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The Problem With PredictionBy Henry Manampiring

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Me?

(Prepared by Henry Manampiring 2011)

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The Boring CV

Accountant graduate! UNPAD

Consumer Insight role at British

American Tobacco and Coca-Cola Co.

Strategic planning at Lowe and JWT

Market researcher at Millward-Brown

(Prepared by Henry Manampiring 2011)

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No, I will not share tips about

advertising, marketing, etc.

(Prepared by Henry Manampiring 2011)

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Love for books...

...revolving around a theme(Prepared by Henry Manampiring 2011)

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Books (and career!) that revolve

around human brain/behaviour

THE BRAIN IS BOTH

WONDERFUL/TERRIBLE

(Prepared by Henry Manampiring 2011)

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Humans are the only species who can

plan for future goals

(Prepared by Henry Manampiring 2011)

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I will marry 10 months from now. I want

to travel and see the world first

(Prepared by Henry Manampiring 2011)

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Humans are also the only species who is willing

to pay to listen to experts prediction

(Prepared by Henry Manampiring 2011)

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KAPAN NIKAH?

KAPAN IHSG

TEMBUS 5000?

(Prepared by Henry Manampiring 2011)

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(Prepared by Henry Manampiring 2011)

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OUR INABILITY TO MAKE PREDICTION....

(AND THE PROBLEMS WE GET AS WE START BELIEVING THEM)

(Prepared by Henry Manampiring 2011)

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What I want to share today:

Humans inability to predict.

And if we understand our own limits,

(hopefully) we can be conscious of our

thinking (and decisions)

(Prepared by Henry Manampiring 2011)

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Philip Tetlock (Haas School of Business Berkeley University)

COLLECTING AND ANALYZING 27,450 EXPERT PREDICTIONS OVER

15 YEARS

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(Prepared by Henry Manampiring 2011)

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IN THE PAST EXPERTS

PREDICTED:IN THE PAST EXPERTS DID NOT

PREDICT:

In 1997 bi er than US Econom

Airplanes have NO military valueThe rise of China and India

(Prepared by Henry Manampiring 2011)

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WHY CANT WE PREDICT?

THE WORLD HUMAN NATURE

(Prepared by Henry Manampiring 2011)

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(Prepared by Henry Manampiring 2011)

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CAN YOU PREDICT ALL MOVEMENTS CORRECTLY?

(Prepared by Henry Manampiring 2011)

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JUST ONE SLIGHTLY WRONG CALCULATION....

(Prepared by Henry Manampiring 2011)

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WHY PREDICTION IS EXTREMELY HARD:

1. KNOWN VARIABLES, UNKNOWN VALUE

(You know that you dont know.) Example: Will Surya Paloh run for president? How

much money will he use for campaign?

2. UNKNOWN VARIABLES, UNKNOWN VALUE(You dont know that you dont know.)

Example:

Will AB have spiritual experience that will

totally change his outlook on life?

Does she turn into ogre at night?

(Prepared by Henry Manampiring 2011)

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BALLS WITH EYES AND AMBITION?

(Prepared by Henry Manampiring 2011)

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AS IF THE WORLD ISNT MESSY ENOUGH...

WE HAVE A BRAIN WITH MANY SOFTWARE ISSUES

(i.e. COGNITIVE BIASES)

(Prepared by Henry Manampiring 2011)

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Seeing pattern in randomness

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Pattern recognition is useful to anticipate

threats/predators in the past

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Pattern recognition is useful to anticipate

threats/predators in the past

(Prepared by Henry Manampiring 2011)

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(Prepared by Henry Manampiring 2011)

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Problem starts when experts start to see pattern

when there is none (random events) -> wrong analysis,

wrong conclusion

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Confusing correlation and causality

Just because A happens before B,does not mean A causes B

Example: If I have fever for 3 days, after

listening to Kangen Band songs I will

recover on day 4. Conclusion: KangenBand songs cure fever

(Prepared by Henry Manampiring 2011)

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Every time there is political problem, Densus 88 kills a terrorist.

Conclusion: Densus 88 operation is a diversion (pengalihan)

But this country has political circus EVERYDAY. Every time you

kill a terrorist most likely there WAS a political news before!

(Prepared by Henry Manampiring 2011)

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(Prepared by Henry Manampiring 2011)

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WE DO NOT LIKE RANDOMNESS.

WE ARE WIRED TO SEE PATTERN

TO CREATE ILLUSION OF CONTROL, WE CREATE STORIES

EXPERTS CAN BE MORE VULNERABLE TO THESEEXACTLY BECAUSE THEY THINK THEY KNOW MORE.

THEY HAVE MODELS/TEMPLATES READY TO APPLY

(Prepared by Henry Manampiring 2011)

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Confirmation Bias: We discriminatefacts/data, only believing those that

confirm our initial belief

Kalo udah sebel ama orang, semua yangdilakuin dia pasti salah

Kalo udah jatuh cinta, tai kucing rasa coklat

(Prepared by Henry Manampiring 2011)

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(Prepared by Henry Manampiring 2011)

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Status Quo Bias: The tendency to see the

future like today

do tend to continue. But the further welook into the future, the more opportunity

things change.

(Prepared by Henry Manampiring 2011)

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In early 90s, the Americans feared Japan domination in

2000....that never happened (in 93, Japan plunged intorecession)

But Japan WAS powerful and strengthening

in early 90s....(Prepared by Henry Manampiring 2011)

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Status Quo Bias in action

(Prepared by Henry Manampiring 2011)

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By the way, Indonesia rocks!

(Prepared by Henry Manampiring 2011)

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Rumput

Prediksi si kambing

Idul Adha

Umur

(Prepared by Henry Manampiring 2011)

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Confidence Convinces

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Dr. Myron L. Fox Experiment An actor

Lecture: The Mathematical Game

Theory As Applied to Physician

Education

Audience:psychiatrists,

psychologists, and social-worker

educators

clarity, confidence, and authority

Excellent evaluation and feedback,

although the lecture was complete

nonsense Lesson: we suspend critical judgment

when we listen to authority.

Sometimes confidence is enough

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A very confident fugitive

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So, can we trust ANYONE?(Philip Tetlocks conclusion - from Future Babble by Dan Gardner)

(Prepared by Henry Manampiring 2011)

Have One Big Thing notinterested in other views/models/

theories

Inflexible

Overtly confident

Became TV stars Mostly wrong

Comfortable with multipleviews/models/theories

Adaptive

Less confident

Metacognition: thinking about

their own thinking, question ownassumptions

Humble/I could be wrong

Less wrong than Hedgehog

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Why we want prediction so bad....

The Illusion of Control...

Humans need a sense of control(The Nursing Home Experiment &

Interrogation technique)

A dark future is scary, we demandsome knowledge to feel in control

(hence astrology, tarot, palm

reading, expert prediction)

(Prepared by Henry Manampiring 2011)

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Can we believe in anything then?

The Weather Forecast, trafficforecast (and many other

relatively simple events) arepretty accurate.... to a point.....

Com licated henomena social

political, economic changes)with vast number of variables forget it

The longer into the future the

prediction is, the more likely itgets wrong

(Prepared by Henry Manampiring 2011)

It t l th t bl

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Its not only the experts problem.

Its also YOUR problem!

With all the perception and cognitive

biases, everybody imagines the

future poorly, in particular what will

Complete this sentence:

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....

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I will be happy when Im married

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I will be happy when Im famous

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I will be happy when Im rich

I ill b h h I i d

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I will be happy when Im....never mind

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People also badly predict what will make

them unhappy!

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Peoples prediction of what makes them

happy often addor remove details(marriage + daily sex, marriage bills)

Studies show lottery winners only

experience temporary jolt of

happiness

Studies also show people with

, ,

loss of loved ones) do not experienceunhappiness as they imagined it to be

We underestimate our psychological

adaptive/immune system

Dr. Gilberts advice: dont imagine what

makes you happy/unhappy. ASK those

who are experiencing it

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And this is what marketing &advertising is all about, to

push peoples imagination:

This product will make you

more attractive, more manly,

healthier, richer and hence,

app er

Th E d f O J

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The End of Our Journey....

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Oleh-oleh/takeaways Complex social phenomenon (with large number of

variables) are hardly predictable

DOUBT! Be critical against experts prediction

Be comfortable with uncertainty... (easier said than done)

o on y exper s pro em: e can even accura e y

predict our own happiness/unhappiness.

Be critical of our own prediction. Beware of our own biases

The human brain is not a good prediction tool.

We, including the experts, are NOT that smart...

STAY HUMBLE

(Prepared by Henry Manampiring 2011)

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I know that I am intelligent, because

I know that I know nothingSocrates, 2,400 years ago

THANK YOU!