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Radical Uncertainty: Decision-Making Beyond the Numbers

3.93  ·  Rating details ·  679 ratings  ·  99 reviews
Some uncertainties are resolvable. The insurance industry’s actuarial tables and the gambler’s roulette wheel both yield to the tools of probability theory. Most situations in life, however, involve a deeper kind of uncertainty, a radical uncertainty for which historical data provide no useful guidance to future outcomes. Radical uncertainty concerns events whose determina ...more
ebook, 544 pages
Published March 17th 2020 by W. W. Norton Company (first published March 5th 2020)
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Average rating 3.93  · 
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Athan Tolis
Mar 17, 2020 rated it really liked it  ·  review of another edition
Shelves: ec-and-finance
For a hyper-discursive one-idea book, this was actually rather good!

Here’s the idea:

Economics would do well to turn its mathematical prowess away from the idea that economic agents are busy maximizing something and must focus on “what’s going on here.”

And “what’s going on” is quite simple: we all have some sort of dream! (the word the authors use is “narrative.”) As we gather information, we assess how this new information influences our dream and adapt accordingly.

The End.

This is neither Mervy
...more
Mehrsa
Apr 18, 2020 rated it it was amazing
I've read both Kay and King's individual books and am a fan of both. This book needed some editing help, but the insights are worthwhile, incredibly relevant, and essential for everyone to understand--especially for financial regulators. ...more
Marks54
Mar 25, 2020 rated it it was amazing  ·  review of another edition
This is a book by two well known British economists, both of whom are accomplished scholars and analysts of economics, corporate strategy, and finance. The premise is fairly straightforward and starts from the work of Frank Knight (1929) who distinguished between risk (a lack of knowledge that can be parameterized) and uncertainty (a lack of knowledge that we cannot parameterize and about which we know little). The study of risk gives us a range of productive fields of study linked to statistica ...more
Sarah Clement
Aug 07, 2020 rated it it was amazing
I admit to starting this book and being a bit bored because I read a lot about uncertainty and risk and how that affects decision making. I have read so many books about mathematics, statistics, modelling, economics, human decision making, etc. So for the first few chapters, I will admit that my attitude was all wrong, and I was thinking "what is this book contributing that's new?" If I am really honest, it wasn't until Chapter 8 that it completely clicked and I realised that this book is truly ...more
SH Holland
Sorry nothing here if you have already read Nassim Taleb’s Black Swan and Antifragility.

The book is 140,000 words long and the main idea could perhaps be summarized in one-tenth of the book. Many chapters can actually be culled as they bore only cursory relevance to the topic of “radical uncertainty”.

Understandably, this book contains is a lot of attack on mainstream economics. However again nothing original here and much better read would be Richard Thaler’s Misbehaving or Danny Kahneman’s Thi
...more
Otto Lehto
Jun 05, 2020 rated it really liked it
Radical Uncertainty makes an important contribution to the current debate. It challenges the role of technocratic experts, and the mathematical models that they hide behind, in decision making. It puts into question the Nostradamus level pretensions of social scientists and policy makers attempting to predict and control an uncertain future. The book feels especially timely and relevant during the coronavirus epidemic. And yet, it would be a mistake to think radical uncertainty has finally been ...more
Drtaxsacto
May 24, 2020 rated it it was amazing  ·  review of another edition
I've spent some time this year thinking about contingencies in life - COVID has forced all of us to do that. I am not sure who recommended the book to me but I am glad whoever it was did.

The book's fundamental premise is that there is a profound difference between situations with definable probabilities (a roulette wheel is one such situation) and ones where about the best that we can do is to try to figure out what is going on. The authors are skeptical of those who assert that we can learn fro
...more
Laurent Franckx
Jun 07, 2020 rated it it was amazing  ·  review of another edition
I didn't rate this book so highly because I learned so much from it (most of it confirmed my existing views) on the topic, but because I think it should be read by anyone who uses (policymakers, military strategists, company executives) or produces (economists, actuaries, transport planners) forecasts involving events that are fundamentally uncertain. Really. Don't read reviews, just read the book. ...more
Max
Apr 13, 2021 rated it it was amazing
A great book on radical uncertainty or deep uncertainty! It fits very well with my study in which model-baded policy analysis is key. I wonder why nobody at my faculty has recommended it yet! Well, I will definitely tell people to read it! And now that you have read this, feel addressed, get the book and get started!
Stephen
I have to admit to struggling through this book. It's not that it's uninteresting, it's just that it needs a good edit for length. The authors take 400 pages to say what they could equally say in 150 to 200 pages. I would have preferred a more c0mpact statement of the argument rather than a discursive approach to the topic.

Why did I rad it all the way through? Because it has an important argument. One that needs to be embraced and absorbed into our daily lives. The argument is simple. Our knowle
...more
William T
Mar 29, 2020 rated it really liked it
I am not finished, but I will say that the central thesis of this book is compelling. I am not convinced that the same couldn't have been accomplished in a shorter book, but I will have more to say when I am finished.

Having now finished, I will suggest that this is a good book and an important addition to the literature of probabilities, decision making and uncertainty. But there remains the problem of repetition. I understood the central thesis fifty pages in, and would have appreciated a short
...more
Mateusz Urban
May 08, 2020 rated it it was amazing  ·  review of another edition
Shelves: economics
Kay and King do something quite remarkable here - they attempt to draw our (economists', policymakers' etc.) attention to the notion of what they call "radical uncertainty", which, with a bit of oversimplification, may stand for the inherent unpredictability of the future. While properly acknowledged, authors claim, the existence of radical uncertainty undermines the rationale for various quantitative predicions and models and ridicules the "pretence of knowledge" and yearning for certainty pres ...more
Rhys McKendry
The principle of ergodicity has led the field of economics astray. Contrary to how the book presents itself, Kay and King didn’t develop this criticism...Post-Keynesians have been articulating and debating the theory of uncertainty for decades, this is no secret. There is no mention of leading scholars and contributors, and for this reason I could not enjoy the text. The authors use interesting and engaging examples to illustrate their point, and this is why I brought myself to finish the book. ...more
Janvi
Apr 18, 2021 rated it it was ok  ·  review of another edition
no thank you
Mahak Raithatha
Nov 29, 2020 rated it really liked it  ·  review of another edition
I luckily stumbled upon this book title's during the time when I was thinking of buying an medical insurance and I needed help in taking decision. I could not make my mind properly since I already have one from my employer for a fixed amount, should I go ahead buy an additional one personally to cover any expenditures exceeding the amount given by my employer?

If I were to go ahead and buy the medical insurance, is that a good decision or am I just falling into the fear created by advertisement
...more
Chris
Nov 30, 2020 rated it it was amazing
Shelves: audiobooks
Radical Uncertainty covers a lot of what is now commonly trodden ground in the behavioral economics genre, so I would not consider the conclusions it draws to be especially novel. However, Kay's exposition of the ideas is one of the best I have seen, and it essentially comes down to this: you cannot model or assign probabilities to poorly defined problems.

The more reports and articles you read with any form of analysis, the more you will encounter claims of; x% chance of the next GFC, y% of the
...more
Jacopo Olivieri
Although at times the text can be circuitous, its premise is logical and legitimate, and the authors' expertise, intellect and engaging writing style equips them to deliver a clear and powerful message regarding the role of uncertainty in Economics.

The essence of the book is that the Economics profession’s fixation with quantitative methods and modelling (which they refer as "mathiness”), even when the underlying assumptions are plainly unrealistic, has led to overstretched theories detached fr
...more
Iryna
Mar 29, 2022 rated it really liked it
Fantastic work comprehensively summarising the history of probability theory intertwined with discourse into how probabilities and uncertainty are inter-related with other disciplines. Written in a very accessible style, it is an excellent "textbook" into uncertainty for anyone, including those whose probabilities expertise is limited to high school knowledge.
My rating for this book is 4 stars, as though I found the reading of multiple historic examples of what the authors consider good decisio
...more
Tim Morgan
Feb 24, 2021 rated it really liked it
Very interesting approach to discussing decision making under uncertainty. Would highly recommend.
Justus
Nov 03, 2020 rated it it was ok
One thing that's become to clear to me in the Age of Coronavirus is just how uncomfortable most people are with uncertainty; more than once I've had friends and acquaintances evince exasperation at conflicting opinions among public health experts. Along similar lines, anyone making any kind of meaningful business decision knows how much guessing and hoping goes into one. In Econ 101 it might appear trivial to set the right price...in the real world it is anything but. So I was eager to see what ...more
Peter Verboven
Sep 12, 2020 rated it liked it
Economists have two major shortcomings. The first one is addressed in this book, the second one is demonstrated by it.
First of all, there is the unnerving urge to stick probabilities and mathematics onto everything. It was something that mesmerized my when I was a student. During my undergraduate years I enjoyed the apparent beauty of formulating a target function, adding constraints and optimizing it using appropriate techniques. The outcomes from this exercise magically explained the world as
...more
Richard Marney
Jun 22, 2020 rated it it was amazing  ·  review of another edition
As a member of the generation of economics students nurtured on Savage, Friedman, Lucas, et al., reading books like this excellent work elicits gasps of “oh, the wasted hours”, “that’s what I argued when I almost failed the test,” and the like.

Decision making under uncertainty based on axiomatic reasoning may have uses in “small world” (class room) situations as a pedagogical tool, but as the authors ably demonstrate - the reality (of the fundamental uncertainty) of our complex and dynamic worl
...more
Paul
Oct 13, 2020 rated it did not like it  ·  review of another edition
Not everything can be neatly quantified and sometimes we just have to deal with less than perfect information.

The point at the heart of this book is a good one, if a lot less radical than the authors imagine, and if the book had stopped after part 2, it would have been really good.

Unfortunately, it doesn't. What we get instead is a series of anecdotes, some of which manage to actually undermine the authors' core point, and which are repeated and restated to the point that I utterly lost the wil
...more
Marco
Nov 05, 2020 rated it really liked it
If you can hold the paradox, it's a good book on many counts but I did not enjoy it much.

What was good: Wide-spanning account of uncertainty from many perspectives (history, science, models, human cognition, economics)

What I did not enjoy much: if you read Gigerenzer, Klein, Taleb, Tetclok, Snowden, and others, there is really not much new (for me) in this book, but it took me through 433 pages of "not much new" and many anecdotes. Valuable read, still, depending on what else have you read on t
...more
David Montgomery
Dec 13, 2020 rated it really liked it
This was probably the most thought-provoking book I've read this year.

When I say that, I don't mean it was the kind of book that made me reconsider everything I believed, though it did some of that. Rather, nearly every page had me pausing to consider and mentally debate the book's arguments, which were always interesting even when I ultimately came down against the authors. (Of course, I have a larger-than-normal interest in epistemology and uncertainty, so your mileage may vary...)

The main po
...more
Georgina Lara
Aug 29, 2020 rated it it was amazing  ·  review of another edition
One of the best and clearest introductions to the distinction of small world puzzles vs large world mysteries and the complete nonsense of trying to apply models and the bayesian dial to solve everything under conditions of radical uncertainty.
Anna
Dec 16, 2020 rated it really liked it
The book is very important for economics, but many of the ideas are already common to cognitive scientists, so little new.

However I'd rate their talk at LSE about the same topic with five stars, for me it condensed the most important parts and was therefore highly valuable.
...more
Clay
Apr 07, 2020 rated it it was amazing
The book's title is a no brainer in the crazy pandemic world of today. This tour de force questions the assumption behind economic models that humans behave rationally. Instead, begin by asking: "What's going on here?" In many cases, the best you can do is come up with possible alternative explanations or options, and then to construct a reference narrative, a story that expresses realistic expectations that is robust and resilient. Then take this narrative and use trial and error to help naviga ...more
Martin Dunn
Oct 03, 2021 rated it it was amazing  ·  review of another edition
Shelves: management, economics
John Kay and Mervyn King have provided a fascinating tour of how probabilistic reasoning has been used in decision-making. They offer insights across history and disciplines that cast light on the many abuses of probabilistic reasoning. However, ultimately you have to think that the main abuse that spurs the authors is the financial models that failed spectacularly in the Global Financial Crisis. This is a work that should be read by every economist, statistician, financial analyst, policy advis ...more
Haur Bin Chua
Jan 08, 2021 rated it it was amazing  ·  review of another edition
Shelves: 2021
In today’s world we are faced with unprecedented uncertainties and complexity. In this book, the authors, two renowned British economists, took jabs at the folly & hubris in the countless failed attempts to model and forecast the world. As recent histories has shown, we are largely unprepared for significant black swan events (as the Queen rightly asked a group of economists after 2008 financial crisis why had they failed to see it coming).

First and foremost, the nature of uncertainty can be bro
...more
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I was born in Edinburgh, Scotland in 1948, and completed my schooling and undergraduate education in that city: I am fortunate to have lived most of my life in beautiful places. I went to the University of Edinburgh to study mathematics. But, after taking a subsidiary course in economics, I decided that I wanted to be an economist. The notion that one might understand society better through the ap ...more

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28 likes · 3 comments
“Radical uncertainty cannot be described in the probabilistic terms applicable to a game of chance. It is not just that we do not know what will happen. We often do not even know the kinds of things that might happen.” 3 likes
“For all that has recently been said about ‘the wisdom of crowds’, the authors prefer to fly with airlines which rely on the services of skilled and experienced pilots, rather than those who entrust the controls to the average opinion of the passengers.” 2 likes
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