439. The Phenomenon of Fluke – Chance, Chaos, and Why Everything We Do Matters

Nikki Miller:

Hello everyone, and welcome back to The ONE Thing Podcast. We are here with Brian Klaas today, who is a Minnesota native, earned his DPhil at Oxford, and is now a Professor of Global Politics at University College London. He's a contributing writer for The Atlantic, host of the award-winning Power Corrupts Podcast, and frequent guests on national television.

Klaas has conducted field research across the globe and advised major politicians and organizations, including NATO and the European Union. And he is the author of Fluke: Chance, Chaos, and Why Everything We Do Matters, which is what we're here to talk about today. Welcome, Brian. We're so excited to have you.

Brian Klaas:

I'm delighted to be here. Thank you.

Nikki Miller:

Brian, I can see how both reading as a reader of it, and I can see how writing this book, or really just us having conversation about the subject could send someone down a philosophical rabbit hole. And as I was sharing with you before we jumped on, I'm excited to have this conversation because, in our world, we often talk about how our action matters by way of productivity, right? Typically, we're interviewing a lot of business owners, we're interviewing people who write strategies on how to have high performance as a human being. And this book has, to me, what feel like two opposing perspectives, which is that everything that we do matters, but alternatively, we also live in a chaotic universe where there's a lot of things that are completely fluke or chance, as you describe it. What was your inspiration for writing this?

Brian Klaas:

That's a very good summary So, I mean, what I would say is that there's a sort of personal and a professional side to the origin story of this book. The personal side is there's a story that starts in the first chapter, this tragic story of a woman having a mental breakdown in 1905 in Wisconsin, and she's got four young kids, and she ended up killing all of her children and then killing herself. And this horrible story, the reason it's in my book is because this is my great grandfather's first wife. And he came home and discovered his entire family dead. And he remarried to my great grandmother.

And I was totally oblivious to this until I was in my 20's, my dad sat me down and told me about this. And I had this realization that I wouldn't have existed if this had not occurred, right? But when you start to think about this in a more detailed way, it also occurs to you that you would not be hearing my voice if this had not occurred, right? And so, I think a lot of stuff around the way we think about why things happen just writes out these sort of weird, arbitrary events from the past and how we reshape our future. But, you know, quite literally my existence is predicated on a mass murder 119 years ago in a Wisconsin farmhouse. So, that's the personal side where sort of, you know, that's stuck with me, as you might imagine.

Nikki Miller:

It's probably wise that you don't add that to your bio, Brian.

Brian Klaas:

Indeed. Yes. Although I will say, you know, my grandpa, he had a dark sense of humor and he used to say, "Well, we're not related to her because that branch of the family tree ended." So, there's no mass murdering genes in me, hopefully.

I mean, the second part of this is that I'm a social scientist. And one of the things that social science does is it tries to figure out how to navigate a really uncertain world. And the way that you do that is you come up with models. Now, sometimes they're very useful, but the problem is that you sort of say, "Okay. Here's, like, five or six things, that if you do them, you can control the world. You can avoid catastrophe because we know how everything works." And the more that I studied things, the more that I realized this was not true, that there's all these things that are out of our control, that there are sometimes very small tweaks that have enormous consequences and all of that doesn't go into the model.

So, on the personal side and the professional side, I was both looking at this worldview where the flukes, the luck, the accidents, the arbitrary nature of change, all that was written out. And then, you come up with this - what I call - storybook version of reality where everything fits together really neatly. And I just don't think that's how the world works. So, that's basically where the book came from.

Nikki Miller:

I'd be curious as someone who studies this and talks about it as much as you do and wrote the actual book on it, does it give you stress or anxiety or pause when you think about if everything I do matters, if I turn left over right, is it going to have consequential effect on the world? It's sort of the butterfly effect in mass.

Brian Klaas:

So, it's a very good question, because in the first chapter, I have this thought experiment where I say when we think about traveling back in time, like you think about Back To The Future, or there's sometimes thought experiments where you travel back to a million years ago and you squish a bug and the whole future is diverted, it changed, and maybe humans don't exist, or maybe you don't exist, because back to the future, you talked to the wrong person and so on, we intuitively accept this. That these small changes in the past can totally radically reshape the future. When we start to think about the present, we just pretend that's not true, but everything that we are doing is reshaping the possible pathways of our existence.

Now, I think the thing that you're asking is how do you live with that? Well, I think there's two things. One is that, first off, I don't think you can change it. You can't control it because you don't know the ripple effects of your actions. My great grandfather's first wife did not know that she was going to produce a podcast episode in 2024 through this action she made in 1905. So, you can't control it. But the flip side of this is I think for wellbeing and thinking about the value of our lives, I think this is actually really empowering because one of the things that I find a lot of people struggle with in the modern world is this feeling of interchangeability or having no power because there's all these structures around them where they feel powerless within them, or AI is going to replace my job or a robot will replace my job.

The nice thing about this worldview, which I think is actually the way the world works, is that everything is important. So, there's no throwaway action. There's no throwaway word. It all reshapes the future, although sometimes it's very small in its effects, and sometimes it's very big, and we can never really know which one it is.

Nikki Miller:

The way you explain it makes it feel comforting in a way that it's these small actions that we can take if we take them with care can have a huge positive ripple effect. I think about in the way that we interact with people. And I'm sure we've all heard the story many a time where, you know, I was having the worst day or potentially was going to have my last day and that person gave me a smile or an encouraging word, or whatever it was, and I made a different decision because of that interaction. And to me, I go to the place of every small action that we take, interaction that we have, whatever it may be, can have an enormous positive effect on our experience and potentially on the future.

Brian Klaas:

So, I think that's a very good way of putting it. I think there's a few things that come out of that philosophically. So, one of them is that sometimes when you have good intentions, you can actually produce bad outcomes and vice versa. I mean, the fact that every joyful moments in my life is derived from this mass murder means that you have a very positive outcome for me from something that was horrific, absolutely horrific. And that's one of the things that's maddening about the way the world works, because there's sometimes good intentions that have bad outcomes, bad intentions that have good outcomes. Now, of course, that doesn't mean you should try to do bad things. Of course, you should always try to live a decent and normal life because you're trying to help other people and so on.

But the really comforting thing, and this is what I find is missing from our dialogue about these things when you start to think about how causality fits together in this sort of chain link of cause and effect that's unbroken for our entire lives, is that the worst moment of your life is inextricably linked to the best moment in your life. They couldn't both exist unless they equally are there. Because the good moment is caused in some way by the diversion of the path you had in life by the bad moment. And I think that's really uplifting and beautiful as a comforting mentality. So, I think we have this idea that there's just these discrete moments and most stuff just gets washed out, and I don't think that's true.

I think that the easiest way to explain this - and I won't go into graphic detail, I promise - it's the moment of conception of a child. If it is one millisecond different, a different person is created. So, if you took a sip of coffee that morning or didn't, it changes which person is born, but that goes back to the day before, and the day before, and the day before. And so, everything in your life is this unbroken chain of causes and effects, and I think when you start to grapple with that reality, it does change your outlook and your worldview of how important your individual actions can be.

Nikki Miller:

Do you find that when you're conceptualizing this or explaining it to people, it really only makes sense when you look back at history? Because you give some incredible stories in the book about had this thing been different, or had this timing been different, this person been different, whatever - there's so many great stories, I couldn't begin to go through all of them - does it only conceptualize when you look backwards? Because you can't hope to predict the future.

Brian Klaas:

So, this is the weird thing about the past versus the present, because we can't see how the present is changing the future, we never think about these. I call them the invisible pivots. So, people do think about the idea of if I had not gone to this university or if I had not gone to the coffee shop this day, I went to met my spouse, whatever, those are the visible pivots, we're aware that they're happening. The invisible pivots are what I call the snooze button effect, which is you hit the snooze button or you don't and does it change your life, this idea.

Now with history, it's easier to conceptualize this, and I can convince people of this more straightforwardly because there are stories where the world pivoted on the smallest thing. And that's why I start the book with a story of a vacation in Kyoto, Japan in 1926. Husband and wife fall in love with Kyoto. They have a week long vacation there and that experience of going somewhere and finding it to be wonderful. Nineteen years later, the husband is America's Secretary of War, Henry Stimson. And the Target Committee, which is deciding where to drop the first atomic bomb picks Kyoto as their top target. And he has to have two meetings with President Truman to convince him to take it off the list. And so, the immediate reason why the first atomic bomb was dropped on Hiroshima instead of Kyoto is because of a vacation that a couple took 19 years earlier. And then, the second bomb was supposed to go to Kokura and there was briefly cloud cover right when the bomber arrived, so it went to Nagasaki instead.

This is the kind of stuff in my own professional life of thinking about social change and all these sorts of things, it's like who would say that the reason why things happen is because of a two decade old vacation and a cloud? But that's history. That's the way it works. And if history works that way, then the present works that way, too, because it's not like there's two versions of how the world works. It's just the same. We just think about them differently, past or present.

Nikki Miller:

It's interesting because this concept or what I think becomes the challenge that we have as human beings living in this world is that the theme comes up of what if. Like, we can look backwards in our life and say, What if I had not broken up with that person or they had not broken up with me? What if I had gone to that college over that college? What if I had made a different decision? And you go further and talk about those invisible pivots that you already mentioned. Can you talk more about this? Because I think this is something that people could get lost in as they think about the small effects that our actions will have and the prediction for the future.

Brian Klaas:

So, I think I was once asked the question of what is the biggest fluke that has changed your life and so on. And the point is that I don't know. I mean, I would guess that the most important --

Nikki Miller:

Right. Yeah, you could never probably guess.

Brian Klaas:

And I think there's probably been times where I almost died and I'm not aware of them. I mean, maybe somebody fell asleep at the wheel and then woke up in time to not hit me. I would be completely oblivious to that. But if they hadn't done that, then maybe I wouldn't be here and so on. I think that when we think about like I use the snooze button as a thought experiment, because a lot of people figure, "Oh, well. Yeah. Okay. But I'll get up at roughly the same time. I'll still have the same routine," and so on. But a five minute delay in your day will make you meet different people that day. You will have different conversations. And those things have ripple effects.

And this is the kind of stuff where chaos theory - I was really baffled by why chaos theory is not applied to humans very often at all. Occasionally in film and so on, you do see this. But in social science and in discussions of business and so on, we mostly have these more clockwork models of change that are the visible pivots. Like, "Oh, here's the five variables that make a successful business." There's a lot of stuff, I think, when you look backwards at it that it could have gone a little bit differently. I mean, if Apple had been to the game of computing three years later, would they be a giant company now? I don't know. Timing was important.

So, there's a lot of stuff where I think the things that we try to make sense of involve these very big, obvious building blocks, like, "Oh, yes. Of course." And we always learn backwards as well. So, if something is successful, we're like, "How did they do it?" Well, if it was a totally random accident that they became successful, which sometimes happens, then we shouldn't learn the lesson because they might have done something that was not that smart and they got lucky and then people mimic it. And so, I think there's this sort of stitching back in time where it's always a very neat thread.

And I think the invisible pivot point moment, I use this idea of what I call The Garden of Forking Paths from a short story from 1941. But it's basically this idea that every time you step forward, the garden in front of you, the pathways change. Every single step, right? Now, some of them will end up in the same destination. You'll still might end up meeting the same person and falling in love with them. You still might end up in the same job. But the pathway matters. It affects the way that your life unfolds. And I think that is something that we just pretend is not true.

And I think when I do talk to people, I think people actually sort of nod along and say like, "Okay. This makes sense, but I've never thought about this," and I think that's the perplexing thing about this disjuncture between the way that we think the world works, and then when we gaze at it a little closer, how it seems obvious that, of course, we're reshaping our futures constantly.

Nikki Miller:

How it actually unfolds. Well, it makes me think about, you mentioned earlier, one of the things that you'll see as a common theme through The ONE Thing that we're always looking for is models. I want to find a model for how to replicate that, or how to do that, or how to be that, whatever it may be. And when I think about this, this almost becomes not only a model for how you look at the world, but also I'd be curious to hear your perspective on what's the model for making decisions knowing this. Because I love what you just said, which is that people don't often apply chaos theory to human beings. And I would offer that we probably are living chaos theory because we take so many actions. And I'd be curious to understand how you use this to make decisions and what your model might be for that if you have one.

Brian Klaas:

So, basically, there are sort of two kinds of situations that require different models of decision making. So, one of them, I use an analogy of Moneyball, for example, which is that famous story of how to sort of optimize baseball based on metrics and data and so on.

Baseball is a really closed system. There's very specific rules. It's the same teams every year. Yes, we don't know who's going to win the World Series, but what we know is that the Miami Dolphins, the football team, is not going to win the World Series. There's specific rules that prevent certain outcomes from happening. The real world is not like that. But if you're in a closed system with very strict rules, and sometimes businesses like this, then you might want to just optimize. If you make paperclips, just make them as efficiently as possible. There's not going to be this massive flukes that totally upend your world that much.

When you're navigating uncertainty, the model has to shift because then flukes and randomness can divert trajectories in ways that are consequential and can create black swan events. You know, the pandemic diverted a whole bunch of trajectories very, very quickly. So, when you're navigating uncertainty, what you should do is dial down optimization to the max and slightly dial up resilience.

So, the way I would say to think about this is, there's an example of an electrical grid in South America, I think it's in Chile, where they basically designed a system that is, like, 10 percent less efficient than it could have been. And that's because they decoupled all these regional networks from the national grid. But when it actually had a blackout and they actually had the system fail, which was a totally unexpected event, they had planned not to have this happen. But when it did happen, it was very localized and it created almost no economic damage.

Whereas, the flip side of this - my favorite example - is that boat that got caught in the Suez Canal because a gust of wind hit it and, all of a sudden, you have $54 billion in economic damage. It decreased global GDP by up to 0.4 percent from one boat. And the reason for that is because the system was optimized so much, there was no slack. And when that fluke happened, it was like, "Okay. Well, we're screwed."

So, in navigating uncertainty, the more uncertain you are, the more you want to prioritize resilience over optimization. The less uncertain you are, the more you can prioritize efficiency and optimization over resilience.

Nikki Miller:

You know, this kind of makes me think of a couple of weeks ago, I interviewed Morgan Housel on his new book called Same As Ever. I don't know if you've had a chance to see it, read it. But effectively, it's the concept on what is now a very famous Bezos quote, which is, people were constantly asking him about what are you innovating for or what's next or what's in the future. And he said, alternatively, what I'm actually innovating for is what will remain constant, what is always going to be the same. And I see a thread of that in what you're saying, because it's not saying give up because everything is fluke and you can't control anything. It's optimize for where you can, but give yourself enough space and thinking power to be able to pivot where you need. It sounds to me like there is an ability to over optimize, that the system gets so tight, you're so strategic that you can't think of what could happen that might be a gust of wind or how you might be able to pivot if this randomized world event happened.

Brian Klaas:

So, I think this is true on two fronts. One is obviously systems around business and politics and so on, which I just mentioned, but also on our own lives. I mean, I look at a lot of people and how they're living. And this was me as well if I look back at my life prior to the pandemic, for example. I was living what I would describe as a checklist existence. Everything was life hacks. It was trying to always get everything a little bit better. I think the problem with that is that you do lose a little bit of the value of navigating uncertainty more effectively because you think that you know exactly what to do. And everything that you make a decision around is like, "Okay. Well, I'm going to make this absolutely perfect." Now, the reason that's not necessarily always good advice is because there's a lot of benefit from experimentation within uncertainty.

And the stories that I really like from the book that bring this out, one of them is an economic study where there was a strike that was made on the Tube. The drivers of the Tubes, the London subway, they went on strike. And so, all of a sudden, the whole city's got to find a different way to work. And these economists got data on anonymized cell phone locations, and they looked at the pathways people took. And they found that more than five percent of the people stuck with the new pathway to work after they were forced to experiment by this accidental inconvenience they had because it was actually better for them. Now, some of them might not have been faster. It was just more enjoyable. And if they hadn't had to walk a little bit, for example, or if they hadn't had to explore a different pathway, they wouldn't have understood that.

So, there's loads of examples and innovation as well where people who are not trying to solve a problem actually solve a problem. So, one of the great examples is the Wright Brothers who were having a picnic and saw some buzzards and got their idea for the plane. Or the idea of the pendulum clock, in a cathedral, there was a chandelier swinging from the ceiling while a person was worshiping. So, these ideas are ones in which, I think, if you have the worldview that you can control everything and optimize everything, you stop experimenting, you stop building resilience, and those things actually turn out to be really, really helpful in our modern world where flukes really matter and they can upend things really, really quickly in devastating ways.

Nikki Miller:

One of the things that stood out to me, and I'll ask you the same question I asked Morgan on this thread, which is that, I think sometimes we deal so much in what we do with coaching and optimizing businesses and corporate consulting and things like that, that I could see someone listening to this, reading this and saying, "Well, if we control nothing, but influence everything, is everything just out of our control? Like, do we just give up and let nature take its course?" What would you say to that person?

Brian Klaas:

I mean, I don't think we should. Humans are striving creatures, right?

We always want to improve our world and we always want to improve our lives and so on, and that's a natural impulse that we shouldn't abandon just because we have less control than we think we do. I think the point is that if you accept the worldview that you have less control, and I do think this is something that's wildly inaccurate about the way that most people view the world, which is if we just do these four things, it will be fine.

When I think about my life, there's like a million things I didn't control. I mean, I didn't control when I was born, where I was born, who my parents were, how loving they were. My personality was not in my control. My brain was not in my control. All those things are hugely influential in my life.

So, I've accepted that I have a lot less control than I think I'm sort of told within our culture, which is all about if you just do these three things and so on.

Nikki Miller:

You'll be successful or whatever.

Brian Klaas:

Yeah, exactly. And that doesn't mean I don't try. Obviously, I try. I'm trying to do everything that I can to fulfill the life that I want. I think what it does though, I think it makes you reflective more. And I think one of the things that's a problem about the optimized existence is that you don't have to think about what you're optimizing for. And this is where I bring the Moneyball thing briefly back into this, because one of the things that was amazing about this was that, as they Moneyballed baseball and everything got more spreadsheet-based and data-based, the game got way more boring. And they started to lose fans because there was less uncertainty.

It was like there were fewer exciting innings because they were able to have defense that would play based on optimization, a more effective game, lower scoring games, et cetera, and the fan base started to fall away. And you're like, "Okay. Hold on. Baseball has forgotten what it's for. It's for entertainment." And uncertainty is part of the entertainment. We love the idea of not knowing how the game's going to end.

So, I think there's stuff where when you have to think about what you're optimizing for, it creates more happiness. I think a lot of people on autopilot are optimizing for efficiency and money. And I think there's some people that that's maybe the best pathway for them and there's other people for whom it's not. And I think that's where the sort of forced experimentation that I was talking about can really showcase that sometimes when we're pushed out of those checklists and forced to adapt, we actually find better pathways forward.

Nikki Miller:

Well, you give countless stories about this in the book. And one of the threads that you bring throughout the book, which I think is really important, is what you just said, which is that having this innovation and sort of acceptance of these uncontrolled events actually creates happiness.

And I find this in business that I don't know that it would relate directly to happiness. But I find that an organization often will consult organizations that are highly, highly, highly systematized. I mean, everything is dialed in. Everything's got a process. Everything's got a system. And they can't understand why they're inefficient. And what will come in and realize is that they are so efficient that people are getting bored and lazy and stop thinking, and therefore, their best players leave because people want to be challenged and they want to be fulfilled at work or they create problems just so they can solve them. Do you see that happen?

Brian Klaas:

Yeah. So, one of the things that was really fun about researching this book is I'm synthesizing history, philosophy, and also science. And one of the things with science is I looked into a lot of evolutionary biology studies. And one of the things that I think is important for thinking about this from a business perspective is everything that you look at around you in terms of animal, plant life, et cetera, has been produced through undirected experimentation. It's basically just random mutations that when they solve problems effectively, they survive. And when they don't solve problems effectively, they die off. And that's basically the engine of evolution.

When you think about that in a business context, well, if you systematize everything, you're creating a brittle process because you can't experiment. Individuals who might have an idea are thinking but I can't because there's this computer software that doesn't allow me to do this differently, and I can't think about this, and everything's supposed to be by the book. So, the sort of top down control systems, there's a place for them in terms of quality control, whatever, you need to make sure that you're doing some of these things. I'm not trying to say you don't. But I am trying to say that you need to build in both slack and experimentation into the system to allow people to innovate.

Because, you know, I think this is the kind of stuff where when you look at businesses that die, and this does happen all the time, you have these businesses top performing and they just die off because the world shifted, the ones that don't die off are the ones that have that ability for people to do some undirected experimentation. I speak from personal experience as an author, a lot of fluke. This book came to me when I was walking my dog. I would sit at my computer and I would just be stuck. And I was like, "What am I going to say?" And then, I would just say, "Okay. This isn't working." I take my dog for an hour long walk, come back, and it would flow out of me. And I think that's the kind of stuff where there's a lot of workplaces where they would say this is a waste of company time and so on. But our brains are not robotic. I mean, we require inspiration and creativity, and those things don't come to most people by sitting in front of a computer when they don't have an answer to a problem.

So, I think there's lessons to be learned from a lot of the natural world, and its wisdom shows that experimentation is the bedrock of innovation and a lot of the experimentation I think is written out of modern life.

Nikki Miller:

Well, I think especially to your point, looking at this in nature is one of the most fascinating things. I mean, animals don't gripe about the way the world is. They just evolve or they die. It's one or the other, right? They adapt to it or they don't make it in the long run. You talked about so many stories and you've mentioned a few here, and there's specifically one that stood out to me, which was the red cow that almost caused the wars. Can you tell that story? I'm not going to articulate it as well as you did, but I'd love for you to tell that story because I think it's such a great example of the thread through this whole book.

Brian Klaas:

Yeah. So, this is a story that is trying to illustrate the point that we always try to make rational sense of why things happen, and a lot of the world runs on irrational accidents that almost occur or sometimes do occur and really change things.

There's basically a sect in Judaism and Israel that has a belief that they need to rebuild the temple to fulfill a prophecy from the Hebrew Bible. But in order to do that, they need to have people purified. And according to their interpretation of the Hebrew Bible, that requires a purely red heifer, so a red cow. Now, in the distant past, there have been red cows - this is a very long time ago - that were certified as being fully red and so on. There was a cow that was born in 1997 named Melody that appeared to be a fully red cow. So, this group got very excited about it and they brought in some experts who could look at it, and they brought a magnifying glass, and they said, "Okay. Yes, so far it is."

But it needed to become three years old. And the reason this was important was because the millennium was going to be in the year 2000 and they figured this is perfect. This is clearly divine destiny, because 1997, a cow was born. At the age of three when we need to actually use the cow in order to purify these individuals, that's the millennium. But then, right before the millennium, they went back and there was a white hair on the tail and so it did not end up meeting the definition and they abandoned the process.

But the crazy thing about this is that if it had been, the plan was to basically use the red cow to purify these builders who would then have to blow up some of the most important holy sites in Islam, which would very likely spark an extraordinarily violent conflict, probably much worse than what we're seeing now in Gaza. And in that instance, you'd have it caused by a system of beliefs from thousands of years ago, interpreted in the modern world, and the birth of a cow.

And this is the stuff where I look at this and I'm thinking, so people like me are tasked with making geopolitical forecasts sometimes. What are you supposed to do when a world war could potentially start based on a cow? And it's not --

Nikki Miller:

The color of a cow. It will be prevented by one hair, quite literally.

Brian Klaas:

Yeah. And the wild thing is that there are groups still currently trying to breed cows specifically for this purpose. So, this historic story has not gone away. There's a group, they refuse to talk to me in the book. They were very polite in responding, but they said that we want nothing to do with speaking to you. And they're a group that's trying to engineer this to happen and I think they're pretty open about their plans. And in the 1980s, there was an attempt to blow up one of the holiest sites in Islam, the Dome of the Rock.

So, you know, this is the kind of stuff where I think when we go to conferences or we talk to people or when I go on T.V. as a pundit, basically what you're supposed to do is you're supposed to stitch together events in a very straightforward, linear trajectory where these three things explain what happened. And I think these stories just sort of challenge that worldview a little bit. It doesn't mean there's no meaning in models. Of course, we should still model things and so on and think about change. It's that we have to allow that there's just a far more complex reality than we often imagine.

Nikki Miller:

How does that show up for you when you are making these predictions? I mean, to your point, you're not only making them, but sharing them on national and international television. And I find this, especially when I think about specifically financial - I mean, I imagine what you do is even more challenging because it's so humanized and human related that it's got to be even more challenging - when I look at financial projections, I have a hard time stomaching them because at least once every quarter, one of the "experts" is predicting some type of crash. And by the way, if they keep doing that for a consistent period of time, they will be right. And eventually, whatever they're predicting will come to fruition because finance especially tends to be cyclical. And so, I'm curious with what you do, especially again, because there's such a heavy human element, which to me makes it all the more unpredictable. How do you make these types of predictions?

Brian Klaas:

Well, it's very difficult. And I think this is one of the points that I'm trying to make in the book is that we should make fewer of them, basically, because there's a hubris to them. I mean, basically, I do have a line in Fluke where I talk about this experience of you're one of six talking heads on cable T.V. or whatever, and you cannot say I don't know and you also cannot say this might just be like an arbitrary accident, like maybe just this one thing happened, we shouldn't make that much of it because it's not actually that meaningful. Who knows? You can't say that.

So, the problem is you always have to come up with this narrative and it's a real bias. It's a way that the world is reflected back at us. And I think economists or financial experts often will say markets are reacting to blah, blah, blah. And you're like, How do you know? This is a really complicated global economy. Can you pinpoint it on one thing? I mean, really? So, whenever I hear that I'm very skeptical.

I think the deeper point though is that, I think we should parcel out questions that we have to answer from questions that we don't have to answer. So, there is uncertainty about what will work if you get cancer. We have a model. We have a probabilistic idea of what will work, but we don't know for certain that it will work for you. We still shouldn't make a guess because otherwise you will die. So, in this instance, we have to answer the question and we use our best guess.

I don't think we need to make an economic forecast for Malawi's inflation rates in 2035. There's no reason to do that. And it's guaranteed to be wrong. And I think about, you know, the geopolitical or economic forecasts, I mean, all of them were wrong. Because just thinking about the last two decades, 9/11 invalidated every geopolitical forecast. The financial crisis invalidated every financial forecast. Then, you had things like the Arab Spring, again, then you had Brexit, Trump, you had the pandemic which obliterated every forecast in the world, and then you have now wars in Ukraine and Gaza.

It's like we don't learn the lesson. I think the lesson is there's certain things that are unpredictable. And we shouldn't make predictions unless we have to. I think that when you have to make decisions and have to make plans, then, of course, it makes sense to model. But doing the hubristic thing of saying the world in six years is going to be like this, none of us have any idea and we don't admit that. I think we should admit that sometimes.

Nikki Miller:

Well, and I think the beauty of what you talked about so much is just giving yourself the space to innovate when you have those constraints. And by the way, you correct me if I'm wrong since you spend your life and career studying this, to me, this is really a muscle that you have to learn to be able to think this way. You have to learn to be able to pivot. You have to learn the resilience that you need in the face of the ever changing world. Because when I look up, I agree that we can't throw everything out and say no models are necessary because nothing is predictable, then we're just not going to put forth effort. We have to pick the model that we're going to follow and then we have to have the flexibility if that model no longer works, or if that business plan no longer works, or the ability to innovate when things aren't going according to plan as they don't.

Brian Klaas:

And so, humans have an inbuilt bias to detect patterns. And there's a chapter in Fluke where I talk about this and how our brains have evolved to basically over fit patterns to nature. I mean, this makes a lot of sense, right? So, if you hear rustling in the grass and it might be a saber tooth tiger, it is much better to have a false positive that you run away from than to ignore it and get eaten. So, there's an evolutionary pathway through which pattern detection was selected for and allowed us to survive better. But we live in a very straightforward world in the distant past of hunter gatherers. The causes and effects were very linear. They were very direct. If a saber tooth tiger comes, you might die.

In the modern economy, it's not a straightforward relationship like that. So, it's much harder for our brains to adapt to this complexity. Now, it is like a muscle in overcoming this bias, because I think one of the things that you have to really think about is if we know that this is the case, if we know that the world is more complex than we have to navigate it, well, we have to sort of accept the limitations of how much the past is predictive of the future.

And this is, I think, a really important point for people in business or finance and so on, which it's an old point that David Hume, the philosopher from several hundred years ago said, he said we can never know that the past is going to predict the future. For a long time it's worked relatively well because we've had stable systems. But now we have such incredible change in such short time scales that if you learn lessons from even ten years ago, that lesson might not fit the current world. I mean, AI is a perfect example. The way that the economy works is changing literally every six months, and that wasn't true in the 1960s.

So, if you have a model that's based exclusively on past data, and you don't exercise that mental muscle of thinking what uncertainty am I actually grappling with, you'll make serious mistakes. I think Hume's Problem of Induction is the formal term for it, but it's basically saying we have evolved to believe that the past equals the present and the future, and that is a false assumption that sometimes is a useful one, but sometimes leads us into catastrophe.

Nikki Miller:

I think my favorite chapter of the whole book was - you're a social scientist by trade and my favorite chapter of the whole book - remind me of the chapter name - was effectively you go on through the whole chapter to say that social science is BS, so I would love for you to expand on it because I just love that you called it out in the way you did.

Brian Klaas:

Yeah, this is not going to make me many friends at the conferences, I'll say. The chapter title is The Emperor's New Equations. And it's not trying to say we shouldn't use data by any means and it's not trying to say we shouldn't use quantitative modeling. I use quantitative modeling. It's a useful tool. But there's some limitations to it. And I think there's some stuff that's really bewildering about this.

And there's two quick examples. One of them is what's called the Fragile Family Study where the sort of holy grail of machine learning and AI to solve all of our problems. These researchers said, "Okay. Let's see if we can do this." So, they took all these children that were in vulnerable positions that might have ended up at risk of going to prison or at risk of drug use and so on, because they had lots of risk factors in their lives and they wanted to predict how well they could figure out the pathway, the trajectory of these various children.

So, they had all these research teams use the cutting edge tools they could and the answer was not very well at all. Basically, all the machine learning teams did about as well as just straight up averages. And that was really bewildering because the point they were making is not the machine learning is useless. It's not. It's obviously very useful for solving problems. It's that for some aspects of uncertainty, we shouldn't have the hubris to think that we can tame things that are often swayed by chance or unpredictability, and some of those models are problematic.

The other one very briefly is they gave 76 research teams in the study the exact same data and asked them the same question. And I won't go into the details for now, but basically the problem was that, in the research teams, half of them found no relationship between the variables they were studying, a quarter of them found a positive relationship, and a quarter of them found a negative relationship with the same data, with the same question.

I mean, that's really bewildering because no one was trying to manipulate the data. They were all trying to answer the question. But what normally happens in social research is one team answers a question with data they pick and then that becomes the accepted wisdom. And what this study is showing is like, hold on, if you reran the study 76 times, you would get this standard distribution, like a bell curve of outcomes. I think that's the thing that's going to rock the core of social science if people start to think about this because that's really problematic. That shouldn't happen.

And so, the point is not that social science is useless. The point is that I think there is a crisis of confidence in how much certainty we can put in social science models that may be not perfect at actually modeling the world we actually live in.

Nikki Miller:

Well, I think this also goes to something you mentioned in the book about how history is written. I mean, so much of it has to do with our interpretation of the events, of the model, of the data, of whatever it is. And then, how we interpret it now today, it has to do based off our interpretation of either that person or that time or whatever it may be.

Brian Klaas:

And this is something I don't talk about in Fluke much, but there's a concept called survivorship bias, which is, I think, a really important concept in this regard of how we understand the past. So, what evidence do we have that cavemen actually lived in caves? Well, their wall paintings are in caves. If they painted on trees, the trees are gone. So, it just survived. I mean, I lived in England, there's a cathedral near where I live and there's some stuff that's graffiti, graffiti in the sense of carved into stone that's a thousand years old. That evidence survived. Some of the stuff that was written down on stuff that was disposable or could decompose is gone.

So, you have this arbitrary snapshot of events and this happens, by the way, in all sorts of realms. I mean, who becomes powerful has survivorship bias in it. There's all sorts of areas. And when you think about these biases about what the data is that we have to work with, it's not the actual evidence. It's a skewed snapshot of it based on these series of biases. So, I think there's a lot of stuff and history is the perfect example of this, of course, because only one side gets written often and the records are often very, very biased if you go back far enough and so on into history.

So, I think the big point is that you should use evidence. You should use data points from the past. You should also be skeptical that simply repeating what was done in the past will create the same success in the future. That's a very big cognitive mistake. And so, I think this is the kind of stuff, you know, follow some advice from people who are successful, but, yeah, there's survivorship bias there because there's maybe some people who followed the exact same advice and failed utterly, but you never hear from those people cause they don't go on podcasts and they don't go on T.V. and they're not famous.

So, there's all sorts of stuff where I just think that our brains are allergic to the sense of uncertainty and chaos. And it's a huge part of our world and we would be very wise to be attuned to it.

Nikki Miller:

I think it's a great point, Brian. I think it's so important, I find this mistake a lot in business which is where I spend the majority of my time so it's my best reference point, and yet I see it so often that someone has a mentor or a coach or a boss that they admire and respect and they just take everything that they say as law. And I often will remind them that they might have great advice, but it's not the only advice. That might be their truth. It's not the only truth. And you have to use your cognitive abilities to assess and ask questions and understand that while it may have worked for them, there probably was more factors than just the one they might be referencing or just the model they might be referencing that led them to the result that they're pointing to as success.

Brian Klaas:

Very well said. I agree with that completely.

Nikki Miller:

Brian, at the end of this podcast, we always want to know for our listeners, what is The ONE Thing you would want them to take away from this conversation?

Brian Klaas:

I think I've covered some of the stuff around business, so what I'll pick instead is one that's more about thinking about our own lives. One of the things that has come to me through researching and writing this book is an acceptance of the limitations of the control I have. And you mentioned one of the lines I have in the book, which is we control nothing, but we influence everything. I think that also comes with some very uplifting and comforting ideas around how much we should not beat ourselves up when we have a setback and how much we should not claim complete credit when we have a success.

I think that we have less control than we think. So, when we have something go well for us, that was partly built on a series of things that we didn't know about, that other people were doing potentially in the background helping us, empowering us, and so on. And when we have a failure, it's sometimes not fully in our control either. And I think the American dream and some of these ideas around the ways to conjure up success give us this illusion that it's all up to us. And I think that's simply not true. I think when you think through chaos theory and some of the ideas that I've been talking about, you wouldn't beat yourself up in terms of losing that roulette, but life has a lot more elements of roulettes in it than we imagine. So, my advice here is to just let yourself off the hook sometimes when things don't go your way.

Nikki Miller:

I love that, Brian. Thank you so much for being here today. If people want to connect with you, where should they find you?

Brian Klaas:

So, I write a newsletter called The Garden of Forking Paths, that same short story I mentioned before, which they can subscribe to for free. It's on Substack. And then, I'm on Twitter, @brianklaas, which is my surname is K-L-A-A-S.

Nikki Miller:

Thank you so much for being here today. We're going to drop the book in the show notes. I'm so excited for everyone to get to read this. Like I said, it will send you down this philosophical rabbit hole and it's a great one to go down. I had got so much value out of it. So, thank you personally for me. And we'll see everybody next time.

Outro:

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