We frequently surrender power to experts, trading off our discomfort with uncertainty for the illusion of certainty that they, the experts, provide. This illusion of certainty is that -- an illusion -- but when it comes to traffic projections, many would prefer the comfort of that illusion over coming to grips with the notion that we can't accurately predict the future. Understanding this tradeoff is key for those wanting to abandon current thinking and embrace a Strong Towns approach.
We're building some momentum with our ongoing fundraiser for bringing the Strong Towns message to Pennsylvania. Our plan is to visit the state and hold 8 to 10 (or more) Curbside Chats. I anticipate some communities committing in the next few days, but we still have a long ways to go to make this happen. Please consider supporting this effort and pass it along to those you know in PA. We'd love to bring this message back to the Keystone State and change the conversation on growth statewide.
Probably the most remarkable feedback I received in response to my analysis in The Projections Fallacy was the notion that, while our models may be wrong, they are better than nothing. Without disrespecting any of the people who made comments or sent me emails (and thus I will omit their names), here is a smattering of this thread of thought:
There should be some model, some theory, that underlies that; or if we lack such a model we should create one. Maybe the results of that model can’t be summarized in a bar graph, maybe it does not converge on one ideal response, but that doesn’t mean we must make decisions blind.
Broadly, I would not expect naively applied models to have a high degree of precision over the lifespan of these long term infrastructure investments. If we're building a road, railway, waterworks, whatever that will last 20, 30, 50 or more years, you should understand that things can be wildly different from the projections. Nonetheless, number crunching can give an otherwise fuzzy discussion a much better context.
If you're about to make an investment that will last 50 or 100 years, you have to have some idea of what's gonna happen, because otherwise, you can not make a decision. And that's where modeling comes in.
I think everybody here agrees that current models suck. The question then is what to do. Get rid of models and just take a swing, or invest in better models? I think the latter. Taking a swing has not proven to be a good model to move forward.
When I was much younger, I watched a news show where the reporter picked a portfolio of stocks by throwing darts at a list of all of the stocks traded on the New York stock Exchange. Then they ran the portfolio for 12 months and beat the performance of nearly every mutual fund available at the time. The point was, if you are paying fees to mutual fund managers, what are you supposed to be getting? For the extra money you pay to be in the fund, you would assume the performance would be superior.
Today there is a fairly broad consensus that nobody is going to beat the S&P 500 index fund over time. The S&P 500, a broad index of 500 companies, is essentially "the market". In fact, consider the following quote:
According to the folks at the Motley Fool, only ten of the ten thousand actively managed mutual funds available managed to beat the S&P 500 consistently over the course of the past ten years. History tells us that very few, if any, of these funds will manage the same feat in the decade to come. The lesson is simple: Unless you are convinced you are capable of selecting the 0.001% of mutual funds that are going to beat the broad market, you would best be served by investing in the market itself.
So if nobody beats the markets over time, why are there mutual funds? Why would anyone pay more for someone to underperform in managing their money?
The same reason we ask for traffic projections from engineers: it gives us comfort in the face of uncertainty.
People who don't know anything about investing but know they need to save money will most often give their money to a manager to take care of. The manager is the expert and their advice will provide peace of mind. I'm not suggesting that is a bad choice; you save and invest to have peace of mind. If you are going to gain a percentage point or two of return but not be able to sleep at night from the tension, paying someone more knowledgeable than you is probably worth the expense.
Let's not kid ourselves, though. Our need for projections is based largely on our need to feel comfortable with our decisions, not on any real value those projections provide. We feel more justified when following the advice of an expert, even when we know that advice to be flawed.
To me, the sad thing about this human tendency is that we collectively cede decision making over to others. We do this particularly when the stakes of the decision are highest. As economist Noreena Hertz states in this amazing TED talk on our over reliance on experts, "We've surrendered our power, trading off our discomfort with uncertainty for the illusion of certainty that they [the experts] provide."
I strongly recommend that you listen to this powerful video. In it she talks about how experts form very rigid camps where a dominant perspective emerges that often silences opposition, how they hero-worship their own gurus, how experts are governed by social norms of their times, are captured by funding streams and cling to dogma.
My favorite quote from her talk:
"Progress comes about not only from the creation of ideas but also from their destruction."
Am I saying that experts are bad and all projections worthless? Absolutely not, but I do think we need to understand the limitations. An engineer can predict with some relative certainty what the traffic counts will be over the next few months, or even a couple of years. For my transit friends, the phenomenon is much the same. We only demand more aggressive projections -- and expect engineers to speak with certainty -- because our system requires us to place such huge bets on the future.
Later this week I will deal with that aspect of the suburban development pattern; the requirement that we place such large bets on the future. In the meantime, I urge those of you that would rather follow a flawed projection than have no projection at all to embrace the reality of a more uncertain future. Instead of being scary, you may actually find it empowering, especially if you take the logical next steps and build some resiliency into your life and community.
If you want to chat with Chuck and many others about implementing a Strong Towns approach in your community, consider joining the Strong Towns Network. The Strong Towns Network is a social platform for those working to make their community a strong town. Get expert assistance, consult your peers and stay current on the latest techniques and analysis.