Intelligence quotient (IQ) and rationality quotient (RQ) are distinct. Think of IQ as the horsepower of an engine and RQ as the output. ... We share the results of a classic test of calibration, which is an important facet of rationality. Well calibrated people know what they know and know what they don’t know. ... Consistent with past research, we find that participants overestimate their accuracy as their subjective probability estimates tend to be higher than the actual percent correct. ... Investors and executives can improve their rationality by keeping score, asking about others, using base rates, and updating probabilities. ... A large-scale forecasting project has shown that the best forecasters use inductive and numerical reasoning, have cognitive control and a growth mindset, and are open-minded and effective working as part of a team.
Walter Pitts was used to being bullied. He’d been born into a tough family in Prohibition-era Detroit, where his father, a boiler-maker, had no trouble raising his fists to get his way. The neighborhood boys weren’t much better. One afternoon in 1935, they chased him through the streets until he ducked into the local library to hide. The library was familiar ground, where he had taught himself Greek, Latin, logic, and mathematics—better than home, where his father insisted he drop out of school and go to work. Outside, the world was messy. Inside, it all made sense. ... Not wanting to risk another run-in that night, Pitts stayed hidden until the library closed for the evening. Alone, he wandered through the stacks of books until he came across Principia Mathematica, a three-volume tome written by Bertrand Russell and Alfred Whitehead between 1910 and 1913, which attempted to reduce all of mathematics to pure logic. Pitts sat down and began to read. For three days he remained in the library until he had read each volume cover to cover—nearly 2,000 pages in all—and had identified several mistakes. Deciding that Bertrand Russell himself needed to know about these, the boy drafted a letter to Russell detailing the errors. Not only did Russell write back, he was so impressed that he invited Pitts to study with him as a graduate student at Cambridge University in England. Pitts couldn’t oblige him, though—he was only 12 years old. But three years later, when he heard that Russell would be visiting the University of Chicago, the 15-year-old ran away from home and headed for Illinois. He never saw his family again. ... Though they started at opposite ends of the socioeconomic spectrum, McCulloch and Pitts were destined to live, work, and die together. Along the way, they would create the first mechanistic theory of the mind, the first computational approach to neuroscience, the logical design of modern computers, and the pillars of artificial intelligence. But this is more than a story about a fruitful research collaboration. It is also about the bonds of friendship, the fragility of the mind, and the limits of logic’s ability to redeem a messy and imperfect world. ... “He was absolutely incomparable in the scholarship of chemistry, physics, of everything you could talk about history, botany, etc. When you asked him a question, you would get back a whole textbook … To him, the world was connected in a very complex and wonderful fashion.”
Is cold fusion truly impossible, or is it just that no respectable scientist can risk their reputation working on it? ... cold fusion (or LENR, for ‘low-energy nuclear reaction’) is the controversial idea that nuclear reactions similar to those in the Sun could, under certain conditions, also occur close to room temperature. ... was popularised in 1989 by Martin Fleischmann and Stanley Pons, who claimed to have found evidence that such processes could take place in palladium loaded with deuterium (an isotope of hydrogen). A few other physicists, including the late Sergio Focardi at Bologna, claimed similar effects with nickel and ordinary hydrogen. But most were highly skeptical, and the field subsequently gained, as Wikipedia puts it, ‘a reputation as pathological science’. ... We know that huge amounts of energy are locked up in metastable nuclear configurations, trapped like water behind a dam. There’s no known way to get useful access to it at low temperatures. ... There are credible reports that a 1MW version of his device, producing many times the energy that it consumes, has been on trial in an industrial plant in North Carolina for months, with good results so far. And Rossi’s US backer and licensee, Tom Darden – who has a long track record of investment in pollution-reducing industries – has been increasingly willing to speak out in support of the LENR technology field. ... We should certainly be very cautious about such surprising claims, unless and until we amass a great deal of evidence. But this is not a good reason for ignoring such evidence in the first place, or refusing to contemplate the possibility that it might exist.
New research puts us on the cusp of brain-to-brain communication. Could the next step spell the end of individual minds? ... we’ve moved beyond merely thinking orders at machinery. Now we’re using that machinery to wire living brains together. Last year, a team of European neuroscientists headed by Carles Grau of the University of Barcelona reported a kind of – let’s call it mail-order telepathy – in which the recorded brainwaves of someone thinking a salutation in India were emailed, decoded and implanted into the brains of recipients in Spain and France (where they were perceived as flashes of light). ... What are the implications of a technology that seems to be converging on the sharing of consciousness? ... It would be a lot easier to answer that question if anyone knew what consciousness is. There’s no shortage of theories. ... Their models – right or wrong – describe computation, not awareness. There’s no great mystery to intelligence; it’s easy to see how natural selection would promote flexible problem-solving, the triage of sensory input, the high-grading of relevant data (aka attention). ... If physics is right – if everything ultimately comes down to matter, energy and numbers – then any sufficiently accurate copy of a thing will manifest the characteristics of that thing. Sapience should therefore emerge from any physical structure that replicates the relevant properties of the brain.
Is it any wonder investors are questioning why they allocate to emerging markets in the first place? Even going beyond the woes of emerging, we are starting to hear some investors asking whether holding non-U.S. stocks is at all necessary. As market historians we can say that the timing of such sentiments tends to be bad – no one seems to ever decide to give up on an asset class after it has just had good performance, and the last burst of “why bother with non-U.S. stocks” occurred just before the top for the S&P 500 in 2000. But just complaining that investors got it wrong last time they voiced these sentiments does not qualify as thoughtful analysis. ... while emerging markets “deserved” some of their bad luck over the last several years and the outperformance of the U.S. has made some sense, we do not believe that emerging is a value trap, nor do we believe that the U.S. has proved itself particularly extraordinary. ... In total, we can surmise that emerging currencies are a “risk asset” of sorts and that they have delivered a return above U.S. cash over time and should probably continue to do so given the capital needs and vulnerabilities of emerging economies. ... even if the U.S. has somehow managed to unlock the secret to permanently high profits and the economy remains solid, it seems unlikely that the secret will remain an entirely U.S. phenomenon. If we imagine a world in which U.S. profitability is able to remain well above historical levels, we would expect non-U.S. companies to begin to copy their American counterparts, similar to the way profitability converged from the 1970s to the early 2000s. ... we have seen an impressive expansion of American profitability that has not been mirrored in the rest of the world, and U.S. stocks have duly outperformed. This has, not surprisingly, led investors to try to convince themselves of the inherent superiority of U.S. stocks to justify continuing to hold them. We cannot completely reject the possibility that those arguments are correct, but the evidence seems pretty thin.
Around 540 million years ago, the ancestors of most modern animal groups suddenly appeared on the scene, in an outburst of speciation known as the Cambrian explosion. Many of these pioneering creatures left fossils behind. Some are so well preserved that scientists have been able to use scanning electron microscope images to piece together their inner anatomy, eyes included, and reconstruct their owners’ view of the world. ... But these eyes were already complex, and there are no traces of their simpler precursors. The fossil record tells us nothing about how sightless animals first came to see the world. This mystery flustered Charles Darwin. “To suppose that the eye, with all its inimitable contrivances ... could have been formed by natural selection, seems, I freely confess, absurd in the highest possible degree,” he wrote in Origin of Species. ... in the very next sentence, Darwin solves his own dilemma: “Yet reason tells me, that if numerous gradations from a perfect and complex eye to one very imperfect and simple, each grade being useful to its possessor, can be shown to exist … then the difficulty of believing that a perfect and complex eye could be formed by natural selection, though insuperable by our imagination, can hardly be considered real.” ... The gradations he spoke of can be shown to exist. Living animals illustrate every possible intermediate between the primitive light-sensitive patches on an earthworm and the supersharp camera eyes of eagles. ... Even under the most pessimistic conditions, with the eye improving by just 0.005 percent each generation, it takes just 364,000 years for the simple sheet to become a fully functioning camera-like organ. As far as evolution goes, that’s a blink of an eye. ... But simple eyes should not be seen as just stepping-stones along a path toward greater complexity. Those that exist today are tailored to the needs of their users. ... Nothing that sees does so without proteins called opsins—the molecular basis of all eyes. Opsins work by embracing a chromophore, a molecule that can absorb the energy of an incoming photon. The energy rapidly snaps the chromophore into a different shape, forcing its opsin partner to likewise contort. This transformation sets off a series of chemical reactions that ends with an electrical signal.
There is no universally accepted definition of boredom. But whatever it is, researchers argue, it is not simply another name for depression or apathy. It seems to be a specific mental state that people find unpleasant — a lack of stimulation that leaves them craving relief, with a host of behavioural, medical and social consequences. ... Researchers hope to turn such hints into a deep understanding of what boredom is, how it manifests in the brain and how it relates to factors such as self-control. ... The scientific study of boredom dates back to at least 1885, when the British polymath Francis Galton published a short note in Nature on 'The Measure of Fidget' — his account of how restless audience members behaved during a scientific meeting. But decades passed with only a few people taking a serious interest in the subject.
Amazing stories of animals and humans surviving extreme cold are fueling futuristic research that verges on sci-fi. We took a deep dive into the DNA of icy wood frogs, a novel approach to cardiac arrest, the potential for cryopreservation, and other shocking developments from the new science of freezing. ... doctors are discovering that when it comes to hypothermia, the line between life and death isn’t clear-cut. If you become severely hypothermic before your heart stops, the cold can actually become a protectant, making it possible for you to enter a state similar to suspended animation in which your metabolism slows to such a pace that your brain and organs can survive on a whisper of oxygen. (For every one-degree-Celsius drop in temperature, metabolism slows by 5 to 7 percent.) If a victim is discovered in time, he’ll appear dead—dilated pupils, no detectable pulse, no breath—but if a rescuer knows to start CPR and get help, he might have a fighting chance. This is true especially if he’s transported to a hospital with the technology to perform a procedure called extracorporeal membrane oxygenation, an advanced life-support system.
As Nadella, a 24-year veteran of the company, would have known, the process of turning a Microsoft Research project into a product would often happen slowly, if at all. That's partly by design. The company's research group was set up in isolation from the product teams to allow researchers to envision the future without worrying about how their inventions will make money or fit into the company's mission. ... But Nadella's tight deadline left executives with no time to debate the separation of church and state. ... Microsoft is overhauling its research arm and the way it works with the rest of the company. The goal is to quickly identify technology with the most potential and get it into customers' hands before a competitor replicates it. ... To break down the walls between its research group and the rest of the company, Microsoft reassigned about half of its more than 1,000 research staff in September 2014 to a new group called MSR NExT. Its focus is on projects with greater impact to the company rather than pure research. Meanwhile, the other half of Microsoft Research is getting pushed to find more significant ways it can contribute to the company's products.
Capital allocation is a senior management team’s most fundamental responsibility. The problem is that many CEOs don’t know how to allocate capital effectively. The objective of capital allocation is to build long-term value per share. ... Capital allocation is always important but is especially pertinent today because return on invested capital is high , growth is modest , and corporate balance sheets in the U.S. have substantial cash. ... Internal financing represented almost 90 percent of the source of total capital for U.S. companies from 1980-2013. ... M&A, capital expenditures, and R&D are the largest uses of capital for operations , and companies now spend more on buybacks than dividends. ... This report discusses each use of capital, shows how to analyze that use, reviews the academic findings, and offers a near-term outlook. ... We provide a framework for assessing a company’s capital allocation skills, which includes examining past behaviors, understanding incentives, and considering the five principles of capital allocation.
Five Principles of Capital Allocation:
1. Zero - based capital allocation
2. Fund strategies, not projects
3. No capital rationing
4. Zero tolerance for bad growth
5. Know the value of assets, and be ready to take action to create value
Calories consumed minus calories burned: it’s the simple formula for weight loss or gain. But dieters often find that it doesn’t work. ... more than two-thirds of American adults are overweight or obese. For many of them, the cure is diet: one in three are attempting to lose weight in this way at any given moment. Yet there is ample evidence that diets rarely lead to sustained weight loss. These are expensive failures. This inability to curb the extraordinary prevalence of obesity costs the United States more than $147 billion in healthcare, as well as $4.3 billion in job absenteeism and yet more in lost productivity. ... part of the problem goes way beyond individual self-control. The numbers logged in Nash’s Fitbit, or printed on the food labels that Haelle reads religiously, are at best good guesses. Worse yet, as scientists are increasingly finding, some of those calorie counts are flat-out wrong – off by more than enough, for instance, to wipe out the calories Haelle burns by running an extra mile on a treadmill. A calorie isn’t just a calorie. And our mistaken faith in the power of this seemingly simple measurement may be hindering the fight against obesity.
His latest venture, Human Longevity, Inc., or HLI, creates a realistic avatar of each of its customers – they call the first batch ‘voyagers’ – to provide an intimate, friendly interface for them to navigate the terabytes of medical information being gleaned about their genes, bodies and abilities. Venter wants HLI to create the world’s most important database for interpreting the genetic code, so he can make healthcare more proactive, preventative and predictive. Such data marks the start of a decisive shift in medicine, from treatment to prevention. Venter believes we have entered the digital age of biology. And he is the first to embark on this ultimate journey of self-discovery. ... His critics call him arrogant but, having talked to him on and off for more than two decades, I think Venter has earned the right to be bullish about his abilities to build a biotech venture from scratch. ... So far, HLI has amassed the sequences of around 20,000 whole genomes, says Venter (he won’t be drawn on whether it is the biggest cache – probably, but he adds that it depends on the details and that “all kinds of people make all kinds of claims”). But, of course, he wants even more. The company has room for more sequencing facilities on its third floor and is considering a second centre in Singapore, planning to rapidly scale to sequencing the genomes of 100,000 people per year – whether children, adults or centenarians, and including both those with disease and those who are healthy. By 2020, Venter aims to have sequenced a million genomes. ... in about a month, each Illumina sequencer can tear through 16 human genomes at the same coverage in just three days. Each week, these machines pump terabytes of data into the cloud run by Amazon Web Services. ... Venter says their findings have changed his static view of the genome. For instance, he has been able to compare his 2006 genome with today’s, using three different sequencing technologies. “One of the findings that would have shocked me and the rest of the world 15 years ago is that our genome is continually changing,” he says. “We can relatively accurately predict your age from your genome sequence, or at least the age when the sample was taken.” ... Targeted initially at self-insured executives and athletes, a full health scan will be priced at $25,000.
Patrick Soon-Shiong wants to turn cancer treatment upside down. On January 12, Soon-Shiong and a consortium of industry, government, and academia announced the launch of the Cancer MoonShot 2020, an ambitious program aiming to replace a long history of blunt trial-and-error treatment with what amounts to a training regimen for the body’s own immune system. That system, Soon-Shiong argues, is perfectly adept at finding and eliminating cancer with exquisite precision—if it can recognize the mutated cells in the first place. Helping it to do so could represent a powerful new treatment for the disease, akin to a flu vaccine. ... Soon-Shiong has hit home runs before. This past July, one of his firms underwent the highest-value biotech IPO in history. A cancer drug he developed, called Abraxane, is approved to fight breast, lung, and pancreatic cancers in more than 40 countries. Soon-Shiong’s path from medical school in South Africa through residency in Canada, to UCLA professor, NASA researcher and corporate CEO has given him the bird’s-eye view necessary to take on a project this ambitious, as well as the resources to marshal the world-class computing and genome-sequencing facilities that it requires.
- Also: Science Alert - Scientists report "unprecedented" success using T-cells to treat cancer < 5min
- Also: Aeon - Death of cancer 5-15min
- Also: The Conversation - The equation that will help us decode cancer’s secrets < 5min
- Also: The New Yorker - Tough Medicine: A disturbing report from the front lines of the war on cancer. < 5min
- Repeat: Mosaic - What’s wrong with Craig Venter? 5-15min
The internet has spawned subtle forms of influence that can flip elections and manipulate everything we say, think and do ... Most of us have heard of at least one of these methods: subliminal stimulation, or what Packard called ‘subthreshold effects’ – the presentation of short messages that tell us what to do but that are flashed so briefly we aren’t aware we have seen them. In 1958, propelled by public concern about a theatre in New Jersey that had supposedly hidden messages in a movie to increase ice cream sales, the National Association of Broadcasters – the association that set standards for US television – amended its code to prohibit the use of subliminal messages in broadcasting. ... Subliminal stimulation is probably still in wide use in the US – it’s hard to detect, after all, and no one is keeping track of it – but it’s probably not worth worrying about. ... what would happen if new sources of control began to emerge that had little or no competition? And what if new means of control were developed that were far more powerful – and far more invisible – than any that have existed in the past? And what if new types of control allowed a handful of people to exert enormous influence not just over the citizens of the US but over most of the people on Earth? ... It might surprise you to hear this, but these things have already happened. ... The shift we had produced, which we called the Search Engine Manipulation Effect (or SEME, pronounced ‘seem’), appeared to be one of the largest behavioural effects ever discovered.
Until the turn of this century, population growth generated more than half of all global consumption. But between 2015 and 2030, three-quarters of global consumption growth will be driven by individuals spending more. This shift has profound implications for companies. What’s now important are emerging demographics: the latest report from the McKinsey Global Institute (MGI) finds that nine groups will generate three-quarters of global urban consumption growth to 2030, and just three of these will generate half of consumption growth and have the power to reshape global consumer markets over the next 15 years.
1. The retiring and elderly in developed economies
2. China’s working-age population
3. North America’s working-age population
Tracking consumer attitudes and behavior is not sufficient if companies are going to capture key consumer markets. They need to understand the core drivers of consumption such as income and age, characteristics such as ethnic mix and education, and the timing of key decisions such as getting married, having children, and buying a house.
Like the population, the business sector of the U.S. economy is aging. Our research shows a secular increase in the share of economic activity occurring in older firms—a trend that has occurred in every state and metropolitan area, in every firm size category, and in each broad industrial sector. ... The share of firms aged 16 years or more was 23 percent in 1992, but leaped to 34 percent by 2011—an increase of 50 percent in two decades. The share of private-sector workers employed in these mature firms increased from 60 percent to 72 percent during the same period. ... Perhaps most startling, we find that employment and firm shares declined for every other firm age group during this period. We explore three potential contributing factors driving the increasing share of economic activity occurring in older firms, and find that a secular decline in entrepreneurship is playing a major role. We also believe that increasing early-stage firm failure rates might be a growing factor. ... We are unable to find strong evidence of a direct link between business consolidation and an aging firm structure. Though we document a clear rise in consolidation during the last few decades, it doesn’t appear to be a major contributor to business aging directly—which has been occurring across all firm size classes, and the most in the smallest of businesses. ...This leaves some questions unanswered, but it clearly establishes that whatever the reason, it has become increasingly advantageous to be an incumbent, particularly an entrenched one, and less advantageous to be a new entrant. ... The trends described here raise some cause for concern in our view. Holding all factors constant, we’d expect an economy with greater concentration in older firms and less in younger firms to exhibit lower productivity, potentially less innovation, and possibly fewer new jobs created than would otherwise be the case.
Just a few tens of nanometres across, they are among a growing array of 'nanolights' that researchers are tailoring to specific types of fluorescence: the ability to absorb light at one wavelength and re-emit it at another. ... Many naturally occurring compounds can do this, from jellyfish proteins to some rare-earth compounds. But nanolights tend to be much more stable, versatile and easier to prepare — which makes them attractive for users in both industry and academia. ... Nanolights have already begun to find application in areas ranging from flat-screen displays to biochemical tests. And researchers are working towards even more ambitious uses in fields such as solar energy, DNA mapping, motion sensing and even surgery. ... Light is emitted when electrons are kicked up to higher energy levels by some outside source, such as ultraviolet light, then fall back down to lower levels.
An accelerating field of research suggests that most of the artificial intelligence we’ve created so far has learned enough to give a correct answer, but without truly understanding the information. And that means it’s easy to deceive. ... Machine learning algorithms have quickly become the all-seeing shepherds of the human flock. This software connects us on the internet, monitors our email for spam or malicious content, and will soon drive our cars. To deceive them would be to shift tectonic underpinnings of the internet, and could pose even greater threats for our safety and security in the future. ... Small groups of researchers—from Pennsylvania State University to Google to the U.S. military— are devising and defending against potential attacks that could be carried out on artificially intelligent systems. In theories posed in the research, an attacker could change what a driverless car sees. Or, it could activate voice recognition on any phone and make it visit a website with malware, only sounding like white noise to humans. Or let a virus travel through a firewall into a network. ... Instead of taking the controls of a driverless car, this method shows it a kind of a hallucination—images that aren’t really there. ... “We show you a photo that’s clearly a photo of a school bus, and we make you think it’s an ostrich,” says Ian Goodfellow, a researcher at Google who has driven much of the work on adversarial examples.
Titled Breakthrough Listen, this 10-year, $100 million project will comprise what Andrew Siemion, director of Berkeley's SETI Research Center, called "the most sensitive, comprehensive and advanced search for advanced intelligent life on other worlds ever performed." (SETI stands for the Search for Extraterrestrial Intelligence.) The goal is to detect some evidence of distant technology, such as radio communication or a concentrated burst of energy. If it succeeds, Breakthrough Listen will answer an existential and philosophical question that humankind has pondered for millennia: Are we alone in the universe? ... What separates the quest to find extraterrestrial intelligence from X-Files conspiracy theories is statistics, specifically the law of large numbers. Scientists now estimate that there are at least 200 billion stars in the Milky Way galaxy, and perhaps 100 billion galaxies in the universe. Fifty billion planets in our galaxy alone may be situated in what astrophysicists call the "Goldilocks zone," a region neither too hot nor too cold to host life, and thus potentially habitable. Last year, astronomers found evidence of briny water on Mars and located a distant exoplanet – dubbed Kepler 452b – so similar to Earth that some say the two could be cousins. ... There may be a troubling reason why in the 13.8 billion years since the Big Bang, no aliens have contacted us: The same technological leaps that will allow human beings to explore the galaxy, such as self-upgrading AI, are the genie that betrays its master once released from the bottle. ... Breakthrough Listen will be gathering as much SETI data in a day as was previously possible to collect in a year, using its expanded telescope access to scan at least five times more of the radio spectrum a hundred times faster than before and sucking in the equivalent of 75 Blu-ray movies per second.
People tell me about miniaturization, about electric motors the size of the nail on your finger. There is a device on the market by which you can write the Lord's Prayer on the head of a pin. But that's nothing. That's the most primitive, halting step. ... Why not write the entire 24 volumes of the "Encyclopaedia Britannica" on the head of a pin? ... Let's see what would be involved. The head of a pin is a sixteenth of an inch across. If you magnify it 25,000 diameters, the area of the head of the pin is equal to the area of all pages of the encyclopedia. All it is necessary to do is reduce the writing in the encyclopedia 25,000 times. Is that possible? One of the little dots on the fine halftone reproductions in the encyclopedia, when you demagnify it by 25,000 times, still would contain in its area 1,000 atoms. So, each dot can easily be adjusted in size as required, and there is no question that there is enough room on the head of a pin to put all of the "Encyclopaedia Britannica."
The company’s genesis can be traced back to the 1893 World’s Columbian Exposition, a world’s fair that took place in Chicago. A recent MIT electrical engineering grad, William Henry Merrill, was hired by insurers to investigate Nicola Tesla’s work illuminating the exposition, which apparently consumed three times as much electricity as the rest of the city of Chicago at the time. Buildings were catching on fire at the fair, and insurance adjustors wanted to know why. Realizing the myriad potential fire hazards that the burgeoning lighting and electricity industries could pose, Merrill decided to stay in Chicago and set up an organization dedicated to testing electrical products and writing safety standards for them. ... More than a century later, UL is still contending with the same problems Merrill saw at the Columbian Exposition—short circuits, faulty wiring, shoddy manufacturing; anything that can cause a product to catch fire. But for the most part, our electronics and houses don’t spontaneously combust, and, in the US, that’s generally because of the increasingly specific and bizarre tests UL puts products through.
We read almost every week of new research into the deleterious effects of sugar on our bodies. In the US, the latest edition of the government’s official dietary guidelines includes a cap on sugar consumption. In the UK, the chancellor George Osborne has announced a new tax on sugary drinks. Sugar has become dietary enemy number one. ... This represents a dramatic shift in priority. For at least the last three decades, the dietary arch-villain has been saturated fat. When Yudkin was conducting his research into the effects of sugar, in the 1960s, a new nutritional orthodoxy was in the process of asserting itself. Its central tenet was that a healthy diet is a low-fat diet. Yudkin led a diminishing band of dissenters who believed that sugar, not fat, was the more likely cause of maladies such as obesity, heart disease and diabetes. But by the time he wrote his book, the commanding heights of the field had been seized by proponents of the fat hypothesis. Yudkin found himself fighting a rearguard action, and he was defeated. ... In 1980, after long consultation with some of America’s most senior nutrition scientists, the US government issued its first Dietary Guidelines. The guidelines shaped the diets of hundreds of millions of people. Doctors base their advice on them, food companies develop products to comply with them. Their influence extends beyond the US. ... We tend to think of heretics as contrarians, individuals with a compulsion to flout conventional wisdom. But sometimes a heretic is simply a mainstream thinker who stays facing the same way while everyone around him turns 180 degrees. When, in 1957, John Yudkin first floated his hypothesis that sugar was a hazard to public health, it was taken seriously, as was its proponent. By the time Yudkin retired, 14 years later, both theory and author had been marginalised and derided. Only now is Yudkin’s work being returned, posthumously, to the scientific mainstream.
In the classical account of a financial market bubble, the price of an asset rises dramatically over the course of a few months or even years, reaching levels that appear to far exceed reasonable valuations of the asset’s future cash flows. These price increases are accompanied by widespread speculation and high trading volume. The bubble eventually ends with a crash, in which prices collapse even more quickly than they rose. Bubble episodes have fascinated economists and historians for centuries (e.g., Mackay 1841, Bagehot 1873, Galbraith 1954, Kindleberger 1978, Shiller 2000), in part because human behavior in bubbles is so hard to explain, and in part because of the devastating side effects of the crash. ... At the heart of the standard historical narratives of bubbles is the concept of extrapolation— the formation of expected returns by investors based on past returns. In these narratives, extrapolators buy assets whose prices have risen because they expect them to keep rising. According to Bagehot (1873), “owners of savings . . . rush into anything that promises speciously, and when they find that these specious investments can be disposed of at a high profit, they rush into them more and more.” ... In this paper, we present a new model of bubbles based on extrapolation. In doing so, we seek to shed light on two key features commonly associated with bubbles. The first is what Kindleberger (1978) called “displacement”—the fact that nearly all bubbles from tulips to South Sea to the 1929 U.S. stock market to the late 1990s internet occur on the back of good fundamental news. ... Second, we would like to explain the crucial fact that bubbles feature very high trading volume (Galbraith 1954, Carlos, Neal, and Wandschneider 2006, Hong and Stein 2007). At first sight, it is not clear how extrapolation can explain this: if, during a bubble, all extrapolators have similarly bullish views, then they would not trade with each other.
As we go about our daily lives, we tend to assume that our perceptions — sights, sounds, textures, tastes — are an accurate portrayal of the real world. Sure, when we stop and think about it — or when we find ourselves fooled by a perceptual illusion — we realize with a jolt that what we perceive is never the world directly, but rather our brain’s best guess at what that world is like, a kind of internal simulation of an external reality. Still, we bank on the fact that our simulation is a reasonably decent one. If it wasn’t, wouldn’t evolution have weeded us out by now? The true reality might be forever beyond our reach, but surely our senses give us at least an inkling of what it’s really like. ... Not so, says Donald D. Hoffman, a professor of cognitive science at the University of California, Irvine. Hoffman has spent the past three decades studying perception, artificial intelligence, evolutionary game theory and the brain, and his conclusion is a dramatic one: The world presented to us by our perceptions is nothing like reality. What’s more, he says, we have evolution itself to thank for this magnificent illusion, as it maximizes evolutionary fitness by driving truth to extinction.
If Las Vegas is the most profligate place on earth, where chance is king and the future is routinely gambled away, it is also possibly the most frugal and forward-looking American city in one respect: water. And now it’s trying to leverage that reputation by turning itself into a hub for new and innovative water technology. ... In the thirstiest city in the nation’s driest state (it gets just 4 inches of rain a year), water is the last thing Las Vegas wants to gamble on. After 16 years of drought, water levels in nearby Lake Mead, the city’s primary water source, have dropped so precipitously that white rings have formed on its banks. Las Vegas, like a bankrupt gambler who suddenly realizes that things have to change, has responded with a host of water conservation measures. ... The water industry is by nature risk averse, since a mistake can have catastrophic health consequences (see Michigan; Flint). But with more pressure on water supplies around the United States and the world, innovation is increasingly important. Las Vegas’ focus on water—and the constant pressure on its supply—has driven years worth of public experimentation, establishing the area’s umbrella water utility, the Southern Nevada Water Authority, as a nationally recognized leader in water quality treatment. The utility boasts a state-of-the-art laboratory that produces ground-breaking research and a roster of scientists who routinely publish in major academic journals.