A maximally intuitive presentation on what correlation is not, with maximally simplified concepts. [Note that I improvise 100% and I don’t prepare] There is a more technical lecture to come.
The CLT allows anyone (including ignorant economists and psychologists) to do statistics by using prepackaged recipes coming from the Gaussian. What are the foundations? How does it work? Where does it not work?
SIMPLIFIED TUTORIAL, 1 (in the series where we break down concepts intuitively): Before we talk about correlation, let’s discuss standard deviation, its analog in dimension 1. People don’t get while using it as a metric for deviation!
See the whole book (gets technical beyond Chapter 5)
“Black Swan” author Nassim Nicholas Taleb on Friday criticized bitcoin as a “gimmick,” telling CNBC he believes it’s too volatile to be an effective currency and it’s not a safe hedge against inflation.
Basically, there’s no connection between inflation and bitcoin. None. I mean, you can have hyperinflation and bitcoin going to zero. There’s no link between them,” Taleb said in a “Squawk Box” interview.
A VERY SIMPLIFIED TUTORIAL (VERY SHORT) Correlation measures are misused in the presence of nonlinearities.
(How a measure of unintelligence can give the illusion of high correlation with performance.)
Correlation measures are not supposed to be used in the presence of nonlinearities. When 2 variables correlate half the time (in a symmetric way around the mean), correlation will not be 50% but will show ~90%. Part of debunking IQ studies. If IQ works for disabilities but does not correlate with success, there is an illusion of correlation because of the biases in the metric.
Most of the tension resides between 1) Embedded, complexity-minded, multiscale/fractal localism (politics as an ecology/complex adaptive system), and 2) Abstract one-dimensional universalists and monoculturalism (politics as a top-down engineering project). We go beyond the verbalism; we rely on information theory, complexity theory, uncertainty approaches (say fragility), and probabilistic rigor to look at politics with the same eyes as we examine highly dimensional interactive elements such as nature, biological systems, internet networks, and medical issues.