Like Brad Delong's site, but with more liberal use of the F-word and less about the New York Times.
Wednesday, October 22, 2008
Humiliating questions which I really ought to know the answer to, am 99% sure that I do know the answer, but which bug me out of all proportion, an occasional series
completely off topic, but what do you think of the following argument about economic forecasts?
"I trust person X's forecast of GDP growth/investment/industrial growth because person X, by virtue of being an investor in the relevant market, has a substantial amount of money at stake. On the other hand, I think that person Y is so totally full of crap because he is an academic forecaster/analyst who has zero money actually invested. He is therefore far less likely to be rigorous and methodical than X because he does not stand to lose anything if he gets it wrong."
I've heard this argument from a number of different people over the years. Has anyone at all compared the economic forecasts of "academic" forecasters with those of economists/analysts either on the sell or buy side, at investment banks or funds?
No, it's pure brand. It has been for some time, since it's been simply a marketing name used by L'Oréal since the 60s.
L'Oréal has laboratories and does R&D, but the science job openings are listed as at L'Oréal International - mostly in New Jersey it seems, but that may be an artifact of my search methods. It pays for a variety of post-doctoral fellowships, and has made a big deal of its support for women in science and offers postdoc research grants to women in the sciences by sponsoring a UNESCO program under the L'Oréal brand name.
Ergo, one can deduce that the firm actually has laboratories and hires presumably reputable scientists. However, none of its scientific activities appear linked to the Garnier name, which while originally being the name of an actual chemist who invented some kind of hand lotion, has been dead for ages and whose eponymous firm was bought out by L'Oréal over 40 years ago.
This has been another edition of answers it longer to type out than to find thanks to Google.
"Former Federal Reserve Chairman Alan Greenspan says the current financial crisis has uncovered a flaw in how the free market system works and that has shocked him.
Greenspan told the House Oversight Committee on Thursday that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had proven in the latest crisis to be wrong.
Greenspan said he had made a 'mistake' in believing that banks in operating in their self-interest would be sufficient to protect their shareholders and the equity in their institutions.
Greenspan said that he had found 'a flaw in the model that I perceived is the critical functioning structure that defines how the world works.'
"I trust person X's forecast of GDP growth/investment/industrial growth because person X, by virtue of being an investor in the relevant market, has a substantial amount of money at stake. Therefore he has a disincentive to give an accurate forecast if that forecast will affect his wealth deleteriously.On the other hand, I think that person Y is impartial because he is an academic forecaster/analyst who has zero money actually invested. He is therefore far more likely to be rigorous and methodical than X because he does not stand to lose anything if he gets it wrong."
In fact person X, having a dog in the race, may make a more accurate forecast (though there's confirmation bias etc) but he won't broadcast it to you.
I do believe that you've been personally acquainted, though, with research scientists who stir the tanks of pink chemical sludge that gets put into bottles of Oil of U^HOlay up at Procter & Gamble on Tyneside.
Now, I want to find out which advertising muppet was the first to think it was a good idea to put the side-effects verbiage for American pharmaceutical ads into the mouths of someone in a doctor coat, and twat the bastard.
In my experience, there are good and bad economic forecasts from academics and investors (and even some stockbrokers), but anyone trying to pull rank like that would get a bit of a black mark in my book.
I'm also acquainted with someone who apparently invented a miracle water purification process that will save the third world (I only know this because his face is all over a load of posters on the Tube advertising the regional development agency who gave his company a grant or something). I'd like to point that I'm a big enough man to have had my attention drawn to this obviously wonderful invention, rather than to the fact that his face is every bit as bug-eyed and funny-looking as it was when we had a fight over my use of the epithet "goofy cunt".
Well, it's only a convention that a Minister should be a member of one of the Houses of Parliament. It's a requirement that they must hold the confidence of the Commons, but that is all.
The precedent is Patrick Gordon Walker between the "if you want a nigger for a neighbour" campaign and his second failed attempt to get back in the Commons (this rather suggests that it wasn't just the racism that dunnit, no?); Wilson appointed him as forry sec anyway, and was advised he could do so by the cabinet secretary.
Clearly it's the Hon. James Palumbo (is he still Hon. or has he lordified yet?). Which is a pity, but themzer breaks.
Being 3,500 miles from the Tube clearly has even more advantages than I had previously thought.
Now, I'll see your Labs Garnier and raise you the Waltham Institute for Pet Care, owned by Mars Inc., makers of Pedigree Chum and Trill.
Actually, that's a bit of a headfuck to think that the people making Kitekat are the mortal rivals of the people making Kit-Kats. Is there a Nestle Institute of Student Boycotts?
Well since 2000 it's just been Garnier, so probably not anymore.
ReplyDeletecompletely off topic, but what do you think of the following argument about economic forecasts?
ReplyDelete"I trust person X's forecast of GDP growth/investment/industrial growth because person X, by virtue of being an investor in the relevant market, has a substantial amount of money at stake. On the other hand, I think that person Y is so totally full of crap because he is an academic forecaster/analyst who has zero money actually invested. He is therefore far less likely to be rigorous and methodical than X because he does not stand to lose anything if he gets it wrong."
I've heard this argument from a number of different people over the years. Has anyone at all compared the economic forecasts of "academic" forecasters with those of economists/analysts either on the sell or buy side, at investment banks or funds?
No, it's pure brand. It has been for some time, since it's been simply a marketing name used by L'Oréal since the 60s.
ReplyDeleteL'Oréal has laboratories and does R&D, but the science job openings are listed as at L'Oréal International - mostly in New Jersey it seems, but that may be an artifact of my search methods. It pays for a variety of post-doctoral fellowships, and has made a big deal of its support for women in science and offers postdoc research grants to women in the sciences by sponsoring a UNESCO program under the L'Oréal brand name.
Ergo, one can deduce that the firm actually has laboratories and hires presumably reputable scientists. However, none of its scientific activities appear linked to the Garnier name, which while originally being the name of an actual chemist who invented some kind of hand lotion, has been dead for ages and whose eponymous firm was bought out by L'Oréal over 40 years ago.
This has been another edition of answers it longer to type out than to find thanks to Google.
Next in this series - Dsquared wakes up in the middle of the night with this question ringing in his head:
ReplyDelete"OK, so who's the Minister of Sound?"
Off-topic:
ReplyDeleteOMFG:
"Former Federal Reserve Chairman Alan Greenspan says the current financial crisis has uncovered a flaw in how the free market system works and that has shocked him.
Greenspan told the House Oversight Committee on Thursday that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had proven in the latest crisis to be wrong.
Greenspan said he had made a 'mistake' in believing that banks in operating in their self-interest would be sufficient to protect their shareholders and the equity in their institutions.
Greenspan said that he had found 'a flaw in the model that I perceived is the critical functioning structure that defines how the world works.'
http://ap.google.com/article/ALeqM5jSSJzC1UNusL4eW21xsZ7HJcM8WQD9409R0O4
WORD FAIL ME.
THANKS A LOT, ALAN. BETTER LUCK NEXT TIME.
"I trust person X's forecast of GDP growth/investment/industrial growth because person X, by virtue of being an investor in the relevant market, has a substantial amount of money at stake. Therefore he has a disincentive to give an accurate forecast if that forecast will affect his wealth deleteriously.On the other hand, I think that person Y is impartial because he is an academic forecaster/analyst who has zero money actually invested. He is therefore far more likely to be rigorous and methodical than X because he does not stand to lose anything if he gets it wrong."
ReplyDeleteIn fact person X, having a dog in the race, may make a more accurate forecast (though there's confirmation bias etc) but he won't broadcast it to you.
I do believe that you've been personally acquainted, though, with research scientists who stir the tanks of pink chemical sludge that gets put into bottles of Oil of U^HOlay up at Procter & Gamble on Tyneside.
ReplyDeleteNow, I want to find out which advertising muppet was the first to think it was a good idea to put the side-effects verbiage for American pharmaceutical ads into the mouths of someone in a doctor coat, and twat the bastard.
In my experience, there are good and bad economic forecasts from academics and investors (and even some stockbrokers), but anyone trying to pull rank like that would get a bit of a black mark in my book.
ReplyDeleteI'm also acquainted with someone who apparently invented a miracle water purification process that will save the third world (I only know this because his face is all over a load of posters on the Tube advertising the regional development agency who gave his company a grant or something). I'd like to point that I'm a big enough man to have had my attention drawn to this obviously wonderful invention, rather than to the fact that his face is every bit as bug-eyed and funny-looking as it was when we had a fight over my use of the epithet "goofy cunt".
"OK, so who's the Minister of Sound?"
ReplyDeleteTrick question - it's a Secretary of State.
Well, it's only a convention that a Minister should be a member of one of the Houses of Parliament. It's a requirement that they must hold the confidence of the Commons, but that is all.
ReplyDeleteThe precedent is Patrick Gordon Walker between the "if you want a nigger for a neighbour" campaign and his second failed attempt to get back in the Commons (this rather suggests that it wasn't just the racism that dunnit, no?); Wilson appointed him as forry sec anyway, and was advised he could do so by the cabinet secretary.
Clearly it's the Hon. James Palumbo (is he still Hon. or has he lordified yet?). Which is a pity, but themzer breaks.
Being 3,500 miles from the Tube clearly has even more advantages than I had previously thought.
ReplyDeleteNow, I'll see your Labs Garnier and raise you the Waltham Institute for Pet Care, owned by Mars Inc., makers of Pedigree Chum and Trill.
Actually, that's a bit of a headfuck to think that the people making Kitekat are the mortal rivals of the people making Kit-Kats. Is there a Nestle Institute of Student Boycotts?