Review

Author(s): D. G. Champernowne
Review by: D. G. Champernowne
Source: Journal of the Royal Statistical Society. Series A (General), Vol. 126, No. 4 (1963),
pp. 599-600
Published by: Wiley for the Royal Statistical Society
Stable URL: http://www.jstor.org/stable/2982589
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 1963] Reviews 599

The book contains many interesting examples from widely different backgrounds and
its presentation is for the most part elementary. Some of the special topics are treated
superficially; in particular, those involving stochastic models, although comprehensive
references are given at the end of each chapter. A similar criticism applies to the discussion
of particular methods for simplifying the computations. For example, there is no warning
that an indiscriminate use of the Lagrange multiplier technique might lead to greater
complication. Nevertheless, the dynamic programming approach is undoubtedly powerful
and the book should encourage further applications.
J. A. BATHER

6. Decision, Order and Time in Human Affairs. By G. L. S. Shackle. Cam-

bridge, University Press, 1961. xiv, 302 p. 82". 35s.

Many important advances in economic theory have been made during the last three
decades by replacing the "economic man" by someone less grasping, intelligent and well-
informed, but perhaps more alike to actual business men. It is no longer assumed that
everyone always acts so as to maximize profits.
In particular, the Oxford Economists Research Group, by listening to a sequence of
business executives throughout the last quarter of a century, have been led to suggest
a number of sensible modifications to our assumptions concerning the manner in which
business decisions are made. Valuable suggestions have been offered on how to
decide what new products a firm shall introduce, and how they should be priced, and
useful light has been thrown on the rules of thumb by which it may be decided whether
to undertake particular investment projects.
Professor Shackle benefited early from the stimulus of such new thinking, and he came
to realize that the mental processes which led up to business choices under conditions of
considerable uncertainty were intuitive and crude by comparison with the highly sophis-
ticated accounts which were all that traditional theory had to offer.
This realization led Professor Shackle to spend much of the next 25 years in developing
the following basic ideas. When a business man contemplates a particular step about
whose outcome he is extremely uncertain, his attention is liable to fix on two particular
possible outcomes, the one involving a financial gain and the other a financial loss. The
two outcomes selected for attention may be thought of as the most pleasant and the most
unpleasant prospects. However, they are not, as a rule, the most profitable and the most
unprofitable of the possible outcomes, for the pleasantness of an outcome depends not
only on the financial profit, but also on the plausibility of the prospect of getting so much
profit or more. The most pleasant prospect may thus be that of a fairly plausible profit
well below the maximum possible profit that may result from the step: similarly the most
unpleasant prospect may be that of a highly plausible and considerable loss, which is yet
well below the maximum possible loss that the step may involve. It is, says Shackle, the
pleasantness and unpleasantness of these two particular hypothetical outcomes, which the
business man is likely to bear in mind in considering whether to take the step. Likewise
in deciding which of several steps to take, what he will compare is the set of pairs of
numbers representing the pleasantness and the unpleasantness of the two outcomes
particularly associated with each step. An adventurer will give greater weight to the
pleasantness, a cautious type will give greater weight to the unpleasantness that may
result, when he is deciding which, if any, step to take.
Had Professor Shackle been content to announce and develop these reasonable ideas
in his lucid style, and to illustrate their applicability by quoting men of affairs, he would
by this alone have made a substantial contribution to economic theory. In fact, he has
attempted a far more ambitious intellectual task, namely to develop a "theory of degrees
of belief" to serve as a basis of his theory of decisions, since none of the orthodox subjec-
tive "theories of probability" bear any recognizable relation to the mental processes
which he attributes to practical men.

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 600 Reviews [Part 4,

Professor Shackle argues that anyone's degree of belief in a hypothesis may be gauged
by the degree of surprise one would potentially experience if he discovered that hypothesis
to be false.
In order to manipulate these concepts of degrees of belief and of potential surprise,
Professor Shackle naturally needs rules for answering such questions as the following:
Q. 1. How may one's degrees of belief in (a) the conjunction, (b) the disjunction, of a
set of hypotheses be expressed in terms of one's degrees of belief in the individual
hypotheses ?
Q. 2. How is one's degree of belief in a hypothesis A (potentially) modified by evidence
assuring one of some other hypothesis B which is compatible with A although
not necessarily essential to A?
In the crucial Chapter X, "Potential Surprise Axiomatised", Professor Shackle reveals
the essential structure of his theory in all its vulnerability. In answer to Q. 1(a) it can be
deduced from the axioms that one's degree of belief in the conjunction of a set of hypo-
theses is the least of one's degrees of belief in them individually: and according to the
first version given of Axiom 7, it can be deduced that one's degree of belief in the dis-
junction of the set of hypotheses equals the greatest of one's degrees of belief in them
individually. But Axiom 7 which is relevant to Q.2 as well as to Q.l(b) is given in three
different forms and has evidently given Professor Shackle great trouble. Questions l(b)
and 2 still have not been satisfactorily answered and it is rather doubtful whether they
ever can be on the basis of this system of axioms.
Professor Shackle's theories have attracted widespread interest. Indeed, the most
fascinating feature of this book is the impartial display of the criticisms that have come
from expert and nincompoop alike, and the courteous, albeit indiscriminatinig, manner
in which the most puerile and most devastating attacks are praised, both for their pro-
fundity and for their great contribution to understanding, and then are brushed aside.
It is impossible in a brief review to give either a just appreciation of all the original
ideas offered in this book, or a fair and adequate criticism of its analytical shortcomings.
D. G. CHAMPERNOWNE

7. The Essence of Biometry. By John Stanley. Montreal, McGill University

Press, 1963. xiii, 147 p. 93". $5.

Practising biometricians are usually very much aware of the gaps between the purely
deductive arguments from a priori models found in most statistical textbooks, and the
problems of data analysis (Professor Tukey's term) that they encounter in real-life coopera-
tion with biologists. I opened this book by a Professor of Zoology hoping that I should
get a clear view of how biometry looked from the biologist's angle, and how far existing
biometrical techniques really helped to answer the questions that biologists raise. I was
sadly disappointed. There were almost no actual biological data; most of the examples
used fictitious data and generated the inevitable lack of interest that such data always do.
It would be disturbing indeed if one had to draw the conclusion that the standard methods
discussed were so little relevant to life that no real data could be found to illustrate them.
A lively, though contentious, book could be written from this standpoint, but Professor
Stanley has chosen to expound once again the well-worn topics of distributions, significance
tests, least squares, regression, correlation and so on. Unfortunately, his statistical know-
ledge appears to be unequal to the task, and the book abounds with misconceptions and
misleading statements. Thus in the opening pages "likelihood" and "a posteriori proba-
bility" are used confusingly in a description of the theory of probability. In discussing
distributions the author confuses population parameters and sample estimates of them,
and attempts to establish a difference between "standard deviation" and "standard error"
which bears no resemblance to accepted definitions. The method of calculating degrees
of freedom is ascribed to Student and the t-test to Fisher! The methods advocated for
fitting sigmoid curves are individual, but have nothing to do with the method of least
squares, which is the concern of the chapter in which they occur. Although the author

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