Sunday, September 13, 2009

What's Right about Intelligent Design

There's an interesting set of videos over at The Science Network on the Origins Symposium that goes over issues in physics and evolution. In the panel on Origin and Evolution of Life and Phenotypic Innovations, highlights many interesting issues. At the end, Richard Dawkins steps up, and says (around 51:00):
I just want to enter a protest against the recurrence of the suggestion that there is something odd going on in the Cambrian and very early times, that we only got new phyla then and we only get new classes and orders today. That obviously has got to be true. I've compared it before to a gardener going into a garden, looking at an old oak tree and saying isn't it strange nowadays we only have little twigs sprouting from this tree, we don't see any great big boughs [trunks] anymore.
The panelists dismiss him:
It's not true with plants...Another way to see this is we can measure morphological disparity, and what we see very early maximal disparity, later on filling in this space...disparity should increase over time...that's patently the opposite of what is predicted.

In other words, Dawkins sees the Cambrian explosion as no big puzzle, while these researchers are saying it is a big puzzle. These are not creationists, they are Darwinists (ie, they are naturalists, and believe in only genetic heredity, random mutation, and selection). In Dawkins's view a phylum is defined with hindsight, and so needs time to be developed, so the fact they are all really old is necessary in the same sense that tree trunks are thicker than twigs. But the panel members state no, this is not what is predicted by standard Darwinian theory, as what was expected was more phyla to be created over time, which is what we see for the plant kindom, and can be measured molecularly and morphologically. It seems that development gets more precise over time, preventing the development of new phyla, so how did all these phyla arise? These are actual researchers published in peer-reviewed journals, something Dawkins does not do.

The lecture mentions other interesting puzzles. For example, the common ancestor for humans and fruit flies need a heart gene, a stomach gene, an eye gene, and each of these has been found in both humans and fruit flies. From a developmental standpoint, what makes a fruit fly gene express itself so differently than a human being is still a mystery given so many similar genes we share. And it's even more bizarre than that, as these eye and heart genes have also been found in jellyfish (which does not have a heart or eye). A hydra is a very simple organism, but has about the same looking DNA as a human, with 20k protein coding genes for things like hearts, eyes, etc. How does this happen?

Dawkins does not see what many cutting edge researchers see as a puzzle, because he is so focused on demonstrating that Darwinian evolution works against Creationists: there are no significant puzzles to the paradigm! However, if you want to make progress, you have to accurately identify what is preventing it, and the Creationists are basically not affecting scientific research at major universities. If you go to the popular biology section at the bookstore you see several large popular tomes arguing against creationism (discussed here). Now, the percentage of journal editors in this field preaching creationism is zero, while the majority of the great unwashed do not believe Darwinian evolution is the complete answer. So, it's strange to focus one's attack on a contigent that is large to be sure, but rather irrelevant in the day-to-day discussion of ideas with colleagues. It's a bit like going to a wine tasting and talking about how unsophisticated beer drinkers are: in some sense you have a sympathetic audience, but they are interested in wine intricacies and so should you be.

I find evolution very interesting because Stephen Jay Gould is correct to highlight that most of the big changes in life on this planet appear without any really good theory at the molecular level. In his theory of 'punctated equilibrium' species appear and remain virtually unchanged, then disappear, over say 5 million year periods. The extinctions you can explain via asteroids and large climate changes, but the origination seems to demand more than the mere extrapolation from processes we can observe in local populations (like human having different skin color based on sun exposure, or lactose tolerance based on the importance of dairy farming). The creation of new helpful functionality, via adding information to the genome, is a lot more difficult than anticipated.

For example, biologists have been tracking E. Coli for over 40k generations, and almost all of the beneficial mutations identified from the studies so far seem to have been degradative ones, where functioning genes are knocked out or rendered less active. Random mutation much more easily breaks genes than builds them, even when it helps an organism to survive. That’s a very important point. A process which breaks genes so easily is not one that is going to build up complex coherent molecular systems of many proteins, which fill the cell. You can actually do the math, and the standard Darwinian mutations do not extrapolate from simple single celled organism to human in a mere 800MM years. 10^800MM, sure, but that's not where we are.

In contrast Dawkins emphasizes that evolution of new organisms is merely the gradual evolution of little mutations in the DNA, the climb up mount improbable is merely counterintuitive because of the numbers involved (millions of years, organisms).

I've read a lot of Michael Behe, whose recent Bloggingheads TV piece was recently delinked, then reposted (with a long apology by Robert Wright about how this happened), and find his arguments very interesting. Not because I believe in God (I don't), but because they highlight how, at the molecular level, the creation of different tissues is much more improbable than Dawkins examples imply. I don't think saying 'God did it' is a better theory, but I do think Behe highlights a major flaw in the convention mechanism of evolution. We haven't identified that in my opinion, as Dawkins' handwaving about slight modifications is as deficient as Gould argued [Gould had a very different endgame, but it's the same puzzle]. That's fascinating to me, and while the ID crowd isn't on to a fruitful new path, they are highlighting key problems to the conventional wisdom, one that highlights we need a new big idea in this area, as opposed to hand-waving about how it's just an extrapolation of how dogs breeds developed.

Perhaps one reason I find this so interesting is that I feel a lot like an Intelligent Design researcher, being dismissed because I'm outside the paradigm. Not that I'm totally outside the box, arguing for some kind of Spaghetti Monster, or Taleb's vague anti-formalism. I have tried to send academic version of my SSRN paper, or arguments in my book Finding Alpha, to journals, or academics, and I don't even get a response. I get responses like: "this is not of interest to the general readers of the Journal of Finance". Now, I could be wrong, in which case of course my hypothesis is uninteresting, but if I'm right I think the idea that risk premiums generally don't exist because of relative utility functions would be of interest, so clearly, he just sees me as a kook and dismisses me. Yet, they don't even want to discuss it.

This has been going on my whole life. My 1994 PhD job-market paper emphasized the negative relation to risk and return, and it was considered so silly I got zero fly-outs, because it implied an arbitrage (see dissertation here). Now everyone agrees that my fact is indeed correct (high volatility or beta loadings is negatively correlated with returns), but supposedly the Stochastic Discount Factor is negatively correlated with these primitive metrics, if we can only find it. Around 2000, when I introduced the idea that equity returns are negatively correlated with Agency Ratings (lower for B and C rated companies), this was also considered factually wrong, I must have made a mistake. Now it is considered right, but again, merely reflects the profound subtlety of the SDF.

I see the anomalies to the standard theory as actually the rule, not the exception. One sees risk aversion in explicit hypotheticals, or fire insurance, where there is no chance for alpha, or hope, but when alpha can exist everything changes. Across and within asset classes, and over time, intuitive measures of risk are not positively correlated with actual returns. This is the consequence of a the assumption about how people evaluate their wealth, via benchmarking, as opposed to comparing themselves to zero wealth. Exploring this path is more fruitful than building branches on a framework that after 40 years, does not explain the data at 30,000 feet.

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