known unknowns

This blog post accompanies the SDPB Monday Macro segment that airs on Monday, April 4, 2022. Click here to listen to and watch the segment.

On April 4th, the Ness School of Management and Economics (NSME)—home of Monday Macro on the campus of South Dakota State University—will host Known Unknowns, an afternoon of public lectures, panel discussions, and conversations on macroeconomic-policy uncertainty, financial-market volatility, and their implications for real estate markets across the U.S. Additionally, panelists will discuss the implications for housing availability and affordability of local planning and zoning practices—real-estate policy—in and around Sioux Falls. The NSME will host the event in the historic State Theatre in Sioux Falls, SD.

Lately, the term uncertainty—that which we know is unknowable—fills the headlines and the thoughts of policymakers of the macroeconomic sort and otherwise. As I wrote in a recent post, Knight Fall, Frank Knight (1885 – 1972), preeminent economist and a founding member of the (University of Chicago’s) Chicago School of economic thought, now-famously distinguished between the concepts of risk and uncertainty. According to Knight (1921), risk is “measurable uncertainty” (233). This is to say, risk is a concept that refers to a distribution of possible outcomes about which we are reasonably well informed, because of theoretical deduction—the probability of rolling a three with a fair, six-sided die is 1/6—or empirical induction—the probability of being struck by lightning is 1/500,000. To use Knight’s (1921) terms, 1/6 is an “a priori” probability, whereas 1/500,000 is a “statistical probability,” and both characterize risk (224-225).

In stark contrast, uncertainty—or, in the parlance of economics, Knightian uncertainty—is a concept that refers to a distribution of possible outcomes about which we know very little, because “there is no valid basis of any kind for classifying instances” (225). In the context of policymaking, risk and, to an extent larger than we often care to admit, uncertainty broadly describe what economists refer to as the limits of our knowledge; that is, the limits of what we as policymakers, for example, can know about the economy. And in addition to (a priori and statistically measurable) risks and (unmeasurable) uncertainties of unforeseeable macroeconomic outcomes, such as the pandemic lockdown, supply-chain disruptions, labor-market search-and-matching inefficiencies, and interstate sectoral shifts in housing demands, economists must manage model, parameter, and timing uncertainties. (For more on these uncertainties, see Monday Macro segment, “Knight Fall.”)

Known Unknowns will feature two lectures and two conversations. Ryan McKnight (Law, NSME), who dreamt up the event, will open and close it. In the first presentation, Joe Santos (Economics, NSME) will identify the macroeconomic policy challenges that confront policymakers amid historically loose monetary and fiscal policies, historically low interest rates, and historically high inflationary pressures—transitory or otherwise—fueled, in part, by supply-chain bottlenecks and labor shortages. Additionally, Joe will argue why the limits of our macroeconomic knowledge are on full display. In the second presentation, Zhiguang (Gerald) Wang (Finance, NSME) will explain why the pattern of fantastic returns in U.S. stock markets in the last two years is threatened by the determination of the Federal Reserve to tighten monetary policy—a determination that, somewhat ironically, may also serve to quell fear in financial markets. Additionally, Gerald will argue why, in the near term, stock-market returns will likely be dominated by growth and technology stocks—such as FAANMGs—or more-traditional value stocks, but probably not both.

Then, Joe will sit down for a Q&A with Mark Vitner, Managing Director and Senior Economist for Wells Fargo Corporate and Investment Bank, to learn’s Mark’s views on all matters related to macroeconomics and real-estate markets—the two areas in which Mark specializes. Mark’s work has featured in multiple publications including, for example, The Wall Street Journal, The New York Times, and Business Week. Mark is also a repeated guest on CNBC and other major networks. Schooled readers may know and rely on Mark for his insightful contributions to the Wells Fargo Economics electronic newsletter. Mark earned his undergraduate degree in economics from the University of Georgia and his M.B.A. from the University of North Florida.

Finally, Brittany Kjerstad McKnight (Law, NSME) will sit down for a Q&A with Scott Anderson, Planning Director for Minnehaha County, and Kevin Smith, Assistant Director for Planning Sioux Falls, to learn their views on housing policies in general and planning and zoning policies in and around Sioux Falls in particular.

Scott studied at Brigham Young University, where he earned degrees in German, Geography, and Urban Planning. After graduating, Scott was hired as the Planning Director for the city of Aberdeen, where he worked from 1987 to 1995. In 1995, he began working in Rapid City, first in the Joint City/Planning Department. In 2000, he took the position of Planning Director in the newly created Pennington County Planning Department. Then, in 2005, Scott moved to Sioux Falls and took the position of Planning Director for Minnehaha County.

Kevin has over 25 years of experience in municipal and regional planning, public works administration, and private consulting. Kevin earned a B.S. in Geography from South Dakota State University and a M.A. in Geography from Western Illinois University. Kevin is AICP Certified from the American Institute of Certified Planners (AICP).


Knight, Frank H.  1921.  Risk, Uncertainty and Profit. New York: Sentry Press.

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