Spyros came to speak at the “Tipping Point” conference in Palanga in September, 2019, but first he kindly agreed to have an interview with Ignas in Vilnius. The conversation was meant to become a contribution for a documentary “A Random Event”.

Spyros, first of all, how would you prefer to be introduced?

[Laughs] That’s a difficult question. Well, I’m a professor. I used to work at , one of the best MBA schools in the world. And I was fortunate enough to do teaching. I had the opportunity to do a lot of research too. And that’s where I wrote the book “Dance with Chance.” I have written more than 20 books. A lot of them go deeper into what is the role of chance in our lives, and how we can distinguish forecasting from fortune-telling. There are a lot of people who say that they can forecast. The only thing they do is fortune-telling. Gypsies are better than them very often. [Laughs]

Now, I’m best known for M-Competition studies that I have done in forecasting. And the objective of M-Competition is to add some objectivity in forecasting as much as we can predict. Any prediction that we make about the future cannot be perfect. It’s going to be uncertain. So, we try to measure the uncertainty associated with every kind of forecasting? That’s very important.

The problem is that a lot of people don’t like uncertainty. So, they don’t want to deal with it. I was doing some consulting in forecasting. Clients were saying, look, we pay you to avoid uncertainty. But you cannot avoid uncertainty. Okay?

Okay. What do you think makes you an expert in forecasting?

Two things. One, and the most important, is that I understand the limitations of forecasting. That’s the most important thing about everything. Everything that we do involves uncertainty. We put a level of how certain or uncertain every forecast is.

And once you understand uncertainty, then you have to figure out what are the risks involved with the uncertainty. So, that’s what distinguishes me. Do you remember what had happened the last few days with Hurricane Dorian? Dorian’s supposed to destroy Florida. But it didn’t. It devastated the Bahamas, and nobody predicted that it’s going to destroy the Bahamas.

And instead of hitting Florida, it hit Canada. It went all the way up to Canada and destroyed a big part of the eastern coast of Canada with winds that were going up 140 kilometers an hour. So, entirely a miss of what was going to happen.

So, one thing is understanding limitations.

Just knowing the limitations. Yeah.

And what is the second thing?

Associate the uncertainty of being wrong in doing the forecast. Anybody can make a forecast. The question is, how?

It’s the limitation of uncertainty.

The limitations of forecasting are associated with a degree of uncertainty. And then once you know the certainty is what you’re going to do about it. For instance, with the hurricane when it was supposed to hit Florida, people were doing a lot of work to protect their houses. In the end, it didn’t hit, so all of the work went wasted. Different from the Bahamas.

has done a book called “Antifragile.” And the question is, how do you prepare yourself when you cannot even predict that something is going to happen?

That doesn’t sound easy.

[Laughs] Life is not easy, right? And if it were easy, maybe it would have been boring. I mean, you say you like philosophy, but if we could forecast accurately and if we knew the uncertainty, then maybe life would be boring.

Do you believe in free will?

Yes, I believe in free will a lot. But there’s a significant element of luck in anything that surrounds us.


So, there is free will. Also, being at the right time at the right place, knowing the right people, maybe these are essential factors. And all of them are because of luck. The most significant luck, for instance, is where we’re born. If you were born in Zambia, the life expectancy is 32 years old. If you’re born in Sweden, it’s more than 80. Now, is that pure luck?

Okay. Why are people so happy about taking silly risks?

Taking the risk, it’s a double meaning. You are taking the risk because you don’t know it can be dangerous. And then not taking enough measures, enough things to avoid the risks that there may come. So, it depends on which way of the two you want to look at risk. Yes, people take stupid risks because they don’t understand the level of uncertainty involved with their decision making. But people don’t want to accept that something terrible may happen to them.

Understanding of limitations and forecasting the uncertainty makes you different from others. Does this understanding come from personal worldview?

Yeah, in psychology, there’s something that’s called the .

Are you prone to that illusion?

Yeah, prone. If something good happens, we think that it’s part of our skills. If something terrible happens, we believe it’s because of bad luck. And this illusion of control happens, because we don’t want to accept the uncertainty in the environment, so we try to ignore it.

People underestimate uncertainty considerably. Not only in terms of uncertainty that they can’t quantify but even uncertainty they can quantify. Also, our forecasting methods underestimate uncertainty because we don’t like it. Uncertainty pushes us, increases our level of anxiety, and we don’t like that.

Of course. Could you share your experience with your approach regarding uncertainty?

Yeah. Nassim Taleb is saying that to make the right decisions and rational decisions, you have to have skin in the game. In other words, if something terrible happens, it has to influence you personally, and if it doesn’t impact you personally, you don’t care what will be the outcome.

Of course.

And this goes very much in terms of what I’m saying about uncertainty.

Could you share your personal experience when your view towards uncertainty was helpful?

You have to understand the level of uncertainty when you make the right decisions.

Okay. Let’s talk about something else. One thing considered to be sure is that we are all going to die.

And pay taxes. [Laughs]

[Laughs] Let’s talk about life and death.


What prejudice do you observe in this?

Okay. And that’s a good point that interests me. One of my primary research topics is predicting medical decisions. And when we get into this, sadly, the quality of uncertainty and fortune tell comes into play.

Do you know that a vast majority of medical decisions are not based on any hard evidence?

Yes, I know. I studied medicine myself.

Maybe you know there is a Greek guy called , who has written an article in 2005 that says that a vast majority of medical research is useless. Doctors base their treatment decisions on research findings. Now, if the majority is false, how good is going to be their recommendations for treatment?

Yeah, it’s a good question. But on the other hand, each human is different.


And therefore, medicine is equal to art sometimes.


And they say, okay, if that would be so simple, that algorithm would cure a person, doctors would not be needed.

There is a Canadian philosopher who says that basically, medicine is the art of uncertainty. The most important thing is that the doctors don’t understand uncertainty. They have never studied statistics. They have no idea of what uncertainty is.

When I was taking surgery myself, the doctor informed me that the procedure is risky in 0.8% of cases. Frequently, patients agree to go for dangerous surgeries.

The great majority of patients are not being told the level of uncertainty. The doctors know better than you, so they’ll do what they say.

There is a study that analyzed 3,000 medical cases to see how many of them were successful. Fifty percent of cases had not enough evidence to prove that the treatment was successful or unsuccessful. Another ten percent of cases did more harm than good. Preventable medical errors are the third most significant cause of death after a heart attack and cancer. These are big numbers — if you look at them, you get scared.

If you were a businessman with such a significant level of errors in your products, you’d be bankrupt. [Laughs]

I don’t go to the doctors unless I am in an emergency. Or if I have to go to a doctor, I get a second and a third opinion. Doctors can make a mistake because they don’t understand uncertainty.

I read a study describing an experiment where several people were given unlimited medical care for free. And the results, in the end, were the same as those who needed to pay for treatments.

Well, since 1929, there is research that has proven that there is no difference in life expectancy between people who do checkups and the people who don’t. But still, doctors ask patients to do checkups.

Yeah, but some kinds of cancer may be preventable.

Look, the people who do checkups should live longer than people who don’t. The fact is that they don’t live longer. Checkups don’t help, right?

And you believe there is enough data to make this conclusion?

There is enough data. They used to ask women to do mammography every year, starting from age 30. Now, they ask to do it every two years after the age of 50. And the preventive medicine guidelines have changed considerably.

And for men, for instance, for prostate cancer, they say don’t do it. The harm is much, much greater than the benefit.

So, you don’t do checkups.

No, no.

Thank you for sharing it with us. How long are you going to live?

Well, that’s where luck comes, right? I mean, there are some genetic factors. It’s like playing the lottery. I mean, I could have had cancer many years ago. Of course, you say there are some things like I don’t smoke, I don’t drink, I try to do exercise, I’m not fat. So, all of these are factors that help how long I’m going to live, but I don’t do them because I will live longer doing them. After all, that’s my character. I don’t like to eat a lot. I don’t like dessert. I try to do exercise even though sometimes it’s not the easiest thing to do, but I try to do it. But there is nothing to prevent me from getting cancer. That’s where luck comes.

How can you dance with luck?

Well, you don’t have to dance. The luck dances for you.

So, you only observe.

You’re an observer, right. And again, the most crucial piece of luck is which country you were born in. That’s the most significant determinant of how long you’re going to live, or how well you’re going to live.

What sort of luck is this?

Most of the people are not born in the United States or Europe, right? Many people are born in Africa, and there is nothing they can do to avoid the consequence of being born in places like Rwanda or Kenya. And once they’re there, I mean, they cannot move, get education. Luck dramatically influences their lives.

You don’t sound like a guy who believes in reincarnation.

No. [Laughs] That’s not something that is part of our scientific understanding of the world. No.

Okay. So, other than the topics we touched here, what could be your message to the world? The things you’ve got to understand during your long academic career and many hours of thinking on those topics.

That most of the things that happen in our life are beyond our control.

Do you ever gamble?

No, not at all. I’m against gambling because the chances are always against us. The chance of becoming a millionaire by winning a lotto is much smaller than a satellite falling on your head. [Laughs]

[Laughs] The lottery is a tax for those who didn’t study math at school. Did you feel an interest in chaos theory?

Well, chaos theory is the same thing with dance with the challenge. What chaos theory tells describes critical things that start from a complete chance. The whole thing of financing and financial decisions it’s chaos theory. The chaos theory describes what the S&P Dow Jones is.

I was talking to one physicist who described his observations in optical physics — when a system moves towards total entropy, the more complex and sophisticated pattern is being formed. And then those patterns result in a higher level of entropy.

Yes, exactly. It’s the same thing about how the stock market behaves. If you look at the Dow Jones Industrial Average, or Standard & Poor’s 500, it starts from randomness. Then creates some very unusual patterns and then goes back to randomness.

Do you have any idea where the world is moving?

Then we get into technology, another area that interests me a lot, which is artificial intelligence. And what artificial intelligence is going to do to the world, which is, is another huge discussion.

Yes. Are you skeptical about it?

Well, I’m both skeptical and optimistic. There is no doubt that artificial intelligence is going to compete with our intelligence. Our intelligence has evolved over a few hundred, thousands of years, at least. So, if in five years artificial intelligence achieved so much, what’s going to happen in the next 200 years?

Maybe it’s learning faster.

Exactly. The learned to beat grandmasters in chess in three days. Also, image recognition programs that analyze cancer pictures can figure out if it is deadly better than doctors.

And this has happened in the last few years. So, what’s going to happen in the next 20 years, in the next 50 years, in the next 500 years? I mean, there’s no doubt that at some point it’s going to become smarter than us. We have to manage to develop our intelligence by learning from artificial intelligence. That’s — an intelligence augmentation.

So, where the world is going, it’s a huge question. We’re going to become the pets of computers unless we learn to augment our intelligence, at least as fast as that of artificial intelligence.

And the most critical part of this is to stop communicating with computers with a keyboard and a screen. And there’s a lot of companies developing a device that allows communicating with the computer directly through brainwaves. Non-invasive forms of communicating with computers without a keyboard.

Today, there are invasive ways also, putting a chip into our brain. And if we put a chip in our brain and this chip has Wi-Fi, we can have the brain-to-brain communications, and we can have the brain to computer communications. That opens an entirely different type of advancement in our intelligence.

So, where is the world going to go? Nobody knows.

But if there are two scenarios, either humans become pets of computers, or...

Or humans become cyborgs.

So, what does your observation say?

Well, many years ago, in 1828, people were discussing if the car is going to replace a horse. A famous economist called said, don’t be so silly, there is no way that the car is going to go into the streets.

So, imagine that somebody at this time would have told him that less than 200 years later, there will be self-driving cars. We have to accept what technology can do. It’s complicated to say where the world is going. But there are those two possibilities.

Artificial intelligence is developing extremely fast. And there are more and more areas where AI is overpassing human intelligence.

Well, of course. Technologies like cars or planes just provided people with more free time, and if we use that time to think, we can augment our intelligence.

Yes. More and more people are getting into R&D. Before, people had to work 15 hours a day, at least seven days a week.

Yes, riding a horse is not an essential skill anymore. [Laughs]

No. [Laughs]

So, what skills will not be necessary for the future?

Anything that is boring, repetitive, it’s not going to be needed in the future. The computer will do it. All of the production of goods and most of the services are going to be done by a robot. The negative part — we’re going to be without work. The positive part — we’re going to have a lot of free time to concentrate on things that are more enjoyable.

According to the singularity, at some point scientific progress is going to start growing at an increasing exponential rate. Because people will have the possibility to develop the technology.

Okay, let’s get back to forecasting. Is it true that a forecast can be more precise for a short period?

Well, the concise periods, they’re going to be more random. Short to medium term forecasting is going to be the most accurate.

Do you deal with large scales like the universe or galaxy?

No. Yearly is most of the data that we do. So, if I’m interested, how long it will take for you to travel from your home to office, I can do a competition and try to measure what will be the uncertainty. Sometimes it’s going to be less or more than the average. There’s a category in forecasting — the known unknowns. For example, we know there’s going to be a recession.

Maybe not.

Well, up to now, there have been recessions all the time. So, we have a period of economic growth and then a recession.

Maybe it’s the end of history as wrote.

Maybe, maybe. It’s not very likely, but it could be. So, that’s another category. But there is the possibility that there’s going to be a recession. Or when you go to work, there’s a possibility there’s going to be a car accident. Now, if there’s a car accident, it may take you much longer to get to work. Right?


So, we have to consider this category, and we have to figure out what is the uncertainty if some things are not within the standard cases. The problem with this type of uncertainty is that it’s much more challenging to measure. Our friend Nassim Taleb calls it fat-tailed uncertainty.


Here are other things that we have to take into uncertainty consideration. Almost the whole economic system was ready to collapse in the last recession in 2007/2008. A lot of companies went bankrupt. A lot of people lost their houses. So, that’s a very different kind of uncertainty.

People overreact to both good and bad news. People aren’t very consistent. The illusion of control is very strong in the way we make decisions. Also, we underestimate uncertainty. We don’t want to worry about it. So, we underestimate considerably.

So, all of these factors influence the way we make decisions and the way we determine uncertainty. Now, if we take the recession, and then we add the judgmental aspect, things get very worse.

There’s an article we did with Nassim. We looked at how the Standard & Poor’s, the stock market behaved for four months during the 2007/2008 recession with 99.98% prediction intervals. That means that all of the values should be within this interval. 53% of the batch was outside of this interval, which means that people overreact to good and bad news. In two days, the market went down by 15%.

So, what’s your conclusion?

If you have the stock market, which is worth about 20 trillion, and in two days you get a 15% decline, that means three trillion. Is it possible in two days that the value of companies will drop by three trillion? One day came up 12%. But is it possible that the market will go down in two-and-a-half trillion in a single day?

It happens.

It happens, but it’s not from rational behavior. It’s not possible.

You think there is an effect of algorithms trading in the stock markets here?

Part of it. At this time, there were not so many algorithms.

But now there are.

Now, there are, so things may get worse. But the most important thing is that we overreact to good and bad news. That’s not normal. That’s what some psychologists call the madness of the crowds. We have the wisdom of the masses, which, during regular periods, helps a lot for things to behave reasonably, and then we have the madness of the crowd, which people do crazy things.

I mean, there is no way that in one day, the value of the stock market, the capitalization of the stock market will go up by two-and-a-half trillion. There is no way in the world, rationally, that this thing could happen.

When there is nothing we can do to forecast or to estimate uncertainty, we call these events “Black swans”. is the only thing we can do, and it is what Nassim is talking about. We have to be prepared, and he gives an excellent example of how our body creates a lot of redundancy. Our heart has three systems to prevent stopping. So, we have to build things that are independent of what’s going to happen because we cannot predict what’s going to happen.

Yeah, but it’s not easy to build when you don’t know what’s going to happen.

Yeah, but black swans do happen. Right? Nassim proposes to build a lot of redundancy. For instance, if you’re a business and you know — now everybody talks about the forthcoming recession. But how do people prepare? They don’t do very much.

Yeah, I agree. People feel better after discussing it or getting in touch with the topic. It makes them feel better, but they don’t prepare.

People don’t like to worry about uncertainty in particular when it’s going to be very big. A CEO will get his big bonuses when the economy’s doing well, and he will do everything possible without worrying about what’s going to happen when there’s going to be a recession because, in the worst case, a CEO is going to resign.

Thank you.