Session 1: Structural forces in 2040

# Session 1: Structural forces in 2040
### Thierry Warin, PhD

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"The peoples are not awake...[There are dangers] which will render a world organization impossible. I foresee the renewal of...the secret bargaining behind closed doors. Peoples will be as before, the sheep sent to the slaughterhouses or to the meadows as it pleases the shepherds. International institutions ought to be, as the national ones in democratic countries, established by the peoples and for the peoples."

Henri La Fontaine, 1913

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### Agenda

1. Introduction

2. Definitions

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class: inverse, center, middle

# 1. Introduction

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class: inverse, center, middle

# 2. Definitions

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# 2. Definitions

Decision Science:

- Certainty

- Uncertainty

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# 2. Definitions

The area of choice under uncertainty represents the heart of decision theory.

Known from the 17th century (Blaise Pascal invoked it in his famous wager, which is contained in his Pensées, published in 1670), the idea of expected value is that, when faced with a number of actions, each of which could give rise to more than one possible outcome with different probabilities, the rational procedure is to identify all possible outcomes, determine their values (positive or negative) and the probabilities that will result from each course of action, and multiply the two to give an "expected value", or the average expectation for an outcome; the action to be chosen should be the one that gives rise to the highest total expected value.

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# 2. Definitions

In 1738, Daniel Bernoulli published an influential paper entitled Exposition of a New Theory on the Measurement of Risk, in which he uses the St. Petersburg paradox to show that expected value theory must be normatively wrong. He gives an example in which a Dutch merchant is trying to decide whether to insure a cargo being sent from Amsterdam to St Petersburg in winter. In his solution, he defines a utility function and computes expected utility rather than expected financial value.[9]

In the 20th century, interest was reignited by Abraham Wald's 1939 paper[10] pointing out that the two central procedures of sampling-distribution-based statistical-theory, namely hypothesis testing and parameter estimation, are special cases of the general decision problem. Wald's paper renewed and synthesized many concepts of statistical theory, including loss functions, risk functions, admissible decision rules, antecedent distributions, Bayesian procedures, and minimax procedures. The phrase "decision theory" itself was used in 1950 by E. L. Lehmann.

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# 2. Definitions

The revival of subjective probability theory, from the work of Frank Ramsey, Bruno de Finetti, Leonard Savage and others, extended the scope of expected utility theory to situations where subjective probabilities can be used. At the time, von Neumann and Morgenstern's theory of expected utility proved that expected utility maximization followed from basic postulates about rational behavior.

The work of Maurice Allais and Daniel Ellsberg showed that human behavior has systematic and sometimes important departures from expected-utility maximization.

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# 2. Definitions

The prospect theory of Daniel Kahneman and Amos Tversky renewed the empirical study of economic behavior with less emphasis on rationality presuppositions. It describes a way by which people make decisions when all of the outcomes carry a risk.

Kahneman and Tversky found three regularities

- in actual human decision-making, "losses loom larger than gains";

- persons focus more on changes in their utility-states than they focus on absolute utilities;

- and the estimation of subjective probabilities is severely biased by anchoring.

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# 2. Definitions

What is intelligence?

https://www.dni.gov/index.php/what-we-do/what-is-intelligence

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Three Mission Objectives refer to foundational intelligence missions the IC must accomplish, regardless of threat or topic:

- Strategic Intelligence—inform and enrich understanding of enduring national security issues;
    - Anticipatory Intelligence—detect, identify, and warn of emerging issues and discontinuities;
    - Current Operations—support ongoing actions and sensitive intelligence operations.

Four Mission Objectives identify the primary topical missions the IC must accomplish:

- Cyber Intelligence—provide intelligence on cyber threats;
    - Counterterrorism—understand and counter those involved in terrorism and related activities;
    - Counterproliferation—counter the threat and proliferation of weapons of mass destruction;
    - Counterintelligence—thwart efforts of foreign intelligence entities.

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Source: https://www.dni.gov/index.php/what-we-do/ic-budget

]

|             Fiscal Year            | NIP Budget  Requested | NIP Budget  Appropriated | MIP Budget  Requested | MIP Budget  Appropriated | Total  Appropriated |
|:----------------------------------:|:---------------------:|:------------------------:|:---------------------:|:------------------------:|:-------------------:|
| 2022                               | $62.3                 |                          |                       |                          |                     |
| 2021                               | $61.9                 |                          | $23.1                 |                          |                     |
| 2020                               | $62.8                 | $62.7                    | $23.0                 | $23.1                    | $85.8               |
| 2019                               | $59.9                 | $60.2                    | $21.2                 | $21.5                    | $81.7               |
| 2018                               | $57.7                 | $59.4                    | $20.7                 | $22.1                    | $81.5               |
| 2017                               | $54.9                 | $54.6                    | $18.5                 | $18.4                    | $73.0               |
| 2016                               | $53.9                 | $53.0                    | $17.9                 | $17.7                    | $70.7               |
| 2015                               | $50.4                 | $50.3                    | $16.6                 | $16.5                    | $66.8               |
| 2014                               | $52.2                 | $50.5                    | $14.6                 | $17.4                    | $67.9               |
| 2013                               | $52.6                 | $49.0                    | $19.2                 | $18.6                    | $67.6               |
| 2012                               | $55.0                 | $53.9                    | ---                   | $21.5                    | $75.4               |
| 2011                               | ---                   | $54.6                    | ---                   | $24.0                    | $78.6               |
| 2010                               | ---                   | $53.1                    | ---                   | $27.0                    | $80.1               |
| 2009                               | ---                   | $49.8                    | ---                   | $26.4                    | $76.2               |
| 2008                               | ---                   | $47.5                    | ---                   | $22.9                    | $70.4               |
| 2007                               | ---                   | $43.5                    | ---                   | $20.0                    | $63.5               |
| 2006                               | ---                   | $40.9                    | ---                   | ---                      | ---                 |

]
]

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# 3. SARS-CoV-2 and uncertainty

- Catalyzing economic trends

- Reinforcing nationalism and polarization

- Deepening inequality

- Straining governance

- Highlighting failed international cooperation

- Elevating the role of nonstate actors

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# 3. Structural Forces

Four core areas:

- demographics

- environment

- economics

- technology

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# 3. Structural Forces

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# Population Growth

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## 3.1 Demographics

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## 3.1 Demographics

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## 3.1 Demographics

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## 3.1 Demographics

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## 3.1 Demographics

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## 3.1 Demographics

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## 3.2 Environment

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## 3.2 Environment

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## 3.2 Environment

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## 3.3 Economics

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## 3.3 Economics

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## 3.3 Economics

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## 3.3 Economics

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## 3.3 Economics

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## 3.3 Economics

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## 3.3 Economics

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## 3.3 Economics

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## 3.3 Economics

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## 3.3 Economics

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## 3.4 Technology

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## 3.4 Technology

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## 3.4 Technology