Egypt and the Narrative Fallacy

A story this morning about military helicopters in the Sinai reportedly attacking people who might be associated with the recent attack on government posts got me thinking about Egypt today. On a number of occasions over the past two years people have asked me about events there, and I think, by and large they have been unsatisfied with my answer, which has been something along the lines of "Good question. It's hard to know." With so much written about the Arab Spring, the Facebook revolution, loosing the yoke of the repression and cronyism of the Mubrak regime, the rise of a secular Islamist party and the reluctance of the army to cede power, there is a tendency to want to see a story emerge, whether it be the rise of democracy, the voice of a new generation, the gift of freedom, or the winds of change.

But lurking behind all of those possible threads, is something known as the narrative fallacy, the inclination of our brains to seek out a story to make sense out of the uncertainty. As Nassim Taleb explains in the Black Swan:

The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding.

A piece in the Financial Times (via Farnam Street) further explains:

We do not often, or easily, think in terms of probabilities, because there are not many situations in which this style of thinking is useful. Probability theory is a marvellous tool for games of chance – such as spinning a roulette wheel. The structure of the problem is comprehensively defined by the rules of the game. The set of outcomes is well defined and bounded, and we will soon know which outcome has occurred. But most of the problems we face in the business and financial worlds – or in our personal lives – are not like that. The rules are ill-defined, the range of outcomes is wider than we can easily imagine and often we do not fully comprehend what has happened even after the event. The real world is characterised by radical uncertainty – the things we do not know that we do not know.

We deal with that world by constructing simplifying narratives. We do this not because we are stupid, or irrational, or have forgotten probability 101, but because storytelling is the best means of making sense of complexity. The test of these narratives is whether they are believable.

People with guns and helicopters make me very nervous. There are so many arrogant knuckleheads who are sure that their actions, whether it be blowing up government stations, kidnapping tourists, deploying attack helicopters or appointing the head of the army Minister of Defense in the new government, will produce the intended results; when, in fact the future is far less certain and much more subject to random events.

I still have no idea where this is going, but it will be interesting to see how the conclusion, which will undoubtedly be viewed  as inevitable and predictable, will come to pass.