Wise quotes, random misapplication

Wise quotes

I stumbled across an interesting hypothesis today. It’s a few hundred years old so I expect many of you will already know it. It’s attributed to a German philosopher, Arthur Schopenhaur* who is described by the authors and editors of Wikipedia as beinng “known for his atheistic pessimism and philosophical clarity”.

All truth passes through three phases
1. It is ridiculed
2. It is violently opposed
3. It is accepted as being obvious

Now there are several unmissable examples that follow this route quite neatly:

  • The earth, I understand, is not flat.
  • “Invisible” germs cause disease
  • Universal literacy is a good thing
  • Most ulcers develop from infection with Helicobacter pylori (a bacteria, not a strange new term for stress)
  • Smoking causes cancer
  • Newspapers are dead

(Ok, I’m a little early on that last one, but watch this space!)

These three steps provide an important lesson: Just because something sounds ridiculous or incredible, doesn’t automatically make it so. Visionaries and entrepreneurs may see the opportunities present in the potential new reality that others wake up to years later.

Random misapplication

But we have a problem, a common logical fallacy. The three phases of truth hypothesis does not imply that everything that is ridiculed or violently opposed is true! It also doesn’t mean that which we accept as correct must be incorrect (since the length of the first two stages could be in the past!)

So, just because there is a vocal minority of amateur politicians, oil company lobbyists, misguided republicans and other crackpots that ridicule and violently oppose the established global warming theories of an overwhelming majority of scientists, doesn’t mean they are right.

Their ridicule and opposition does not make their position true.

In their misguided search for non-existent balance, news channels and reporters seek to provide equal airtime to both sides of the debate. The reality is that amongst scientists, particularly climate scientists (who really should know) there is virtually no debate at all. Being on the side of Enron in this debate is not a mark of distinction!

A more general application

When analysing your company’s performance, or evaluating a proposed strategy from the latest best-selling business advice book, the sniff test is still useful. Does this make sense? Is there logic underlying a collection of sampled data points? Could other (preferably simpler) explanations fit here? What about the companies that took risks and failed disastrously (countering the view that you must take risks to succeed)?

In the same way that you shouldn’t take Schopenhaur’s three steps as gospel, so you should never accept the next big thing as your silver bullet.

*Incidentally, Herr Schopenhaur is not to be universally praised for his insights. One of his positions was that “woman is by nature meant to obey”. Make what you want of that!

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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