“Disaster myopia”: Failing to learn the lessons of increased uncertainty
Wednesday, 23 February, 2011 2 Comments
From Andy Haldane at Bank of England in ft.com:
People tend to forget events that happened a long time ago and give much less weight to the probability that these will happen again. This “disaster myopia” led to models that hid the true probability of some disasters. A further look back into history would have shown fluctuations in UK GDP four times greater than that of the past 10 years, that of unemployment five times greater, that of inflation seven times greater and that of earnings 12 times greater.
The following is an extract from (with link to) my original article
David – i am working on an article with a flash video on how entropy measurement quantifies uncertainty. I am sure you will enjoy it!
Thanks for forwarding the article on mortgage supply chain!
Bala.
Sounds like that could be very useful…looking forward to that Bala.
Be assured as/when I have the time I will happily recycle some of your always useful and beautifully succinct articles.
Regards,
David