7 ms·

Upside decay (2020)

61 points by skmurphy 5y ago

skmurphy 5y ago
Upside decay is Lui's term for lower odds rare but useful events combining to create a "lucky break." The outer edge of their upside shrinks. He makes these key points: 1. Upside decay is hard to spot. It’s invisible if we’re not specifically looking for it, because the absence of rare positive events is unexceptional. 2. Upside decay is preceded by a lack of virtue that leads to zero-sum or even win-lose transactions 3. Two Leadership choices: virtuous or unvirtuous culture which leads to two disparate outcomes: virtuous culture -> positive sum interactions -> weak ties help -> lucky breaks unvirtuous culture -> zero sum interactions -> weak ties abandon -> upside decay “The right culture, the highest and best culture, is a seamless web of deserved trust.” Charles Munger Note: Clayton Christensen makes the same point for individuals who prioritize "winning" and "career advancement" over relationships in "How Will You Measure Your Life (https://hbr.org/2010/07/how-will-you-measure-your-life https://hbr.org/2010/07/how-will-you-measure-your-life). Summary at https://www.skmurphy.com/blog/2020/02/16/clayton-christensen-on-how-will-you-measure-your-life/ https://www.skmurphy.com/blog/2020/02/16/clayton-christensen...
- mijoharas 5y ago
  I agree with your assessment of the main points of this article. However, when I read the post, it felt very disconnected. He presents his model of upside decay... and then, a GDP graph? Ok... let's see how this is relevant... Ummm... it's not really. The problem is, I'm sympathetic to some of the drive underlying his points I think, they're just too diffuse and unconnected for me to appreciate in this article. From top to bottom: 1. what evidence is there GDP growth is predicated upon a few large bursts of progress rather than steady iteration (I think this is likely, but it's asserted without evidence). 2. We've established that we're talking about upside decay, so why are we switching to comparing 0.5 ^ 5 vs. 0.3 ^ 5? (you can argue that he's integrating the side of the normal distribution above 0 for the non-upside-decay and upside-decay case, but why? it doesn't fit with the argument being made, why are we arguing that this model fits what we're trying to look at?). 3. So now we introduce "weak ties" and how they regulate upside-decay. Why? It's presented with no evidence or argument. e.t.c. I feel like my comment has come off negative, though I don't particularly want it to. I think there's some interesting stuff here, I just don't think it's particularly well grounded.
  - slowmovintarget 5y ago
    It appears he was taking notes on a talk he attended and published them.
    - mijoharas 5y ago
      Oh... that explains things. Apologies if I was negative! Would love to see additional arguments from this talk. Does anyone know the primary source?
      - GoTao 5y ago
        Not sure how much more info to give, but the talk was given in the University of Hong Kong a week prior this posting!
        skmurphy 5y ago
        The article was from October of 2020 so it's more likely the article influenced a talk given last week than vice versa.
      - deleted 5y ago
        [deleted]
      - skmurphy 5y ago
        The article was from October 2020 so this looks more like someone being facetious.
  - skmurphy 5y ago
    my take: 1. It's an assertion. I think a punctuated equilibrium model is a reasonable argument looking at the last 250 years or so of technology progress but I agree he does not present data. 2. I understood this to mean that a breakthrough is a "combination lock" event that requires multiple positive events to align. If counter parties are more suspicious of you then the odds of a favorable interaction go from 50% to 30% so the odds crater. 3. Your reputation is bounded within a group context. Your weak ties are more likely to lead novel insights and (see for example Granovetter's "Strength of Weak Ties" https://sociology.stanford.edu/publications/strength-weak-ties https://sociology.stanford.edu/publications/strength-weak-ti...) by enabling unique combinations of multiple ideas. I think your critique is accurate but from my perspective Lui's article represents some very innovative thinking that offer the core of several valuable insights.
- roenxi 5y ago
  The distinction of cultures into "virtuous" and "unvirtuous" is meaningless. China hasn't achieved a miracle by being "virtuous", they achieved it by working very hard and accepting outside investment. Their strategic and social policies have been not consistent, but they have been driven from a consistent culture (the internals of the Communist Party) for decades. They not only can, but probably already have, gotten away with cultural genocide in Tibet. Nobody did anything about it. Ripping up the Sino-British declaration is a non-event in global politics. This isn't a case of "well they were virtuous in 1990 and abandoned virtue in 2020". Ditto America or the Europeans. Virtue is that the winners of the big wars get to decide what crimes will be highlighted and what will be ignored - until they lose a war. Realpolitik is a more powerful and explanatory lens to explain all the manoeuvrings than whatever this 'virtuous culture' concept is meant to represent. Anyone can put together a "virtuous" or "unvirtuous" list of 20 dot points for any country with more than 100 million people. 100 million is a lot of people. There is a lot going on.
  - meheleventyone 5y ago
    I don’t think it’s supposed to be the culture of the country rather the culture of leadership and it’s relations to their peers. In the case of China it’s actions that people they depend on such as the leadership of the USA see as bad that increased friction which then compounds in the upside decay.
- ivanmaeder 5y ago
  Thanks for sharing the article. He has a nice way of framing things: > My conclusion: Management is the most noble of professions if it’s practiced well. No other occupation offers as many ways to help others learn and grow, take responsibility and be recognized for achievement, and contribute to the success of a team. I'd be very interested in actual data that compares virtuous and unvirtuous cultures, out of curiosity of course!
chairmanwow1 5y ago
What is the point of a "content warning" about current Chinese politics? Seems needlessly meek.
- Tossrock 5y ago
  Being reminded of an ongoing genocide makes some people upset. Those people might choose to avoid reading about it.
  - chairmanwow1 5y ago
    I follow Chinese politics pretty closely and I had no idea wtf the author was talking about. Not a huge fan of this kind of tepid tone.
abathur 5y ago
The first 15 of 24 instances of the term "Upside Decay" that are actually in the article title/body are not at all definitional. Somewhere between 1 and 15 I stopped caring about whatever the writer is either too cool to tell me or assumes I already know and decided to count instead... The 16th use gets close: "Upside decay is preceded by a lack of virtue." The 17th, 18th, and 19th invocations get closer still (but, pardon my French, sound like astrology): > There’s a good reason why lack of virtue causes upside decay, and why virtue isn’t just a feel-good luxury: weak ties. > Weak ties control upside decay > Unvirtuous actions cause upside decay through the mechanism of weak ties. The 20th use is the first to say anything I'm comfortable with calling a definition: > Without weak ties, organizations resort to strong ties and hard assets. This leads them to adopt a mercantilist approach. Their zero-sum mindset alienates others and makes them even less virtuous, because their positive-sum actions are now viewed suspiciously by others. Left with no choice but to double down on their zero-sum approach, they’ll antagonize all their weak ties and enter upside decay. If you write anything, please don't do this. If you must, put a disclaimer at the beginning that says the article is too cool for people who don't already know what upside decay is. Or a link to the definition. Anything, really, that shows respect for the reader's time. Edit: or, per slowmovintarget in https://news.ycombinator.com/item?id=27376573 https://news.ycombinator.com/item?id=27376573, a disclaimer that this is notes on a talk.
- Thorrez 5y ago
  >The reduction in area under the curve (the orange part) represents the loss of positive outcomes. The total loss is small, but it’s concentrated in the tail of the curve where the extreme successes happen. This is upside decay and it’s catastrophic. "Loss of positive outcomes" is the definition. That is, rare but really good outcomes become rarer. The diagram at the beginning of the article illustrates it pretty clearly to me. I had never heard of upside decay before this article, and as soon as I saw the diagram I understood the meaning (but not the cause).
  - abathur 5y ago
    Yes--I exaggerated. The diagram clearly depicts a shaded fraction of the right-tail of a normal distribution. The text asserts: - this shaded fraction represents the loss of positive outcomes (and implies that there are real-world conditions that can lead to this loss) - this loss of outcomes is upside decay - upside decay catastrophic So, sure. It's a definition in the sense that anyone can highlight a distribution, assert that part of it could go missing, assert a name for such a missing portion, and assert that it would be a catastrophe if whatever the shaded area represents went missing. But this definition has nothing to do with the article's topic. You can s/upside decay/-8 luck/ without having much impact on what the first ~2/3 mean. Tautological highlights on graphs of normal distributions surely aren't the kind of catastrophe the definition means. The map is not the territory. The definition has multiple dangling references, and has little bearing on the topic until the author starts resolving them.
prionassembly 5y ago
Bold prediction on China.
- rektide 5y ago
  Agreed but I felt like the difficulties with rising health care, housing, & other costs across much of the world, coupled with an increased difficulty forming new enterprises is a gate worldwide that makes upside growth increasingly difficult. Liu talked about China but the message felt ultra applicable to the parts of the world that I know better.
b9a2cab5 5y ago
But does state investment into R&D and state sponsored companies more than compensate for this? I think (as does Ray Dalio) that the U.S. will be surpassed in the next 15 years. The U.S. aggressively removes meritocratic gifted programs and replaces them with diversity quotas [1] while China's Gao Kao is widely studied for (in contrast to say the SAT) and pure meritocracy. How can you claim that lower odds events will occur more often in the U.S. when we're suppressing the programs which produce people that go on to make those lower odds events happen? 1: https://www.washingtonpost.com/local/education/thomas-jefferson-high-admissions-change/2020/10/07/0a1f8faa-08a7-11eb-9be6-cf25fb429f1a_story.html https://www.washingtonpost.com/local/education/thomas-jeffer...
- gumby 5y ago
  There’s a very strong counter argument. First, exams like Gao Kao, Bac, SAT are indeed “meritocratic” in that they tend to predict success…because success” tends to mean “does well in this exam” rather than later outcome; to the degree they predict later outcome they reflect a pre existing network, wealth, etc on the part of the students. Now knowing how to speak with people and having some informal network support can make things run smoothly and even in some cases “better” — I think there’s little argument to that. The problem with these pre-existing networks is that they become intellectually and socially inbred (in the US just look for example at the networks that led to the viet nam war, or the crowned heads of Europe, or the churning (over the centuries) dynasties of China). A society built on hybrid vigour is likely to be more resilient and capable than one built on the “fitness” of legacy-based entrants. The latter is a flawed definition of “merit”.
  - b9a2cab5 5y ago
    I don't think you can argue that a society built on admitting based on diversity rather than even imperfect standardized testing can be more independent of the pre-existing network. By denying admits from poor "overrepresented" minorities you preserve the status quo, since in practice affirmative action merely admits minorities who are already wealthy and connected rather than lifting people out of poverty. At least in the Gao Kao system you have new entrants in upper socioeconomic tiers since you can realistically study your way out of poverty. Those entrants can bring new viewpoints whereas wealthy people, even if they're different races, are fairly homogenous in life experience. Personally I believe standardized tests reflect the degree of time and diligence invested into preparing for them ("grit"), which although negatively impacted by poverty is still a strong signal for future success.
deleted 5y ago
[deleted]
tpoacher 5y ago
This reminds me of a similar point I first heard by Jordan Peterson, regarding how stereotypical judgements often have a true basis given the extremes of the distribution with regard to a trait, but are effectively false with regard to the vast majority of the population under the curve, explained in a purely statistical manner. E.g. Why is it always X (e.g. men) that do bad thing Y (e.g. violence)? Well, it's because, if the mean of the distribution of X vs ¬X is shifted by even just a 0.00001, then at the super-rare-extremes of the distribution, X will still have a much higher probability than ¬X for that event at the tail. However, for the most part, at anything but the extremes, there's virtually no difference. So in many ways, stereotypes are simply the basic fallacy of mistaking a likelihood for a posterior.

Upside decay (2020)

61 points by skmurphy 5y ago

Upside decay is Lui's term for lower odds rare but useful events combining to create a "lucky break." The outer edge of their upside shrinks. He makes these key points: 1. Upside decay is hard to spot. It’s invisible if we’re not specifically looking for it, because the absence of rare positive events is unexceptional. 2. Upside decay is preceded by a lack of virtue that leads to zero-sum or even win-lose transactions 3. Two Leadership choices: virtuous or unvirtuous culture which leads to two disparate outcomes: virtuous culture -> positive sum interactions -> weak ties help -> lucky breaks unvirtuous culture -> zero sum interactions -> weak ties abandon -> upside decay “The right culture, the highest and best culture, is a seamless web of deserved trust.” Charles Munger Note: Clayton Christensen makes the same point for individuals who prioritize "winning" and "career advancement" over relationships in "How Will You Measure Your Life (https://hbr.org/2010/07/how-will-you-measure-your-life https://hbr.org/2010/07/how-will-you-measure-your-life). Summary at https://www.skmurphy.com/blog/2020/02/16/clayton-christensen-on-how-will-you-measure-your-life/ https://www.skmurphy.com/blog/2020/02/16/clayton-christensen...

mijoharas 5y ago
I agree with your assessment of the main points of this article. However, when I read the post, it felt very disconnected. He presents his model of upside decay... and then, a GDP graph? Ok... let's see how this is relevant... Ummm... it's not really. The problem is, I'm sympathetic to some of the drive underlying his points I think, they're just too diffuse and unconnected for me to appreciate in this article. From top to bottom: 1. what evidence is there GDP growth is predicated upon a few large bursts of progress rather than steady iteration (I think this is likely, but it's asserted without evidence). 2. We've established that we're talking about upside decay, so why are we switching to comparing 0.5 ^ 5 vs. 0.3 ^ 5? (you can argue that he's integrating the side of the normal distribution above 0 for the non-upside-decay and upside-decay case, but why? it doesn't fit with the argument being made, why are we arguing that this model fits what we're trying to look at?). 3. So now we introduce "weak ties" and how they regulate upside-decay. Why? It's presented with no evidence or argument. e.t.c. I feel like my comment has come off negative, though I don't particularly want it to. I think there's some interesting stuff here, I just don't think it's particularly well grounded.
- slowmovintarget 5y ago
  It appears he was taking notes on a talk he attended and published them.
  - mijoharas 5y ago
    Oh... that explains things. Apologies if I was negative! Would love to see additional arguments from this talk. Does anyone know the primary source?
    - GoTao 5y ago
      Not sure how much more info to give, but the talk was given in the University of Hong Kong a week prior this posting!
      - skmurphy 5y ago
        The article was from October of 2020 so it's more likely the article influenced a talk given last week than vice versa.
    - deleted 5y ago
      [deleted]
    - skmurphy 5y ago
      The article was from October 2020 so this looks more like someone being facetious.
- skmurphy 5y ago
  my take: 1. It's an assertion. I think a punctuated equilibrium model is a reasonable argument looking at the last 250 years or so of technology progress but I agree he does not present data. 2. I understood this to mean that a breakthrough is a "combination lock" event that requires multiple positive events to align. If counter parties are more suspicious of you then the odds of a favorable interaction go from 50% to 30% so the odds crater. 3. Your reputation is bounded within a group context. Your weak ties are more likely to lead novel insights and (see for example Granovetter's "Strength of Weak Ties" https://sociology.stanford.edu/publications/strength-weak-ties https://sociology.stanford.edu/publications/strength-weak-ti...) by enabling unique combinations of multiple ideas. I think your critique is accurate but from my perspective Lui's article represents some very innovative thinking that offer the core of several valuable insights.
roenxi 5y ago
The distinction of cultures into "virtuous" and "unvirtuous" is meaningless. China hasn't achieved a miracle by being "virtuous", they achieved it by working very hard and accepting outside investment. Their strategic and social policies have been not consistent, but they have been driven from a consistent culture (the internals of the Communist Party) for decades. They not only can, but probably already have, gotten away with cultural genocide in Tibet. Nobody did anything about it. Ripping up the Sino-British declaration is a non-event in global politics. This isn't a case of "well they were virtuous in 1990 and abandoned virtue in 2020". Ditto America or the Europeans. Virtue is that the winners of the big wars get to decide what crimes will be highlighted and what will be ignored - until they lose a war. Realpolitik is a more powerful and explanatory lens to explain all the manoeuvrings than whatever this 'virtuous culture' concept is meant to represent. Anyone can put together a "virtuous" or "unvirtuous" list of 20 dot points for any country with more than 100 million people. 100 million is a lot of people. There is a lot going on.
- meheleventyone 5y ago
  I don’t think it’s supposed to be the culture of the country rather the culture of leadership and it’s relations to their peers. In the case of China it’s actions that people they depend on such as the leadership of the USA see as bad that increased friction which then compounds in the upside decay.
ivanmaeder 5y ago
Thanks for sharing the article. He has a nice way of framing things: > My conclusion: Management is the most noble of professions if it’s practiced well. No other occupation offers as many ways to help others learn and grow, take responsibility and be recognized for achievement, and contribute to the success of a team. I'd be very interested in actual data that compares virtuous and unvirtuous cultures, out of curiosity of course!

chairmanwow1 5y ago

What is the point of a "content warning" about current Chinese politics? Seems needlessly meek.

Tossrock 5y ago
Being reminded of an ongoing genocide makes some people upset. Those people might choose to avoid reading about it.
- chairmanwow1 5y ago
  I follow Chinese politics pretty closely and I had no idea wtf the author was talking about. Not a huge fan of this kind of tepid tone.

abathur 5y ago

The first 15 of 24 instances of the term "Upside Decay" that are actually in the article title/body are not at all definitional. Somewhere between 1 and 15 I stopped caring about whatever the writer is either too cool to tell me or assumes I already know and decided to count instead... The 16th use gets close: "Upside decay is preceded by a lack of virtue." The 17th, 18th, and 19th invocations get closer still (but, pardon my French, sound like astrology): > There’s a good reason why lack of virtue causes upside decay, and why virtue isn’t just a feel-good luxury: weak ties. > Weak ties control upside decay > Unvirtuous actions cause upside decay through the mechanism of weak ties. The 20th use is the first to say anything I'm comfortable with calling a definition: > Without weak ties, organizations resort to strong ties and hard assets. This leads them to adopt a mercantilist approach. Their zero-sum mindset alienates others and makes them even less virtuous, because their positive-sum actions are now viewed suspiciously by others. Left with no choice but to double down on their zero-sum approach, they’ll antagonize all their weak ties and enter upside decay. If you write anything, please don't do this. If you must, put a disclaimer at the beginning that says the article is too cool for people who don't already know what upside decay is. Or a link to the definition. Anything, really, that shows respect for the reader's time. Edit: or, per slowmovintarget in https://news.ycombinator.com/item?id=27376573 https://news.ycombinator.com/item?id=27376573, a disclaimer that this is notes on a talk.

Thorrez 5y ago
>The reduction in area under the curve (the orange part) represents the loss of positive outcomes. The total loss is small, but it’s concentrated in the tail of the curve where the extreme successes happen. This is upside decay and it’s catastrophic. "Loss of positive outcomes" is the definition. That is, rare but really good outcomes become rarer. The diagram at the beginning of the article illustrates it pretty clearly to me. I had never heard of upside decay before this article, and as soon as I saw the diagram I understood the meaning (but not the cause).
- abathur 5y ago
  Yes--I exaggerated. The diagram clearly depicts a shaded fraction of the right-tail of a normal distribution. The text asserts: - this shaded fraction represents the loss of positive outcomes (and implies that there are real-world conditions that can lead to this loss) - this loss of outcomes is upside decay - upside decay catastrophic So, sure. It's a definition in the sense that anyone can highlight a distribution, assert that part of it could go missing, assert a name for such a missing portion, and assert that it would be a catastrophe if whatever the shaded area represents went missing. But this definition has nothing to do with the article's topic. You can s/upside decay/-8 luck/ without having much impact on what the first ~2/3 mean. Tautological highlights on graphs of normal distributions surely aren't the kind of catastrophe the definition means. The map is not the territory. The definition has multiple dangling references, and has little bearing on the topic until the author starts resolving them.

prionassembly 5y ago

Bold prediction on China.

rektide 5y ago
Agreed but I felt like the difficulties with rising health care, housing, & other costs across much of the world, coupled with an increased difficulty forming new enterprises is a gate worldwide that makes upside growth increasingly difficult. Liu talked about China but the message felt ultra applicable to the parts of the world that I know better.

b9a2cab5 5y ago

But does state investment into R&D and state sponsored companies more than compensate for this? I think (as does Ray Dalio) that the U.S. will be surpassed in the next 15 years. The U.S. aggressively removes meritocratic gifted programs and replaces them with diversity quotas [1] while China's Gao Kao is widely studied for (in contrast to say the SAT) and pure meritocracy. How can you claim that lower odds events will occur more often in the U.S. when we're suppressing the programs which produce people that go on to make those lower odds events happen? 1: https://www.washingtonpost.com/local/education/thomas-jefferson-high-admissions-change/2020/10/07/0a1f8faa-08a7-11eb-9be6-cf25fb429f1a_story.html https://www.washingtonpost.com/local/education/thomas-jeffer...

gumby 5y ago
There’s a very strong counter argument. First, exams like Gao Kao, Bac, SAT are indeed “meritocratic” in that they tend to predict success…because success” tends to mean “does well in this exam” rather than later outcome; to the degree they predict later outcome they reflect a pre existing network, wealth, etc on the part of the students. Now knowing how to speak with people and having some informal network support can make things run smoothly and even in some cases “better” — I think there’s little argument to that. The problem with these pre-existing networks is that they become intellectually and socially inbred (in the US just look for example at the networks that led to the viet nam war, or the crowned heads of Europe, or the churning (over the centuries) dynasties of China). A society built on hybrid vigour is likely to be more resilient and capable than one built on the “fitness” of legacy-based entrants. The latter is a flawed definition of “merit”.
- b9a2cab5 5y ago
  I don't think you can argue that a society built on admitting based on diversity rather than even imperfect standardized testing can be more independent of the pre-existing network. By denying admits from poor "overrepresented" minorities you preserve the status quo, since in practice affirmative action merely admits minorities who are already wealthy and connected rather than lifting people out of poverty. At least in the Gao Kao system you have new entrants in upper socioeconomic tiers since you can realistically study your way out of poverty. Those entrants can bring new viewpoints whereas wealthy people, even if they're different races, are fairly homogenous in life experience. Personally I believe standardized tests reflect the degree of time and diligence invested into preparing for them ("grit"), which although negatively impacted by poverty is still a strong signal for future success.

deleted 5y ago

[deleted]

tpoacher 5y ago

This reminds me of a similar point I first heard by Jordan Peterson, regarding how stereotypical judgements often have a true basis given the extremes of the distribution with regard to a trait, but are effectively false with regard to the vast majority of the population under the curve, explained in a purely statistical manner. E.g. Why is it always X (e.g. men) that do bad thing Y (e.g. violence)? Well, it's because, if the mean of the distribution of X vs ¬X is shifted by even just a 0.00001, then at the super-rare-extremes of the distribution, X will still have a much higher probability than ¬X for that event at the tail. However, for the most part, at anything but the extremes, there's virtually no difference. So in many ways, stereotypes are simply the basic fallacy of mistaking a likelihood for a posterior.