Published on Wednesday, September 3, 2025
Uncertainty: clarity in the fog
Summary
The world faces climatic, geopolitical, demographic, and technological uncertainties. Distinguishing between probabilistic, rare-event, and epistemic uncertainty helps turn fog into useful knowledge and enables more lucid, resilient decision-making.
Key points
- Key points:
- Uncertainty can be classified into three levels: probabilistic (recurring, modelable events), rare-event (requiring scenarios and historical parallels), and epistemic (when data are lacking and assumptions are questioned).
- During globalization, probabilistic uncertainty prevailed, enabling sophisticated economic models. COVID-19, by contrast, exposed the force of epistemic uncertainty, characterized by the absence of historical benchmarks.
- Today, economics broadens variables and scenarios to address epistemic uncertainty. The IMF projects outcomes ranging from a “low-ambition” world, where global GDP merely triples, to a “high-ambition” scenario with GDP multiplying by thirteen and living standards by nine.
- Markets tend to treat uncertainty as probabilistic, but acknowledging epistemic uncertainty is essential: widening perspectives, avoiding complacency, and remaining agile are key to managing the future.
Geographies
- Geography Tags
- Global
Topics
- Topic Tags
- Macroeconomic Analysis
- Geostrategy
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