I, The Absolute

is normality an invalid assumption?

Posted by itheabsolute on October 22, 2005

…………the biggest problem we now have with the whole evolution of the risk is the fat-tailed problem, which is really creating very large conceptual diffculties.. Because as we all know, the assumption of normality enables us to drop of the huge amount of complexity in our equations.. Because once you start putting in non-normality assumptions, which is unfortunately what characterizes the real world, then these issues become extremely difficult.
-Alan Greenspan

this statement has bowled me out. i am a believer in normality (bell curve). if as greenspan, considered the greatest central banker of all time, says normality is an invalid assumption, then many of my beliefs also need to be questioned. maybe, this is new beginning of a different line of thoughts.

today, we had the famed director Shekhar Kapur on campus. he went on to talk about the duality, uncertainty, relativity, the fundamental contradiction in the universe, deterministic universe, the indepence of the event from the creature of the event, et al. after a while, most of the audience was lost and just waited for the talk to end. extreme math, which is completely equation driven and very specific is difficult to comprehend and appreciate. on the other extreme, philosophy which is as nebulous as anything can get is equally difficult to comprehend and appreciate. middle path, as advised by the Buddha, is an easy path and simple one at that. that is normality too.

PS: think about this. The word “dog” represents all the dogs in the world, but the word differs from the physical dogs which it represents. so the word dog is actully not representing the dog which it supposes to represent. does it make sense? these are the types of questions which philosophers dabble in, which to some degree Shekhar Kapur touched upon.

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