Economics and similar, for the sleep-deprived

A subtle change has been made to the comments links, so they no longer pop up. Does this in any way help with the problem about comments not appearing on permalinked posts, readers?

Update: seemingly not

Update: Oh yeah!

Tuesday, September 29, 2009

Statistical significance vs practical significance

What a depressingly sordid week, every other news story seems to be about child abuse. The Vatican PR guy decides that attack is the best form of defence, having a go at other major world religions and passing on the comforting news that "between 1.5% and 5%" of priests are paedophiles. I would note that for the purposes of frequentist statistics, this means that it is impossible to reject the null hypothesis that there are no paedophile priests at all, and am frankly surprised that they didn't try that one on, it would have been just as convincing.
6 comments this item posted by the management 9/29/2009 06:11:00 AM

Monday, September 28, 2009


Top two headlines on Reuters right now:

1. Anger in France and Poland after Polanski arrest

2. Poland okays forcible castration for pedophiles

Talk about mixed messages. ("mieszane wiadomości")

Update: The Polish bill apparently also "criminalises any attempt to justify paedophilia". This is all a bit awkward, isn't it?
0 comments this item posted by the management 9/28/2009 10:21:00 AM

Friday, September 25, 2009

Stands still the clock at ten to three? And is the Economist Big Mac index still fundamentally misconceived?

I think this year must mark the fifteenth anniversary of my first letter to the Economist pointing out that the Big Mac is, in fact, not a homogeneous commodity worldwide - it differs from country to country in fat content, calorific value and even weight, according to local tastes. Thinking about it, the Big Mac Index can plausibly claim to be the major methodological forerunner of Freakonomics, as it combines the two methodological techniques of choosing "quirky" instruments more valuable for their amusement value than their validity, and not checking anything to see whether it's economically meaningful.

Trivia point: Nick Leeson claimed to be able to distinguish the Big Macs sold in different SouthEast Asian countries in a blind test. I am not sure how the logistics of this one might have worked so it might be apocryphal.


14 comments this item posted by the management 9/25/2009 10:10:00 AM
A short note on Keynes

Lots of people appear to be forgetting this one or getting it wrong; the important difference between "rational expectations" and Keynesian macroeconomics really doesn't have all that much to do with behavioural psychology, stock market bubbles or any such. Keynes did write chapter 12 of the General Theory (the one about the nature of long term expectations formation) and the Post-Keynesians are right to say it was and is very important. But the fact is, the central model of the General Theory of Employment, Interest and Money is a rational expectations model.

I'll repeat that - expectations in the General Theory are rational, and in equilibrium all of agents' forward-looking beliefs are borne out. People are not systematically wrong. You can look it up if you don't believe me. Keynes did actually believe that businessmens' expectations were volatile and driven by non-rational factors[1] but, correctly anticipating criticism on this score, he didn't make this assumption essential to his model. In the Keynesian underemployment equilibrium, people correctly anticipate a low rate of demand, correctly infer that this will result in a low level of profitability and thus correctly make the decision not to invest. It's a rational expectations equilibrium.

The difference with the soi-disant "rational expectations" school is over the expectations-forming process with respect to the effect on price and output of monetary policy, not anything else. Hope that's cleared up now.

[1] The phrase "animal spirits" also terribly abused. It's got nothing to do with evolutionary psychology, or psychology at all.
8 comments this item posted by the management 9/25/2009 01:47:00 AM

Thursday, September 24, 2009

More snubs, please

quite. I am wholeheartedly glad that Obama snubbed Brown, and hope he keeps snubbing him for the forseeable future. It was Will Rogers who noted that the United States of America never lost a war or won a conference; they could whip the whole world on the battlefield, but when they sat down to negotiate with Costa Rica, they were doing well to hang on to their undershirt.

I have a feeling that Brown/Obama would be rather like that. Seriously, when Barack Obama finally deigns to sit down in a room with Her Britannic Majesty's Prime Minister and First Lord of the Treasury, will it be because he's thought of a load of lovely presents he wants to give us? Like thump it will. It'll be because he wants something else from us, probably more troops for Afghanistan, and no we can't borrow their helicopters.

As Ajay said in B&T comments, the USA has two types of allies; the type that they give things to, and the type that give things to them. We're not Georgia or Israel; we're much better off trying to have as few of these little tete-a-tetes as possible.
2 comments this item posted by the management 9/24/2009 05:15:00 PM

Tuesday, September 01, 2009

Denis Gets It Done

I note from the Companies House website that the annual return for EISCA Ltd has now been filed, three months late. Congratufuckinglations.
3 comments this item posted by the management 9/01/2009 02:42:00 AM
Business models

I thought I had already made this point, but the search function suggests I hadn't. The Prince James Murdoch[1] critique of the BBC appears to be that it is "too big" and "over-reaching". The idea being that while the BBC website exists and provides excellent content for free, it is impossible for commercial providers to provide a service anywhere near as good and to charge for it.

Once more, while I entirely realise that the current location of the cover price of the Times in my sky rocket rather than the bank account of News International must be a constant source of anguish for Prince James, this is not the sort of pain that anyone has a right to have relieved. Speaking as a consumer and licence-fee payer, the proposal being extended is that while I currently get a lot of news and content for free, if there were to be prescriptive regulation of the BBC I could get a worse service and have to pay for it. I simply don't see what's in this for me.

[1] I am following Alexander Trotman's excellent habit in referring to people who got their job because their family owned the company. To be honest, I don't intend to do this systematically with people who don't bring it on topic by starting to talking about "competition" and "meritocracy".
15 comments this item posted by the management 9/01/2009 12:28:00 AM

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