Just a public service announcement to readers in the UK with access to the BBC iPlayer and who missed the programme Imagine last week: Alan Yentob following in the footsteps of Oliver Sacks’ book Musicophilia: Tales of Music and the Brain (US edition). There is just one day left to download it; you can then keep it for 30 days. Do it: it’s worth it. The streaming landing page is here.

I’ve been doing a lot of experimentation with music over the past few years, not least trying to understand why I like what I like, how my tastes evolve, and what relationship there might be to my own cognitive function at different times. For example, for the past two months I’ve been listening almost exclusively to classical music radio, barely a CD and almost no pop.

The key points for us here in Imagine were the results of a functional magnetic resonance imaging scan of Alan Yentob’s brain while he listened to three different pieces of music: one that made him happy (Is This the Way to Amarillo), one that annoyed him (some angry heavy metal), and a piece with deep emotional significance for him (one of Strauss’s Four Last Songs sung by Jessye Norman (US version).

There were two unexpected results. One was that the first song didn’t annoy Yentob (OK, that was my conclusion). The second was that the fMRI scan showed Yentob’s brain literally “bathed in blood” during the most poignant musical choice; the first two songs activated regions of the brain more usually associated with music.

Then there was the autistic and blind pianist, Derek Paravicini, who’d come to music at an early age, and as an adult demonstrated extraordinary virtuosity — able to reproduce a piece of complex jazz immediately after hearing it for the first time.

But here you need to pay attention, because it was made plain — then sort of glossed over later by some Yentobian editorialising — that turning the early latent musical genius into what we saw on screen took years of patient mentoring by the music teacher; that his ability to express his musicality through the keyboard was painstakingly earned, and perhaps more so than for an unencumbered musician. The boy’s ability to coordinate and apply appropriate fingering had been deeply limited by his disabilities (blindness/autism). There is probably a whole separate programme here on the process of releasing latent talent, particularly among those with learning impairments.

Finally, a group of Tourette’s syndrome sufferers, who displayed uncoordinated tics when gathered in a room, became immediately transformed and synchronised as musicians when they started a drumming exercise. This apparently supernatural effect suggests a deep-rooted social component to our experience of music, and one that I’ve sought out myself over the past few years as part of my own evolutionary fitness experiments. But I suspect my choirmaster would dispute how readily I become synchronised with my co-singers.

For those who can’t get the BBC, here are couple of YouTube’s. The first with Sacks talking about rhythm, and the second from Derek Paravicini’s website, which is ostensibly a UK TV documentary made specifically about him, featuring among others Jools Holland and Simon (not Sacha) Baron- Cohen.

Welcome to the Knackered Hack. If you're visiting in search of my paleo lunch with Black Swan author Nassim Taleb, you'll find it in three parts here. If you enjoy what you see don't forget to subscribe to the RSS feed. Alternatively, so you don't miss an important update and can more easily forward those salient posts to your friends and business contacts, sign up for my regular email service. You can follow me on Twitter by clicking here. Thanks for visiting!

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The Economist this week has two stories back-to-back in its Science and Technology section on cognitive enhancement. Not surprisingly the first one, which is about the widespread use of cognition-enhancing drugs (such as Ritalin and Provigil) to help you pass exams or improve performance, and the expectation of more to come, has been given the greater attention by the wider press. It’s a scare story about competition and cheating and raises the possibility of the need to test students as potential drug cheats. But The Economist takes a controversial tack in its editorial, likening this to “harmless” coffee and arguing it is a good thing.

It falls on deaf ears here because this is a week when I did not drink or eat any coffee, milk, wheat product, potato, rice or any refined carbohydrate excepting that contained in one bar of 85% cocoa chocolate. I drank no alcohol either. I’ve been doing this as a stricter enforcement of a paleo-style diet to help regulate my weight, but above all else to enhance cognition, and for longer-term preventative health. As far as I’m aware, it is working. With one or two qualifications. Those qualifications being a coincident virus that caused a migraine which lasted longer than I’d normally expect, prompting a little hypochondria and Googling for ideas about nutritional deficiency — to no avail.

The paleo-style diet (or lifestyle) is hard to sustain and I can tell you that it has been a lot harder in the short run than popping a few pills. But my argument with The Economist’s view is that the brain is a complex system: don’t mess with it if you don’t need to. My own experience seems to suggest that I’m a little insulin-resistant, with diabetes in the family, so a lower-carb diet is likely to be beneficial.

But the second story in The Economist pairing owes more to my approach than the pill-popping. This other story describing research that social position can be detrimental to cognition has received no mainstream attention elsewhere, as far as Google can tell us. It has been, thus far, editorially cold-shouldered, and subordinated, and yet by far and away it is the more interesting story for self-experimenters, self-improvers, collaborationists, diversity specialists, managers, teachers, coaches and parents.

Pamela Smith and colleagues from Radboud University Nijmegen suspected that a lack of social power might reduce someone’s ability to keep track of information and make plans to achieve goals in difficult and distracting circumstances. This seems like common sense, not least because I’ve seen a number of situations, for example, where even senior executives have lost confidence and status and then suffered a quite immediate impairment. I’ve even experienced it myself at significant moments. I once had to pitch for $30 million for a management buy-out having been booked into a shoddy lower-Manhattan hotel where the breakfast was served on paper plates. Not a good start to the day. The next day, for the next pitch, I moved to a different hotel and a waterside suite — ironically for much the same price.

The Economist says:-

To explore this theory, she (Dr Smith) carried out three tests. In the first, participants were divided at random into groups of superiors and subordinates. They were told that the superiors would direct and evaluate the subordinates and that this evaluation would determine the subordinates’ payment for the experiment. Superiors were paid a fixed amount. The subordinates were then divided into two further groups: powerless and empowered. A sense of powerlessness was instilled, the researchers hoped, by having participants write for several minutes about a time when they were powerless or by asking them to unscramble sets of words including “obey”, “subordinate” and so on to form sentences. The empowered, by contrast, were asked to write about when they had been on top, or to form sentences including “authority”, “dominate” and similar words.

Not much, you might say, to induce a sense of inferiority or superiority when compared with the real-life stress of a domineering boss or other confidence-draining circumstance, but nevertheless enough to make an impact on several cognitive tasks:-

In all three tests Dr Smith found that low-power participants made 2-5% more errors than their high-power counterparts. She argues that these results were not caused by the low-power volunteers being less motivated, as they had the same financial incentive as the high-power volunteers to do well. Instead, she suspects that those lacking in power suffered adverse cognitive effects from that very lack, and thus had difficulty maintaining their focus on the tasks.

A common problem in evaluating how well someone is doing relative to their ability is the often-mentioned fundamental attribution error: a pretty universal cognitive bias where we will tend to ascribe another’s failure in a task to their personality rather than their circumstances — largely because we will probably have more data about their personality than the circumstances. Conversely, we judge our own failures more kindly because we know what extenuates them.

What Pamela Smith’s findings suggest is that when we are judging an individual for promotion, for example, it is quite possible that their performance will be transformed once they emerge from a subordinate position, and even more so if we have failed to motivate them properly. They may have been swimming hard against a tidal flow that we cannot see.

Of course, this applies from hiring manager to teacher, coach, and parent, and should require CEOs and other leaders to show a little more humility given the cognitive momentum their high status affords them.

While I love what the cognitive sciences are doing these days, I can’t help but be reminded of the existing literature on these matters. This one evokes the first record I ever owned: Hans Christian Anderson’s tale of The Ugly Duckling. And this YouTube rendering is not so different from the way I used to enjoy it nearly 40 years ago.

Take a look. And believe that you are a swan.

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A few weeks ago, at an EBDM seminar at the London Business School, happiness economist Bruno Frey put up a slide entitled:-

Television weakens the will of active people.

I know that feeling. Professor Frey does without television completely, from what he said, as a route to optimising his own happiness function.

I asked Professor Frey if any similar research has been conducted in relation to the internet: as to whether the internet might do the opposite. He was not aware of any. It’s hard to tell from personal experience; I’m still in the process of evaluating whether or not extensive interaction on the internet is a time-sink or a route to more expansive individual productivity. No doubt there is an optimum balance, and discovering it may be more a matter of luck than judgement. The galloping growth of social media is frequently disdained by professionals in the mainstream media; the glib response, shared by a good number of ordinary friends and acquaintances, is that these social media types (to which I now increasingly actively belong) need to get a life.

But a couple of weeks ago I interviewed Matt Mason whose book The Pirate’s Dilemma: How Hackers, Punk Capitalists, Graffiti Millionaires and Other Youth Movements Are Remixing Our Culture and Changing Our World (Allen Lane/Penguin) I’ll be reviewing sometime this week, alongside some interview snippets. You can get hold of the US version here. Matt recommended a new book, Here Comes Everybody: The Power of Organizing Without Organizations (Allen Lane/Penguin) (US version available here) by Clay Shirky.

From the following video, it’s clear why Matt is recommending Clay’s work. Clay quantifies rather neatly in an historical context what is going on in terms of shifting patterns of behaviour, and why Wikipedia is so important to understand in a more positive light than many do. Above all, in a very amusing way, he highlights why the old-media perception of this phenomenon is so often wildly misconceived in terms of how attention is distributed these days. Of course, what Clay does not highlight is the malign possibilities of this cognitive surplus combining in the wrong way.

Thanks to Dave Morin for the pointer.

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I was thinking about the geophysicist Didier Sornette the other day. The reason being that (in my counter-factual way) I wondered what the world would look like if research (or a prediction, or an analysis) by people like Sornette were avidly watched — front-page news even. And then I remembered that I’d already written that post a long time ago, in my first blog. Like the other Yogi, it was déjà vu all over again.

Every day that I wake up to more bad news about the credit crunch, I feel slightly nauseated. It’s a bit like when you’re on a boat and the weather is closing in. Or the point that night falls and you’re out of sight of land. Or both. You’ve been there before, but your night vision needs to kick in. Time to hit the chart table, fix your position, re-evaluate how much sail you are carrying. A combination of nerves and trepidation focuses the mind. The concern is not so much for yourself, but for others. You’re in a complex system. Your fear must not guide you. You need to be confident, but careful. You may be master of the ship, but not the elements nor the other seafarers. A wetted finger is not good enough to figure out which way the wind’s really blowing. You need to calculate and apply learned heuristics, the wisdom of ages, one of which is “don’t rely on electronics”.

Finance being the bad-news-of-the-day for months on end is something I’ve never experienced before. I cut my teeth as a journalist during the extended bear market in oil that ended with the First Gulf War. The build-up was virtually a private affair for those of us who were specialists; no-one cared that much that the economy was benefiting from lower oil prices. The inflection point, when it came, was very public and geopolitical. Its consequences are still being worked out. I certainly did not see the Iraqi invasion of Kuwait coming; I was convinced that Saddam Hussein was just posturing. And yet, in retrospect, I vividly remember a conversation I’d had with a wise soul from the Middle East who showed an inexplicable agitation a few weeks before the invasion that you might characterise in the same way that animals are said to become jumpy before an earthquake. What was upsetting him was that he could read the runes whereas his colleagues could not. I was 25, still working below decks, lucky that he would take my call, and lacked the experience to fully engage with what was bothering him. The build-up to the credit crunch has been different and in some ways has already engaged the entire economically active population in psychological and also very concrete ways. The fall-out looks like being just as comprehensive.

It would be helpful if one could feel some sense of vindication, but it just ain’t happening. When you see someone driving recklessly, you don’t know whether it will end in a crash; that you are on the same bit of road — to mix metaphors — means you are inescapably in the same boat.

Getting it wrong is the sine qua non of economic forecasting. As the Stand-up Economist (whose gig on Saturday night at Oxford’s OFS I’ll be attending), says:-

Micro-economists are people who are wrong about specific things, and macro-economists are wrong about things in general … macro-economists have successfully predicted 9 out of the last 5 recessions.

Weather forecasters are often pilloried for getting it wrong. But, of all specialists, behavioural studies have revealed that they are the least confident in their own predictions. Economists and stock analysts, by contrast, are the most cocksure. And yet, the same people who failed consistently to identify the scale of the danger are also asked now to explain what happened. Nice work if you can get it.

Predicting markets is a notoriously tricky business, arguably foolish, and the great criticism that bulls usually level at those bears predicting bubble-bursts is that “even a stopped clock is right twice a day”. But what’s the inverse, exactly? Can’t the same criticism be levelled at the bulls? — precisely how “right” are they the majority of the time? And what’s the consequence of the bulls being very wrong just the once? Think back to Joanna Lumley playing Purdey [sigh] in The New Avengers in the 1970s, having to shoot her way through a kind of paintball training course. She was pleased that she’d scored 99%, marked by a single red dot that represented a bullet. Her sidekick, Gambit, pointed out it’s the 1% that kills you.

But I take the stopped clock thing seriously as a criticism of scepticism because it disparagingly suggests inaction and risk-aversion — who would want to be Chicken-Licken, after all? Certainly not the Emperor With No Clothes — and it cropped up in a piece of newspaper coverage about the credit crunch recently. My James Cramer reference the other day bears some reflection too. He would maintain, I believe, that his spiel is aimed at those with spare cash to gamble. But I think, in truth, he has been a cheer-leader for an industry that has been sailing toward the storm carrying every last scrap of sail in the locker.

But then, there is a problem with consistency. It’s generally over-rated. The ability to change one’s mind without shame should be more highly prized. As should be the ability to accept, without regret, that things may turn out better than one fears. Many a fisherman decides to stay in port only to find his catch and income is lost to a storm that doesn’t quite descend. He takes risks for a living, but I’m sure has learned too that it’s better to be wise before the event when so much is at stake. By contrast, a lifeboat man will put to sea in all weathers. But you’re taught at navigation school that he’s not to be confused with the AA man who will come and fill up your tank if you run out of petrol; he should only need to put to sea for the real black swans, not your incompetence. He won’t make that judgement, of course, but will respond to your Mayday anyway.

And so I was looking back at my own adventures as a Jeremiah, thinking about questions of timing. And that’s when I remembered that old post from my earlier blog about Didier Sornette. Sornette has long been on my reading list and in my view is one of the larger anti-heroes of modern finance that comprise my anti-library of unread books. He fits into that category where the Econophysics blog sits. The jacket of his book on markets, like Mandelbrot’s, shows fractal snail-shell patterns: you get the picture. I must buy it some day.

But I did read one or two of Sornette’s papers when they came out. I found them compelling, although the maths was completely impenetrable for me. It would be hard to find a more serious analysis of how vulnerable the markets had become at that point. That was the time to take in sail, batten down the hatches, and prepare (if necessary) to trail warps, spill oil on troubled waters, consider the possibility of removing all sail — what ocean yachtsmen call “bare poles” sailing, in the case of the perfect storm. In finance, it would mean de-leveraging early, not now.

At a very small talk I attended with Nassim Taleb in London way back in 2004, Nassim was asked by a London quant whether he thought the UK property market was in a bubble. Typical of Nassim at that time, I believe, he was confessing to not reading the newspapers so had no idea. The quant persisted that Sornette thought UK housing was in a bubble. Taleb’s response, if I recall correctly was this: “If Sornette thinks there is a bubble, then there is a bubble”. These are things I tend to remember.

Interesting, because Alan Greenspan was defending himself in the financial press the other day — and has done many times before — saying that it’s not possible to identify when markets are in bubbles. It’s a view that the prediction industry likes to repeat. But my understanding of Sornette’s science is that this is just not correct; you can identify bubble conditions from within trading price data using the same approach a seismologist does to gauge the susceptibility of the fault lines between tectonic plates to a sudden shift. I think the mathematical model he applied to the housing markets goes by the name of “log-periodic oscillations”. Predicting when the quake will occur, and with what magnitude, is the problem. That is still a work in progress, but one guesses that Sornette will be at the forefront of it as it unfolds.

Anyway, this is part of what I posted way back in June 2005 in my first, rather arch attempt at blogging called “Not that I’m Biased”:

If one is looking for a truly disinterested expert, and one with the latest knowledge on bubbles, we recommend geophysicist Didier Sornette. The mathematics of Sornette’s discipline is well beyond the lay reader. The essence of it is to show how complex systems work. He is an expert in the study of earthquakes. Stock market and housing crashes are the financial equivalents.

When people think about housing they don’t tend to think of a complex system. They will first think about their own house, those in the neighbourhood, and then a national price index recently described in the press which provides a sense of overall direction. They will probably then invoke a sense of someone who made a killing on property, or whom they saw renovate and sell at a profit on some TV show. From this they will make decisions to buy or sell. There is a strong element of imitation in what motivates them.

These behaviours are definitely part of what makes up a market, but Sornette’s specialism is in analysing them mathematically through study of the price activity of markets. Sornette’s last paper on housing demonstrated that the UK housing market would peak late 2003 or mid 2004, and then be susceptible to a crash. At that time, he did not characterise the US market as a bubble, but in his latest paper he shows that, two years on, the US is in a bubble.

A bubble with a crash in the UK will be one thing, but a serious reversal in the US would be very damaging. It remains to be hoped that the pump priming that occurred in 2000-2001 has not created a greater problem from which the world economy will suffer a more severe hangover.

It is no doubt a symptom of our collective aversion and lack of understanding of mathematics that Sornette’s work is not major news.

When the Asian tsunami hit, there was much hand-wringing about why the cooperation required to create an early warning system had failed. And yet, we know that events of that size are indeed extremely rare black swans, even though they appear to live in the folk memory of some of the coast-dwellers on Africa’s eastern seaboard. Financial shocks are coming with increasing frequency, but financial institutions, governments and the regulatory authorities — let alone the critical faculties of the media, — do not seem to be prioritising really listening to the complexity folks, despite the increasing volumes of accessible literature they have been generating in the past several years. It’s something I discussed yesterday with Brooke Harrington from the Max Planck Institute after her talk at the RSA. But that may have to wait for another post.

Photo credit: BrittneyBush

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