The Great Simplification with Nate Hagens - Reality, Probability, and Perception | Frankly #29

Episode Date: April 14, 2023

Recorded April 10, 2023   Description  In this Frankly, Nate explains how he views the future from a probability perspective - a tool frequently used in industries such as finance, retirement planning, and by e.g. gamblers. While there will be only one eventual outcome, the possible paths to that future fall in a distribution, with some results much more likely than others. We can shift these results with our actions in the present. However, no one person can know this distribution perfectly, only the distribution shaped by their own bias, knowledge, and perspective. How might we use a probabilistic approach to better understand what's possible - and even to better relate to others? By thinking of the future as a spectrum, can we avoid falling into traps of certainty and complacency that inevitably lead to inaction? While there are some outcomes that are impossible, there are still many within our power to steer towards during a Simplification.   To watch on Youtube: https://youtu.be/uWn2svl6aBU For Show Notes and More: https://www.thegreatsimplification.com/frankly-original/29-reality-probability-and-perception

Greetings. Today I'm going to talk about probability, uncertainty, and perception. This is how I think about the world, and I've thought about this, frankly, topic for a while. This is going to be graph heavy. All of the graphs in this presentation are conceptual, except for the nuclear war impact on climate and the IPCC climate projections. If you're like me, imagine you being in a room with 20 or 30 of your friends, your family, your neighbors, and asking them a question, what do they think the temperature relative to pre-industrial will be in the year 2100? What would the size of the global human economy be in the year 2100? How many of the current 6,500 species of mammals will still exist in the year 2100? Probably there will be an extremely wide

variety of responses, even with people in your family and your friends. Let's start with yourself. What does your city look like in the year 2050 or 2100? What is the temperature and the environmental future going to be in the deep future? All of us have discrete views on this, ranging from a very specific thing to, I have no idea. I just want to pay this month's bills. But the point is there will be a reality for your city, for your region, for the planet in the future. And when you think about it, you might think that there's a single point, but in reality, you are imagining a distribution of futures and just voicing the single point.

So instead of confusing with climate or GDP or animal populations, let's start with an easy, example, who was in this year's Super Bowl in the United States and who was their opponent? If I had asked you that one year ago, how would you have thought about this question? Well, there's 32 teams in the NFL, 16 in each division. So 16 times 16 is 256 possible outcomes. If you knew nothing about football at all, which probably many people listening to this podcast, as don't, you would think all 32 teams and all possible matchups were equal chance. So each point on this white line would be one 256th chance of being in the Super Bowl.

But not all teams and scores have equal chances. The distribution of 32 teams and likely matchups creates kind of a possibility of outcomes with the best teams before the season, making up the fat middle part of this distribution and the long shots represented by the tails. And all the probabilities under a curve add up to one or 100%. If the shape of this outcome is normally distributed, the odds will look something like 68% will be in the fat, tall middle. 27% will be in the shorter next tail.

And a few tiny percent will be in the small tails. left and the right, with a far smaller chance. So, as the football season goes by, there's more clarity on who the best teams were, and some bad teams were mathematically eliminated from the playoffs in the Super Bowl. By the time the playoffs, the number one seeds had the highest odds, and the distribution became much tighter and taller. Until after the Super Bowl was played, the distribution had collapsed into a single discreet outcome. Kansas City defeated Philadelphia. In a similar way, a distribution of possible

outcomes exists for nearly any issue that we discuss in this podcast or that we care about in the future. And these distributions don't need to be normal in shape. They can take all sorts of shapes depending on physical events and perceptions of same as long as the area under the curve adds up to 100%. Okay. So I'm going to outline three ways to think about these probability distributions about the future. First is the probability distribution of the actual future reality. This cannot be known by any human or group of humans, but it exists nonetheless. Second, I'm going to talk about the best science by humanity applying all we know to come up with a distribution of possibilities. And finally, there is a probability distribution of our own individual perceptions of this reality,

both as individuals and as a cultural aggregation. Okay, here we go. So there exists some sort of probability distribution for all events or issues at discrete dates in the future. The tails of this distribution shrink as time to the future shrinks. At the final future date, there is. no longer a distribution, but a single point. There will be a specific reality for future events. No one on earth knows it. So a hypothetical distribution of global temperature rise in the year 2100 might look like this now in 2023. And after seven more years, some more information and policies

and Earth's responses have occurred. So the distribution tightens a little bit. After four, 50 years, many things will have happened. So this distribution narrows further until the year 2100, there will be some discrete outcome. And we don't know what it is. For ease of understanding in these graphs, we're going to show bad futures relative to today on some topic to the left of the graph and better futures in the realm of the possible to the right. So this dynamic pertains to all issues in the future, but let's focus on climate for now, measured by the average global temperature increase relative to pre-industrial times in degrees Celsius. There is an actual probability distribution of what Earth's climate will be in the year 2100. No one knows it, but for illustrative

purposes, I will create this black curve to represent this future reality, which can change over time based on physical and human influences. Furthermore, standing here today, there also exists some sort of probability distribution for all events in the future, global things like climate, GDP, or biodiversity, or plastic pollution, or average income, or amount of topsoil, etc. Any human event or policy that suddenly shifts the distribution on future 10,000, to the right, meaning cooler planet, a more benign future outcome, is not independent of all these other future issues. In effect, the graphs of future events move in sync or inversely, not on their

own. What is good for poor people may not be good for dolphins or forests. It is generally true today that policies good for environmental issues will be bad for economic ones and vice Okay, no one can possibly know the future. Too many variables, too many unknowns. But in most cases, with an important caveat, I'll explain in a minute, the aggregate distribution of scientists and experts is the best humans can get at understanding and predicting physical reality. So global temperature change from CO2 emissions is obviously a very important issue in today's world. This graph is from a real scientific paper showing an aggregate proxy of IPCC models of global temp versus pre-industrial in the year 2050. The midpoint of this distribution is centered around plus

1.8c or so, with over 60% of the outcomes between 1.8 and 2.2 degrees Celsius. This is a real chart made by scientists attempting an aggregate distribution. Note, while there is close to zero chance, that temps will be above 3 degrees Celsius in 27 years from now, there's also zero chance of temps lower than plus 1 degrees Celsius. The boundary of this distribution starts at around 1.2 Celsius. If we extend this analysis to the year 2100, another 50 years of emissions and lag effects from prior emissions, and we see the distribution is flatter and wider, the green chart.

more uncertainty with a higher midpoint. The midpoint is now around 2.8 degrees Celsius. Note that the odds of something like 5 degrees Celsius are low, but still higher than plus 1.5 degrees Celsius, which the climate models show are effectively zero. First of all, as an aside, and note your own reaction seeing these charts. Depending on where you are in the climate discussion,

you will think these numbers are either very conservative or highly overblown or possibly just right. I'm going to get to that in a minute. So in my opinion, and it's also a truism, for most scientific topics, the aggregate of science is the best prediction of probabilities that we can input into our cultural decisions. However, here is the caveat.

Most scientists are experts in one field, so they're a bit siloed in how other events might impact their issue, not to mention the fact that conventional economic and business-as-usual assumptions and the political pressure that underpins them are relevant to many long-term projections, especially on things like climate change. So the systemic implications of these distributions may be overlooking key variables. I'm not a climate expert. I have a piece of and natural resources. I've read 50 or 60 climate papers, but I am not a climate expert. However, I have spent 20 years looking at systems. And I can point out at least three reasons that the

future probability distributions from the aggregation of IPCC climate scientist do not accurately represent the real distribution. First, as often mentioned on this podcast, so, some of including most climate scientists are energy blind. There is not a single integrated assessment climate model that shows negative economic growth from today to 2100. Viewed from the perspective of the carbon pulse, the optimistic economic and technological outlooks for income and wealth in the coming eight decades, given a likely near-term peaking in the master research, which is crude oil, are optimistic to egregiously optimistic. So this systemic addition would tend to shift the future climate reality to the right

or less dire temperatures in the year 2100. On the other hand, since there are no scenarios in climate scientists showing declining growth until after 2070 at the earliest, there are also no models that factor in increased access of forest biomass for fuel and timber. As shown in Easter Island and recent economic downturns, 2009 in Greece, 2022 in Germany, tough economic times and not enough money or natural gas leads to people desiring wood and coal. And if humanity access is the standing forest on earth today for fuel in a large way, we not only burn the stored carbon, but we remove the forest carbon sinks in the process. So this in turn shifts the probabilities back towards a worse temperature

distribution. Another aspect not figured into future science distributions of global temperature is the increasingly non-zero possibility of a nuclear war, even a large strategic nuclear war, There are multiple scenarios that are hard to gain, but in my own personal analysis on this, there's at least a 20% chance of this happening in coming decades. And I hate to say that, but based on what's going on now between NATO and Russia, I think it even could happen in 2023. A strategic exchange of nuclear weapons would have catastrophic impacts on the global biosphere, including models show up to a 15 to 17 degrees Celsius cooling in the short term

and a cooling of 1 to 2 degrees Celsius over longer term horizons. So this shifts the global temperature graph modeled by IPCC to the right. Not only is their global cooling, but it would largely stop global emissions. While this would be a good scenario for temperature, it would be absolutely horrific and catastrophic for all other economic environmental distributions and life on Earth. This would be a sixth mass extinction. So, summarizing those three little things that I've added on here, relative to the consensus climate science, my own mental distribution for few, future temperatures would look something like this. But that's my reading of things.

I could be slightly too completely wrong. But that leads us to a central point of this, frankly, and perhaps the most important aspect of this little analysis. When you think about, for example, temperature or the size of the economy, or your own income or world population at some future date, you say out loud, but a discrete number or prediction. But in your mind is really a distribution of the sort I've been illustrating here. Each of us, without realizing it, has a probability of different events in a distribution in our minds.

We say, I think temperature in 2100 will be 3 degrees Celsius warmer than today. But what we really mean is 3 degrees Celsius is the middle of my mental distribution of what the future will be. And by definition, each of us believes that our distribution about a certain event or issue is the correct one, or else we'd adopt someone else's view on the fly to be our view. So, as you might imagine, the diversity of opinions on things like temperature rise, economic growth among billions of human individuals is very wide. the aggregate of individual perceptions, kind of the average of all of us, is represented here in the dark purple. Humans prefer certainty. We also want to be socially accepted, so we often adopt both narrow distributions to avoid energy and time of our mental bandwidth use, worrying about some outcome. And we also converge around the opinions of people in our accepted social. social groups. Social media has had at least three impacts on these cultural distributions of perceived

reality. First, we no longer get together personally in our shared spaces as much, so we don't have the anchor of real relationships, tolerance, past interactions of trust back and forth as much as we used to. Two, people can find their own beliefs supported by information online pretty much on anything. This confirmation bias echo chamber reduces the uncertainty that was present in the pre-social media world. And third, in addition to narrowing the openness to new beliefs, social media's impact that via upvoting of extremes for clicks and dollars for social media companies has polarized opinions. on most issues. What have I told you? Basically three things. Let's summarize. Predictions and

expectations about the future are not binary, yes or no, but all form some sort of a distribution, the shape of which is influenced over time by natural, human, and emergent phenomenon. There is an actual reality distribution that none of us can know. There's a scientific human consensus aggregate distribution, and there's a whole lot of individually perceived opinions about the future. The human brain prefers binary, nuance, and complexity are physically uncomfortable, especially if the information is outside of what one's tribe is saying. Social media selects for both more certainty, which is the narrowness of the distribution, and more polarization, which is the low.

left and right directional movement of people's distributions. The result is that most people can no longer even talk to each other because there's no overlap of their mental perceived distributions on most issues of consequence. Okay, why did I do this kind of convoluted graphical depiction of what's in my mind. Why does this all matter? There are five things I can think of. So what is the purpose of this podcast, the great simplification in this work that many of you are doing around the world more broadly? Well, first of all, it's to shift some people's understanding and expectations more towards reality on the economy, energy, and material reality of coming decades. In order to make better choices in our own lives and as a culture, we have to converge,

at least some of us, on a systemic curve representing possible and likely futures. This is going to be especially difficult as the end of growth will quite likely imply the beginning of something other than democracy. And science also is at risk. Science and principles. of enlightenment might not function well in such an environment, which is why it's important to get people at least having a common language to describe things. Third reason why this is relevant. I think over time, we have to attempt to break the inverse relationship between interventions on what's best for humans and what's best for the environment to be more aligned. Could we imagine a point, 10 or 20 years from now where some things good for the environment are also good for the human

system and vice versa. Another point is that if we consider the above blue graph to represent an aggregation of all human and ecological events in the future, it may be more dystopian than modern culture and politicians are able to understand or willing to admit, but there are many possibilities still under that curve. So an understanding of this might shift your individual focus of interventions, preparations, pro-social projects for those watching this. If you think there's going to be a near-term human extinction, you're unlikely to work on advance policy type of issues. If you think humans will soon be colonizing Mars and living like George Jetson, you probably aren't going to be planting a garden or talking to your neighbors a lot. So if your own

personal distribution of possible futures is the red curve or the green curve, how certain are you and how much of your efforts are assuming that your future that you expect will 100% arrive? And lastly, and ultimately, the purpose of this podcast in our work is to, shift the underlying reality towards better odds and outcomes. Thank you for listening. I hope some insights made it through. And if not, you have a little bit of a better understanding of what goes through my mind as I visualize what's going on in other people's minds and these distributions. And that fact plus $10 will get you a coffee in New York City. I will talk to you soon. This Earth Month, there will be a new Earth Day talk coming up in a couple weeks. Thanks.