Chapter 6
STEP 2—IMAGINE THE FUTURE
For as long as I can remember, I have been fascinated by the future and after reading my first Robert Heinlein book at age eight, I became a science fiction fanatic. For the next ten years, I read almost nothing else. It was not what I would call a balanced approach to literature, but it did expose me to a wide range of theories about the nature of time and the relationship between the past, present, and future. At various times, different paradigms felt more or less “true” to me. There was Kurt Vonnegut’s theory of being “unstuck in time” (or more specifically that our lives are set in stone and our consciousness just moves through them),12 there was the idea that multiple futures exist simultaneously (e.g., Fritz Leiber’s The Big Time13), and of course there were dozens of books that contemplated time travel and the ability to change the future by going back and changing the past. I voraciously consumed them all and considered each theory in turn.
In that period of my life, in all the science fiction books I read, the notion that really stuck and the one that shaped my early thinking about the future more than any other was that of “psychohistory” as described by Isaac Asimov in his Foundation Trilogy.14
The Nature of the Future—Chaos and the Psychohistorians
Asimov’s Psychohistorians were the wizards of the distant future. Mathematicians of the highest order, they were able to understand and model on a detailed level the course of human events such that they could predict the future with certainty and more importantly, make small, behind-the-scenes adjustments to the present that would steer future history in the right direction. In many ways, the idea of the psychohistorian is no different than that of those who think that through the use of Big Data and powerful computer models we can foretell the future and, if we just tweak the inputs (e.g., by passing a law or two) we can make things come out the way we want.
I now think that psychohistory and, for that matter, the benefits of computer modeling (at least when it comes to making predictions) are mostly fantasy, but forty years ago, I believed in the possibility of psychohistorians and wanted to become one when I grew up. While I eventually let go of the idea that enough information, analysis, and insight will enable us to predict and direct the future, the basic premise of psychohistory remains for me an article of faith. In particular, I believe that actions have consequences and those consequences manifest themselves directly and explicitly in the future. That there is a high degree of uncertainty about those consequences—uncertainty that is best addressed through the use of the mathematics of probability and statistics—in no way undermines the proposition that almost all of what we see happening is deterministically determined, albeit (at least in my belief system) without the guiding hand of some all-powerful being.
Lately I have come to believe that chaos theory provides the best model for how we move from the present into the future. A detailed discussion of chaos theory is beyond the scope of this book, but for our purposes here, the important aspect about chaos is that it is a process that is deterministic but not predictable.15 Whether this is in any sense truly how the universe works is a philosophical proposition that one could spend years contemplating, and I am sure that there are many far smarter than me who have delved deeply into it.
Before going on, I need to say that I completely respect those among you who are very religious and believe that the future is determined by God alone. I would never presume to argue with such a belief, but if you are going to use Present Value, it is important that when you think about what is going to happen you suspend that belief and instead adopt an attitude of humble curiosity, noting that while calculating exact probabilities of future events will never be possible, you can imagine what the future might look like and you may be able to estimate some relative likelihoods of future events (even chaos theory allows some short-term statistical predictions). Such estimations require careful thinking and will always be approximate, but as we will see in the next chapter it is not necessary to determine exact probabilities to use Present Value effectively. We only have to get it right enough to distinguish between the alternatives we are considering.
Thinking about the Future while being in the Present
“The past cannot remember the past. The future can’t generate the future. The cutting edge of this instant right here and now is always nothing less than the totality of everything there is.”
Robert Pirsig from
Zen and the Art of Motorcycle Maintenance16
Eventually, I got over my obsession with science fiction, time travel, and psychohistory and headed off to college. While there, I was, of course, exposed to a much wider array of literature and ideas about how the world works, but the book that became my “bible” and the one that has influenced my thinking more than any other in the years since was only mentioned in passing by one of my history of science professors who put forth the proposition that much of what we think we know about the world was not discovered but rather invented by the human mind and does not, in any real sense, exist until someone creates it. He illustrated the point by reading the passage from Robert Pirsig’s Zen and the Art of Motorcycle Maintenance, where the author deconstructs Newton’s Theory of Gravity demonstrating that it has no more external “reality” than the ghosts and spirits that many Native Americans believe in.17 It was an insight that hit me hard, and immediately after class I went out and bought the book. I have read it more than a dozen times since, and each time, I learn something new.
The reason I am writing about it here and now, however, is because what Pirsig says about the present and the future is highly relevant to Present Value. In this step of using Present Value, it is not so much envisioning the specific details of future events that is important as the mental attitude that is necessary to adopt when contemplating what is going to happen, and here, the words of Pirsig are particularly helpful. Pirsig—like countless others—counsels us to be in the present moment and that as he says above, “the future can’t generate the future.” I would go further and say that the future can’t predict or imagine the future, either. I believe that to imagine the future, you have to be firmly in the present moment. By being in the present moment, you are not attached to any particular future and hence are in a better position to consider all of the possible futures that can follow this moment. The point is that as soon as you imagine yourself in the future, you have made a choice as to which future you will be in, and even if you start to sequentially imagine yourself living through different futures, you are going to prefer one scenario over another and that will not only limit the number of alternatives you can imagine but also cause you to be less than objective when evaluating the likelihood of each. This is not to say you shouldn’t think about how much value you place on a given set of consequences; in fact, Present Value requires you to do so. But that comes later. First you must imagine the landscape, and then you can begin to explore the territory, determining the value and the likelihood of each of the possible ways the future might manifest.
Imagining ALL the Possibilities
Of course it’s impossible to imagine all the possible ways in which the future might unfold, but to focus on just the possibilities that seem obvious or most likely can not only cause you to miss the forest for the trees, but also lead you to make serious mistakes by discounting low likelihood events that could have a huge impact on the outcome of the issue you are trying to resolve. My friend Bob Walter and I used to talk about this a lot, both in our professional lives (Bob is an attorney who is particularly good at envisioning worst-case scenarios), and in the bar after work where conversations almost inevitably gravitated towards the two games that we each pursued to a perhaps unhealthy degree—bridge (in Bob’s case) and chess (my passion).
Despite not being an actuary or having formal training in probability and statistics, Bob has a superlative intuition for probability theory and the ways things might go wrong that has helped him become an expert bridge player. Bridge is a game that rewards statistical inference, close observation of behavior, envisioning all the possible (even wildly unlikely) distributions of unseen cards, and most of all, making the “the percentage play.”
Bob understands and demonstrates to a degree that is unusual even among credentialed actuaries that the range of possible outcomes of any question we are looking at is generally far wider than we imagine, and that it is critical, when facing an important decision, to take the time to use your imagination and consider all the possibilities inherent in a situation, including those that might ordinarily be considered “too unlikely to matter.” He illustrated this point time and again with entertaining anecdotes from the many bridge tournaments he witnessed and/or was a part of, but to show you what I mean by imagining the future, I want to go back to the many conversations we had on the question of what taking a risk really means when playing bridge versus chess, the game that I am most familiar with.
Over the years, Bob and I compared and contrasted our two avocations extensively. On its surface, chess is completely unlike bridge in a couple of key aspects. First of all, in chess one has complete information about the situation on the board. The position is there for both players to see. This is very unlike bridge, where during the bidding only 25% of the cards are known to each player, and after the bidding is complete and the “dummy” is laid down, only 50% of cards are visible. Much of the essence of the game is in deducing and/or making educated guesses as to the distribution of the unseen cards. The distribution itself is completely random, and thus on the surface there is a very high degree of luck in the game. In chess, on the other hand, there appears to be no luck whatsoever. Each player has complete control over the move they make and the manner in which the position will change as a result. But is it really so clear? Beyond that, even if there is no luck in chess, is that the same as saying that the future is really predictable?
I always used to argue that despite the complete information and theoretical presence of an objective best move in every chess position, there is so much that is unknown to chess players as they are contemplating their next move that an uncertain future is as much a fundamental feature of chess as it is of bridge. When I contemplate a move in chess, the future is largely unknown—not only can my brain not fully contain, calculate, or evaluate all the future scenarios that might emerge on the board, but I also don’t know what my opponent is contemplating, how many and which of the future scenarios he or she can envision and how he or she might react to my next move. In my view, the purely deterministic nature of the game is only theoretical, and in the end there is no qualitative difference between guessing which of my bridge opponents holds a key ace and speculating on whether my chess opponent will understand the intent behind my sacrificial attack and find the defensive resources (whose existence even I may or may not be aware of) to repel it and defeat me. It seems, if anything, the future outcome is more uncertain in chess, because while in bridge I have a way of measuring the likelihood of certain card distributions and hence make the “percentage play,” in chess the probability (of any particular one) of my opponent’s possible responses to my move occurring is completely unknown, and therefore one needs to ultimately envision as many possibilities as one can and make decisions based on intuition rather than calculation.
But the situation is even more complicated than that because both games are (usually) played by human beings, and the plays that these human beings make (or don’t make) contain information that is often highly relevant to the decision to make a risky chess move or an “against the odds” play of a bridge hand. Beyond obvious issues like the relative strength of my opponent (which could give me a sense of how he or she will play, both in the absolute and against me), there are other questions whose answers are far less objective and have equal potential impact on the decisions I make. For example, did my opponent think for an unusually long time over the last bid or choice of card to play? Why didn’t my opponent take the pawn I mistakenly left unguarded two moves previously? How important is it to my opponent that he defeat my contract by one trick (vs. two or three)? What is the impact of the result of this particular deal or game on my opponent’s standing in the tournament we are playing or on who he or she might meet in the next round? Are there emotional or other factors (e.g., age of my opponent) that should affect my play? Some of these questions can’t be answered, some shouldn’t be considered (based on ethics), and some might be downright misleading if one relied too much on their significance. However, to ignore the presence of all this additional information and to pretend that the future is predictable or “calculable” misrepresents the situation both in bridge and chess as well as in life in general. A quick story will illustrate what I mean.
As enthusiastic a student of the game and avid reader of the literature as I am, I am also very much an underachiever when it comes to my actual chess tournament results. I have beaten a couple of experts and once or twice was able to draw a master, but by and large I lose more games than I win and my rating is only class B (three steps below mastery). I have, however, played in enough tournaments to have faced a couple of grandmasters in serious games, and each time the experience was both sobering and educational. So when David Bronstein came to town to give a simultaneous exhibition (playing thirty games at the same time against anyone willing to buy a ticket), I eagerly signed up to play.
In chess, there are masters, there are grand masters, and then there are the super grand masters—the elite players, legends of the game like Kasparov, Karpov, Fisher, Capablanca, and a few dozen others who vie every few years for the World Championship. In the ’50s, ’60s, and ’70s, David Bronstein was very much in that category, and in 1951 came within a hair’s breadth of becoming the world champion by beating Mikhail Botvinnik in an epic twenty-four-game match (the match was drawn 12–12, and Botvinnik retained his title).18 By the time the simultaneous exhibition took place, Bronstein had largely retired from serious play but was still ranked as one of the top 200 or so players in the world, and was fully capable of producing games of surpassing beauty and depth. But he was also old, not in the best of health, and was obviously tired from touring the country and giving exhibitions in every city he visited. And so when I sat down and made my first move, I wasn’t exactly optimistic, but I had some hope that I would last long enough to enjoy the experience for more than a few moves. The game began, and having chosen an unusual opening that I was very familiar with, I was able to negotiate the first ten moves or so without incident. But then, just as the opening phase of the game ended, I suddenly saw an opportunity to win a pawn with no apparent cost.
Now I was faced with a very difficult decision. World champions do not allow players like me to simply “snatch pawns.” In fact, that is exactly how they dispatch weak opponents quickly. They offer a pawn (or some other piece) as bait and then punish their hapless prey with an attack that takes advantage of the vulnerability of their opponent’s position that is created by the time it takes to take the “poisoned” offering. But try as I might, I couldn’t see any real danger in taking the pawn. I could see some defense I would need to engage in, but no attack that I couldn’t respond to. To me, it looked like a bluff. So the judgment I had to make was whether the probability that this near world champion could see something in the position that I couldn’t was so much more than the chance that his move was simply the result of age, exhaustion, having twenty-nine other games to play, and/or an underestimation of my ability (if I couldn’t repel the attack I did see, I would lose quickly and Bronstein would have one less game to worry about) as to justify risking a quick demise by taking the pawn. The fact that my father, who was playing in the game next to me (and is only a slightly weaker player than me), had just gone down to a quick and violent defeat did not make my decision easier.
Fundamentally, it was a determination that was impossible to quantify, and so I had to use my intuition. In the end, I grabbed the pawn as much because I wanted to see what would happen as because I thought it was the percentage play. Happily, it turned out that there was no deep, hidden reason behind Bronstein’s move, and I ended up with a material advantage that I jealously guarded and nursed, exchanging pieces whenever I could, until forty moves later I found myself in an endgame still ahead by a single pawn but with so few pieces left (just a couple of rooks and a few other pawns) that despite the fact that I lacked the expertise to convert my slight advantage into a win (along with the disconcerting realization that there were now only two or three other games going on leaving me with an uncomfortable amount of Bronstein’s attention), it seemed that if I didn’t make any mistakes I would be able to survive and end up with a draw. Such a result would, for me, be a triumph wildly beyond any expectations I had going into the game. In fact, that is what transpired, and I left the exhibition feeling elated.
My euphoria dissipated considerably when the next day, as I was going over the game with my chess teacher, we discovered that during the endgame Bronstein had made another mistake that I should have been able to capitalize on and win the game. It was a continuation that, though not obvious, was one fully within my ability to see, had I been looking for it. So excited and focused was I on gaining a draw against this famous grand master that I never, for a minute, considered the possibility that there might be an additional future possible scenario under which I might actually be able to win my game. And that really is the problem that we face most of the time—we simply get too attached to one (or maybe several) possible ways the future might unfold.
As this story shows, it is not just the catastrophes that you should take the time to imagine, but the miracles as well. The future is vast and full of both, and until we adopt a humble attitude and take the time to contemplate all that might occur, we will never be able to determine how likely any particular scenario is, let alone what will occur. One of my friends calls it the “art of not knowing.” That is where the future starts—here in the present, before we know anything.