Jaebong Son & John gastreich
description
Transcript of Jaebong Son & John gastreich
![Page 1: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/1.jpg)
1
JAEBONG SON &JOHN GASTREICH
![Page 2: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/2.jpg)
The Second Oldest ProfessionCh 1
![Page 3: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/3.jpg)
3
Predictable Future?
Determinism
History follows a certain pattern.
![Page 4: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/4.jpg)
4
Future Imperfection
SituationBias
Chaos
Complexity
Economy
Stock Market
Weather
Obscured by present conditions and trends
![Page 5: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/5.jpg)
When Chaos RainsCh 2
![Page 6: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/6.jpg)
6
Basic Assumption in Forecasting Weather
Weather patterns regularly repeat themselves.
![Page 7: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/7.jpg)
7
The Problems of Prediction
Nonlinear
![Page 8: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/8.jpg)
8
The Problems of Prediction - Nonlinearity
Nonlinear relationships cause variables to increase or decrease at more or less exponential rates.
Cost the customer
$60
Cost the customer
$1,250
Interest of 12% on a constant basis
Interest of 12 %on a compound basis
$100 for thirty years
Paid 10% of interest by mistake
![Page 9: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/9.jpg)
9
The Problems of Prediction
Chaos
Nonlinear
![Page 10: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/10.jpg)
10
The Problems of Prediction - Chaos
The simulated temperature patterns in the figure never repeat themselves.
1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829300
0.2
0.4
0.6
0.8
1
1.2Hours After Forecast
Actual TemperatureForecasted Temperature
B = 0.4 – 4A2
where A stands for the current temperature and B stands for the temperature one hour into the future.
![Page 11: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/11.jpg)
11
The Problems of Prediction – Butterfly Effect
Butterfly
Effect
Chaos
Nonlinear Edward Lorenz
![Page 12: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/12.jpg)
12
The Value of Weather Forecasting Is the $4 billion spent each year worldwide
on weather forecasting worth the investment without taking into account the problems mentioned above?
Why did God create economist?In order to make weather forecasters look good.
![Page 13: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/13.jpg)
The Dismal ScientistsCh 3
Economists have forecast nine of the last five recessions.
![Page 14: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/14.jpg)
14
Theory of General Equilibrium
Inherently stable
Dampen external shock
Restores itself to equilibrium
The economy is predictable.
![Page 15: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/15.jpg)
The Economy as a Complex System
No Natural Laws
Complex systems have no natural laws governing their behavior at either their micro-level (individual humans) or their macro-level (the economy).
15
Steven N. Durlauf
![Page 16: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/16.jpg)
The Economy as a Complex System
No Natural Laws
Cannot be
Dissected
Complex systems cannot be dissected into their components, because the systems arise from the numerous interactions among the components.
16
![Page 17: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/17.jpg)
The Economy as a Complex System
No Natural Laws
Cannot be
Dissected
Positive &Negative Feedback
Loops
Complex systems are so highly interconnected with numerous positive and negative feedback loops that they often have counterintuitive cause-and-effect results.
17
![Page 18: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/18.jpg)
The Economy as a Complex System
No Natural Laws
Cannot be
Dissected
Positive &Negative Feedback
Loops
Self-Generated Turmoil
Complex systems exhibit periods of order and predictability, punctuated by unexpected moments of self-generated turmoil.
18
![Page 19: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/19.jpg)
The Economy as a Complex System
No Natural Laws
Cannot be
Dissected
Positive &Negative Feedback
Loops
Self-Generated Turmoil
No Fixed Cycle
Complex systems have no fixed cycles. = Histories do not repeat themselves.
19
![Page 20: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/20.jpg)
The Economy as a Complex Adaptive System
No Natural Laws
Cannot be
Dissected
Positive &Negative Feedback
Loops
Self-Generated Turmoil
Adaptionand
Evolution
No Fixed Cycle
Complex adaptive systems adapt to their environments and evolve.
20
![Page 21: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/21.jpg)
The Economy as a Nonlinear Complex Adaptive System
No Natural Laws
Nonlinear
Cannot be
Dissected
Positive &Negative Feedback
Loops
Self-Generated Turmoil
Adaptionand
Evolution
No Fixed Cycle
The existence of these nonlinear relationships does not conform to the general principles of the theory of General Equilibrium.
21
![Page 22: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/22.jpg)
The Economy as a Nonlinear Complex Adaptive System with Erroneous Data
No Natural Laws
Nonlinear
Cannot be
DissectedErroneous Data
Positive &Negative Feedback
Loops
Self-Generated Turmoil
Adaptionand
Evolution
No Fixed Cycle
Economic data are scant and erroneous.•Questionable government survey data, false information from respondent, revised historical statistics.
22
![Page 23: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/23.jpg)
23
Human as Irrational Actors
No Natural Laws
Nonlinear
Cannot be
DissectedErroneous Data
Positive &Negative Feedback
Loops
Irrational
HumanSelf-
Generated Turmoil
Adaptionand
Evolution
No Fixed Cycle
Robert Heilbroner “At the root of the economic matter lies man, but it is not man the ‘economic’ being, but man the psychological and social being, whom we understand only imperfectly.”
![Page 24: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/24.jpg)
24
Recommendations from the Author To remake economics into a much more
scientific field, economists should: Cast off deterministic economic theories and
perspectives. Start to study the economy as a complex
system that is far more dynamic than the idea about the economy contained in today’s textbooks.
Look more to biological science than to physics for explanations of how the economy works, since the economy is made up of biological units.
![Page 25: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/25.jpg)
25
Recommendations from the Author cont’d Economics must use the scientific method,
which requires developing theories based on real-world observation and then testing them through ever more observation.
![Page 26: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/26.jpg)
The Market GurusCh 4
The stock market is part of the economy and thus a complex system.
![Page 27: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/27.jpg)
27
Speed
No Natural Laws
Nonlinear
Cannot be
DissectedMessine
ss of Data
Positive &Negative Feedback
Loops
Irrational
HumanSelf-
Generated Turmoil
Adaptionand
Evolution
No Fixed Cycle
Speed makes the stock market much more dynamic and complex than the economy
Speed
![Page 28: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/28.jpg)
28
Irrational Herd Mentality & Mass Psychology
No Natural Laws
Nonlinear
Cannot be
DissectedMessine
ss of Data
Positive &Negative Feedback
Loops
Irrational
HumanSelf-
Generated Turmoil
Adaptionand
Evolution
No Fixed Cycle
The stock market is clearly driven by irrational herd mentality and mass psychology: A psychological soup of fear, greed, hope, superstition, and a host of other emotions and motives.
Speed
Irrational Herd
Mentality & mass
Psychology
![Page 29: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/29.jpg)
29
The Random Walk Theory The random walk theory states that stock
market prices evolve according to a random walk and thus the prices of the stock market cannot be predicted.
Technical Analysis(history of prices)
Fundamental Analysis
(future earnings, a discount rate)
![Page 30: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/30.jpg)
30
EMH and Irrationality of the Stock Market
The Efficient Market Hypothesis (EMH) (1960s by Fama) The stock market knows everything that is
knowable about future corporate earnings and thus prices all stocks at their true values.
However, the market also responds to news events in a strange way. The crash of the U.S. stock market in 1987The irrational dimension of the stock
market means that the EMH is at least partially flawed.
![Page 31: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/31.jpg)
31
Lessons Learned The only certain things in life are death and
taxes. Faulty assumptions must lead to wrong
research conclusions. A small mistake could lead to major errors. Psychological bias affects predictions and
research results. Increased complexity degrades forecasting
accuracy. If possible, divide a problem into small
pieces.
![Page 32: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/32.jpg)
Checking the “Unchecked Population”Ch 5
![Page 33: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/33.jpg)
33
Gloom & Doom The Ice Age Cometh
The End: The Imminent Ice Age and How We Can Stop It! (1988)
Ice ages are predictable Spread rock dust over earth’s surface
Global Famine Famine – 1975! (1967)
“Starvation will become widespread famine” But, undernourished people declined from 942M to 786M (1970 – 1990)
Societal Collapse Exponential pop. growth outstrip natural resources
Easter Island
![Page 34: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/34.jpg)
34
Population Momentum & Predictability
Total population is predictable for decades (U.S.)
Demographers still miss the turning points
![Page 35: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/35.jpg)
35
World Population Forecasts accurate for decades
Remained flat until 200 years ago
![Page 36: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/36.jpg)
36
County Populations Accuracy increases with size
![Page 37: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/37.jpg)
37
Life Expectancy Death is predictable (U.S.)
![Page 38: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/38.jpg)
38
Death Rate (U.S.) Death rate easy to predict; little change
Forecasters miss turning points
![Page 39: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/39.jpg)
39
HIV Predictions Overstated Public Health Service – 85 experts
![Page 40: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/40.jpg)
40
Unborn Difficult to Forecast 20-year forecasts are accurate for exist
population
Demographers miss turning points
![Page 41: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/41.jpg)
41
Contraceptives Strong predictor of fertility
![Page 42: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/42.jpg)
42
Developing Countries Exponential growth only in developing
countries
![Page 43: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/43.jpg)
43
Immigration (U.S.) Bureau of Census underestimates numbers
![Page 44: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/44.jpg)
44
Chapter 5 Conclusions Nature abhors exponential growth & curbs it Question: When & how?
8 billion? 10 billion? More?
Future depends on uncertain forces Global cooperation Technology
![Page 45: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/45.jpg)
Science Fact and FictionCh 6
![Page 46: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/46.jpg)
46
Mind-Boggling Leaps in Technology Older generations have witnessed
Television Radar The laser Atomic energy Manned space travel
Younger generations have witnessed Information technology Genetic engineering
![Page 47: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/47.jpg)
47
Technology Forecasting Evolution of Technology Forecasting
![Page 48: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/48.jpg)
48
Flow of Technology Forecasting From organizations to media
![Page 49: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/49.jpg)
49
World’s Largest Technology Forecaster
Japanese government’s technology forecasting
![Page 50: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/50.jpg)
50
Technology Forecasting Techniques Brainstorming techniques
Delphi method Nominal group process
Trend extrapolation techniques S-curve Trend analysis Correlation analysis
Analytic techniques Cross-impact analysis Analytic hierarchy process
Relevance trees Systems dynamics Scenario development
Real-world situation analysis Case study method Lead-user analysis
“Useless in predicting the most significant
events in the evolution of technology”
![Page 51: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/51.jpg)
51
S-Curve Pro: Useful to forecast established technologies Con: Hard to predict size and shape of S-curve
Market size Development speed
![Page 52: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/52.jpg)
52
Technological Darwinism Uncertainty in technological evolution
![Page 53: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/53.jpg)
53
Moore’s Law Increasing density of microprocessors
![Page 54: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/54.jpg)
The FuturistsCh 7
Faith Popcorn John Naisbitt
![Page 55: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/55.jpg)
55
Infirm Foundations of Social Science Society – a complex system
Popular attitudes & beliefs Economic conditions Technological advances Population trends Political events Wars Weather
All UnpredictableSociety is
Unpredictable
![Page 56: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/56.jpg)
56
The Newtonian Socialists Believed
If Newton can predict paths of planets, we can predict social evolution
Social progress in inevitable as Newton’s laws of motion
![Page 57: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/57.jpg)
57
Futurology Coates (author of Future Work)
There is no single future We can see those alternative futures We can influence the future We have a more obligation to influence the
future However, most futurists
Argue strongly for a single vision Do not identify alternatives Say, “There will be.”
![Page 58: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/58.jpg)
58
Trend Spotters Commercial trend spotters
Search for emerging social trends Sell their “discoveries” to business & gov’t
Firms Gallup Yankelovich
Gurus John Naisbitt Faith Popcorn
![Page 59: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/59.jpg)
Corporate ChaosCh 8
![Page 60: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/60.jpg)
60
Strategies of Management Boston Consulting Group’s growth-share
matrix
![Page 61: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/61.jpg)
61
The Unpredictable Future Realm of future possibilities
![Page 62: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/62.jpg)
62
Opportunity Realm of current possibilities
![Page 63: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/63.jpg)
The Certainty of Living in an Uncertain WorldCh 9
![Page 64: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/64.jpg)
64
Thinking Critically People are vulnerable to false prophets
We fear uncertainty Seek counsel of those who “know” the
future Innately gullible
Believe rather than question Attribute meaning to chance events
Driven by herd instinct Easily swayed by voices of authority
![Page 65: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/65.jpg)
65
Self-Defense Against Futurists React with informed skepticism Ask 5 questions
Based on hard science? How sound are the methods? Forecaster has credible credentials? Forecaster has a proven track record? Is my belief influenced by personal beliefs
& wishful thinking?
![Page 66: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/66.jpg)
66
Dr Browning Predicts Earthquake Prediction
New Madrid, Missouri Near epicenter of 1811 most severe earthquake On Dec 3, 1990 (plus/minus 48 hours)
Mass Panic Reaction Schools & factories closed Shopping centers taped up windows Residents left town & called Red Cross Rumors that town reservoir dropped 15 feet Media: New York Times to Poland
![Page 67: Jaebong Son & John gastreich](https://reader036.fdocuments.in/reader036/viewer/2022062815/568168be550346895ddfb439/html5/thumbnails/67.jpg)
67
Questions