POST HOC ERGO PROPTER HOC – from fallacy to policy

POST HOC ERGO PROPTER HOC – from fallacy to policy

28 Dec 2021

Post hoc ergo propter hoc, or after this, therefore because of this, is a well known logical fallacy. A sequence of events does not guarantee that there is a causal relationship between those that precede and those that follow. 

Wise investors know to beware of confusing correlation with causation. A famous and surely harmless example is the Super Bowl indicator that claims that the stock market has a good year when a team from the NFL triumphs but falls if an AFC team is victorious. 

Nevertheless, retrospective explanation for the movement of asset prices is a serious industry that seeks to establish an understanding of the past and, by implication, of the future, available only to a select few. I have written about this before.

To an investor it doesn’t or shouldn’t matter why an asset rose or fell in price. All that matters is being aligned with the outcome. Occasionally a company that has been performing badly gets taken over at an agreeable price. Shareholders who had invested because they thought that the managers of the business were competent discover that this was not the case but ultimately are rewarded for being wrong. They give thanks and move on, as unelected leaders of their own portfolios, to their next idea without embarrassment. (Or maybe that’s just me).

The so-called nonpharmaceutical interventions (NPIs) to deal with Covid-19 have elevated “post hoc ergo propter hoc” from a fallacy to the foundation of policy. Imposing lockdowns, shutting schools and destroying businesses are all actions that I consider cowardly as well as destructive, though it seems that the majority were willing to go along with them as long as the government would drive itself to the edge of insolvency to compensate them.

What is, I think, beyond dispute is that the advocates of these NPIs must appear to be supported by convincing evidence that they made a positive difference. Issues of liberty, free speech, mental health and the treacherous Swedes can be relegated to background noise as long as the narrative holds. 

Karl Popper proposed the Falsification Principle. It states that for a theory to be considered scientific it must be able to be tested and conceivably proven false. The advocates of NPIs who say that we must “follow the science” need to avoid Popper’s thesis at all costs. 

The thought that lives have been blighted and hundreds of billions of pounds wasted on mistaken measures is too awful to contemplate. Every major political party and almost every broadcaster and academic has been in full support, as has big business (which is always prepared to see small and medium-sized competition sacrificed to a good cause).I doubt whether even wartime has seen such unanimity among national institutions

In order to derail debate, every cessation of the spread of the virus has been attributed to government actions. If tens of thousands of extra deaths did not happen (and they are constantly not happening, at least from Covid) it can always be said to be because schools and clothes stores were closed or because people walked to their restaurant table in a mask or queued at two metre intervals to enter a supermarket. This is not science, it cannot be tested and nothing could be better for the advocates of NPIs.

At last we have reached a point where this comfortable consensus is being challenged. England’s response to Omicron is markedly less panicky than that of Scotland and Wales. At last we have a possible test of the theory. We will be able to measure and compare the outcomes of more and less intervention. 

I am starting to hear the fear in the voices of the NPI advisors. The only way they can avoid the evidence that appears to be imminent is to bully or shame the government of England into introducing something, anything, however trivial (the rule of six, for pity’s sake!), that will allow “post hoc ergo propter hoc” to be wheeled out again once the current “surge” has abated. 

Let us profoundly hope that our government does not cave and throw them a treat. It is time for some real science.

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