Feb 142015
 

‘What the heck is he talking about?’ is an entirely legitimate reaction to reading my latest posts. So let me explain.

The overarching theme in my blog is the relationship between beliefs and evidence, as fruitfully encapsulated in Bayes’ Theorem. In fact, so pervasive is my reference to Bayes that I am myself reminded of Abraham Maslow‘s saying: ‘To a man with a hammer, everything looks like a nail’ (one of Charlie Munger’s favourite quotes). My point, however, is that Bayes’ Theorem is not a tool. It is not what we should do. It is what we do. We are all Bayesian. Indeed, all living creatures are as, from our first breath, we try to figure out what on earth is going on:

Bayes’ Theorem describes learning: how we use evidence to update our beliefs and, therefore, our actions and behaviours. We formulate a hypothesis and try to decide whether it is true or false. We do so by collecting evidence and judging whether it is more consistent with the hypothesis being true or with the hypothesis being false. This includes all learning, from a baby’s first steps to the frontiers of science. In this sense then, yes, everything is a nail, in the same way that in physics every thing has a weight (or, more precisely, a mass). In investing, the hypothesis is whether the price is right or wrong. In a trial, it is whether the defendant is guilty or innocent. In dropping a ball, it is whether it lands on the floor or somewhere else. And in learning to walk, it is dozens of tottering hypotheses on the best way to stand up and go. The basic elements are always the same: priors, evidence – hard and soft, conclusive and inconclusive, positive and negative – faith, certainty, accuracy, confidence, trust.

We ask ourselves questions and give ourselves answers. Uniquely among animals, our questions are shaped as whys and our answers as explanations, which beget new questions and new answers, in a seemingly unending chain. Such infinite regress is the root of what the ancient Greeks called thaumazein: wonder at what there is. Wittgenstein called it the mystical: ‘Not how the world is, is the mystical, but that it is (Tractatus Logico-Philosophicus, 6.44). Since childhood, we find endless why-chains inconceivable. We can envisage boundless space, endless time, countless numbers, but not infinite questions. Explanations cannot go on forever. Every why-chain must have a last ring, an ultimate answer that ends all questions. As children, we expect that grownups have worked it all out. Thaumazein is our amazement at realising that they haven’t.

Dealing with such inescapable conclusion is part and parcel of being human. One way or another, we all do it. There are two common solutions. One is faith in a self-sustaining super-human entity. The other is to cast the problem aside, get on with life, enjoy it while it lasts and hope for the best.

I have great respect for the first solution, and for people who elect faith – a prior belief requiring no evidence, and that no evidence can change – as a guiding principle to leading a righteous life. The trouble with religion starts when faith is replaced by certainty. It is arguable whether there is more evidence in favour of the God hypothesis or against it. But it is undoubtedly a tough tug of war, where claiming that the evidence is overwhelmingly in favour can only be done by turning a blind eye to the evidence against, or by relying on some faulty piece of conclusive evidence. Authentic religious faith requires no evidence: it regards God as self-evident. It is when faith turns into certainty that religion is liable to produce its worst excesses.

The second solution is by far the most common, as it includes inauthentic faith, professed out of convenience, conformity or a misreading of Pascal’s wager. It is a practical solution: if we have no clue on how to solve a problem, we might as well dissolve it. Forget thaumazein and carry on.

Neither solution works for me. I have no sense of religious faith or, as Wittgenstein called it, the mystical feeling: ‘the feeling of the world as a limited whole’ (Tractatus, 6.45). I find it respectable and often admirable. But I can’t see God as self-evident. When I stare at God’s triangle all I see is a Penrose triangle.

I do, however, dislike religious certainty. I find it smug and irrational, and – as copiously proven in history, past and present – an instrument of senseless conflict and appalling violence.

As for the second solution, I do carry on. In fact, I made an early point of centring my life on solidly practical grounds. But a strong sense of wonder has never left me since childhood. Why is there what there is? Or, as Leibniz famously put it, ‘Why is there something rather than nothing?’ (The Principles of Nature and Grace, Based on Reason, in Philosophical Essays, p. 210). This is the first question, he said, we have the right to ask once we assume the Principle of Sufficient Reason. Leibniz – like Gödel, one of the smartest men ever alive, but also a practical and worldly polymath – thought the answer was obvious: God – the free, omnipotent, infinitely good creator of the universe. Alas, like the principle on which it is based, Leibniz’s answer – the first solution to thaumazein – makes no sense to me.

But the second solution doesn’t do it either. I agree that we can live with thaumazein, embrace uncertainty and get on with it. Faith is not a prerequisite of a righteous and meaningful life. There is no need for an ultimate answer. A life built on sand is no less beautiful. But that’s not the point: whether or not there is an ultimate answer has nothing to do with our need to know it. The fact that we can live without a solution does not mean that there is none, or that searching for it is a meaningless pursuit.

On the other hand, if there is an ultimate answer, it may well be completely out of our reach. Though it sounds like it, a Theory of Everything – physics’ ongoing attempt to unify General Relativity and Quantum Field Theory – would generate many further questions, rather than end all of them. The ultimate answer is not only a sufficient reason that explains everything. It is also a necessary one, explaining why everything is in the only possible way. It is like 5+3=8: Q.E.D. No more questions. As Gödel showed, even arithmetic is based on undemonstrated axioms. But these are intuitively and, to our complete satisfaction, self-evidently true.

Will we ever be able to comprehend why there is what there is? Or are we like apes, or even ants, staring at IBM Watson? I think we can. I believe that there must be an ultimate answer and that we can find it. This is my faith.

And this is the heck I am talking about.

 

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  • Rukun
    You ask an important question. I wrote the next post to answer it.

  • Rukun Tarachandani

    Hi,

    First of all, I am a big fan of your blog. And although I am not very quantitative oriented I like your unique perspective towards investing.

    I am a bit confused by this blog post though. In your blog post on Kurt Gödel you mentioned how there is uncertainty in all facets of life and that we must be comfortable with it. Also from that blog post “The Principle of Sufficient Reason is not just crazy: it can make one crazy, by luring him into the fabrication of baseless explanations.”
    However in this blog post it seems you feel that there is one ultimate and certain answer and that we can find it. Wouldn’t that make us susceptible to “fabrication of baseless explanations”?

    Thank you,
    Rukun Tarachandani