I used the word “Empirica” in a comment below. I think it is a useful word to describe the world we live in. It has overtones of utopia, but it is exactly the opposite. People who believe in utopias invariably get destroyed by Empirica. Utopias are dreams, Empirica is the unseen reality. Empirica rises up occasionally and slaps us down: tsunamis, 8.0 earthquakes and giant meteors. It also slaps us down in lesser ways: prison, death, divorce, business failure….etc.
It turns out the word is used by Nassim Taleb as the name for...
It turns out the word is used by Nassim Taleb as the name for his investment company: Empirica LLC.
Empirica seems to be related to Taleb’s investment strategy which is based on a simple statistical insight. Prices in an equity market reflect a random process. Such a process does not have a standard deviation. This is a mathematical truism.
Flipping coins is a binomial distributions with a standard deviation
and most physical processes are Bell curves all with a standard
deviation. Any process that has a standard distribution means we can
predict the chance that a specific event will occur in that process
(There is a 5% chance that a railroad crash will happen this week.)
With a random price process, prediction is impossible (Google stock will go up, down or stay the same this afternoon). Taleb figured
out that this truism could be used for investment purposes. He
generally believes that price prediction is impossible (so is almost
any prediction about the future.) I concur.
Taleb’s investment company buys options for extreme events, like a Dow Jones one day crash of 500 points or a climb of 1,000 points in a month. The options on such extreme events are cheap but we know the events can occur. Taleb makes enormous amounts of money on these rare events.
I suspect that Taleb uses the word empirica to suggest that the real world is very different from the banal standardized world we think we live in.
In Empirica the unexpected nearly always happens. Empirica is a small domain of our knowledge and a vast domain of our ignorance.
My Empirica is a little different but it does include Taleb’s. Empirica, for me, is the world we live in and about which we only learn from empirical examination. Commerce is empirical, technology is empirical as is our democracy and our judicial system.
The way to deal with Empirica is for all of us to
test everything, to be open about what we learn and communicate our
experiences and our findings.
Like evolution, which is an empirical system, we live in a world created by a variety of empirical systems that keep building on the past, just as evolution does. Commerce and technology have clearly built most of the world we live in, and to a lesser extent so have democracy and our judicial system. Exogenous variables (meteors, wars, old girl friends etc) come along and radically change everything; then our empirical systems adapt to the new environment.
Empirical systems, by the way, are not moral…so our world in all respects is not a moral one. We have to make it moral, if that is what we want.
I think Empirica, conceived as a time and a place and a universe is a useful construct.