The Signal and the Noise: Why Most Predictions Fail-But Some Don't

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Editorial Reviews
What People Are Saying
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Meet the Author
Table of Contents

Overview

"Nate Silver's The Signal and the Noise is The Soul of a New Machine for the 21st century."
—Rachel Maddow, author of Drift

Nate Silver built an innovative system for predicting baseball performance, predicted the 2008 election within a hair’s breadth, and became a national sensation as a blogger—all by the time he was thirty. The New York Times now publishes FiveThirtyEight.com, where Silver is one of the nation’s most influential political forecasters.

Drawing on his own groundbreaking work, Silver examines the world of prediction, investigating how we can distinguish a true signal from a universe of noisy data. Most predictions fail, often at great cost to society, because most of us have a poor understanding of probability and uncertainty. Both experts and laypeople mistake more confident predictions for more accurate ones. But overconfidence is often the reason for failure. If our appreciation of uncertainty improves, our predictions can get better too. This is the “prediction paradox”: The more humility we have about our ability to make predictions, the more successful we can be in planning for the future.

In keeping with his own aim to seek truth from data, Silver visits the most successful forecasters in a range of areas, from hurricanes to baseball, from the poker table to the stock market, from Capitol Hill to the NBA. He explains and evaluates how these forecasters think and what bonds they share. What lies behind their success? Are they good—or just lucky? What patterns have they unraveled? And are their forecasts really right? He explores unanticipated commonalities and exposes unexpected juxtapositions. And sometimes, it is not so much how good a prediction is in an absolute sense that matters but how good it is relative to the competition. In other cases, prediction is still a very rudimentary—and dangerous—science.

Silver observes that the most accurate forecasters tend to have a superior command of probability, and they tend to be both humble and hardworking. They distinguish the predictable from the unpredictable, and they notice a thousand little details that lead them closer to the truth. Because of their appreciation of probability, they can distinguish the signal from the noise.

With everything from the health of the global economy to our ability to fight terrorism dependent on the quality of our predictions, Nate Silver’s insights are an essential read.

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What People Are Saying

Bill James

Projection, prediction, assumption, trepidation, anticipation, expectation, estimation... we wouldn't have 80 words like this in the English language if it wasn't central to our lives. We tend not to take prediction seriously because, on some level, we know that we don't know. Silver shows us how this inevitable part of life goes awry when projected on a grand scale into the murky worlds of politics, science and economics. Dancing through chess, sports, snowstorms, global warming and the McLaughlin Group, he makes a serious and systematic effort to show us how to clean the noise off the signal.
—Bill James (author of The Bill James Baseball Abstracts)

Richard Thaler

Yogi Berra was right: 'forecasting is hard, especially about the future.' In this important book, Nate Silver explains why the performance of experts varies from prescient to useless and why we must plan for the unexpected. Must reading for anyone who cares about what might happen next.
—Richard Thaler (co-author of Nudge)

Peter Orszag

Here's a prediction: after you read The Signal and the Noise, you'll have much more insight into why some models work well-and also why many don't. You'll learn to pay more attention to weather forecasts for the coming week-and none at all for weather forecasts beyond that. Nate Silver takes a complex, difficult subject and makes it fun, interesting, and relevant.
—Peter Orszag (former director of the Office of Management and Budget)

Rachel Maddow

Nate Silver's The Signal and the Noise is The Soul of a New Machine for the 21st century (a century we thought we'd be a lot better at predicting than we actually are). Our political discourse is already better informed and more data-driven because of Nate's influence. But here he shows us what he has always been able to see in the numbers-the heart and the ethical imperative of getting the quantitative questions right. A wonderful read-totally engrossing.
—Rachel Maddow (author of Drift)

Governor Jon Huntsman

Making predictions in the era of 'big data' is not what you might imagine. Nate Silver's refreshing and original book provides unpredictably illuminating insights differentiating objective and subjective realities in forecasting our future. He reminds us that the human element is still essential in predicting advances in science, technology and even politics... if we were only wise enough to learn from our mistakes.
—Governor Jon Huntsman

From the Publisher

“Nate Silver’s The Signal and the Noise is The Soul of a New Machine for the 21st century (a century we thought we’d be a lot better at predicting than we actually are). Our political discourse is already better informed and more data-driven because of Nate’s influence. But here he shows us what he has always been able to see in the numbers—the heart and the ethical imperative of getting the quantitative questions right. A wonderful read—totally engrossing.”
—Rachel Maddow, author of Drift

“Yogi Berra was right: ‘forecasting is hard, especially about the future.’ In this important book, Nate Silver explains why the performance of experts varies from prescient to useless and why we must plan for the unexpected. Must reading for anyone who cares about what might happen next.”
—Richard Thaler, co-author of Nudge

“Making predictions in the era of ‘big data’ is not what you might imagine. Nate Silver's refreshing and original book provides unpredictably illuminating insights differentiating objective and subjective realities in forecasting our future. He reminds us that the human element is still essential in predicting advances in science, technology and even politics... if we were only wise enough to learn from our mistakes.”
—Governor Jon Huntsman

“Here's a prediction: after you read The Signal and the Noise, you'll have much more insight into why some models work well—and also why many don't. You'll learn to pay more attention to weather forecasts for the coming week—and none at all for weather forecasts beyond that. Nate Silver takes a complex, difficult subject and makes it fun, interesting, and relevant.”
—Peter Orszag, former director of the Office of Management and Budget

“Projection, prediction, assumption, trepidation, anticipation, expectation, estimation… we wouldn’t have 80 words like this in the English language if it wasn’t central to our lives. We tend not to take prediction seriously because, on some level, we know that we don’t know. Silver shows us how this inevitable part of life goes awry when projected on a grand scale into the murky worlds of politics, science and economics. Dancing through chess, sports, snowstorms, global warming and the McLaughlin Group, he makes a serious and systematic effort to show us how to clean the noise off the signal.”
—Bill James, author of The Bill James Baseball Abstracts

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Editorial Reviews

From Barnes & Noble

From tomorrow morning's weather, to football results, to political elections, we all sometimes obsess about predictions. Nate Silver's new release demystifies the subject of predictions, explaining why even veteran professional prognosticators often get it wrong. A brisk reader that doesn't require a calculator or an advanced degree.

The Washington Post

The strength of the book lies in the abundance of relevant detail Silver provides about each field and his analysis of why predictions are generally much better in some fields than others…All in all, The Signal and the Noise provides an appealing and instructive compendium of the state of predictability in different domains, and, based on my personal sample of one, I predict readers in all 50 states will agree.
—John Allen Paulos

The New York Times

Mr. Silver…is an expert at finding signal in noise…[he] illustrates his dos and don'ts through a series of interesting essays that examine how predictions are made in fields including chess, baseball, weather forecasting, earthquake analysis and politics…a chapter on global warming is one of the most objective and honest analyses I've seen.
—Leonard Mlodinow

The New York Times Book Review

What Silver is doing here is playing the role of public statistician—bringing simple but powerful empirical methods to bear on a controversial policy question, and making the results accessible to anyone with a high-school level of numeracy. The exercise is not so different in spirit from the way public intellectuals like John Kenneth Galbraith once shaped discussions of economic policy and public figures like Walter Cronkite helped sway opinion on the Vietnam War. Except that their authority was based to varying degrees on their establishment credentials, whereas Silver's derives from his data savvy in the age of the stats nerd.
—Noam Scheiber

Publishers Weekly

Despite the fact that there is more information about everything from finance to professional sports available than ever before, predictions "may be more prone to failure" in this "era of Big Data." Balancing technical detail and thoughtful analysis with fluid prose, statistician Silver (FiveThirtyEight ) picks apart the many ways in which predictions in various fields have been flawed, while suggesting approaches that could improve the practice. The catastrophic miscalculations on the part of financial lending agencies that led to the recession of 2008 arose for the same types of reasons that caused baseball scouts to undervalue Boston Red Sox all-star player Dustin Pedroia or feed into a political pundit's flawed forecast: overconfidence in models based on oversimplified principles and unrealistic initial assumptions. Though there is no simple solution, a Bayesian methodology, in which prior beliefs are taken into account and initial assumptions constantly revised, would lead to more accurate predictive models. Effective prediction requires, according to Silver, "the serenity to accept the things we cannot predict, the courage to predict the things we can, and the wisdom to know the difference." Agent: Sydelle Kramer, The Susan Rabiner Literary Agency. (Oct.)

Kirkus Reviews

An anointed wunderkind explains his own success as a prognosticator and explains why so many self-anointed "experts" are often wrong about winners in politics, sports and other realms. New York Times blogger Silver initially gained attention by developing a computer-based system meant to predict performances of Major League baseball players. Eventually, the author turned his talents to nonsports topics, including trying to figure out who would win the U.S. presidency during 2008. In 49 of 50 states, Silver correctly chose the presidential vote winner. In the 35 races for the U.S. Senate, he called every one accurately. In the 2012 election, he accurately called the presidential vote in all 50 states. Silver emphasizes that predictions are ultimately a human endeavor and that computers are programmed by humans. Meteorologists, for example, predict the weather incorrectly more than anybody would like. They have, however, used computer-based data analysis to improve accuracy. In the financial sphere, economists and other professional predictors failed to grasp the coming recession in 2008 despite sophisticated computer modeling. However, Silver writes, "nobody saw it coming" is an unacceptable excuse. The financial collapse was foreseeable with the proper underlying assumptions about economic behavior programmed into the computers. Too many underlying assumptions were misguided. Even more significant, 9/11 could have been predicted as well. Intelligence-agency analysts, however, could not grasp that religious zealots would plot their own deaths in order to kill Americans. No amount of computerized information can rectify a blind spot of that nature, Silver writes. Predicting the future performance of baseball players with well-documented pasts is more conducive to predictive accuracy than trying to understand previously anonymous fanatics. Some of the sections of the book are best understood by readers with mathematical reasoning skills, but the author is mostly accessible and enlightening.

The Barnes & Noble Review

Nate Silver shot to fame during the 2008 election, when out of the welter of political polling he correctly predicted the outcome of the presidential race in 49 out of 50 states. Since then his blog FiveThirtyEight — the name comes from the number of votes in the Electoral College — has been subsumed into The New York Times, where he nailed almost all the 2010 congressional and gubernatorial races. His role is somewhere between a commentator and a bookie. Political types might worship him, but for Silver politics is a purely quantitative undertaking, not so far from his original beat of fantasy baseball.

The Signal and the Noise applies the FiveThirtyEight model of rigorous data analysis to a whole range of fields, from poker playing to hurricane forecasting. But readers expecting the second coming of Freakonomics will (I'm happy to say) be very disappointed. There are no wacky results from deep data mining, nor unintuitive outcomes tailor- made for dinner party fodder. Data itself is not Silver's story; prediction is. We are producing more information, and faster, than ever before, and yet, "if the quantity of information is increasing by 2.5 quintillion bytes per day, the amount of useful information certainly isn't."

The financial ratings agencies, deluged with data, predicted that CDOs were as safe as AAA bonds. Health organizations failed to foresee the recent epidemics of bird flu and swine flu. The massive earthquake in L'Aquila in 2009 caught Italian authorities unawares. And the predictions of innumerate TV pundits "display about as much political acumen as a barbershop quartet," with no better than an even chance of being correct. The rise of big data has not been accompanied by better predictions; if anything, we're getting worse. (Silver naturally has a quantitative demonstration of this: in the corpus of scientific literature, instances of the word "predictable" overtook those of the word "unpredictable" in the 1950s; it kept climbing after that, but now "unpredictable" is making a comeback.)

Silver's satisfyingly geeky solution to uncertainty is "Bayesian reasoning" ? basically, updating predictions over time with new information. Bayes' Theorem, devised in the eighteenth century, is a simple algebraic formula (although Silver exiles the equation to a chart on page 245): given the probability of a future event prior to some new occurrence and some other fundamentals, you can calculate the event's probability posterior to that occurrence. Silver gives a litany of serious, not to say unpleasant, examples — is your husband cheating on you? Do you have cancer? Are planes going to fly into the World Trade Center? — to make a point beyond politics or sports betting: we have to "think probabilistically about the world, even when it comes to issues that we don't like to think of as matters of chance."

To an ideologue that sounds frustrating if not heretical. But Silver isn't claiming that all events are random. On the contrary, he's saying that there are limits to our knowledge, and the best way to understand the world given our epistemological blinders is to take new information as it comes and refine our perceptions accordingly. Poker players do this all the time: once your opponents bet or fold, you can reassess the relative strength of your own hand, and win a pretty sum if you do it right.

In the waning days of the 2012 presidential election — which he consistently called in favor of President Obama, whom he gave about an 80 percent chance of victory — Silver took serious stick from blowhards such as Joe Scarborough and the Politico crew, who don't seem to understand that a close election doesn't have to be an unpredictable one. (Time actually ran a column by their in-house pundit Joe Klein with the headline "I Don't Know.") Silver doesn't just infuriate them because he's almost always right, but because he's right without any special information. Although the FiveThirtyEight algorithm has grown more sophisticated with the years, Silver isn't a pollster, and he has no inside intelligence. And while Silver's politics-as-fantasy-baseball stance can sometimes grate, his analysis is a far sight better than the ruminations of the perpetually inaccurate pundit class.

Silver doesn't know the outcome in advance, only the likelihood of possible outcomes. The problem, as he concedes in The Signal and the Noise, is that while the odds of an event may be borne out over 10,000 or 100,000 instances, the actual vote happens just once. Writing about poker, a game he played for years, Silver observes: "If we make a prediction and it goes badly, we can never really be certain whether it was our fault or not, whether our model was flawed or we just got unlucky." The same, alas, goes for elections.

Jason Farago is a writer and critic whose work has appeared in the Guardian, the London Review of Books, n+1, Dissent, Frieze, and other publications. Trained as an art historian, he has contributed to several exhibition catalogs on art since 1960. He recently returned to his hometown of New York following a long sojourn in London.

Reviewer: Jason Farago

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Product Details

ISBN-13: 9781594204111
Publisher: Penguin Group (USA) Incorporated
Publication date: 9/27/2012
Pages: 544
Sales rank: 1,255
Lexile: 1260L (what's this?)
Product dimensions: 6.45 (w) x 9.50 (h) x 1.00 (d)

Meet the Author

Nate Silver is a statistician, writer, and founder of The New York Times political blog FiveThirtyEight.com. Silver also developed PECOTA, a system for forecasting baseball performance that was bought by Baseball Prospectus. He was named one of the world’s 100 Most Influential People by Time magazine. He lives in Brooklyn, New York.

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Introduction 1

1 A Catastrophic Failure of Prediction 19

2 Are You Smarter Than a Television Pundit? 47

3 All I Care About is W's and L's 74

4 For Years You've Been Telling Us that Rain is Green 108

5 Desperately Seeking Signal 142

6 How to Drown in Three Feet of Water 176

7 Role Models 204

8 Less and Less and Less Wrong 232

9 Rage Against the Machines 262

10 The Poker Bubble 294

11 If You Can't Beat'em … 329

12 A Climate of Healthy Skepticism 370

13 What You Don't Know Can Hurt You 412

Conclusion 446

Acknowledgments 455

Notes 459

Index 515

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The Signal and the Noise: Why Most Predictions Fail-But Some Don't

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A Brief Summary and Review

Very credible analysis

Problems on Nook Simple and Tablet with book Problems with this book on Nook Simple

I teach probability and statistics and really wanted to like thi

So far so good...!

Some good, some bad

Well written, fascinating and highly recommended

Definitely worthwhile, but not light reading

A good book

Great book

I finished reading "The Signal and the Noise" a couple

Worthwhile but wordy and repetitive

Interesting, enlightening

Dancelover23

Probably a Worthwhile Read on Probabilities

Terrific!

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