Using the Wrong Map To Find My Way

So . . . like pretty much anyone else, I've done personal budgets in the past. After all, we have make sure we're keeping tabs on our spending and not buy things we can't afford (yeah, right, like no one does that). But the funny thing about budgets is that they're always wrong, if only because we can't predict the future. I've gotten better at making budgets by avoiding the planning fallacy (i.e. don't allocate every dollar of your income, because there will always be unexpected events) and leaving a generous (seemingly too big) buffer. But whether we overestimate or underestimate, our budgets and predictions will be wrong.

One recent example that caught my eye was that there is a proposed rail link between downtown Toronto and Pearson airport, and apparently the project is going forward. The lease for the lands is 46 years long. Besides wondering why they specifically chose that number, I had to wonder whether we would actually still be using airports 46 years from now (probably, but you never know . . .). My point is that we can't predict two weeks into the future - I am almost positive that something will have changed such that this rail link will no longer be (as) useful in 2056.

But I digress. In the book The Black Swan, Nicholas Nassim Taleb (who is an awesome thinker and writer, by the way, despite my occasional disagreement with his ideas, like here) takes issue with the notion that even flawed predictions are better than no predictions. Because a central tenet of his ideology is that we can't predict, he is often accused of being a nihilist and advocating no predictive tools at all. One response he has to this is that it would be a bad idea for someone to use the wrong map (e.g. using a map of the Pyrenees to navigate the Alps, or a pilot using a map of LAX to find a gate at JFK), and it would better to use no map at all in such instances.

I disagree (with a caveat). It would be beyond foolish to expect that the wrong map would accurately tell you where to go. But what the wrong map can tell you is the general information that may be helpful in navigating yourself. A map of LAX would at least give some information about the general design of airports and terminals, and their associated component parts. A map of the Pyrenees would inform you of mountainous terrain in general. But if we are going to use the wrong maps, we need to be aware of that fact and incorporate it into our thinking. Use the limited tool for limited purposes.

The problem occurs when people use flawed predictive tools as the decision-maker, rather than as information helpful in making decisions. Let's say you play the stock market, and have a computer program that predicts future prices. If you take the output of that program and blindly follow it, you are using the wrong map in the wrong way. If you take that output and combine it with other information and your own judgment, you are using the wrong map in a potentially helpful way.

So go ahead, make a budget. But don't ask why reality differs from your expectation, because it always will and we won't always know why. Recognize that it is guideline rather than a rule, and that it is a flawed map. It could help, but to find your way home you're going to have to use your own sense of direction.