Sunday, October 14, 2007

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BDM, in profile

Good Magazine has a long Michael Lerner profile of Bruce Bueno de Mesquita, the chair of political science at New York University (in the field, Bruce will forever be known by the three letter acronym "BDM.")

Lerner's story is about BDM's political forecasting techniques, his use of rational choice methodology... and the uniqueness that is Bruce:

If you listen to Bruce Bueno de Mesquita, and a lot of people don’t, he’ll claim that mathematics can tell you the future. In fact, the professor says that a computer model he built and has perfected over the last 25 years can predict the outcome of virtually any international conflict, provided the basic input is accurate. What’s more, his predictions are alarmingly specific. His fans include at least one current presidential hopeful, a gaggle of Fortune 500 companies, the CIA, and the Department of Defense. Naturally, there is also no shortage of people less fond of his work. “Some people think Bruce is the most brilliant foreign policy analyst there is,” says one colleague. “Others think he’s a quack.”

Today, on a rare sunny summer day in San Francisco, Bueno de Mesquita appears to be neither. He’s relaxing in his stately home, answering my questions with exceeding politesse. Sunlight streams through the tall windows, the melodic sound of a French horn echoing from somewhere upstairs; his daughter, a musician in a symphony orchestra, is practicing for an upcoming recital. It’s all so complacent and genteel, which is exactly what Bueno de Mesquita isn’t. As if on cue, a question sets him off. “I found it to be offensive,” he says about a colleague’s critique of his work. “This is absolutely, totally, and utterly false,” he says about the attack of another....

To verify the accuracy of [BDM's] model, the CIA set up a kind of forecasting face-off that pit predictions from his model against those of Langley’s more traditional in-house intelligence analysts and area specialists. “We tested Bueno de Mesquita’s model on scores of issues that were conducted in real time—that is, the forecasts were made before the events actually happened,” says Stanley Feder, a former high-level CIA analyst. “We found the model to be accurate 90 percent of the time,” he wrote. Another study evaluating Bueno de Mesquita’s real-time forecasts of 21 policy decisions in the European community concluded that “the probability that the predicted outcome was what indeed occurred was an astounding 97 percent.” What’s more, Bueno de Mesquita’s forecasts were much more detailed than those of the more traditional analysts. “The real issue is the specificity of the accuracy,” says Feder. “We found that DI (Directorate of National Intelligence) analyses, even when they were right, were vague compared to the model’s forecasts. To use an archery metaphor, if you hit the target, that’s great. But if you hit the bull’s eye—that’s amazing.”

How does Bueno de Mesquita do this? With mathematics. “You start with a set of assumptions, as you do with anything, but you do it in a formal, mathematical way,” he says. “You break them down as equations and work from there to see what follows logically from those assumptions.” The assumptions he’s talking about concern each actor’s motives. You configure those motives into equations that are, essentially, statements of logic based on a predictive theory of how people with those motives will behave. From there, you start building your mathematical model. You determine whether the predictive theory holds true by plugging in data, which are numbers derived from scales of preferences that you ascribe to each actor based on the various choices they face.

Read the whole thing if you want a mostly accurate but incomplete discussion of rational choice theory and its critics -- Mearsheimer and Walt make cameo appearances!

[Jeez, doesn't BDM seems like a bit of a self-promoter?--ed. Compared to whom? Relative to many IR scholars, Bueno de Mesquita has not been shy in trumpeting his own horn. Compared to others, however, BDM seems pretty normal.]

The part that grabbed my attention was BDM's proposal for how to address the Israel/Palestinian conflict:

Recently, he’s applied his science to come up with some novel ideas on how to resolve the Israeli-Palestinian conflict. “In my view, it is a mistake to look for strategies that build mutual trust because it ain’t going to happen. Neither side has any reason to trust the other, for good reason,” he says. “Land for peace is an inherently flawed concept because it has a fundamental commitment problem. If I give you land on your promise of peace in the future, after you have the land, as the Israelis well know, it is very costly to take it back if you renege. You have an incentive to say, ‘You made a good step, it’s a gesture in the right direction, but I thought you were giving me more than this. I can’t give you peace just for this, it’s not enough.’ Conversely, if we have peace for land—you disarm, put down your weapons, and get rid of the threats to me and I will then give you the land—the reverse is true: I have no commitment to follow through. Once you’ve laid down your weapons, you have no threat.”

Bueno de Mesquita’s answer to this dilemma, which he discussed with the former Israeli prime minister and recently elected Labor leader Ehud Barak, is a formula that guarantees mutual incentives to cooperate. “In a peaceful world, what do the Palestinians anticipate will be their main source of economic viability? Tourism. This is what their own documents say. And, of course, the Israelis make a lot of money from tourism, and that revenue is very easy to track. As a starting point requiring no trust, no mutual cooperation, I would suggest that all tourist revenue be [divided by] a fixed formula based on the current population of the region, which is roughly 40 percent Palestinian, 60 percent Israeli. The money would go automatically to each side. Now, when there is violence, tourists don’t come. So the tourist revenue is automatically responsive to the level of violence on either side for both sides. You have an accounting firm that both sides agree to, you let the U.N. do it, whatever. It’s completely self-enforcing, it requires no cooperation except the initial agreement by the Israelis that they are going to turn this part of the revenue over, on a fixed formula based on population, to some international agency, and that’s that.”

I'm not sure the long-run demographics of the region would support this idea, but it's certainly intriguing.

Full disclosure: When I was putting together my dissertation committee oh so many years ago, I was fortunate enough to persuade Bruce to join -- and The Sanctions Paradox is a much, much better book because of that decision.

posted by Dan on 10.14.07 at 09:00 AM


If you were a grad student and came across BDM's story of predicting Khomeini's successors years in advance, why would you do anything *but* game theory?

Students, explain this to me.

posted by: arthur on 10.14.07 at 09:00 AM [permalink]

I am not sure Tourism based formula as advocated by BDM would work.

We have on record Hamas behavior in last few years - knowing fully that their actions would stop revenue stream, they still went ahead and did those actions. What BDM presumes here is rationally Hamas would not do those actions. But Hamas 'rationality' is to base actions on perceived help from Arab and their other money bags. Those helping hands do not realize on time is a different matter, but Hamas is not that convinced 'not to base' their actions on those presumed helping hands.

Also what about the line of thinking from Hamas where the goal is to ‘weaken’ Israel regardless of what pain comes to them? They have visceral belief in their own surviving abilities but quite shallow, negative opinion of Israel’s ability to sustain the financial blows (or terrorist acts). Again the irrationality is well evident – despite the proven fact of 6 decades of continued existence of Israel; Hamas like groups continue to fall for the thinking that their terrorists and financially ruinous acts can break Israel. So where is the basis of rationality on Hamas side?

Only when events finally drive the point to Hamas that negotiating with Israel is the only viable choice; then some real progress may happen.

The key is not to overrule the possibility of Hamas exaggeration of their inter-nation help as well as irrationality in their behavior. Individuals, groups and societies do have 'irrational' premises / way of behavior on which they base their actions. And this irrationality can go on for quite long. (Variant of Keynes quote – markets / actors can be irrational far longer than you can be solvent...) In way that is the notion of ‘free actor’ – in a fixed set of actors who we can regard as ‘free actors’; that freedom would essentially get manifested when we notice at least few ‘irrational’ actors.

posted by: Umesh Patil on 10.14.07 at 09:00 AM [permalink]

Like Umesh Patil, I'm not sure what Dr. BDM's first step here is a first step toward.

It would give more revenue to a Palestinian government (once we assume that all tourist revenue is "very easy to track." There is reason to doubt this). What, then, is the appropriate response to Palestinians objecting to any money coming from foriegn tourists to "their" attractions (e.g. Bethelem) going to Israeli occupiers? To Israelis objecting to Palestinian terrorist sympathizers getting any revenue from tourists visiting Mediterranean beaches? To people on either side willing to cost their side revenue as long as it hurts the other?

In a region without conflict, it seems to me, economic viability would not derive primarily from tourism, though that would help, but from Palestinian integration into the Israeli economy. This would require much closer contacts between Israelis and Palestinians than there are now. But that is the problem. Neither side really wants closer contacts for economic reasons if these look as if they might lead to obstacles to the pursuit of political objectives.

Perhaps I'm just misunderstanding Bueno de Mesquita's theory, or its application here, and I'd welcome a correction if that is the case. It just looks to me as if he's proposing taking baby steps toward an objective toward which both sides of the Israeli-Palestinian dispute look with great ambivalence. That isn't a departure from the traditional Mideast peace process; that IS the traditional Mideast peace process.

posted by: Zathras on 10.14.07 at 09:00 AM [permalink]

He's right about the problem with the "peace process" in Israel -- the commitment issue -- but his solution as summarized in that article is bizarre. Dividing up tourist dollars by population? Huh? This would seem to be based on some sort of odd notion that there's some sort of collective "tourist dollars" that gets put into a big pool which can be divided up by some centralized government scheme, the way international aid dollars do.

Uh, tourists -- not governments -- provide "tourist dollars," and they provide their dollars not to some "tourist dollar agency" which can divvy up the money, but to individual hotels, restaurants, souvenir stands, etc...
I don't even understand what it means when it says that tourist revenue is "easy to track."

The only thing I can think is that they make up some number which they claim is tourist dollars, figure out what the sales taxes would be on that estimate, and then divide that number by population. But to the extent that Israel and the PA collect taxes, don't they already do this? So don't the same incentives already exist? The only innovation BDM seems to be advocating is to divide by population rather than by actual revenues generated. But why is that more conducive to peace?

posted by: David Nieporent on 10.14.07 at 09:00 AM [permalink]

It's still not clear to me how de Mesquita has solved (or thinks he has solved) "garbage in, garbage out".

The most striking feature of international relations is how little any one actor knows. I suppose one can control for this somewhat with analysis of internal consistency, but it still remains the case that of any 10 "facts" fed into such a system, at least 3 are probably wrong.

In poker (my favorite simplified testing field for game theory) it is possible to determine what the correct strategy is (more or less, heh), but one's ability to predict the outcome of a given hand is distinctly limited. Even in the long run, it demands that one play at least somewhat probabilistically in order to avoid being too predictable. In other words, successful gamesmanship demands that one be unable to predict the specifics of even one's own behavior in advance.

Does rational choice theory expect the shear volume of interacting variables to dampen out such "noise" in the real world? If so doesn't this take us straight back to GIGO?

I'm not just raising objections here, I'm actually quite curious. Can anyone suggest an answer, or at least a good place to look?

posted by: heedless on 10.14.07 at 09:00 AM [permalink]

Um arthur, a few reasons why:
- BDM has been a big supporter of the Bush admin and Iraq war, until it went clearly south - whoops;
- almost none of the formal modelers in IR or anywhere in the field have any public policy profile of any sort - no one knows who they are, and even fewer people care what they think. I'd bet you vast amounts of money that within the US government far more people would be interested in what a Barry Posen or Bob Jervis has to say than any game theorist out there;
- many of the predictions ain't exactly rocket science (Israel-Palestine negotiations unlikely to succeed? Shocking!). He also predicted the end of the Cold War - in a paper published in 1997. Moreover, many of his models rely heavily on inputs from people who actually know some things about history, other countries, foreign languages, etc.

posted by: anon on 10.14.07 at 09:00 AM [permalink]

Color me unimpressed. If BDM were as astonishingly good a prognosticator as he claims he ought to be worth tens of billions of dollars; our government ought not to ever be suprised by anything; and/or BDM should have been assasinated by a foreign power that realized that with him the US has an unbeatable superweapon. Some of his claims to have predicted things like details of Iranian succession years in advance are just nuts -- there's fundamental randomness in the processes that make such predictions implausible, as if I claimed that I have a track record of predicting winning lottery numbers a year in advance 97% of the time. Either I'm making ex post facto "predictions", the system is rigged, or I'm just making shit up.

Don't get me wrong, I do quant work, I think game theory has lots of insights, even in IR, and some of them have come from BDM. But his predictive claims are ludicrously inflated. When I took an advanced game theory seminar I was the lone IR guy in a room of Americanists, and I presented and critqued some BDM articles. They were flabbergasted that someone would claim that kind of predictive ability for foreign events given that it goes so far beyond the state of the art for forecasting in the relatively more data-rich, rule-bound, and transparent American poltics (or U.S. business behavior).

posted by: on 10.14.07 at 09:00 AM [permalink]

BDM is smart guy. In his "Predicting the future" he made similar claims to those presented here - in 1985 he was able to predict the end of the Cold War. He did not think about it, but the data he had could allow him to.

However, intriguing as this idea is, I see a flaw. This proposal works in a absolute-gain world. As we know, relative gains are more important. Do Israeli want peace, or do they want a weak Palestinian community? No morality, just facts: they want the Palestinian to give up violence, but they do not want them to be stronger. Otherwise, it will be the Palestinians to "rule".

In his Predictin the Future, BDM claims that the stronger usually dampens economic growth to maintain its power. He relies on the example of a treaty signed in 1242 (if I am not wrong) through which the Catholich Church attempted to slow down the European economy and thus prevent the rise of competitors.

Thus, why should Israel let the Palestinians get stronger? BDM should answer - but I see a contradiction with his own works.

bye, a.g.

posted by: A. Gilli on 10.14.07 at 09:00 AM [permalink]

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