Prelude: This is my second economics book, in a series of very different books which I am reading relating to my eventual major in the field. This being said, I am still analyzing the book based on literary elements, as well as how the author decided to puts thoughts into words. So here it goes.
Summary: The Signal and the Noise by Nate Silver is a book based on predictions in today's world. How to make them, why you should be cautious, what can be seen, what can't, etc. The main message of the book, is that in an information intensive day and age, we have to sift through endless amounts of information to determine what is truly important (signal), and what can be forgotten (noise). Prediction plays a key role in economics, and failed predictions can lead to events such as the market crash in 2008, after the housing bubble exploded. And here is where the book begins.
"Big Data"
The book has logos strewn into its pages into the fullest extent, using series of numbers and graphs to help prove its point. These numbers are brought about in one of two ways. Either through an anecdote, or by raw data.
Anecdote: " It was October 23, 2008. The stock market was in free fall, having plummeted almost 30 percent over the previous five weeks. Once esteemed companies like Lehman Brothers had gone bankrupt. Credit markets had all but ceased to function. Houses in Las Vegas had lost 40 percent of their value."
Raw Numerical Data: "IBM estimates that we are generating 2.5 quintillion bytes of data each day, more than 90 percent of which was created in the last two years."
In order to keep the book both interesting and relevant, the author wrote about pop culture incidents to keep the reader's attention, as well as data that affects many of us on a daily basis.
Allusion: "At the time Michael Lewis was busy writing Moneyball, the soon-to-be national bestseller that chronicled the rise of the Oakland Athletics and their statistically savvy general manager Billy Beane."
The book also uses personification in one part to make the ideas more easily understood by general audiences
"The fox knows many little things, but the hedgehog knows one big thing. Hedgehogs are type A personalities who believe in Big Ideas-...Foxes, on the other hand, are scrappy creatures who believe in a plethora of little ideas and in taking a multitude of approaches toward a problem."
Pun: "How to know if your forecasts are all wet."
Now much of the book is about numbers. Recessions, earthquake forecasts, loan forecasts, how the stock market reacts to different phenomena. However, there were parts of the book which significantly peaked my younger minds interest in the subject. Starting with this quote:
"Voulgaris had watched a lot of Lakers games: he liked what Jackson was doing with the club. So he place $80,000- his entire life savings less a little he's left over for food and tuition- on the Lakers to win the NBA championship."
This being a success story in a sea of failed gambling yes, but the author included it to show what happens when predictions succeed. From that point on he used both keen knowledge of the sport, along with a computer program specifically designed by himself, to gamble on almost every professional sports game, earning 1-3 million dollars a year on the craft. Now from this side story, he introduces a very important equation to the prediction style that the author supports. Bayes's theorem. Like Hayek's book, the author mixes in relatively unimportant interesting topics, in his the heart of the subject to both keep the reader interested, and get the message across in one fell swoop. Which is what seems to be the pattern between the two economics books that I've read so far. More to come.
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