionary or startling about these ideas. Only negating them is bizarre and counter-intuitive. Could I be more than one consciousness? Or not located in a body, but somewhere else? It seems possible, but saying so does not come naturally to me. [↩]
2. Most people believe that death is not the end; they seem to think that there is an afterlife, reincarnation, or some other kind of migration of the soul. While these ideas appear quite goofy to me, I don't think the possibility of an afterlife matters very much to the main thrust of my argument. Whatever I am and wherever my soul ends up, I think it's quite straightforward to say that death is the end of me, Adam Norman. If my soul moves, it leaves behind the things that constitute me: my location, my body, my sensory organs, my aches and pains. Whatever is left over (and I do believe it to be nothing at all), it is not the Adam Norman I'm quite fond of. It seems exceedingly unlikely that whatever is left feels anything at all; the things that do the feeling are gone. [↩]

Linux programmers suck

Would it kill Linux programmers to name the folders for what they contain? Where the frak are the programs? And what is in sbin? Or opt? Or var?

Linux is getting easier to use, but it has a ways to go.