Gary N. Smith

Gary N. Smith is the Fletcher Jones Professor of Economics at Pomona College. His research on financial markets statistical reasoning, and artificial intelligence, often involves stock market anomalies, statistical fallacies, and the misuse of data have been widely cited. He is the author of The AI Delusion (Oxford, 2018) and co-author (with Jay Cordes) of The Phantom Pattern (Oxford, 2020) and The 9 Pitfalls of Data Science (Oxford 2019). Pitfalls won the Association of American Publishers 2020 Prose Award for “Popular Science & Popular Mathematics”.

Archives

The Word “AI” Has Become a Marketing Ploy

_{Think twice before investing in a business that uses the word "AI" without further explanation}_{Gary Smith
July 29, 2021}

Justin Wang received a bachelor’s degree from Murdoch University in 2012 with a grade of 83.7% and a master’s degree in Information Technology Management from the University of Sydney in 2016 with a grade of 82.5%. In January 2017, he founded a Singapore-based company with the mysteriously cool name Scry in order to “manage information technology to achieve business goals, as well as – and perhaps more importantly – how it can be wielded to disrupt existing value networks.” What’s behind the mystery and jargon? It turns out that Scry is a “social forecasting platform.” Users join for free and can enter their personal estimates of the probabilities that certain events will happen, with Scry calculating the average probability. For example, one question is,…

Using Benford’s Law to Detect Bitcoin Manipulation

_{Market prices are not invariably equal to intrinsic values}_{Gary Smith
July 13, 2021}

For a while, there was a popular belief among finance professors that the stock market is “efficient” in the sense that stock prices are always correct — the prices that an all-knowing God would set. Thus, investors can buy any stock, even a randomly selected stock, and be confident that they are paying a fair price. This belief was based on seemingly overwhelming evidence that changes in stock prices are difficult to predict. Efficient market enthusiasts argued that if stock prices are always correct, taking into account all currently available information, then any changes in stock prices must be due to new information which, by definition, is impossible to predict. Therefore, the evidence that changes in stock prices are hard to…

The Great American Novel Will Not be Written by a Computer

_{It takes more than statistical genius to understand words and create works of art}_{Gary Smith
June 30, 2021}

I’ve written before about how computer algorithms are like Nigel Richards, the New Zealander who has won multiple French-language Scrabble tournaments even though he does not understand the words he is spelling. Computers can similarly manipulate words in many useful ways — e.g., spellchecking, searching, alphabetizing — without any understanding of the words they are manipulating. To know what words mean, they would have to understand the world we live in. They don’t. One example is their struggles with the Winograd schema challenge — recognizing what it refers to in a sentence. Another example is the inability to answer simple questions like, “Is it safe to walk downstairs backwards if I close my eyes?” A third type of example is the brittleness of language translation programs. Yet another…

A Vulnerable System: Fake Papers and Imaginary Scientists

_{Publication counts and citation indexes are too noisy and too easily manipulated to be reliable}_{Gary Smith
June 17, 2021}

In the last two posts, we examined how scientific publication has ceased to be a good measure of scientific accomplishment, and how the peer review system is being gamed by unscrupulous publishers and researchers alike. Now, we will continue the discussion on the undermining of scientific publication using two examples: SCIgen and citation counts. SCIgen In 2005 three MIT graduate computer science students created a prank program they called SCIgen for using randomly selected words to generate bogus computer-science papers complete with realistic graphs of random numbers. Their goal was “maximum amusement rather than coherence,” and also to demonstrate that some academic conferences will accept almost anything. They submitted a hoax paper titled, “Rooter: A Methodology for the Typical Unification of Access Points and Redundancy,”…

Gaming the System: The Flaws in Peer Review

_{Peer review is well-intentioned, but flawed in many ways}_{Gary Smith
June 15, 2021}

Last time, we examined how scientific publication has ceased to be a good measure of scientific accomplishment because it has now become a target, following Goodhart’s Law. In today’s post, we will continue that examination by turning to the peer review system, and how that system is being gamed by unscrupulous publishers and researchers alike. In theory, the peer review process is intended to ensure that research papers do not get published unless impartial experts in the field deem them worthy of publication. Peer review is well-intentioned, but flawed in many ways. First, the best researchers are incredibly busy and naturally more inclined to do their own research than to review someone else’s work. Thus, peer review is often cursory or…

Publish or Perish — Another Example of Goodhart’s Law

_{In becoming a target, publication has ceased to be a good measure}_{Gary Smith
June 14, 2021}

The linchpin of scientific advances is that scientists publish their findings so that others can learn from them and expand on their insights. This is why some books are rightly considered among the most influential mathematical and scientific books of all time: Elements, Euclid, c. 300 B.C.Physics, Aristotle, c. 330 B.C.On the Revolutions of Heavenly Spheres, Nicolaus Copernicus, 1543Dialogue Concerning the Two Chief World Systems, Galileo Galilei, 1632Mathematical Principles of Natural Philosophy, Isaac Newton, 1687The Origin of Species, Charles Darwin, 1859 As Newton said, “If I have seen further it is by standing on the shoulders of Giants.” It seems logical to gauge the importance of modern-day researchers by how much they have published and how often their research has been cited…

A World Without Work? Don’t Hold Your Breath

_{Predictions of mass unemployment caused by robots continue to be wildly inaccurate}_{Gary Smith
May 26, 2021}

Will we soon be sitting on couches watching reality TV shows while robots work 24/7 doing all of the work humans used to do? The idea that robots will replace most human labor has been around for almost 100 years and has become more popular with each new advance, from sensors and microprocessors to enterprise software, data analytics, and AI. The latest wave of robot hysteria was tweaked by The Singularity is Near in 2005, emboldened by Race Against the Machine in 2012, and sent over the top by The Second Machine Age and The Rise of Robots in 2016, and A World Without Work in 2020, all best sellers. A World Without Work was shortlisted for the Financial Times & McKinsey 2020 Business Book of the Year, in addition…

Exercise is Medicine: The Power of Regular Physical Activity

_{Recent research reveals that exercise is one of our most powerful defenses against illness and disease}_{Gary Smith
April 15, 2021}

The United States spent $3.8 trillion on health care in 2019, before COVID-19. That’s 17.7 percent of U.S. Gross Domestic Product and nearly $13,000 per person. That’s more than double the average spending in dozens of comparable countries, yet U.S. health care outcomes are near the bottom of any list. We have the highest obesity rates in all age groups and the second highest death rate from heart disease. For life expectancy at birth, the U.S. ranks 34th, behind Chile and Lebanon. We have arguably the best doctors, medicines, and hospitals. Why are so many of us in poor health and why do so many of us die young? We can blame the system or we can blame ourselves. Enter…

Artificial Unintelligence

_{The failure of computer programs to recognize a rudimentary drawing of a wagon reveals the vast differences between artificial and human intelligence}_{Gary Smith
April 9, 2021}

In 1979, when he was just 34 years old, Douglas Hofstadter won a National Book Award and Pulitzer Prize for his book, Gödel, Escher, Bach: An Eternal Golden Braid, which explored how our brains work and how computers might someday mimic human thought. He has spent his life trying to solve this incredibly difficult puzzle. How do humans learn from experience? How do we understand the world we live in? Where do emotions come from? How do we make decisions? Can we write inflexible computer code that will mimic the mysteriously flexible human mind? Hofstadter has concluded that analogy is “the fuel and fire of thinking.” When humans see, hear, or read something, we can focus on the most salient features, its “skeletal essence.”…

Doctors Won’t Be Obsolete Anytime Soon

_{Despite fanfare and positive portrayals in pop culture, artificial intelligence “doctors” are failing to live up to the hype.}_{Gary Smith
March 29, 2021}

A careful analysis of British hospital records found that an annual average of 1,600 adults over the age of 30 had used outpatient child and adolescent psychiatry services and that a comparable number of youths aged 0-19 years old had used outpatient geriatric services. Tongue-firmly-in-cheek, the authors speculated that, “We are not clear why so many adults seem to be availing themselves of pediatric services, but it might be part of an innovative exchange program with pediatric patients attending geriatric services.” They also found that thousands of men used outpatient obstetrics, gynecology, and midwifery services each year, though there were fewer women availing themselves of vasectomies. These were clearly clerical errors made by fallible humans recording patient data. Could computers do…