The very first comment on my preventive stupidity post said this:
“Absence of evidence is not evidence of absence.” This was a very useful concept to point out to those people who believed that because nominal national US housing prices had never dropped before that they wouldn’t drop in the future.
At 39:59 in this excellent podcast, Barry Ritholtz says, “It’s just not true [that US housing prices have never declined]. Obviously in the post-Depression era home prices really collapsed.” The saying absence of evidence is not evidence of absence kept those who said it from looking into the facts of the matter.
But in fact it didn’t matter whether prices had dropped: the (correct) point was that they could drop in the future, regardless. That poster’s ignorance of pricing history, coupled with sound reasoning that discounted any conclusions from that ignorance, led to the correct conclusion. If in fact people were actually misled about house pricing history (which seems to be the case), sound reasoning would have protected them. Reasoning promoted here would lead one to look at a period in which prices had not (or were said not to have) dropped, and take it as evidence that they would not drop.
It is weird that you think this is an example of preventative stupidity rather than that of an incomplete argument.
Side note, the phrase “evidence of absence” in the context of the phrase you think of as “preventive stupidity” seems to have a more specific meaning than your more literal interpretation:
https://en.wikipedia.org/wiki/Evidence_of_absence
I didn’t make the other good arguments against housing price movements never going down because it seemed off topic – but there is a whole lot of other data driven analysis that could have been made about the likely path of housing prices such as price to rent or income ratios, affordability indices, real prices historically dropping, rising interest rates, unsound lending and the financial condition of the average borrower, the prevalence of ARMs and the future path of interest rates, other regions in the US with falling housing prices such as Texas in the 80′s and CA in the 90′s and other countries with falling housing prices.
The key here is that even the above arguments are just surface arguments. I can’t just make an argument about price to income ratios without addressing whether or not there is something truly significant about that ratio. If we are having an in-depth discussion, I also have to address the counter arguments that try to give a justification for why those higher ratios are sustainable in today’s environment.
The question is whether or not the other arguments on your list of “preventive stupidity” are good in the same way as the price to income ratio is useful for learning about housing markets – they make a point but are otherwise incomplete. I still stand by my statement in the original comment – In the case of housing markets, knowing that something can still be possible or even likely despite it not happening in recent history can be very useful. It is actually more useful than knowing that housing prices went down in the Great Depression, because while many people believed that the future path of the economy was tied to the housing market, the point that housing markets fell in the Great Depression is just not that interesting unless people thought another Great Depression was likely independent of the housing market.
Now, when discussing ideas with other people we do not always give them the benefit of doubt and dig down into the data with them. The salesman/huckster and politician are two groups of people where we know they are biased so if we do engage them we might not engage them fully. It is insulting to explain that I am not weighting their ideas very much because I think their anecdotes or correlations are just convenient coincidences or carefully cherry-picked data. In these cases it is often easier to tell them that the plural of anecdote is not data and correlation is not causation rather than go into the details and accuse them of dishonest data manipulation.
It is very annoying to be on the other side of this style of confrontation because the person making the “preventive stupidity” arguments, when not followed up with the below arguments is being a little (or if it is about your own research, very) disrespectful to the person who sees themselves as trying to learn the truth in an unbiased manner.
1. The underlying cause for the correlation.
2. When the absence of evidence would be significant or what evidence would disprove the view (The housing market hasn’t fallen in recent history, but if the market is still rising when the mortgage credit to GDP ratio falls I’ll take that as evidence that the market has moved for fundamental rather than speculative reasons)
3. The reasons why the anecdotes were collected in a biased manner and how this bias skews the results
From this point in a conversation, you can either label their actions preventive stupidity and halt discourse entirely, or you can ask for more depth about what they think the underlying causal factor is, what would qualify as evidence of absence or why the anecdotes are significantly biased/unrepresentative.
yeah, I agree. To respond to “correlation doesn’t equal causation” by saying “that’s preventive stupidity” is little help. It’s much better to do the various things you list (e.g., ask “the reasons why [the person speaking believes that] the anecdotes were collected in a biased manner and how this bias skews the results.”)
example of preventative stupidity rather than that of an incomplete argument so that an incomplete argument is preventative stupidity.
Black swan events are an interesting study because in complex systems they happen so often.