8.9: SOC, causation, and prediction

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If a stock market index drops by a fraction of a percent in a day, there is no need for an explanation. But if it drops 10%, people want to know why. Pundits on television are willing to offer explanations, but the real answer may be that there is no explanation.

Day-to-day variability in the stock market shows evidence of criticality: the distribution of value changes is heavy-tailed and the time series exhibits pink noise. If the stock market is a critical system, we should expect occasional large changes as part of the ordinary behavior of the market.

The distribution of earthquake sizes is also heavy-tailed, and there are simple models of the dynamics of geological faults that might explain this behavior. If these models are right, they imply that large earthquakes are not exceptional; that is, they do not require explanation any more than small earthquakes do.

Similarly, Charles Perrow has suggested that failures in large engineered systems, like nuclear power plants, are like avalanches in the sand pile model. Most failures are small, isolated, and harmless, but occasionally a coincidence of bad fortune yields a catastrophe. When big accidents occur, investigators go looking for the cause, but if Perrow’s “normal accident theory” is correct, there may be no special cause of large failures.

These conclusions are not comforting. Among other things, they imply that large earthquakes and some kinds of accidents are fundamentally unpredictable. It is impossible to look at the state of a critical system and say whether a large avalanche is “due”. If the system is in a critical state, then a large avalanche is always possible. It just depends on the next grain of sand.

In a sand pile model, what is the cause of a large avalanche? Philosophers sometimes distinguish the proximate cause, which is most immediately responsible, from the ultimate cause, which is considered some deeper kind of explanation (see http://thinkcomplex.com/cause).

In the sand pile model, the proximate cause of an avalanche is a grain of sand, but the grain that causes a large avalanche is identical to every other grain, so it offers no special explanation. The ultimate cause of a large avalanche is the structure and dynamics of the systems as a whole: large avalanches occur because they are a property of the system.

Many social phenomena, including wars, revolutions, epidemics, inventions, and terrorist attacks, are characterized by heavy-tailed distributions. If these distributions are prevalent because social systems are SOC, major historical events may be fundamentally unpredictable and unexplainable.