Thinking Ahead is a collection of essays on Big Data, Digital Revolution, and Participatory Market Society (co)written by Dirk Helbing. Helbing’s Wikipedia entry is mostly a very long list of achievements and awards in several areas. His interest and expertise run from traffic management to crowd disasters to the risks and opportunities of the digitalizing of the world. The constant is that all these topics are about managing complex systems. The definition of complex systems as used in the book is: “Complex systems are characterized by numerous interacting actors and factors. Examples are social, economic, or traffic systems, as well as the behavior of crowds or ecosystems. The behavior of these systems is often dominated by their internal dynamics. Attempts to control them from outside frequently lead to unexpected and unintended results”.
Complex systems and the financial market
The financial market and crisis are frequently used as an example by Helbing. The global financial market is so complex that it can’t be monitored and controlled anymore. More and more assets don’t have real-world value. It’s almost impossible to understand what is behind these completely virtual assets, which means that we can’t tell whether their value is realistic or if it’s inflated.
Many ideas about the financial market (conventional economic thinking) and how to manage it and keep it from crashing are either outdated or just plain wrong. These ideas don’t take the effect of all systems being connected into account. The fact that globalization has led to more interconnections between financial markets means that the risk of a local problem leading to a global crisis has increased significantly. The resilience of the system is not described by the average stability, but by the weakest link. To be able to isolate risks a system needs compartmentalization and there are no safety points in the financial market today.
The current models for how the financial market will behave is based on the idea that people are completely rational. That we act as “homo economicus” and make optimal decisions.
It turns out that this is not a truthful projection of how humans behave. While some people might take decisions based on purely rational arguments, most people are impacted by emotions. It’s also not true that all people make decisions that are most favorable for them personally. There is not just “homo economicus”, but also “homo socialis”. “Homo socialis” displays other-regarding and cooperative behavior. While older models might suggest that other-regarding behavior is unfavorable in terms of evolution and will therefore eventually disappear, it turns out that this is only the case if a cooperative person is placed amongst a group of selfish people. If a group other-regarding people can stick together it’s the cooperative behavior that gets favored and allows “homo socialis” to spread.
Helbing also dives into the challenges and opportunities of “Big Data”. Big Data is a term that has been around for more than 15 years now and it means that data sets are now so big that they can’t be coped with using standard computational methods. Big Data is also referred to as the oil of the 21ste century. It’s worth a lot of money if we can process it. Big Data in itself doesn’t pose a lot of value or risk. We must learn to drill and refine data so we can transform it into useful information and knowledge.
While the processing of Big Data offers a lot of opportunities, it also poses a lot of risks. We share information almost constantly, both implicitly and explicitly. Of course, sharing information on social media platforms is explicit. However, by using services like Google Maps we share our whereabouts. By using loyalty systems in the supermarket it’s possible to determine how you live your life and when your life might be changing. Even just browsing the internet we leave behind a telling tale of our lives, our loves, our hates and our opinions.
The way in which information is processed can reinforce patterns. This means that it can reinforce discrimination and promote homogeneity. If that would happen it could of course negatively impact any minority, but it would also be bad for everyone else. Innovation only takes place if people with unique interests and ideas, who are ahead of the curve, can flourish. Filtering out uniqueness would be disastrous for our well-being and economy.
Another challenge is that we can’t really opt out of all of this information sharing. You can decide to not join any social media networks. Web browsers make it possible to turn off cookies, although it means that many web sites become almost unusable. There are tools that support obfuscating your IP address while you are browsing the web, but this still doesn’t guarantee that you are browsing anonymously. And as the number of smart and connected devices is increasing the amount of data that is being collected is exponentially increasing.
Staying in control of data from you or about you is hard, if not impossible. We cannot control what information companies and people collect about us and we cannot control what they will do with the information, or how long they will keep it. Incorrect information about us might also be stored and even spread. This can happen either on purpose or by accident and it’s very hard to correct it.
The European GDPR law has been created to try and protect people from misuse of data from and about them. It forces companies collecting data to be transparent about what data will be used for and it prohibits them from using it for any other means. Once data has outlasted its original purpose it has to be destroyed and if your data is leaked because it wasn’t adequately protected companies will have to pay significant fines.
To me, the book provided a very interesting brain exercise. In the essays collected in Thinking Ahead Helbing does an excellent job of explaining the challenges and risks of globalization and Big Data in a way that’s relatively easy to understand. He also talks about several ideas that might go some way towards limiting risks and providing solutions. None of these ideas will be easy to implement in the real world though and a lot of them will have a significant impact on the lives of many. Based on the book I find it hard to form clear ideas about solutions.
I would personally be interested in exploring some potential solutions a little more and learning about what steps we could take to get closer to a more stable and a more fair world.
Pingback: Looking back | Kalliope's Journey