Butterfly effect

The Jolly Contrarian’s Glossary The snippy guide to financial services lingo.™ Go Premium Index — Click the ᐅ to expand: Glossary Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

The butterfly effect is a much misunderstood observation of complexity theory - that the behaviour of a complex system is highly susceptible to its initial configuration, and small differences in that initial state — in an ecosystem, the flapping of a butterfly’s wing — may mean the system behaves in vastly — and quite unpredictably — different ways.

This is not the same as saying, as people are prone to, that “a butterfly flapping its wings in the Amazon causes a hurricane in China”.

To the contrary, it is to make the opposite point: these “systems are so complex there's absolutely no chance of predicting how they will behave.”

Butterfly wing flaps are discrete independent events. One butterfly flapping its wings will not make more or less likely another butterfly’s decision to do the same, let alone any of the other environmental factors that might cause a tropical storm.

Furthermore, there are millions of butterflies in the Amazon, all discretely wing flapping, and Gaussian nature of these events will largely cancel each other out, putting butterfly wing flapping in “Mediocristan” and not “Extremistan”.

If individual-butterfly-wing-flapping-in-Brazil status is a material part of the complex system that generates weather systems in China, then how many other factors are as or more material.

It is respectfully submitted there would be trillions. Have fun deconstructing the causal chain to see how much of a causal role your butterfly actually had. As Elizabeth Warren has found to her cost, just ten generations dilutes your ancestor’s genetic contribution to your DNA to 1/1024, and in the same as way there is no meaningful sense in which a flighty butterfly causes Chinese hurricanes.