We hear a lot of people talking about “uncertainty” in social sciences and engineering. So what is uncertainty?
According to dictionary, “uncertainty” is defined as “state of having limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possible outcome”.
Uncertainty inherently is not part of a process, instead it is with people’s observation or measurement. Uncertainty arises not because the process itself is not sure how to evolve and where to evolve, it is because people lack of perfect information of the process under observation, therefore have diverse opinions etc. Uncertainty is different from noise. Noise exists at the surrounding area of a process. Uncertainty can be increased in the presence of noises. In a process where human behaviors can have influences, uncertainty could in return add noises to the process. A typical example is stock market.
In stock market, uncertainties arise because market participants have diversified opinions about the valuations of stocks and their trends. This is because first, people have different accessibility to information; second, they interpret the same information not the same way; and third, the market does not always provide all information.
The future of globalization, the current rise of protectionism, the U. S. tax cut and infrastructure spending … all these development might be definitive processes if we could remove from them the uncertainties due to human elements.