Professional Documents
Culture Documents
Ravi Kashyap
Gain Knowledge Group
City University of Hong Kong
January 2, 2014
Incomplete Early Draft - Soliciting suggestions, omissions and other feedback.
Contents
1 Abstract 1
2 Introduction and Motivation 2
3 Conceptual Framework 7
3.1 The Nature of Social Systems and Social Beings . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 The Stimuli for Social Interactions and the Purpose of Social Relationships . . . . . . . . . . 10
3.3 The Perils of Prediction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 An Uncertainty Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1 Abstract
The more precisely the position (of some particle) is determined, the less precisely the
momentum (of that particle) is known in this instant, and vice versa. Heisenberg, uncertainty
paper, 1927.
Inspired by the Heisenberg Uncertainty Principle for sub-atomic particles in Quantum Mechanics, we
Any generalization in the social sciences cannot be both popular and continue to yield
accurate predictions, or in other words, the more popular a particular generalization in the
When we compare the central tenets of the two principles, a striking commonality emerges. This has to
do with how each system is aected by eorts at increasing the accuracy of measurements for one variable,
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The Uncertainty Principle of the Social Sciences, thus stated, in terms of popularity and accuracy of
predictions, primarily deals with the scope and limitations of any relationships we uncover in social systems.
We lay the groundwork for a theoretical framework towards measuring and understanding the Uncertainty
Principle of the Social Sciences. Two elements seem to immediately contribute towards this uncertainty; one
is the number of participants in the social system and the other is the number of possible states the predicted
outcome can take. The simplifying assumption here is that we can identity all the possible predicted outcomes
We will attempt to create an Uncertainty Index, using the variables mentioned above, for any social system
that captures the diculty inherent in making predictions regarding this system. In certain instances, we
will see that it is important to distinguish between the number of participants in the social system and the
number of participants in the social system that are aware of the particular relationship that is expected to
yield a prediction.
We then look at dierent social systems with a view of predicting various outcomes in these systems and
how the accuracy of the predictions change as more participants become aware of the generalizations that
yield these predictions. We begin this exploration by starting with simple social systems and increasing the
complexity in terms of the range of possible outcomes and the number of participants.
Whether the Heisenberg Uncertainty Principle is the ultimate cause of the Uncertainty Principle of the
Social Sciences, or, if there is some relationship between the two is a topic better saved for another time.
that we have found ways to understand and deal with the uncertainty in the natural world by postulating
These physical laws are deductive and are based on three statements - a specic set of initial conditions, a
specic set of nal conditions and universally valid generalizations. Combining a set of generalizations with
known initial conditions yields predictions; combining them with known nal conditions yields explanations;
and matching known initial with known nal conditions serves as a test of the generalizations involved. The
majority of the predictions in the physical world hold under a fairly robust set of circumstances and cannot
be inuenced by the person making the observation and they remain unaected if more people become aware
of such a possibility.
Though, a lot of social science principles and methodologies are inspired from similar counterparts in the
natural sciences, the situation in the social sciences, is exactly contrary to what we observe in the natural
world. In his monumental work, The Poverty of Historicism (1957), Sir Karl Popper, shows how predictions
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in the physical sciences dier from the social sciences and points out the root cause of the dierence: The
human factor is the ultimately uncertain and wayward element in social life and in all social institutions.
In the social sciences, a set of initial conditions yielding a prediction, based on some generalization ceases
to hold, as soon as many participants become aware of this situation and act to take advantage of this
situation. This means that predictions are valid only for a limited span of time and we cannot be sure about
the length of this time, since we need to factor in constantly the actions of everyone that can potentially
The literature is rife with attempts of prediction, ranging in scope from small neighborhoods of a few
dozen people all the way up to nations that are responsible for the welfare of millions. It then becomes
imperative that we reect upon the temporal and population scope variations of any prediction made; and
the associated decision making that seeks to benet from these predictions.
Paiche and Sterman (1992) inquire into decision making in complex environments and conduct an ex-
periment where subjects must manage a new product from launch through maturity, and make pricing and
capacity decisions. Building upon previous studies, they demonstrate that decision making in complex dy-
namic environments tends to be awed in specic ways by not accounting suciently for feedback loops, time
delays and nonlinearities. Even with a decent amount of experience, there is no evidence that environments
with high feedback complexity can produce improved decision making ability.
Bohnet and Zeckhauser (2004), Bohnet et. al. (2008) use the term social risk to describe situations
where decisions by other human beings are the prime source of uncertainty. They nd that people are less
willing to take a risk when another person rather than nature determines the outcome. Taking a chance
on whether another player proves trustworthy, risks incurring betrayal costs, costs shown to be above and
beyond mere monetary losses. Due to betrayal aversion, people take risks less willingly when the agent of
Hattie and Timperley (2007) nd that feedback can be a powerful inuence on learning when built
upon a foundation of initial learning and can be of little use where there is no surface information. While
their discussion looks at feedback from a classroom perspective or other such learning environments; many
participants in a social system implicitly assume the roles of teacher and student and the mechanism of
Doidge (2007) presents classic cases from the frontiers of neuroscience that chronicle the biological changes
happening in the brain driven by external impetuses, revealing that adapting to new circumstances and
learning to deal with adversity are almost hard wired into us. In essence what they reveal is that the brain
Kashyap (2014a) puts forth the statement of the uncertainty principle of the social sciences, stating the
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inverse relationship between the popularity of observations and the accuracy of related predictions. While
the statement of the principle and parts of the discussion are generic, the greater part of the discussion
centers around the themes of investing and nancial services, paving the way for later studies to analyze
other social science systems. As the nancial participants try to nd better and improved ways to contend
with uncertainty (See Kashyap 2014a, 2014b), we will see that the protability of using any particular trading
mechanism might decrease. This can lead to us believe that over time, in an iterative fashion, as the prots
will continue to erode, participants will seek superior ways to value nancial instruments and alternate
methodologies to monetize trading strategies. The cyclical nature of the transactions, which in some case
can have its tentacles spread far and wide, can result in catastrophic repercussions, especially when huge
sums of money move back and forth (Kashyap 2015a). No discussion involving randomness is complete
(Taleb 2005, 2010), especially one involving randomness to the extent that we are tackling here, without
being highly attuned to spurious results mistakenly being treated as correct and extreme situations causing
devastating changes to the expected outcomes. Things can go drastically wrong even in simple environments
(Sweeney and Sweeney, 1977), hence in a complex valuation of the sort that we are dealing here, extreme
caution should be the rule rather than the exception. (Kashyap 2015b, 2015c, 2015d) look at recent empirical
Another hall mark of the social sciences is the lack of objectivity. Here we assert that objectivity is with
respect to comparisons done by dierent participants and that a comparison is a precursor to a decision.
Despite the several advances in the social sciences, we have yet to discover an objective measuring
stick for comparison, a so called, True Comparison Theory, which can be an aid for arriving
at objective decisions. While some would compare the search for such a theory, to the medieval alchemists'
obsession with turning everything into gold, for our present purposes, the lack of such an objective measure
means that the dierence in comparisons, as assessed by dierent participants, can eect dierent decisions
under the same set of circumstances. Hence, despite all the uncertainty in the social sciences, the one thing
All attempts at prediction, including both the physical and the social sciences, are like driving
cars with the front windows blackened out and using the rear view mirrors, that give an indication of
what type of path has been encountered and using this information to forecast, what might be the most likely
type of terrain that lies ahead for us to traverse. The path that has been travelled then becomes historical
data that has been collected through observation and we make estimates on the future topography based on
this. Best results generally occur, when we combine the data we get in the rear view mirror with the data we
get from the side windows, which is the gauge of the landscape we are in now, to get a better comprehension
of what lies ahead for us. The quality of the data we gather and what the past and the present hold then
give an indication to what the future might be. So if the path we have treaded is rocky, then the chances of
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it being a bumpy ride ahead are higher. If it has been smooth, then it will be mostly smooth. Surely, the
better our predictions, the faster we can move; but then again, it is easy to see that the faster we travel, the
more risk we are exposed to, in terms of accidents happening, if the constitution of the unseen scenery in
A paramount peculiarity of the social sciences is that passage on this avenue is part journey and part
race. The roads are muddy, rocky and more prone to have potholes. This means being early or ahead on
the road brings more winnings. We also have no easy way of knowing how many people are traveling on
this path, either with us, ahead of us or even after us. As more people travel on the path, it starts falling
apart, making it harder to travel on it, a situation which is accentuated considering we don't have any vision
out front. On the other hand, let us say, physical science roads, being well paved and well-constructed using
concrete, hold steady for much longer time durations, so what has been observed in the past can be used to
make durable forecasts that hold for lengthier amounts of time in the future.
Contemplating further upon uncertainty in society and using an example from the quantum world provides
interesting insights.
In the quantum world, (in simple terms) various methods to increase the accuracy of measuring the
position of a particle have an eect on the momentum of the particle. The more we desire to increase the
accuracy of the position measurement, the greater the eect we will have on the momentum of the particle,
As an example, Heisenberg (Heisenberg, 1927, p. 174-5) considered the measurement of the position of
an electron by a microscope. The accuracy of such a measurement is limited by the wave length of the light
illuminating the electron. Thus, it is possible, in principle, to make such a position measurement as accurate
as one wishes, by using light of a very short wave length, e.g., -rays. But for -rays, the Compton Eect cannot
be ignored: the interaction of the electron and the illuminating light should then be considered as a collision
of at least one photon with the electron. In such a collision, the electron suers a recoil which disturbs its
momentum. Moreover, the shorter the wave length, the larger is this change in momentum. Thus, at the
moment when the position of the particle is accurately known, Heisenberg argued, its momentum cannot
be accurately known: At the instant of time when the position is determined, that is, at the instant when
the photon is scattered by the electron, the electron undergoes a discontinuous change in momentum. This
change is greater, the smaller the wavelength of the light employed, i.e., the more exact the determination of
the position. At the instant at which the position of the electron is known, its momentum therefore can be
known only up to magnitudes which correspond to that discontinuous change; thus, the more precisely the
position is determined, the less precisely the momentum is known, and conversely.
In a similar vein, in the social sciences, eorts to increase the accuracy of a prediction as given by a
generalization, requires repeating the experiment multiple times. Here, the accuracy of the prediction refers
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to the degree of condence we have in whether the initial conditions will lead to the expected outcome; that
is, the certainty of our beliefs. The accuracy of a prediction can be said to have increased after we perform
many observations, which give the desired outcome. This follows from basic statistics, where, more events
yielding the desired outcome lead to a higher level of conviction in the outcome. Such repeated eorts to
verify the prediction, will inuence the system in such a way that the prediction will become harder to foresee
and the set of initial conditions leading to certain expected outcomes may cease to apply. Each additional
attempt at repeating a particular generalization, that predicts a certain outcome, can lead to a decrease in
Lastly, let us touch upon the subject of equilibrium. The inability to make consistent predictions in
the social sciences; the lack of an objective measure of comparison, or a True Comparison Theory, and the
associated subjectivity in decision making, which serves as the stimulus to displace any state of equilibrium,
means that is almost impossible for someone to know what a real state of equilibrium is. A state of true
equilibrium is never fully attained since no one has an idea what that state of equilibrium is and the actions
of the participants serves only to displace any state of equilibrium, if it did exist. The analogy for this would
be a pendulum with perpetual motion; it swings back and forth around its place of rest with decreasing
amplitude and the place of rest keeps changing with time, starting a new cycle of movement with reinforced
vigor.
We can then summarize the above with the Uncertainty Principle of the Social Sciences , which
can be stated as, Any generalization in the social sciences cannot be both popular and continue
to yield predictions, or in other words, the more popular a particular generalization, the less
accurate will be the predictions it yields. This is because as soon as any generalization and its set of
conditions becomes common knowledge, the entry of many participants shifts the equilibrium or the dynamics,
such that the generalization no longer applies to the known set of conditions.
Our eorts will then be to study uncertainty and uncover quasi-generalizations; understand their limita-
tions in terms of what can be the closest states of pseudo-equilibrium; how long can such a situation exist;
what factors can tip the balance to another state of temporary equilibrium; how many other participants are
It is also worthwhile to mention here that for most assertions made below, numerous counter examples
and alternate hypothesis can be produced. These are strictly attempts at tracing the essentials rather than
getting bogged down with a specic instance. However, any study requires forming a conceptual framework
based on the more common observations, yet being highly attuned to any specics that can stray from the
usual. Also, for the sake of brevity, a number of ner points have been omitted and certain simplifying
assumptions have been made. Given the scope and complications of the below discussion, drawbacks are
hard to avoid and future iterations will seek to address these as they are discovered.
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3 Conceptual Framework
3.1 The Nature of Social Systems and Social Beings
Before we get to the core theme of Uncertainty, Popularity and the accuracy of Predictions in the Social
Sciences, let us understand the dierent facets of social systems and the relationships observable in such
systems that will have a signicant bearing on our discussion. This digression is worth the eort since it
will lay a framework for the concepts we discuss and will demonstrate the near universal applicability of the
Uncertainty Principle of the Social Sciences. Each of the following terms will be dened and distinguished
below, solely as applicable to the context of our discussion, and used throughout the paper.
• Social Environment
• Social Being
• Social Object
• Social Interaction
• Social State
• Signs of Intelligence
• Capacity to Learn
• Participation Threshold
• Social Institution
We dene a social environment as a system comprised of social beings , engaged in dierent forms of
social interaction , facilitated by the means of social objects , and transitioning through various social
states . Henceforth, the terms social environment or social system will be used synonymously.
The concept of a social being is helpful to further clarify the kind of social systems that would be of
relevance to our discussion. The distinguishing feature of social beings is their ability to interact with one
other, either directly; or indirectly, either through other social beings or through the means of social objects.
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We then outline the term social object to rm up the denition of a social system. Trying to avoid getting
caught in the cyclical trap where we are dening everything using denitions that refer to one another; we
dene everything that is part of a social system that is not a social being as a social object. Social objects are
physical systems, that could be natural or they could be modications of natural systems, fabricated by social
beings with the intention of social interaction or for the accomplishment of an objective that incidentally
leads to social interaction. There are complexities here that we need to be cognizant of, primarily that it
is possible for a social being to get utilized as a social object by another social being. Hence it becomes
important to keep in mind that, we need to consider the changing roles of the participants in a social system
and view these roles in light of the specic interactions that the participants are part of.
A social interaction, as the word interact implies, is the use of any or all of the sense organs, which
receive stimuli from social objects and social beings in the social environment, by at least two social beings
simultaneously while acknowledging the presence of one other; or the use of any or all the sense organs on
the same set of social objects either simultaneously or at dierent times, with or without being aware of the
other social beings involved. A social being can stimulate itself and interact with itself, but we consider this
The subjective nature of social interactions needs to be highlighted here. We claim that a social interaction
requires a minimum of two social beings and can only be identied by social beings. We could have dierent
interactions depending on when an observation starts and when it ends. For the purposes of this study, we
need to assume that we are the omnipresent but impotent observers and we cannot inuence the situation in
anyway. For the sake of setting a uniform stage, every social interaction that we consider will be facilitated
by the means of social objects. What this seeks to rule out is interaction by means of conscious thoughts,
unconscious dreams or other unknown means, which are not perfectly understood at this time.
We will look at some examples to dene the boundaries and scope of what we wish to consider. Throwing
a rock in a pond is not a social interaction, unless the rock was thrown intentionally at a school of sh in the
pond, in which case, there is a clear interaction between the social being throwing the rock and the sh; the
social object facilitating this interaction is the rock. Water, air, light and other elements are unacknowledged
social objects and we never explicitly mention them as part of a social system, unless their presence needs to
A monk meditating in a cave; a hermit living in a forest; or a sundial bathing in the sun, observed in
isolation, are not social interactions. Two people looking at each other or talking to each other are direct
interactions; whereas the telephone and the television are social objects that facilitate indirect interaction.
In the case of a telephone, the social beings are aware of who they are interacting with. In the case of a
television, millions could be watching the world cup soccer and there might be no awareness on behalf of the
social being, being watched, of who the other participants are. A social being talking to a wall is not social
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interaction whereas someone talking to a wall and another person both hearing the echo o the wall or hiding
behind the wall and listening is a social interaction. Someone writing on a wall and someone else reading
it later and either initiating or inuencing a course of actions is a social interaction. Social interactions can
A social state then is simply a combination of social objects and social beings at a certain point in time,
after completing a set of social interactions or poised for the next social interaction. The observation can
start at the beginning of a new interaction with or without the awareness of the previous interactions or the
A social being, is not just a member of the species, homo sapiens or homo sociologicus, but could be
anything that derives benets from other members similar to itself, that is, from its own species, or even
from other dissimilar social beings. This means that any entity that can take actions based on an awareness
of its present social state and the eect the action will have towards advancing it to a new social state is
We recognize this property of being able to register a present condition and take steps towards advancing
to a new condition, as exhibiting a sign of intelligence . All social beings display signs of intelligence.
Surely, entities that have been made to display intelligence articially can also be included here. This means,
many varieties of animals and plants, robots, video games and other computer programs, all fall under the
umbrella of social beings, while clearly, the level of intelligence can be markedly dierent among the various
social beings. It is important to bear in mind that the philosophical debates regarding articial intelligence
and the soul of living creatures are not material for our discussion, since as we will see later, social systems
as dened above, say even comprised of robots, will fall under the purview of the Uncertainty Principle of
Another key attribute of social beings, closely related to intelligence, is their capacity to learn . Learning,
in conjunction with intelligence, enables a social being to comprehend the circumstances of a situation, along
with any eorts made to alter the situation to accomplish a desired objective; and apply similar eorts in
another situation. Learning and intelligence, despite their tight coupling, are slightly distinct elements of the
process that enables social beings to recognize the state they are in and move to another state. Intelligence
is that part which renders the awareness of the state and the decision aspects that lead to another state.
Learning occurs as a consequence of intelligent decision making and becomes a summary of the events and
the circumstances that led to the state transition. Usually, intelligence increases with learning and increased
We distinguish learning and showing signs of intelligence from memory based repetition , which for our
present purposes will be an identical reproduction of an event and any associated response of the social being.
While exact replicas of situations and actions enacted during that situation occur quite commonly; learning
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and intelligence allow a social being to apply the response utilized in a particular event or a combination of
responses from multiple situations, to another situation. It then follows that a larger retention of previous
episodes, that is better memory, can lead to a richer combinations of previous events and is generally a sign
The question of whether a social being starts with intelligence rst that enables it to learn or whether it
has the ability to learn that gives it intelligence is interesting and complex. We will simplify this by assuming
that the social beings we deal with are at a stage, where they have the capacity to learn and also show
signs of intelligence simultaneously, after having gone through earlier cycles of mutually reinforced learning
and demonstrating intelligence. We call this the participation threshold of the social beings. We only
consider social systems with social beings above a certain participation threshold or after the social beings
cross this participation threshold in a social system and refer to these as mature social systems and restrict
our discussion to such systems. This requirement is enforced only to make our discussion easier; since the
Uncertainty Principle of the Social Sciences can be applied to the temporal variations of an immature social
system.
A social system then facilitates the existence of social beings and for the most part, in the long run,
social beings tend to favor and try to adopt social systems that enhance their well-being, or, crudely put,
the well-being of the majority of the social beings (or the dominant social beings) associated with that social
system is increased. The dierent social systems, both in terms of their nomenclature and their properties,
then merely become manifestations of which and how many social beings and objects are involved in that
particular social system and the circumstances that govern the social interactions and the transitions between
social states.
3.2 The Stimuli for Social Interactions and the Purpose of Social Relationships
With the terms we have introduced, social relationships can be viewed as interactions that transition social
beings across dierent states. For simplicity, many trivial state transitions or interactions can be clubbed
together and viewed as a smaller number of material transitions. It then becomes possible to view a set of
interactions and state transitions as a game, which in eect means that social relationships are transition
While it is fair to say that, the manifold complexities associated with human motivation are not fully
understood, the framework we have allows a simplied view of relationships and interactions. It is also
possible to say that the primary objectives of these transitions are to maximize the collective well-being of
the social beings involved. Social beings require various benets for their well-being. This then leads to the
development of social systems with dierent degrees of complexities depending on how such a system can
10
nurture such benets.
The question of whether a social being wishes to move to another state purely for the sake of association
with another social being is a rather involved one and for our present purposes, we can employ a simplication
that circumvents this issue: the knowledge that when multiple social beings desire to move to a new state,
the new state can be made more conducive to all the social beings involved, by their combined eorts. This
establishment of a more conducive new state is typically a harder task to accomplish for a smaller number of
social beings and renders the matter of whether some social beings are taking part in this movement between
states purely for the sake of association with other social beings moot, since there will always be the benet
of the collective eorts of all social beings that each individual social being derives.
We also need to consider here that there could be certain social beings that initiate the transfer of state or
set in motion a sequence of events that lead to a state transition and that there would be other social beings
that aid the transition or simply become part of the journey to end up in the new state. This initiation of
a state transfer then becomes the concept of leadership that has become a cornerstone of modern societies.
A simple measure of leadership can be obtained by the level of uncertainty in a social system as related to
the objectives and state transfers set in motion by the leader; greater the quality of leadership, lesser the
This brings up the related topic of looking at the combined interactions of a group of social beings. It is
useful to abstract the eorts of a group of social beings as being aligned towards a common goal. We can then
view this group of social beings as another social being and label it a social institution . While there could
be internal conicts in the behavior of the social beings that comprise a social institution, the net result of
the overall actions can be oriented towards a common purpose. A social system can then be a combination
of social institutions, wherein groups of social beings are acting together to move to dierent states, and the
behavior of complex social systems can be similarly explained. It is worth reiterating that in a complex social
system, the accuracy of any inferences we can draw would be less accurate than similar interactions between
social beings, since a social institution is a combination of many beings. In the discussion that follows later,
Deception Signaling an intention to move to a particular state and going to another one.
The Extent of inuence by dierent social beings could be dierent. It is possible to consider
dierent measures and look at this as dierent social beings moving to dierent social states.
between two states. The generalization is the relationship and connection between two states.
What can be a considered a prediction? A prediction is the expectation that there would be
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a transition from a certain state to another state.
The extent of deviation from the intended outcome is the measure of uncertainty.
Time Frames can vary signicantly just as in natural and social systems
Forecasts over dierent population sizes, where the social beings are above the participation
threshold.
Considering the forecast as the sum of dierent random variables, where the random vari-
ables in the two scenarios are changing due to the dierent population sizes. The random
variables have greater variance in the system with the larger population.
Consider the forecast as a Linear Projection on the above set of random variables.
Combine with level of complexity of natural systems multiple states / continuous etc.
does depend on the actual sales of lottery tickets. But the amount of winnings depends on how
many others can end up buying tickets within the specied time. This means the buyer of a
lottery ticket needs to factor in how many people can end up buying the ticket before the draw.
Diusion of Random Processes As soon as we have realized that there is nothing random
about this process, we would have solved the puzzle of existence, the question of life, the
Stock Market
Symbiotic Relationships
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5 Conclusion
We postulated a Principle regarding Uncertainty in the social sciences, similar in nature to the Heisenberg
Uncertainty Principle from Quantum Mechanics. The source of the uncertainty in both instances were eorts
to increase the accuracy of one variable that lead to a decrease in the accuracy of knowing another related
variable.
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