I recently posted about the challenges of predicting the future in my review of Nassim Taleb's book, The Back Swan. Another person who has had a long interest in the underlying patterns in how things change is fractal geometrician Benoit Mandelbrot.
Mandelbrot studied the historical data of some of the world's great rivers, in particular the Nile. He characterized the patterns he saw by borrowing from stories from Genesis: the "Joseph Effect" and the Noah Effect.
The "Joseph Effect" — after Joseph's interpretation of Pharaoh's dream of seven fat cows and seven gaunt ones to mean that there would be seven prosperous years followed by seven lean ones — describes persistence. He discovered that trends tend to persist; that is, if a place has been suffering drought, it's likely it will suffer more of the same. In other words, things tend to stay the way they've been recently. Some examples:
- Healthy people tend to stay healthy;
- Winning teams tend to keep on winning; and,
- Products that have been successful for the past five years will probably be successful next month.
On the other hand, the "Noah Effect" — after the story of the Great Flood — describes discontinuity. Mandelbrot found that when something changes, it can change abruptly. For example, a stock priced at $40 a share can quickly fall to $5 without ever being priced at $30 or $20, if something significant triggers its collapse.
As science writer James Gleick put it:
The "Noah" and "Joseph" Effects push in different directions, but they add up to this: trends in nature are real, but they can vanish as quickly as they come.
Thus, we can expect what's been happening to continue to happen, but we should also expect the unexpected.
Questions to think about: What patterns describe the flow of your current situation? Where do you see "Joseph" or "Noah" at work in the world around you?