Models, Computer Models, and Fantasies (Updated)

If the report from the Daily Mall is true, it may comprise one of the most outrageous abuses of computer modeling in my knowledge:

Britain’s airspace was closed under false pretences, with satellite images revealing there was no doomsday volcanic ash cloud over the entire country.

Skies fell quiet for six days, leaving as many as 500,000 Britons stranded overseas and costing airlines hundreds of millions of pounds.

Estimates put the number of Britons still stuck abroad at 35,000.

However, new evidence shows there was no all-encompassing cloud and, where dust was present, it was often so thin that it posed no risk.

The satellite images demonstrate that the skies were largely clear, which will not surprise the millions who enjoyed the fine, hot weather during the flight ban.

Hat tip: Amba

Normally, since it’s overseas news this would be fodder for a post of mine over on OTB but, since we’ve been discussing modeling here for the last couple of months, I thought I’d post it here.

I don’t oppose mathematical models. I’m not opposed to computer models. As I’ve written before I took independent studies in computer and mathematical modeling and developed my first computer model going on fifty years ago. But models have limits.

They must be based on observation, rooted in a knowledge of the underlying principles involved, and calibrated and re-calibrated with real, live, sampled data. And taken alone they do not prove that something exists; only that it is possible that something exists.

My questions about the stimulus package are based on the apparent unwillingness of the economist supporters of the tactic to provide real data. Here, for example, is an apparently data-based study that finds a weak stimulus effect for deficit spending for fiscal stimulus. I have seen other data-based studies that find no stimulus effect whatever. I have seen no data-based study that supports the idea of a strong stimulus effect from deficit spending. I have, however, seen lots of models.

I also think that one of the problems that fomented the fiscal crisis was an excessive use of computer models without the moderating effect of common sense. Another thing I’ve commented on before: how the use of computer models, operating in lock step, can exaggerate a real life problem. And the incentives support operating in lock step.

Update

Former metallurgical engineer, present private equity firm partner, and frequent commenter Drew makes this helpful contribution:

Jet engines have combustion and then cooling sections. The combustion chamber is of sufficient temperature to liquify silica based ash. It then cools and precipitates (in globs) in cooler sections disrupting the air flow. Second, if still solid, these particulates travelling through the engine are moving so fast that they act like a sand blaster, destroying (like right now) the surfaces they come into contact with. This all with apparent “clear” skys.

As I understand it the bottom line is that you can’t determine the quantity, nature, danger, or even the presence of the ash in the air from the ground by visual inspection or from looking at satellite photos (at least using natural light). Clear skies don’t necessarily mean anything.

However, models don’t necessarily mean anything, either. To determine the actual state of affairs you’ve got to take real measurements and use them to calibrate your models. Back when I was a student I have great confidence that most of the engineering students in the country and many of the practicing engineers would be busily trying to figure out how to measure the amount, composition, direction, and so on of the ash from the Icelandic volcano. I guess things have changed.

21 comments… add one
  • Drew Link

    To my knowledge the most aggressive estimate on the fiscal multiplier was produced by Valerie Ramey, at 1.4. As I’m sure you know, Barro has it at .6 – .7.

  • My understanding (based on NPR’s reporting at the time) is that the danger of volcanic ash clouds are such that the sky appears to be clear to the naked eye because of how fine the particles are, but in reality the particles accumulate in the engine over time. Accordingly, one would expect a “clear” satellite image, right?

    I do think that the flight bans in Europe were overkill — U.S. Air Traffic Control has successfully assisted airlines in routing around ash clouds in the Pacific when volcanoes in Alaska erupt with no major cancellations.

  • Drew Link

    As Glittering Eye’s resident metallurgist, may I weigh in with an inch deep of understanding of the specifics.

    Jet engines have combustion and then cooling sections. The combustion chamber is of sufficient temperature to liquify silica based ash. It then cools and precipitates (in globs) in cooler sections disrupting the air flow. Second, if still solid, these particulates travelling through the engine are moving so fast that they act like a sand blaster, destroying (like right now) the surfaces they come into contact with. This all with apparent “clear” skys.

    I only know this because many moons ago I almost went to work for Howmet Turbine when coming out of undergrad school. Also, a similar phenomenon (rogue compound precipitating in a process stream) in the petrochemical refining industry was the subject of a technology owned by a company we were considering purchasing.

  • Drew Link

    Well that didn’t take long. I just googled “jet engine ash cloud”

    And this:
    http://news.discovery.com/earth/volcanic-ash-gives-jet-engine-a-turbocharge.html
    among many others is what I found. I only read two articles, but the picture seems, ahem, “clear.”

    I wouldn’t want to take a chance flying through a “clear” cloud.

  • Drew Link

    “As I understand it the bottom line is that you can’t determine the quantity, nature, danger, or even the presence of the ash in the air from the ground by visual inspection or from looking at satellite photos (at least using natural light). Clear skies don’t necessarily mean anything.”

    It seems odd that the military, with planes in the air all the time, doesn’t have a full handle on this. Does Bernard have a view?

    In any event, so now I’m on staff full time, right? After all, doesn’t every blog need a metallurgist turned private equity guy? Right?……Right? 😉

  • Michael Reynolds Link

    Drew:

    Thanks so much for the image of particles sandblasting the hell out of jet engine parts as I book my UK/Northern Europe book tour.

    It’s not enough that I have to flinch every time a guy with a beard heads to the men’s room. Now it’s invisible particles. My mellow is, like, so harshed now.

  • Drew Link

    They have pills for that, Michael.

  • Don’t worry Michael, the probability that you’ll actually go on that tour is astronomically small. It is almost surely the case that you’ll do something else.

  • Michael Reynolds Link

    Steve:
    I start in Scotland and end in Munich at the beginning of Octoberfest. On the off-chance that I make it alive I will drink a glass of Scottish whiskey and a stein of good German beer to the Glittering Eye Commentariat.

  • Drew Link

    LOL I didn’t get Steve’s reference until just now. The jeopardy of half attention.

    You have to admit, Michael, you might randomly end up in some hazy opium den with little froggy native boys in Thailand.

    Tough to explain to the wife.

  • Where in Scotland will you be going, Michael? Of the dozen or so countries I’ve visited, I had the most pleasant time in Scotland.

  • Michael,

    I was tongue-in-cheek referencing our back and forth about predictions and human behavior one or two posts down. Since you made the claim that humans behave randomly and emotionally, the chances you actually follow through on your tour is astronomically small.

    Frankly, I think you’ll end up in China looking for a good burger joint. :p

  • steve Link

    What is your alternative to modeling Dave? I think one of the keys is the common sense you cite plus a bit of humility. Someone in charge who has been around for a while should have told the modelers that if one crap mortgage is bad, it makes no sense to think that 10,000 rolled together can become AAA.

    I found the recent reports that CDOs could be structured in such a way that you cannot ascertain their risk just by knowing the individual components within the CDO.

    Steve

  • Basically, as you put it, Steve, humility. I’m not opposed to models. I’m just aware of their limitations.

    And observation is supreme. There’s no substitute for it. It’s the difference between 21st century technology and the technology of the ancients who disdained experimentation.

    Actually, I think that’s part of the problem. Are there status issues that divide those who actually conduct experiments and gather data from those who cook up elegant models?

  • Michael Reynolds Link

    Dave:
    All they’ve told me so far is Edinburgh.

    However, I made it a condition of going on the tour that I would have some time to myself in Scotland to visit religious shrines. Understanding that my own denomination may venerate oak casks and the sacred barley.

    What would you suggest if you had, say, 48 hours, a publisher’s expense account and a rental car?

  • Michael Reynolds Link

    Steve:
    Since I’m handling the reservations myself there’s every chance I’ll end up in Shanghai trying to figure out the Mandarin for “no tomatos.”

  • Michael Reynolds Link

    Drew:
    What, they don’t have opium in Scotland?

  • It would be easy to spend 48 hours in Edinburgh alone. Of course there’s Edinburgh Castle, the High Street, and the Scottish National Gallery.

    There are two great distilleries nearby (Glenmorangie and Glenkinchie) and a Scotch Whisky Heritage Center.

    Tell me, are you going to be there in the last week of July/first week of August? It’s a zoo (speaking of zoos the national zoo is there, too) at that time: there’s an international jazz festival going on.

    There are a couple of decent distilleries in nearby Fife, too. My knowledge of restaurants is too dated to be interesting.

    Now if you’re going to Glasgow you might be talking. I’m a fan of island scotches and scarcely think there’s anything worth drinking south or east of the Highland fault.

    Oddly, I’ve never been to Munich. All of my activity was up north. I understand that Octoberfest is pretty whacky.

  • Andy Link

    Michael,

    The Scottish countryside is something that should be seen if you have the time. I also recommend the borders area where there are many beautiful ruins of Abbeys – but I’m particularly biased toward the borders because it’s where I was married. You may like it because of its literary heritage.

    48 hours isn’t much time and there is so much to see, so you’ll obviously have to prioritize based on your interests.

  • Michael Reynolds Link

    Thanks for the suggestions guys. Not sure yet how much free time I’ll have. Edinburgh I’ll see at least some of since I’m at the book festival there. But I’ve long wanted to go driving around the countryside.

  • Pity, you wont have time to visit Islay, home of some of the most flavorful scotches.

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