Theories that make no predictions

It’s interesting to look at three subjects (ie sets of facts and theories) that don’t seem to make predictions – and certainly give little thought to either predictions or testing. They are Theology, critical theory and business studies.

Analysis shows surprising parallels between them.

Theology

Theology does not seem to make predictions. Most theology is aligned with a single major religion, or even a denomination or sect, though some ideas are shared. Theology has existed as a discipline for at least 1,500 years and has shown some evolution. However it doesn’t seem to show much progress.

Theology has three fundamental problems:

· There’s doubt as to whether its subject matter – God – actually exists. Even saints and eminent churchmen have expressed doubts on this matter (though not usually in public).

· There’s no agreement as to how theological ideas are to be tested. Ideas may be tested against holy books (but which?), or tradition (which?) or personal revelation (whose?). Without this agreement progress is probably impossible.

· The views of scholars can be overruled by the official utterances of religious leaders.

Theology is thus the projection of religious feelings into the realm of reason and morals. There seems no reason to expect that such feelings will be good guides to the nature of reality and thus it should not be judged by its ability to produce predictions.

How it should be judged is another matter – and not one to which I have an answer. However, unless theologians can produce an answer it seems difficult to see why anyone should pay it any attention.

Critical theory

Critical theory is a collection of theories used by scholars in the humanities. These theories include Marxism, psycho-analysis and post-structuralism. An introduction to critical theory will mention several dozen theories. It’s immediately clear to an interested outsider that this isn’t at root a quest for truth in the sense that the sciences are. For while science has many controversies – and occasional feuds – these eventually get resolved with the successful theories being consolidated into the larger body of science. This hardly happens in critical theory – though some theories have become unfashionable.

If critical theory is not a quest for truth what is it? Critical theory is, I believe, a form of politics. Its theories reflect, often explicitly, political movements in society. They are the projection of those movements and issues into the analysis of cultural products such as books, films and clothes. Now to the degree that this analysis is right it should not be judged by its ability to produce predictions but by its ability to produce social change. That’s not a judgement that I shall attempt here.

Business studies

I use the term business studies to cover research and analysis published by business schools and management consultancies. There is a great deal of such material and the quality varies greatly.

· Some is rigorously empirical. It treats businesses as phenomena whose behaviour can be studied. This can lead to predictions. The results of testing such predictions are reported VERY occasionally.

· Some of this material is usefully analytical. That is, it dissects a significant business problem in order to identify threats, opportunities and constraints. It can be useful to managers without making predictions.

· Much, however, is weak. It takes a small number of examples – often selected on no clear basis – and draws conclusions that seem largely subjective.

As with theology and critical theory there’s plenty of change but little clear progress. There’s little evidence of an accumulation of agreed facts and theories and little referencing of the work of others. Often the same ideas appear at different times under different names.

Furthermore, names are often used by consultancies and research houses as sub-brands and there are real material rewards for consultants and analysts who create names that are adopted by the market. Thus the published material often reflects the competition between business schools, for students, and between consultancies, for clients. (Such competition is not absent in theology and critical theory but it is more marked here.)

If business studies is judged by the volume of valid predictions it performs poorly but many analysts and consultants would say that that is not its main purpose. Its purpose, they would say, is to recommend actions. How, then, should such recommendations be judged?

It is possible – medicine has the same purpose. Recommendations should be judged by their outcomes. This, however, is typically very difficult. The number of companies adopting any given recommendation may be small – and they may be taking other initiatives in parallel. And they may well treat all their initiatives as confidential.

Types of model

In The Starting Point, my first post on this blog, I argued that “(B) Much knowledge can be seen as … models.” That’s obvious to some degree but it raises the question of what constitutes a model.

There are at least four kinds of model: Structural, taxonomic, developmental and causal. There are also metamodels.

In The Starting Point I argued that “(A) Knowledge is most interesting and important where it is general.” Some models are very general. Thus most fundamental models in physics can apply anywhere in the universe. Some are entirely specific, eg the UK Treasury’s model of the UK economy applies only to the UK and probably for only a few years. For now I only note this distinction. It may be desirable to formalise it at some future point.

Structural models

Structural models show the structure of an actual or proposed object. They may be physical or virtual. Structural models are used in many areas including medicine, chemistry and the various kinds of engineering.

Doctors have created generic models of the body’s skeleton, nerves, blood vessels, etc. which are used in medical education and to guide surgery. In sensitive cases exploratory operations and non-invasive scans (using X-rays, ultrasound or MRI) are used to create models of an individual patient’s body. Another recent advance has been the construction of full-size

Chemists have long used structural models of molecules to help them reason about their properties and reactions. For many years they were drawn on paper or built using rods and balls but now they are increasingly likely to be electronic. Electronic models allow calculation of, eg, molecular shapes.

Engineers used to rely on drawings to communicate their designs to clients and those who have to build them. They increasingly use 3D models which also support design work and construction. During design they enable stress calculations, simulation of performance, compatibility, etc. They may generate lists of required materials, work allocations and control data for numerically-controlled tools.

Taxonomic models

A taxonomic model is a set of categories with allocation rules. These rules are usually text for use by a human classifier but may be executable. Thus, in 1999 the BBC automated the allocation of incoming news reports to its own 5,000 news categories. Journalists use these categories to select the reports they need. The system, News On-line (NEON), replaced the people who had previously done this job.

Some taxonomies are very simple. For instance, the states of matter are solid, liquid, gas and plasma. These are often stable.

Others are very large and may evolve continuously. Well-known large-scale taxonomies include:

• In science, the Periodic Table of the Chemical elements and the Linnaean taxonomy of living things.
• In business, Standard Industry codes (SIC), the UN Product Classification, the Yellow pages categories.
• In marketing, the Mosaic set of consumer profiles.
• In information retrieval, the Dewey decimal system and the Yahoo ontology.

We sometimes find that a causal model underlies a taxonomy, eg, blood groups. Sometimes this is known first; sometimes only later. Thus:

• The distinctness of the chemical elements reflects the quantum mechanics of atomic nuclei.
• The Linnaean taxonomy reflects the evolution of living things – a phenomenon that was not understood in Linnaeus’ time.
  
• The Mosaic profiles reflect people’s lifestyle choices and resources

This also applies to sub-atomic particles and blood groups but not (so far) to genres or Standard Industry codes (SIC), the Dewey decimal system or the Yahoo ontology.

Developmental models

A developmental model asserts that its subject, eg an organism or a market, must pass through a series of stages. There are many stages models. Amongst the best-known are those developed by Piaget in the area of child development.

A well-known business example is Geoffrey Moore’s market development model:

• Innovators
• Early adopters
• Chasm
• Early Majority
• Late Majority
• Laggards

(See Crossing the chasm by Geoffrey Moore).

Like a taxonomy a developmental model may be based on a causal model or may be purely empirical.

Causal models

Causal models show how events lead to consequences.

The most basic causal models are purely indicative – little more than a list of factors that predispose to a result.

At the next step up are empirical models. These models produce forecasts by extrapolating from previous experience. Many economic and financial planning models are of this kind.

The best causal models are mathematical and allow quantitative prediction of consequences. They may be tacit or explicit. Tacit causal models may be no more than correlations. Explicit causal models, eg Newtonian mechanics, include explanations.

Some models are hybrid. Typically they use theory-based formulae where they are available and empirical formulae elsewhere. The Dupuy Insitute's Tactical Numerical Deterministic Model (see separate posting) appears to be a hybrid.

A causal model requires a taxonomy as foundation. That is, the entities in the model must be clearly defined. Sometimes the taxonomy predates the causal model but some causal models, probably including the most significant ones, require some revision of the taxonomy.

Metamodels

A metamodel is a general model that says, for one or more specific models, which features are significant and, sometimes, how they are represented.

Suppose a database contains a digital model of a gearbox. Underlying the database is a schema, an executable digital listing of the kinds of data items and relationships used to store that model. This schema is the metamodel for the gearbox model and would be equally applicable to other gearboxes and, probably, to a wide range of engineered structures.

In principle there are metametamodels – but these are only needed by, for instance, people designing new database and knowledge management systems.

TNDM: A predictive model for warfare

The Dupuy Institute's Tactical Numerical Deterministic Model (TNDM) (Economist. Technology Quarterly; 17 Sept 05) is a forecasting system with an excellent track record in forecasting the durations and casualties in armed conflicts. The Institute has a database of raw information on which its analysts perform extensive statistical analysis to identify patterns and trends. TNDM is available commercially (for $93,000 in 2005) and has been bought by both governments and arms suppliers. The Swedish government uses TNDM to propose new kinds of weapons.

The model includes many factors some technical, eg types and characteristics of weapons and armour, some geographical, eg presence of rivers, some tactical, eg disposition of troops, some logistical and even the matter of morale.

TNDM is generally more accurate than other 'war forecasting' systems because:

• It's based on real data
  
• It's model is based rigorous analysis rather than the wishful thinking of arms manufacturers and military organisations.
• It's model has been repeatedly tested against actual experience.

The success of TNDM is significant because it deals with human behaviour (which is sometimes claimed to be wholly unpredictable) and because it shows the success of empirical, 'scientific' method in an area remote from the physical sciences.