Risk and the spurious air of technicality

The following appeared in a letter to the editor in response to the Times article Risk Mismanagement by John Nocera.

I'll never forget a referee report I once saw which referred to the equations and graphs in a paper as "lending a spurious air of technicality" to otherwise pure speculation. The same comment might be applied to whole fields of research :-)

Charles Mackay’s 19th-century book “Memoirs of Extraordinary Popular Delusions and the Madness of Crowds,” recounting John Law’s Mississippi Scheme, the South Sea Bubble, Tulipomania and others, was reissued in 1932 (for obvious reasons). In a foreword, Bernard Baruch wrote: “All economic movements, by their very nature, are motivated by crowd psychology. . . . I never see a brilliant economic thesis expounding, as though they were geometrical theorems, the mathematics of price movements, that I do not recall Schiller’s dictum: ‘Anyone taken as an individual, is tolerably sensible and reasonable — as a member of a crowd he at once becomes a blockhead.’ ” Baruch speaks of “crowd madness” and says that “these are phenomena of mass action under impulsions and controls which no science has explored.” Sir Isaac Newton, who lost a life’s savings in one of these bubbles, wrote, “I can calculate the movements of the heavenly bodies, but I cannot calculate the madness of men.” Einstein said Newton was the greatest scientific mind who ever lived, so if he couldn’t do it, who can?