Sunday, August 24, 2014

199: Precaution or Paranoia?

Audio Link

Before we start, I'd like to thank listeners Dim Questor, who posted another nice review on iTunes, and Jordan Mahoney, who shared our podcast link on Facebook. Remember, you too can have your name,or bizarre iTunes nickname, immortalized in my podcast by following in Dim or Jordan's shoes!

Now, on to today's topic. You may have heard some online skeptics derisively referring to the "precautionary principle", the idea popular among certain activists that if a new technology has any risks at all, or some new product has a nonzero amount of toxic contamination, we need to take the safe path and ban it. While a certain level of caution is always wise, the fact is that anything you do contains some level of risk, and any product contains some level of contamination. For example, we all still ride in cars, even though an average of 0.72 people die for every 100 million passenger miles driven in cars. Should cars be banned because this number in .72 rather than 0? If we were to follow this principle in general, we would effectively prevent all forms of scientfic and technological advance. So I was surprised to see some buzz on the internet indicating that Nassim Nicholas Taleb, a famous mathematical philosopher who has written several books on risk and probablility, and who I respect a lot, has been arguing that the Precautionary Principle needs to be applied to the concept of genentically modified foods, or GMOs, and that they should therefore be banned. I downloaded his paper, linked in the show notes, to learn a little more about this somewhat surprising position.

Let's begin by reviewing Taleb's "Black Swan" concept, which you may remember me intruducing back in podcast 84, "How to Bankrupt Your Boss And Get Rich". The idea here is that when managing risk, we have to consider both the probablility of a negative event, and the magnitude of its effect. If a low-probablility event, known as a Black Swan, causes a huge penalty, this may outweigh all the cumulative benefits of taking a risk over time. For example, suppose we make a bet that we will flip a coin once per month, and I have to pay you $100 for each head, and you pay me $1000 for each tail. There are risks to each coin flip- I might gain or lose money- but not much overall risk to me by playing this game, since it's nearly impossible to lose a lot of money, and in the long term I will profit nicely on average.

Now suppose we add a new rule: if we see the "black swan" event of five heads in a row, I need to pay you a million dollars. With this rule, the game has changed a lot. If a certain low-probability but not impossible result happens, I will be totally ruined, losing more money than I have ever won in this game. The expected number of tosses to get 5 heads in a row is about 62, so even though it might seem like a profitable game for a year or two, I'm virtually guaranteed to be ruined in the long run. Of course this game is pretty silly, but as Taleb has pointed out, many traders of complex derivatives in the stock market are essentially playing it: they please their bosses by showing steady market-beating profits, and collect their annual bonuses, until one day some low-probability Black Swan event causes them to lose their company much more money than their accumulated total profits. Often by that point they have built up enough savings so they don't care if they are fired.

The Black Swan concept goes beyond finances, of course, which is where the GMO discussion comes in. Taleb points out that when taking any action which provides risk of global ruin, we need apply the Precautionary Principle, because when you multiply a small probability risk by the infinite costs of the global ruin scenario, you can see that the risk just isn't worth it. In other words, in cases where the cost is total ruin, the Precautionary Principle should apply, and we should refuse to take any risk, no matter how small it seems. We need to be careful here, though, in that Taleb is not advocating a universal embrace of the precautionary principle, but just advocating it for very specific scenarios. He still rides in cars and planes, for example. He also continues to support nuclear power, because even though a nuclear meltdown is not good, the risks are all local: a single nuclear accident, though bad for the immediate area, will not blow up the planet, and thus can be planned for within the domain of normal risk management.

If I'm reading Taleb's paper correctly, his main concern with GMOs is that large near-monopoly companies are selling newly existing forms of life to a global market, and in effect creating a monoculture, where a huge proportion of the world's crops in each category are a single, globally genetically identical species. Furthermore, these are new species, lacking the centuries of farming experience we have with naturally existing ones. This means that we have a high risk of problems with these new species, and many such problems carry risk of infinite-cost global ruin. If it has hidden long-term effects on human health, nearly the whole planet will be affected at once. If it is capable of virally spreading and displacing other species, this will all happen at once worldwide. And if some new disease can kill this species of crop, it will devastate the whole world's food produciton. Thus we are taking an infinite potential cost, which can affect agriculture or humanity worldwide, and offsetting it against a marginal benefit of improved crops due to the GMO. Incurring the risk of an infinite-cost Black Swan event, for a finite benefit due to GMO crops, does not balance out mathematically, and thus we shouldn't do it.

It seems to me that his most compelling point is really about the risk of monoculture- having a tiny set of large companies as global seed suppliers- rather than the risks of GMOs themselves. If Monsanto disavowed GMOs in favor of old-fashioned selective breeding, this monoculture issue would still be present. In general, Taleb has good points about monopolies and central control-- we do need to be careful about transforming local risks to global ones by making things the same everywhere. This is similar to his critique of the economic theory of Comparative Advantage, which we discussed back in episode 165. We need to watch for and prevent a true worldwide dependence on a tiny set of near-genetically-identical species, and make sure any new species is extensively tested in a small, local environment before being propagated further. And we do need to make sure we never reach a point where too large a proportion of the world is dependent on a single species of crop. But as long as we are taking action to avoid this worldwide monoculture, the concept behind GMO foods is basically the same as traditional selective breeding-- producing a new species based on existing forms of life-- so it's hard for me to see why it should be treated so differently. Many new plant varieties have been developed and deployed based on selective breeding over the past century as well.

Whether GMOs truly provide a risk of global ruin, or really just a finite risk of some bad crops in local markets, becomes even more important when we balance these risks against the potenital benefits. Improving overall crop yields and nutritional value, one of the potential GMO benefits, is a life-or-death question for many impoverished populations worldwide. Nobel Peace Prize winner Norman Bourlaug, known as "the man who saved a billion lives" due to his work improving the yields of Third World agriculture, stated before he passed away that we are approaching natural limits in making use of arable land, and that GMOs would be required in addition to fully end world hunger. Taleb dismisses such GMO benefits because we could theoretically solve the problems through other means-- but I don't think it's valid to argue on the basis of what can be theoretically done, if nobody is currently doing it. Our society, markets, and culture currently have the will and ability to solve these problems through the careful use of GMOs, and are not doing it through other methods suggested by Taleb.

So, should we follow Taleb's recommendations and ban GMOs, due to the imbalance of a finite benefit vs an infinite risk? Or embrace GMOs with open arms and dismiss Taleb as a kook on this issue? Neither is quite right. I think Taleb does have a good point about the risks of monoculture, and we need to make sure we create policies that ensure agricultural variety, and prevent reaching a point where nearly the whole world is depending on a fragile handful of plant species. But it looks to me like as long as we avoid this pitfall, the other risks of GMOs are comparable to those of naturally bred species, and the potential benefits are massive, potentially saving millions of starving and malnourished people. Thus we need to think carefully about all the benefits involved, and the true level of risk, before taking any hasty government action.

And this has been your math mutation for today.


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