Wednesday, 31 March 2021

Why Deal or No Deal should have been cancelled

In the Autumn of 2005, Noel Edmonds would return to our screens with a new show called Deal or No Deal. Somehow the show managed to drag out the process of picking random numbers, from 1 to 22, and turn it into TV gold. There wasn't particularly any skill involved, other than perhaps convincing the banker that you were risk-loving in order to get a good deal for your box. 

Looking back, it was amazing to think people actually apologised for opening a random box that contained the £250,000 - as if they were somehow at fault. The contestants would often join hands if a crucial box was about to be opened, willing good fortune in messianic prayer. 

Perhaps the weirdest thing was once a player had accepted an offer, they would continue to carry on playing the game to see what "would have" happened. Noel would frequently chastise a contestant if it turned out they had a higher value number in their box: he was giving people grief for not being able to predict the future. 

My view is that Deal or No Deal should have never been broadcast or at the very least been put on after the watershed. Let's imagine for a moment that there was a TV show that doubted evolution called Ape or Not Ape. My bet is that there would be thousands of complaints by the "science-minded community" and drive it off the air within a matter of weeks.

You are probably thinking now that most people know that Deal or No Deal is rubbish and that I am overreacting.* However, just because you know something and find it easy, doesn't necessarily mean everyone else will. To quote another famous TV host: "it's only easy when you know the answer".

About 40% of the population do not get a C or above in Maths at GCSE and probably will only have a handful of lessons that are devoted to statistics. Yet just a few years ago, lots of kids would be getting taught Noel Edmond's version of probability, every day after school. 

OK, so Noel Edmond's may not be responsible for people believing that holding a rabbit's foot (say) will affect the distribution of events in their favour. However, I am not so sure we should have tacitly endorsed this kind of show either, as I think the percentage of people who believe in supernatural luck is probably quite high.**

You may think this all links to stupidity but supernatural luck is incredibly intuitive. You wear a lucky football shirt to the match and your team win, you attribute the shirt to affecting the outcome. Each time your team wins you feel it's partly down to the shirt and mostly ignore/forget if your team loses. This type of cause and effect reasoning is how we navigate the world. You don't need scientific proof that putting your hand over a candle will burn you, but have you learned this by experience in exactly the same way.

Often people think that the reason supernatural luck is unscientific is due to theoretical reasons. For example, what could possibly be causing the horseshoe to give you a higher chance of winning the lottery? You would have to believe in some supernatural effect that has powers to control the outcome of the numbers. As you cannot see the mechanism, it is unlikely to exist. But try and explain the theoretical reasons why a flame burns you without it sounding equally bizarre. 

Science isn't just about theory. Of course, theory helps us explain things but ultimately science is about proof. Just because evolution provides a plausible theory of why the beaks of finches on the Galapagos have different shapes, it doesn't necessarily mean evolution is what caused it. How we actually go about proving something scientifically is essentially a statistical claim (and if you are interested in finding out how exactly how scientific proof works then we cover it extensively in our new book).

There has been quite a push back to "science" in recent years and I think one of the main reasons is because it focuses too much on theory and not enough understanding scientific proof. The New Atheism movement seems to be dying away as most people claim to be agnostic. I think one of the main reasons for this is that people feel Atheism is more certain than Agnosticism: how can we be so sure God definitely doesn't exist? 

The frustrating thing about all this is that the whole point of scientific proof is that we can never be certain of anything. We do not know for certain, that a flame will always burn us or that evolution is real, but we think it is highly likely that these are both the case. But in order to understand how we go about scientifically proving something we need to have a better understanding of statistics as a society. And until we do, I am not so sure we should be indulging in shows like Deal or No Deal. Now let's all join hands and pray that it never gets recommissioned.

*The irony of all this is that a lot of "smart" people got a lot of the stats wrong about the show. I remember reading a Charlie Brooker review that argued the contestants shouldn't be cheering the other contestants on because if they win, then by the "law of averages" they are more likely to lose. Some people also argued that the person should swap the last box because of the Monty Hall problem, but it isn't a Monty Hall problem. [EDIT: I can't find the Charlie Brooker review of him saying this so I will not besmirch his good name. However, I am pretty sure someone said this.]

**According to this survey by Paddy Power, it's 38% of people. Now, what percentage of people do you think know this survey is biased? But in all seriousness, this poll is likely to survey gamblers, so it is more likely an accurate reflection of people who gamble than the general UK population. However, if this statistic is anywhere close to the true population of gamblers, then I would be worried whether gambling can really be considered an informed choice.

Saturday, 27 March 2021

Bitcoin and trust: how cryptocurrencies are "backed" by the government

If you ask most people what the £ is backed by, they will say "gold". There is a belief that somewhere, in the Bank of England, there is this huge vault of gold bars that you could exchange your hard-earned cash for. What gives money value, is not a question that most people really think about. That is until recently, with the advent of Bitcoin. 

The £, like the majority of global currencies, is a fiat currency, which means it is not backed by a commodity like gold but is government-issued. You could interpret this as being "backed" by the government, as people will accept £s as payment because you can always pay your taxes in it. What this effectively means, however, is that fiat rests on one important aspect: trust.

Many Bitcoins proponents will say that because it is backed by blockchain technology (a type of transparent ledger) it is backed by something immutable. As a result, we can trust Bitcoin more than any government. 

The problem is, for Bitcoin to actually work effectively, we still need to trust the government. Let's say you have some Bitcoin burning a hole in your virtual pocket and you decide to buy a Tesla. You send over your hard-mined, virtual cash and wait for delivery. But it never arrives. You send an angry e-mail to HR and no one gets back to you. You tweet at Elon Musk but he just tweets back: "lol n00b". At this point, you are understandably irritated and you decide to take Tesla to court. 

But wait a minute, what is forcing Tesla to make good on its promise? "Well, you will quite rightly say, "it's the law, it was a legal transaction that the seller failed to oblige by". But who is enforcing that law, what gives the law, value? Just because it is the law, doesn't mean it will necessarily be enforced.*

So in order for this transaction to go smoothly with Bitcoin, you need to have trust. Trust in the fact that the government will enforce your contract (this is technically what a purchase is) and also protect your property. Although some libertarians will argue that you can get around this in all sorts of ways, I am unsure if many people will be comfortable going down this route, even if hiring goons to beat-up Elon is an attractive prospect.**

Put simply, if you can't trust a government to behave responsibly with its currency, then it's unlikely you are going to be able to trust the government - in many other ways - in order for us to use a currency of any kind. This is why making governments trustworthy is so important and why we have mechanisms such as democracy to instil that trust. 

If we have that trust in fiat currency, it has the added bonus of central banks are able to have greater control over the booms and busts of the economy (I think this another aspect of monetary systems that most people are not really aware of). Also, Fiat currency doesn't have the issue of Bitcoin, which is that is inherently deflationary. As it gets harder and harder to mine Bitcoins it puts a limit on supply, as the value of Bitcoin increases people will want to hold on to them rather than use them to purchase stuff. What happens as a response is that sellers lower prices, which just makes Bitcoins more valuable and the spiral continues. This is one reason why a feature of a good currency is that it is stable over time. 

Bitcoin also has the feature that it is untraceable.*** If you are living under nefarious government, then this would be something we would think is desirable. But is it really a good feature if the government is somewhat trustworthy? I can understand in some countries this would be beneficial, perhaps if you were raising money for a protest against a corrupt government, for example. However, all this lets us do under a trustworthy government is things we as a society have deemed we don't want, like buying a bag of weed, tax evasion or hiring a hitman. 

If Bitcoin really became a serious candidate to replace fiat currency then you can see why governments would want to do something about it. However, even at the level it is operating at now, the amount of carbon it is producing (from all computational power needed to mine Bitcoin) is a serious cause for concern. This doesn't mean that certain types of research related to blockchain technology has to stop, but it would mean effectively having to ban cryptocurrencies (this is in fact what India have done).

So how would you ban Bitcoin? I am told from a legal expert friend that the high court in the UK has recently declared Bitcoin to be property, so in effect, you could ban owning it like we do with illegal substances. However, this has not yet been upheld by the Court of Appeal or UKSC.

Alternatively, you could make it illegal to mine bitcoins. This may be quite difficult to catch anyone doing it, but that's not the point. What it means is that if you buy something with bitcoin, and they don't fulfil your promise, you can't take them to court. The irony of all this is that if you were then to buy something with Bitcoin, you would have to trust the seller.

*The fancy Winnie the pooh terms here are De Jure and  De Facto

**Although you may have to hire more goons, in order to beat up the goons that were meant to beat up Elon, if they didn't fulfil their contract).

***As it is an open ledger system potentially a government could force people to register their private wallets, which would sort out some of these issues.

Sunday, 21 March 2021

Misleading Words: why we need to rename "statistical significance"

What is the definition of arachnophobia, equinophobia & hippophobia?

If you said they are all fears relating to spiders, horse and hippotamus then you would be wrong. 

The correct answer is spiders, horses and horses, respectfully.

Most people will be aware that phobia means fear and perhaps know spiders relate to arachnid and equine to horses. Many of us will be less familiar with the fact that hippo is actually related to horses unless you have heard of this before (or are a 2000-year-old Athenian).

The way we often understand new words is through inference: a way of narrowing down the answer. We do this all the time without thinking like with “lexically ambiguous” words. If I said “there were bats flying around my house last night”, the context helps us understand that this is referring to the animal rather than cricket bats. 

We do the same kind of thing when we learn a new word. Often words contain clues within the word itself or in the context we use them. For example, let’s make up a new English word called “worseimprovement” based on the direct translation of the German word, Verschlimmbesserung.

You may already have a vague idea of what this means* - and you should guess now before reading on. But if we used it in context it’s easy: “I added more spices to my dish but it ended up a worseimprovement”. We don’t really need to offer a definition, as it should be obvious that it refers to a situation where we try and make something better, but it ended up worse. 

Words, however, do not need to contain any relevant information at all. We can define a word however we want, as long as people are on the same page. For example, if we were to rename “banana” as “orange”, what fruit is the man in the picture holding?

If you said “banana” you are wrong, it is an “orange” - we have literally just been through this guys. It really doesn’t matter what we call this elongated yellow fruit as long as we all know what the name we give it refers to.

Problems, however, can occur if we were to keep up this definition. People who haven’t read this article may be perplexed if you said you hate the flavour of oranges and see you downing a Fanta**.

This isn’t always a massive problem. For example, Egregious is now a negative word when it originally meant "distinguished" or "eminent”, it was used in an ironic way to such an extent that the definition has changed over time. However, there are some words or phrases which can lead to incorrect inference. I think I will tentatively call them "misleading words", but I am worried that this may actually create a "misleading word" in itself.

The word "fertility" is a misleading word when it is used in the technical sense: how many children a woman has had. This can lead to lots of problems like saying women are now less "fertile" in their 20’s than their grandmothers were in their 30’s. If you read this without knowing the technical definition, you probably would think it means women are somehow biologically less able to give birth now, than before.
Another example of a misleading term is something I use a lot and can be seen in the following sentence:

“Drinking urine makes us live longer and this finding is statistically significant.”

Most people will think the “statistical” part suggests that some sort of statistics are involved and it’s science-related (and they would be right on this). “Significant”, however, usually implies noteworthy, something that commands attention. This is definitely not what statistically significant means so please don't think that (for the actual meaning, I have heard there is a good book out at the moment that explains it well).

Drinking urine could literally only increase your life by 10 seconds, and the findings could be statistically significant. This does not sound like “significant” in the everyday use of the word, so if you started drinking your own urine as a result of this misleading word, I think you have a right to be annoyed. Trying to get everyone to understand what the term actually means is really difficult. Yes, it isn't a problem if people who use it understand it, like the banana/orange example above, but we rarely think about the consequences when the word starts getting used with people who are not privy to the definition. They will do what we all do and use inference to get an idea of the word and be badly misled.

As a result, I think the best thing to do is to change the name of statistical significance to something else, like statistically detectable (it is worth thinking about what we exactly change it to carefully though).

It may take some time, but I think with a bit of coordination it is certainly possible. If we can change the name of a Marathon Bar, we can do anything.

*Inbesondere wenn Sie Deutsch sprechen.

**I am aware there are other flavours of Fanta, but if I said Fanta Orange here you may think it was referring to a banana.