In our final episode of the year, I converse with author and data scientist Coco Krumme about the benefits and costs of optimization in finance, industry, and our daily lives. We explore AI and its overlap with optimization. We also consider the pros and cons of life optimization and finally discuss the extreme challenge of opting out.
Show Notes
Optimal Illusions: The False Promise of Optimization by Coco Krumme—Penguin Random House
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Transcript
Welcome to Money for the Rest of Us. This is a personal finance show on money, how it works, how to invest it, and how to live without worrying about it. I’m your host, David Stein. Today is episode 505. It’s titled, “Optimization, AI, and Opting Out with Coco Krumme.”
In this, our final episode of the year, I have a conversation with Coco Krumme, whose work I’ve referenced this past May in episode 480 on optimization. In that episode, I mentioned Mervyn King, former governor of the Bank of England, wrote, “As humans, we don’t optimize. We cope. Yet, there’s a great deal of optimization occurring, that has brought incredible benefits to humans. There are also costs.”
Coco Krumme describes herself as a writer, applied mathematician, and occasional filmmaker. She earned a master’s and PhD from MIT. Her book, Optimal Illusions: The False Promise of Optimization, was published last year. Her consulting business helps research teams with computational science and strategy in agriculture, climate science, logistics, materials, and biosciences.
She writes on her LinkedIn profile “I have some fancy pants degrees from fancy schools, and I was a professor for a while, but I don’t consider myself a fancy person.” These days she writes “I mostly live in a small rural place where I get to pretend to be a farmer.”
In our conversation, Coco and I discuss “What is optimization? What are the benefits and costs?” We explore AI, and where it overlaps with optimization. We consider the pros and cons of optimizing our lives and finally discuss the extreme challenge of opting out. I hope you enjoy this year-end episode. We’ll be back on January 8th, 2025 with episode 506.
David Stein: Coco, welcome to Money for the Rest of Us. I read your book this year. We touched on it some in an earlier episode. This book and the concept of optimization so intrigued me that I wanted to bring you on the show and kind of have a conversation of the positives and negatives of optimization. But to start off, how do you describe what optimization is, and what are some of the benefits, and ultimately some of the trade-offs? .which clearly is what your book’s about. But just if somebody doesn’t know what optimization is, what is it?
Coco Krumme: Okay, well, we could start there. It’s great to be here, David. Thank you. So optimization I like to think about it as there’s a technical definition and then there’s sort of a cultural, colloquial definition. And the technical definition is it’s a set of technologies to, within a bounded space, set an objective function, and optimize, minimize or maximize some value within that space.
And I’m far more interested in the sort of cultural implications of this set of technologies that’s been evolving for a few centuries, but really, evolution as a technology and a way of thinking has accelerated in the last few decades. And that cultural definition takes its cue from the technical one. So it’s minimizing or maximizing, and it involves a way of thinking that constrains things in order to minimize or maximize some value. So we might be talking about minimizing downtime in transportation schedules.
In order to do that, to make that optimization, involves a huge set of philosophical assumptions, that in this case we’re minimizing time; we’re minimizing wasted time, and we’re arranging things and looking at the world, looking at schedules, and looking at airplanes or trains or whatever schedule we’re looking at, in a particular way that allows for that optimization to happen. And that’s sort of where the book kicks off from, is trying to understand how that point of view came about.
David Stein: What are some things, like clear benefits? Where has it led us?
Coco Krumme: There are so many benefits all around, right? And I often get pushback or accused/accusations on this book of being a Luddite or being against optimization. And I’m actually totally blown away by many of optimization’s fruits. The book is simply an inquiry into what are the tradeoffs associated with those fruits, and sort of what we’ve lost.
But some examples—I go into modern agriculture in the book. We have a wider array of foodstuffs at—and I wrote this or did the research before this latest wave of inflationary pressures, but I’d still argue it’s largely the case that we’re in an era of some of the cheapest food in human history. And just the abundance in terms of quantity and availability, variety of foodstuffs around the world is mind-boggling.
And that is a result, in large part, of optimizations of all sorts. Treating farming as something to make more efficient has led us here. Certain monetary inventions—commodity markets, for example, has led us here. Certain optimizations, as I was alluding to earlier, in transportation or supply chains, in getting petroleum to different places on the globe has allowed that. So that’s just one example, is the cheapness and availability of food, but there are numerous others, most of them pertaining to kind of the quality and ease of our Western lifestyles.
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