The fact this book was finished before Coronavirus was astonishing timing because the virus gave everyone in the world this very topic: radical uncertainty.
Radical Uncertainty was written by John Kay, a professor and director of several public companies, and Mervin King, the governor of the Bank of England from 2003 to 2013 – including the 2008/9 financial crisis.
I absolutely loved this book. Whilst writing this review I flicked through the book and ended up reading several pages again.
The book’s premise is simple: how can NASA send probes into space, due to arrive at their destinations several years in the future, and everything goes according to perfect plan, arriving at a specific point in space right on the predicted time; whilst we fail to predict tomorrow’s stock price or today’s traffic? The answer is that when humans are involved, we experience radical uncertainty.
The book teaches how we should be answering more of life’s questions with “I don’t know”, or more constructively “What is going on here?”
Mervin King describes how when he was governor of the Bank of England he was asked to predict (model) future national economic models. I’d love to know if he was as blunt, replying “I don’t know” back then.
We humans are an odd species. Have you ever wondered (which Mr Kay and King have), why does any one person buy others a round of drinks in a pub? Why do we enjoy Christmas when we give presents to each other, (or in economics terminology, “…when we give an exchange of value between each other”)? Why do total strangers provide directions to each other when we are lost?
The authors break down the difference between puzzles and mysteries, which ultimately lie behind many of the questions so far.
One case study that we keep revisiting in the book is when President Obama was told “There’s a 95% chance of Osama bin Laden in that house in Pakistan”, what does “95%” mean? Other people in the room estimated as low as 30% chance. Did that mean if the event was to be re-run 100 times, on 30 occasions Osama would be in there? Why did Obama go ahead with the mission with such uncertainty? Please read the book to discover the reply that a World leader gives in a situation like this.
Back to the current lockdown and remember that the book was finished before we ever started to imagine the current situation. It’s easy to assume we humans don’t like uncertainty. Yet humans thrive in radical uncertainty rather than stationarity. In fact, most people find stationarity, whether work, food, holidays, entertainment, and even friends, boring.
We know how the virus has brought on radical uncertainty and boredom at the same time.
So, how much do we need to save for a pension?
Thoroughly recommended reading.