What I wish the Uni professors taught me

Four years have passed since I began my University studies and I am delighted to say it did not interfere with my education. Over the years I have voiced a fair amounts of criticism directed at the courses I had to attend. “How would a proper course look like?” I asked myself – surely, having been such a loudmouth I must have an alternative option prepared, right. Well, I had not, but for the sake of fun I am putting it together.

First though I shall point out what exactly I missed in the courses I attended, thus pointing out what malfunctions.

Statistics and related courses

Fat tails; the improbable-but-defining

In neither of the two statistical courses were we told of the most profound difference between fat tailed domains and domains following the normal distribution (Gaussian curve). For in the fat tailed domains (finance, for example), fat tails – highly improbable, but with great impact – are the only occurrences that matter. The rest do not. What this means is that any statistical tool based on Gaussian curve does not work in fat tailed domains or, worse, its use is right away dangerous.

Explanation

As you can see on the picture of the Gaussian curve below, 99,7% of the measured numbers are within 3 standard deviations from the mean. Now consider that the crash of October 19, 1987 had a standard deviation of 22σ – that is far far to the right, beyond the end of the table (or bus door?) you are sitting at; and its ‘probability’ was less than 1 in 1050 – so small it was virtually impossible (source: Mandelbrot). Yet on that fateful day, fortunes were either made, or (as majority found to their sorrow) lost.

Gaussian curve

In this case the Gaussian curve and conventional probability measuring methods, rather than telling us something about fat tail probabilities, prove themselves to be utterly impropriate for mapping such occurrences.

Forecasting

Other baffling issue was forecasting. Two things are worth mentioning: first – one cannot effectively predict what did not happen, therefore predictions based on “history” and “recent developments” are risky. Recall that many disastrous events took the folks in power “by surprise” because “they never happened before.” Second – and tightly connected – to predict the future, one has to predict the fat tailed events, because these events “make history.” Without them, the prediction is extremely fragile (credit: Taleb).

Economics and related courses

Failing to notice that economic theories come and go, everything we have been told has been told without the slightest hint of scepticism, as if what we were told was correct, unbreakable, and unquestionable.

The view of an economy being a sort of a machine that can be “fixed” in a similar manner as one fixes a car engine with screwdrivers and hammers, albeit being a Procrustean bed (credit: Taleb), prevailed in the teaching. Economics were taught as if the causality between deeds and events was given. A leads to B, which leads to C, which causes D – that is how you resurrect an economy in times of X [fill in crisis; unemployment, wild inflation…].

I dare to say the economic environment is so complex and opaque one cannot properly measure the results of one’s interventions, therefore using such economic theory is based on hoping that it will work out.

Nothing, too, was said about the issues of centralization and decentralization – possibly key issues in questions of stability, fragility and corruption.

Management and related courses

Management courses consisted mainly of empty words, learning how to give a ‘good’ presentation, the body language etc. – in other words castrating a fellow of his personality and chopping restlessly until he fits the “standard form.” Nothing has been said about ethics and no practical work around self-awareness has  been done.

Courses I liked

Majority of the courses was, according to my own preferences, flawed. Some, however, stood out and provided a great amount of value. I must thank the responsible teachers for doing a great job. Chinese language – a profound experience; Informatics/Information and Communication Technologies (great, even if slightly falling behind); Psychology; Agricultural Systems; Market and Trade; Fundamentals of Horse Breeding and Riding; Accounting – directly to the core, oriented at practicality.

The practical part of Fundamentals of Horse Breeding and Riding consisted of learning how take care of and ride horses. This course has taught me more about communication, leadership, persuasion and overcoming fear than all management courses combined. There is a lot to be learned from horses. They truly are magnificent, beautiful and intelligent animals.

Was it worth it?

During my high school years I’d voraciously read Julien Smith’s blog and in one post he wrote, that you should not have faith in institutions to educate you. By the time they build the curriculum, it’s likely that the system is outdated– sometimes utterly broken. You both learn and get respect from people worth getting it from by leading and doing, not by following.“

I took it to my heart and did my best, therefore I must say that the greatest asset of my Uni course was the free time outside it, which I could use for tinkering and pursuing my own interests. Partly a shame, partly a blessing.

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About Petr Klíma