B-schools vs Scientists

I don’t have much intellectual respect for B-school (school of business) types, and unlike most scientists I have had some dealings with them. It appears the pseudo-skeptics are getting a lot of mileage out of some bet that Al Gore is justifiably ignoring and some generic principles that do not apply promulgated by a Professor Armstrong.

I said in the comments to another article:

So the person behind forecastingprinciples.com accuses climate science of being unaware of forecastingprinciples.com . To this accusation I for one plead guilty.

He isn’t moving the goalposts, he is inventing the game.

It is certainly the case that the sorts of forecasts he dwells on on his site are very difficult.

On the other hand, a forecast of the position of Jupiter in the sky exactly 50,000 years hence is quite feasible.

Climate physics is more constrained than social dynamics and less constrained than the orbits of the planets. So we can get more than 5 years and less than 50,000.

Beyond that you have to get into detail.

These guys are promulgating purported universal principles on the basis of an argument from authority, when as far as I can tell the only basis for their authority is having registered “forecastingprinciples.com”.

Well, I registered 3planes.com some years ago. This means that anyone claiming to be three-dimensional will have to pass 83 criteria identified by me.

Well, that last bit goes a tiny bit too far. It appears that Armstrong has some authority. He is a professor at the esteemed Wharton School of Business.

While I am sure the Wharton School is more respected than the U Wisconsin – Madison B-School I have a couple of anecdotes about one of the most popular and respected professors at UW, a recent emeritus from whom I took a minicourse in management. I was universally assured by the B-school that this was an extraordinary opportunity.

The good professor X, whom I shall not further embarass by identifying, suggested that it is “not all that hard to start a business”. He reported on an extensive survey over several business categories which he did by simply comparing the yellow pages (business phone directories) from two years a decade apart (say 1989 and 1999). He asserted that 80% of the businesses in the 1989 directory were around in 1999, and that therefore the rate of successful startups (defined as lasting a decade or longer) was clearly 80%. (Think about it.) The words “sample bias” escaped neither his lips nor those of any of the students. Nor did he distinguish between startups and existing businesses at all.

That was bad enough, but the time he used the question numbers on a questionnaire to weight the results really had me slapping my forehead. He made several other glaring logical errors. I saw the other engineer in the room rolling his eyes on one occasion. Everyone else was diligently writing down everything the illustrious professor X was saying.

To be honest, I did get a couple of insights from this course into how MBAs think, not all of them pretty but not all of them horrible either. It did strike me that they had essentially zero skill in quantitative reasoning though; they make economists look like von Neumann.

My father likes to tell the story of the successful illiterate businessman from the shtetl:

“Look, from factory in Minsk, I buy each piece for hundred ruble,” he says. “In market at Omsk I sell each piece for three hundred ruble. And from this three percent (shrug) I make a living.”

Anyway, James makes clear why it’s not a bet worth taking, but implies that it is surely dishonest. I think this gives business people too much credit. Armstrong may or may not have chosen the points of comparison disingenuously. It may just be a perfectly honestly constituted invalid metric, an instance of Hanlon’s Razor.

My father also has this to say about B-school types:

“If they know so much about how to get rich, why would they be telling you?”

Which disciplines to esteem and which not to in decision making is a difficult problem. Authority and competence may shift as time passes. As long as decision makers listen to bad advice more than they listen to good advice, we will have serious problems.

Is there some systematic way to tell the difference?

Update: Unfortunately but unsurprisingly this nonsense has made the op-ed section of the Wall Street Journal. That makes this interesting story relevant.

Update: The Armstrong thing is further dissected on RealClimate. The concluding summary says all you need to know.

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