Let the Wild Rumpus Begin

“This time last year it looked like we might have a standard bubble with resulting standard pain for the economy. But during the year, the bubble advanced to the category of superbubble, one of only three in modern times in U.S. equities, and the potential pain has increased accordingly. Even more dangerously for all of us, the equity bubble, which last year was already accompanied by extreme low interest rates and high bond prices, has now been joined by a bubble in housing and an incipient bubble in commodities.

One of the main reasons I deplore superbubbles – and resent the Fed and other financial authorities for allowing and facilitating them – is the underrecognized damage that bubbles cause as they deflate and mark down our wealth. As bubbles form, they give us a ludicrously overstated view of our real wealth, which encourages us to spend accordingly. Then, as bubbles break, they crush most of those dreams and accelerate the negative economic forces on the way down. To allow bubbles, let alone help them along, is simply bad economic policy.

What nobody seems to discuss is that higher-priced assets are simply worse than lower-priced ones. When farms or commercial forests, for example, double in price so that yields fall from 6% to 3% (as they actually have) you feel richer. But your wealth compounds much more slowly at bubble pricing, and your income also falls behind. Some deal! And if you’re young, waiting to buy your first house or your first portfolio, it is too expensive to get even started. You can only envy your parents and feel badly treated, which you have been.”

-Jeremy Grantham, “Let the Wild Rumpus Begin*” gmo.com. January 20, 2022

People Mistake the Internet’s Knowledge For Their Own

“In the current digital age, people are constantly connected to online information. The present research provides evidence that on-demand access to external information, enabled by the internet and search engines like Google, blurs the boundaries between internal and external knowledge, causing people to believe they could—or did—remember what they actually just found. Using Google to answer general knowledge questions artificially inflates peoples’ confidence in their own ability to remember and process information and leads to erroneously optimistic predictions regarding how much they will know without the internet. When information is at our fingertips, we may mistakenly believe that it originated from inside our heads.”

-Adrian F. Ward, “People mistake the internet’s knowledge for their own.” PNAS. October 26, 2021 118 (43) e2105061118; https://doi.org/10.1073/pnas.2105061118

One person’s rancid garbage is another person’s Golden Corral buffet that they believe they cooked themselves.

The P-Factor

“‘One of the most interesting origins for much of this aberrant thought comes out of harsh and inconsistent and unpredictable early environments,’ Caspi tells me. ‘Those kinds of experiences that set up the anticipation of bad things happening, or they set up the anticipation of being rejected, they set up the anticipation of being violated, they set up anticipation of constantly being threatened, and things going wrong. Things, you know, being unalterable. And thereby spiraling out of control. So I think a lot of it is about what those early experiences do – they distort our expectations about the future. And that’s why they’re so consequential.’…

…The p-factor might turn out to be nothing more than a statistical artefact. But if there’s some value in its conception, it’s in raising the possibility that targeted measures in childhood – prevention of abuse, effective treatment of mental disorders in parents, and cognitive behavioral therapy lessons in schools – could reduce the prevalence of the most severe mental disorders that diversify and disable throughout a person’s life…”

—Alex Riley, “The seed of suffering.” Aeon. May 14, 2021.

I buy the notion the mental illness has a progression, where our childhood lays the groundwork and our sensitivities combined with later environments can lead to different sequela that emerge from common origins, with inflammation serving as a useful metaphor.

The Dunning-Kruger Effect Is Probably Not Real

“For an effect of human psychology to be real, it cannot be rigorously replicated using random noise. If the human brain was predisposed to choose heads when a coin is flipped, you could compare this to random predictions (heads or tails) made by a computer and see the bias. A human would call more heads than the computer would because the computer is making random bets whereas the human is biased toward heads. With the Dunning-Kruger effect, this is not the case. Random data actually mimics the effect really well…

…Measuring someone’s perception of anything, including their own skills, is fraught with difficulties. How well I think I did on my test today could change if the whole thing was done tomorrow, when my mood might differ and my self-confidence may waver. This measurement of self-assessment is thus, to a degree, unreliable. This unreliability–sometimes massive, sometimes not–means that any true psychological effect that does exist will be measured as smaller in the context of an experiment. This is called attenuation due to unreliability. ‘Scores of books, articles, and chapters highlight the problem with measurement error and attenuated effects,’ Patrick McKnight wrote to me. In his simulation with random measurements, the so-called Dunning-Kruger effect actually becomes more visible as the measurement error increases. ‘We have no instance in the history of scientific discovery,’ he continued, ‘where a finding improves by increasing measurement error. None.'”

—Jonathan Jarry, “The Dunning-Kruger Effect Is Probably Not Real.” McGill: Office for Science and Society. December 17, 2020.

Trauma & Transformation

Psychologists like to talk about trauma. If you have experienced X, then it must have been a traumatic experience. But, this is a function of the lens with which they view the world.

Our experience of the world tends to form a lens of interpretation. An emergency room physician — who, by definition, sees emergencies in their community — will think emergencies are normal. It will shape they way they view the world.

The same is true of every line of work. If you are a police officer, you will have developed a heightened sense of whether a situation matches a pattern where people are likely to be breaking the law. If you are an insurance claims adjuster, you will have seen a lot more outlier events and might view certain activities as more risky than others, when they might not be.

The same phenomena applies to psychologists and psychiatrists. They have seen people in their worst psychological condition, and they know to what depths we can all sink. But, the selection bias is such that the people that don’t need their help might be viewed as damaged people that just don’t know that they need their help. But, how often, in most circumstances in life, do we need help and not know it? This situation is unusual, not commonplace.

The problem is that trauma is just one story. We have the ability to overlay onto our experience a whole host of manufactured fictions. And while trauma may have a time and a place, I’d argue that trauma as a primary narrative should be reserved for experiences and situations which truly require assistance from a professional. Most situations don’t.

One person’s apocalypse is another’s day-to-day. If you need help, by all means, get it. There’s nothing wrong with getting it from psychologists or most any other place, if it benefits you. However, I’d argue that we are all much more resilient than we know, that trauma below most thresholds is the means through which we trigger the adaptation response and become stronger – mentally, physically, etc. – in response to our environment. This is not a negative nor should the focus be on the trauma, but in the adaptive response to it.

Of course, there’s taking it to the level of Neitzsche: “What does not kill me makes me stronger.” If you have had a limb cut off, it is unlikely you will become “stronger” in any meaningful sense of the term. But, on the other side, painful experiences do help to build psychic muscles. Doesn’t it make more sense to view most negative experiences as positive forces driving our development over the narrative of trauma?

Masks are the Pandemic Marshmallow Test

“The Stanford marshmallow experiment was a study on delayed gratification in 1972 led by psychologist Walter Mischel, a professor at Stanford University.[1] In this study, a child was offered a choice between one small but immediate reward, or two small rewards if they waited for a period of time. During this time, the researcher left the room for about 15 minutes and then returned. The reward was either a marshmallow or pretzel stick, depending on the child’s preference. In follow-up studies, the researchers found that children who were able to wait longer for the preferred rewards tended to have better life outcomes, as measured by SAT scores,[2] educational attainment,[3] body mass index (BMI),[4] and other life measures.[5] A replication attempt with a sample from a more diverse population, over 10 times larger than the original study, showed only half the effect of the original study. The replication suggested that economic background, rather than willpower, explained the other half.[6][7]

Wikipedia, The Free Encyclopedia, s.v. “Stanford Marshmallow Experiment,” (accessed December 7, 2020), https://en.wikipedia.org/wiki/Stanford_marshmallow_experiment

It occurs to me that masks might be the pandemic equivalent of the marshmallow experiment.

Cults: Dissociation, Group Psychology, and Cognitive Dissonance

“”How does cult psychology work? How is it possible to persuade human adults to enter a weird cognitive landscapewith no basis in reality? To enter a fantasy realm so profound that they’ll willingly die for whomever has been selected as the local Messiah?”

–Matthew J Sharps Ph.D, “Cults and Cognition: Programming the True Believer.” Psychology Today. October 2, 2020.

Partial answer: Through dissociation group psychology, and cognitive dissonance.

“…cognitive dissonance (e.g ., Festinger et al. 1956), which manifests itself in the tendency to overvalue anything in which we’ve invested too much—money, time, emotional energy, whatever. Cognitive dissonance essentially means that the more you’ve paid, the better you like. Whether it makes any sense or not.


Happiness Curve / U-Curve

For some reason, I believe I’ve posted the idea that happiness and perception of well-being follows a predictable curve that hits its low-point in one’s late 40’s for people in developed countries. However, looking for it right now, I was not able to find it. So, here’s a link to an overview article, a book length treatment, and a research article with the following abstract that brought the idea into popular currency:

“We present evidence that psychological well-being is U-shaped through life. A difficulty with research on this issue is that thereare likely to be omitted cohort effects (earlier generations may have been born in, say, particularly good or bad times). First, usingdata on 500,000 randomly sampled Americans and West Europeans, the paper designs a test that can control for cohort effects.Holding other factors constant, we show that a typical individual’s happiness reaches its minimumeon both sides of the Atlanticand for both males and femalesein middle age. Second, evidence is provided for the existence of a similar U-shape through thelife-course in East European, Latin American and Asian nations. Third, a U-shape in age is found in separate well-being regressionequations in 72 developed and developing nations. Fourth, using measures that are closer to psychiatric scores, we document a com-parable well-being curve across the life cycle in 2 other data sets (1) in GHQ-N6 mental health levels among a sample of 16,000Europeans, and (2) in reported depression-and-anxiety levels among 1 million UK citizens. Fifth, we discuss some apparent exceptions, particularly in developing nations, to the U-shape. Sixth, we note that American male birth-cohorts seem to have becomeprogressively less content with their lives. Our results are based on regression equations in which other influences, such as demo-graphic variables and income, are held constant.

-David G. Blanchflowera and Andrew J. Oswald, “Is well-being U-shaped over the life cycle?Social Science & Medicine. March 7, 2008.