WE'VE FINALLY DONE IT - THE ECONOMISTS PREDICTED THE DATE OF THE DEATH OF HUMANITY

The odds of human extinction,
“mother of all tail risks”

Robin WIGGLESWORTH  FT Alphaville

Robin Wigglesworth is the Financial Times’s capital markets correspondent, focusing particularly on countries in financial and economic distress. He joined the FT as a Gulf correspondent in June 2008, and covered the Arab Spring in Bahrain and Libya for the paper. Before that he was a Nordic economics and politics correspondent for Bloomberg News. He lives in north London with his partner and their irascible daughter.

- 50 percent probability of death to mankind 2290 year and 95 percent that it will happen to 2710 year.
- Humanity with a high probability to live no more than 700 years. 
This is stated in the report of the canadian company, BCA Research, specializing in investment research, RBC. Chief strategist Peter Berezin estimated at 50 percent probability of death to mankind 2290 year and 95 percent that it will happen to 2710 year. He notes that the emergence of intelligent life on Earth itself was a rare event among the 400 billion galaxies in the observable Universe we have not found other life. Berezin refers to the concept of a “Great filter” of the American scientist Robert Henson, which implies a high probability of destruction of humanity at the stage of advanced technological development.

What are the odds on Doomsday, when might it happen, and what are the investment implications?

This may seem like a futile exercise, but BCA, a Canadian research house, has published its take on the “mother of all tail risks”.

In a report published on Friday in time for the weekend (yeah, thanks for that), BCA estimated that there is an even chance of the human race being wiped out by 2290, and an overwhelming likelihood of extinction by 2710.

Paraphrasing Dylan Thomas, the late Welsh writer, the research firm noted that there are “no shortage of ways that humans could go gentle (and not so gentle) into that good night”, citing extra-terrestrial dangers like meteor strikes and nearby stars going supernova, and human risks like the rise of malevolent artificial intelligence, disastrous climate change and nuclear war.

While these dangers may be odd ones for an investment research company to ponder, as BCA said: “The complete annihilation of all human life represents the mother of all tail risks.”

The note pointed out that despite 400 billion galaxies in the observable universe, scientists have thus far detected no overt or covert signs of intelligent life elsewhere, concluding that there might be a “Great Filter” — in the words of economist Robin Hanson — that tends to wipe out sentience soon after it emerges.

Perhaps most tellingly, we see no compelling evidence that aliens have ever visited earth. Granted, space is vast, but even a space-faring civilization capable of traversing the Milky Way at 1% of the speed of light could colonize the entire galaxy within 10 million years – a blink of the eye on a cosmological timescale.

Some have claimed that advanced civilizations will have as much interest in us as we do in ants.

That’s possible, but then again, there are plenty of people on earth who are fascinated by ants.

Others have claimed that extremely advanced civilizations will adhere to a Star Trek-like “Prime Directive” forbidding them from interfering with technologically inferior worlds. That’s also possible, but it would only take one alien civilization to ignore the Prime Directive before the whole gig was up.

So far so logical. It is clear that mankind currently possesses the tools for its own self-immolation, and we still don’t have the technology needed to survive or escape Armageddon.

But how to calculate the probabilities is where it gets tricky, as BCA’s Peter Berezin admits:

Of course, humanity has little-to-no direct experience with any of these risks. While this is obviously a good thing, it does make assigning plausible probabilities to any of them a mug’s game.

To reach some vague probabilities, Berezin assumes for the sake of simplicity that we are born in the middle of the distribution of all past and future births, and puts the total number of all humans that will ever be born at 100bn (N). BCA’s baseline simulation assumes that the global fertility rate rises to 3 over the next decade, and then stays constant at this level.

If so, the total ever-born population will double by 2290 (when we will cross a 50 per cent chance of extinction) and increase twentyfold by 2710 (a 95 per cent chance of extinction). BCA’s fertility rate estimate is punchy, but as the note says:

There is good reason to think that future fertility rates will surprise to the upside, perhaps dramatically so.

Like virtually all human traits, fertility preferences are influenced by genetic factors. It is reasonable to suppose that as populations evolve, parents who want more children will have more offspring than those who do not….

And even if such evolutionary changes do not manifest themselves, the prospect of mind-uploading, cloning, and synthetic engineering could all vastly increase the population of human or near-human beings.

Now, this may seem somewhat unrigorous, based on some pretty random assumptions. As Berezin wrote, a mug’s game. But let’s not that stop us from delving further into this interesting idea.

Since BCA is an independent investment research outfit, it naturally discusses the financial implications of Armageddon.

If the risk of doomsday is, in fact, elevated, what is an investor to do? For one thing, “saving for a rainy day” becomes a less desirable proposition if that rain consists of fire and brimstone. A lower equilibrium level of savings, in turn, implies a higher neutral real rate, and hence lower bond prices.

This is obviously a pretty long-term view, so FT Alphaville doesn’t recommend you sell all your fixed income right now. Human longevity might be lengthened dramatically by technology (or Thiel-ian blood transfusions), but this is more likely to be a threat to our great great great great great great great great great great great great grandchildren.

Still, BCA raises another interesting thought experiment. Given that some futurists and scientists think that there is an infinite or near-infinite number of parallel universes, there are possibly millions of versions of “me” and “you”, which “raises interesting investment considerations”, the note says.

For example, why buy a $1 lottery ticket if there’s just a one-in-a-billion chance of winning? But if you know there are billions of versions of you, and there are some universes where you would definitely win, many people might be more inclined to buy a ticket, simply because they might be cheered by the thought of a parallel multiverse version of themselves becoming a millionaire.

BCA offers up a similar but different scenario. Suppose you’re running late to the airport. Do you run a yellow light, when there’s a million-to-one chance that you injure yourself or someone else? Quite a lot of people would, sadly. But what if they knew that inevitably there would be a parallel universe where an accident was certain to occur?

These hypothetical examples suggest that the existence of a multiverse is likely to make people more willing to take gambles where there is a small chance of a big payoff, but less willing to take gambles where there is small chance of a big loss.

Note that the former is akin to the risk/reward offered by speculative stocks (where the loss is limited to the value of the shares purchased, but the upside is unlimited), while the latter best describes high-quality government bonds (where the upside is limited, but there is a very small chance of a major loss). Thus, if you accept the premise of a multiverse, you should be biased towards holding equities over bonds.

Somehow, I just knew we’d end up at TINA (there is no alternative to equities).

[This entry was posted by Robin Wigglesworth on Monday September 12th, 2016 08:30 at FT Alphaville]

Read some more from the other source:

Canadian economists have calculated the date of the death of humanity

Humanity can die already by the year 2290, economists calculated by canadian research firm BCA. In theory this means that investors have less reason to save and more to invest in risky assets
Humanity may have to live no more than 700 years is an extremely short time scale in the history of human existence, which has about 3 million years, the report of a canadian company, BCA Research, specializing in investment research. Been sent to clients last week, the review entitled “Risk of the day of judgment” (there RBC) chief strategist BCA Research Peter Berezin, a former economist at Goldman Sachs, is set to a non-trivial investment analysis whether to come to an end and what is the probability of total destruction of human civilization. Although such a hypothetical event is considered to refer to the so-called “tail risk” (tail risk), implying a very low probability to underestimate it it is impossible. “The most disappointing that our analysis implies a high probability of disappearance on the horizon of several centuries, and perhaps much earlier”, — says the review.
Recognizing that the calculation of these probabilities is only a mind game, Berezin however, estimates at 50% probability of destruction of mankind to 2290 year and 95% that this will happen to 2710 year.

“The great filter” 

The emergence of intelligent life on Earth itself was a rare event — otherwise people could count on detecting any traces of their own kind among 400 billion galaxies in the observable Universe. However, so far there are no signs of the existence of extraterrestrial civilizations, says Berezin. American scientist Robert Hanson in 1996, explained this using the concept of the “Great filter”, which among other things implies a high probability of destruction of humanity at the stage of advanced technological development. “We already have technologies that allow you to destroy the Earth, but we haven’t developed technology that will allow to survive in the event of a disaster,” writes BCA Research.
Berezin gives an example: in 2012, scientists at the University of Wisconsin in Madison in USA have shown that it is possible relatively easily to breed a new strain of flu is more dangerous than the “Spanish flu” that wiped out 50 million people worldwide in 1918. And this is not to mention the threat of nuclear war, asteroid impact, pandemics, the emergence of unfriendly artificial intelligence, out-of-control climate change.

The theorem on the end of the world 

Berezin reminds about another catastrophic hypothesis — “the theorem of the doomsday” (Doomsday argument) astrophysicist Brandon Carter. Carter reasoned that if people today are in a random place in the whole of human history, chances are good that we live in the middle of this chronological scale. Economist at BCA Research borrows this idea comes from the fact that, to date, lived on Earth, according to rough estimates, 100 billion people. If civilization is destined to die, it will happen once on the planet is born even 100 billion people.
If humanity can colonize other planets or create a giant orbital ships, the probability of extinction of earthly life because of a disaster will decrease sharply, says Berezin, but at the moment the probability of doomsday is much higher than it was in the distant past or will in the future. According to him, civilization is apparently close to a turning point — the third in its history, overcoming that humanity will be able to rapidly raise the IQ by genetic technologies. Developing intelligence, in turn, will ensure the emergence of more and more intelligent people. However, with the increasing opportunities also increase the risks of end, says the economist, referring to a theory about the end of the world.
“A theorem on the end of the world” claims that humanity cannot or will not exist forever. It also does not set any upper limit of the number of people who will ever exist, no date of extinction of mankind. According to some calculations (the canadian philosopher John Leslie), there is 95% probability that humanity will die within 9120 years. But Peter Berezin suggests that the world could end much earlier. In his analysis he assumes that the total fertility rate in the world stabiliziruemost on the level of 3.0 (now is about 2.4), and comes to estimates, that the probability of 50-95% mortality of mankind will come before the year 3000.

Investment “ideas” 

The reasoning Berezina, if we assume that humanity in the foreseeable future, waiting for death, the accumulation of funds ceases to be so attractive. A lower savings rate, in turn, implies a higher interest rate and thus cheaper bonds, says the economist.
Another hypothesis that Berezin analyzes the impact on the choice of investment strategy, the concept of “parallel universes”, each of which are one and the same natural laws and which have the same world constants, but which are in different States. Proponents of this idea, among which are such famous physicists like Stephen Hawking, Brian Greene and Michio Kaku, I suppose, that we live in a multiverse which consists of many “universe bubbles”.
If the investor believes in the multiverse, he may be more predisposed to the bets that can bring a big payoff with very low probability, and thus harder to avoid a very small risk of large losses, says Berezin. The fact that the choice of investment person, may consider that even if he does not earn her much money, it will comfort the idea that this will be one of his “doubles” in a distant galaxy or a different quantum state.
Therefore, if we assume that there are billions of parallel universes, where billions “versions” of each person, for investors, is preferable to more risky assets (such as stocks) is less risky (bonds), concludes the economist BCA Research. [Source: EDESKNEWS | Orig. posted on Sep 15, 2016.]