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!

Saturday, February 27, 2010

Names, not numbers

Via a commenter at Aaronovitch Watch, a Very British Davos, thagyuveymutch. Oooh. I'm trying to cut down on the incoherent ranting and wishing of horrible fates on fellow human beings at the moment, so I'll just say that they've got their mates and I've got mine. And that I hope it rains.

Even the name is annoying. As a cry against the homogenization and impersonality of the modern world, "Names, not numbers" has a pretty fundamental logical flaw. Which is that if what you're concerned about is being treated as an individual, then it's quite clear that dozens or even hundreds of people might have the same name as you (see right sidebar), but an identification number you're given is unique to you alone. That is kind of the whole point of identification numbers.
26 comments this item posted by the management 2/27/2010 04:16:00 AM

Wednesday, February 24, 2010

Thursday music link

"Nostalgia ain't what it used to be" ... A joke of course, but one of the strangest experiences is realising that something (say, 1980s FM synthesisers) which was once the acme of trend, but which for the last ten yaers of your life has sounded horribly, toe-curlingly dated, now doesn't sound all that dated any more. The next stage is surely death.

I wonder the composer of this thinks of this? I wonder what he will think in twenty years' time.

Labels: , ,

5 comments this item posted by the management 2/24/2010 11:19:00 PM
Probably the most important thing you won't read this week

The bank lending channel revisited. Yes thank you. No matter how many times we "revisit" this amazingly cut and dried question, the answer is going to be the same - Bernanke & Blinder (1988) are just wrong. Banks make loans and then work out how to fund them, they don't raise deposits and then work out how to lend them. Therefore there basically is no "credit channel" of monetary policy; bank lending is exogenous (or rather, it's exogenous to the monetary policy regime; it's determined to a significant extent by overall macroeconomic conditions but not in a straightforward or easily analysable way).

The fact that banks post-fund rather than pre-funding in general, and that loan decisions are not made on the basis of the supply of deposits, has been available for years and years to anyone who cared to ask, but it's nice to see that you can establish it by econometrics too. And then it's nice to see you can establish it again, ten years after the Bank of England Quarterly Bulletin articles which first established it, via slightly different econometric means. Will this stop people talking about bank lending as if it were a policy instrument, or a cause of the economic outlook rather than a consequence? I very much don't think so. Bernanke & Blinder '88 is like Martin Amis's reputation or those plastic things that hold six-packs together - it simply doesn't biodegrade.
8 comments this item posted by the management 2/24/2010 03:43:00 AM
The foundations of mathematics and the roots of finance

An important spreadsheet-checking tip; if a company has both negative net asset value and operating losses, it will show up as having a positive return on equity.

(Extra credit question: Is the number you get by dividing the losses by the shareholders' funds deficit a meaningful quantity to measure?

For the journalism and English majors: If company X lost $100 last year and lost $50 this year, has the attributable profit "increased" or "decreased"? (Significant amounts of money has been lost and lifelong friendships broken up, basically over this point of usage).
7 comments this item posted by the management 2/24/2010 12:32:00 AM

Thursday, February 18, 2010

Thursday music link

I took the boy to the Imperial War Museum a while ago for a trip (overall a very good museum, although a couple of the wall captions take a very hawkish view of the strategic bombing campaign, although don't try getting an eight-year-old interested in this). While there, I came up with an idea for a new exhibition for them: "Peterloo to Amritsar: The British Army In Action Against Unarmed Demonstrators, 1819-1920"[1]. Back in the mists of time, I noted this strange blind spot on the part of George Orwell, who in his essay on Kipling accused the English of having a "one-eyed pacifism" when it came to "making mock of uniforms that guard you while you sleep", when the facts were that for more or less Kipling's entire life the British Army had been used as an instrument of aggression abroad and repression at home.

20 Seconds To Comply. Mental. I am a real sucker for those Bomb Squad productions. There's definitely a branch of alternate history which breaks off in 1990, when alt-Metallica choose Hank Shocklee instead of Bob Rock to produce the black album[2] and I think heavy metal would have been much better for it.

[1] I stretched the dates in order to get Croke Park in there too.

[2] It absolutely could have happened, via the Rick Rubin connection, although frankly the Anthrax/Public Enemy collaboration shows that this could have gone wrong and it's probably best to follow Doctor Who's advice about meddling in the past. We might have got another chance if The Cult had followed "Electric" with a Bomb Squad album, thus changing the course of Goth - in this case, whatever else happened we would have been saved Sonic Temple.
50 comments this item posted by the management 2/18/2010 04:37:00 AM

Friday, February 12, 2010

Political parables

Brad and Matthew Yglesias and many others have spent many words on a simple point which can be illustrated by narrative.

Once upon a time there was a great pianist, who played the piano in a whorehouse. Never once did anyone tell him what tunes to play, or give him a single bit of instruction about how to play them. However, he was never selected to appear as designated soloist at Carnegie Hall, because he wasn't a concert pianist, he was a guy who played piano in a whorehouse.

Two points:

1. Because I have given up on anyone understanding these things for themselves, the point is that when an otherwise honest person goes to work for an utterly dishonest news organisation, it is not a defence on their part to say that their own work is not interfered with. For the first reason, which is that they are providing window-dressing for the other stuff; a news organisation which is utterly dishonest is one that will be ignored by everyone, while a dishonest news source that occasionally prints an honest article will get an audience for its dishonest stuff. And for the second reason, that they cannot give this guarantee for all time; one day, as sure as turkeys get throttled in December, they will find that their stuff is interfered with, on a very important issue, and the people who get fooled by their altered article will not necessarily notice the journalist's attempt to resign with his reputation intact.

2. The guy in the anecdote of course said "please don't tell my mom I play piano in a whorehouse; she thinks I'm an investment banker".
4 comments this item posted by the management 2/12/2010 01:17:00 PM
Friday trivia

Ireland and Romania, but no other states of the European Union and surprisingly few worldwide. What?

Answer: Much ingenuity in comments, but I was thinking of something a lot simpler - Ireland and Romania are both (and surprisingly rarely) countries with one-word official names ("Ireland" and "Romania"). Particularly strange in the case of Ireland because it's regularly referred to as "The Republic Of Ireland", much more often than, say, "The Kingdom of Spain" or "The French Republic" are referred to by their actual official names. Presumably it comes from the need to distinguish the football team from NI; the Federal Republic of Germany is the only other country that gets this treatment at all.

It was suggested in comments a few times that Romania and Ireland are also unusual in having a large block in a neighbouring country who want to unify with them, and presumably this is all tied up with the name thing, as country names are often used to express political opinions (cf the Imperialist Definite Article). It is worth taking the trouble to get Ireland right in my experience - in all honesty the only type of person who will correct would be a) a very nationalistic Irishman who b) had taken a dislike to you for other reasons anyway[1], but I suspect that constantly referring to "The Republic of Ireland" or "Irish Republic" in conversation would set teeth on edge and mark you out as ignorant. If you're interested in the history, here it is, at length, although not at anything like as much length as the (Former Yugoslav?) Republic of Macedonia.

[1] I see from the Wikipedia page that stylebook for every British media organisation except the Economist is to be ignorant. Also that if you're planning on serving an extradition warrant in Ireland from Britain, you'd do well to bear in mind that apparently the Supreme Court is made up of nationalistic Irishmen who have taken a dislike to you anyway.

Update: Congratulations to ML who sneaked under the wire and got the right answer while I was typing that in!
22 comments this item posted by the management 2/12/2010 12:25:00 AM

Thursday, February 11, 2010

The World's Most Dangerous Economist

One regularly sees polls like this one, listing the leading lights of the profession and their greater and lesser degrees of culpability for the crisis of the day. But they almost always assume that economists are only dangerous to your wallet, which is sadly no longer the case; Robert Auman, Nobel Laureate 2005 and a game theorist, has been an advisor to the Israeli government for years on strategic aspects of dealing with negotiations with the Palestinians. I humbly suggest that these have been a much bigger disaster than anything Long Term Capital Management did with money that rich people could afford to lose.

Aumann shared the 2005 Nobel with Thomas Schelling, theorist of strategic deterrence. Deterrence was, of course, economics' "Purple Rain" - the big success that convinced economists that they could do anything, and led to all manner of hubris and ill-advised projects.
4 comments this item posted by the management 2/11/2010 11:51:00 PM
Thursday music link

Q: Why would H'Angus the Monkey be at home in Gotham City?

A: (answer to come later today)

Hint: Consider "Moonraker".

Update!: Richard got it in comments. Both "Gotham" and "Moonraker", for all that they sound all cool and edgy, are derived from tales of English rural idiots. The 16th century book Merry Tales of The Mad Men of Gotham was popular enough 300 years later for "Gotham" to be a shorthand for "halfwits", and for everyone to know what Washington Irving meant when nicknaming Manhattan "Gotham" in Salmagundi; the Batman location presumably followed via a number of connections to New York, depending on which internet reference you believe. "Moonrakers", on the other hand, are Wiltshire yokels, because a bunch of them were apparently once caught trying to catch the reflection of the moon in a pond, believing it to be a cheese. Revisionists with Wikipedia editing powers have recast this as a story of clever smugglers fooling the excisemen by pretending to be stupid, but frankly how likely is this (particularly since Wiltshire is not on the coast).

But the Hartlepool idiots apparently never made it to Hollywood. Shame. I can sort of see an outline treatment for an action-adventure film called "Monkeyhanger", but I would guess that if you were being seriously considered for casting in it, something would be up with your career. Eventually filmed starring Jason Statham and not long before DVD release.

I Want You. I think Alex noted that the Fall, like several other influential bands, are really best experienced through the medium of press coverage and interviews rather than through listening to their actual records (this is also, to reignite an old debate, basically the difference between JAMC and Sonic Youth). But there are odd moments - this one, "Cruisers Creek", Kurios Oranj - when you can sort of see what all the fuss was about.
11 comments this item posted by the management 2/11/2010 12:46:00 AM

Wednesday, February 10, 2010

Human capital in terrorism, another slight return

Just struck me - try googling the phrase Athens bomb. Unlike British jihadis, Greek anarchists seem to be quite able to manufacture and plant large car bombs without getting caught. They also seem to do this without constantly flying back and forth for "training" in places like Yemen and Pakistan[1]. There remains, IMO, a distinct puzzle of why it is that the British jihadi milieu has such a big human capital shortage. Two possibilities come to mind. First, we could be looking at an organisational capital problem - what John Kay calls "architecture". On this model, the Athenian anarchists have a functional party structure and work together naturally with a get-it-done attitude. Al Qaeda in the UK, on the other hand, is one of those rambling matrix structures from hell, always flying its employees around on pointless training courses, nobody talking to each other and all the time being spent in meetings listening to self-selected windbags sounding off their latest piece of wishful thinking. The other is simply that organisational competence is at least partly a function of how hostile your environment is to being competent in; I've heard from a few corners that there's actually quite a large iceberg of law enforcement activity that goes on, shutting down bomb factories and cells, and that they only put out press releases on a small fraction of them. Which in turn would imply that the key organisational competence of the Greek terrorists is the ability to keep their mouths shut - which brings me back to my original human capital posts - that recruitment of wannabe jihadis from the population of internet message board loudmouths is one of the things that we definitely want to see. If there's one thing that would make me sleep more easily in my bed at night, it would be the thought that Al Qaeda was recruiting bloggers.

[1] Of course Greek anarchists, being Greek, will all quite probably have done their compulsory military service and might have got relevant training that way? I dunno. Most Greek guys I know spent their military service either sitting in an office handling purchase orders for spuds, or fucking about in motorboats round the Aegean. I would have thought that detailed explosives and sabotage training would be reserved for someone who'd made a bit more of a commitment in career terms.
13 comments this item posted by the management 2/10/2010 03:13:00 AM

Monday, February 08, 2010

Rental yields, slight return

Let's just bash this one into the ground, shall we? Via Felix, a bit of fluff on the London property market, by one of those American financial commentators of the sort who often give off the impression that they'd be a lot happier if they and their countrymen wore the toga, as in the good old days of the Imperium. How strange we Londoners are with our valuable houses and expensive taxis! Of course we can't afford them, because the man from the Wall Street Journal can't and, well, civis Romanus sum! So we must be the equivalent of those funny Neapolitan counts that Norman Lewis wrote about, desperately trying to keep up appearances while starving to death. The alternative hypothesis - that these funny drinky-stabby-crooked-teethy people are an actual country of 60 million people, whose capital city sustains a daytime population of 7 million people, many of them in jobs that pay better than the Wall Street Journal - is too strange to contemplate.

But anyway, putting my national amour propre to one side, let's look at the numbers on this "bubble". An apartment overlooking Hyde Park costs "$1.5million"! That's a hell of a lot compared to a much larger condo in Florida, or a mansion out in Wisconsin or ...

... but what with this being a market economy and all, we don't value properties based on their square footage, or their similarity to another property in a completely different location. We assesses their value by one method and one method alone; the method of comparing the value to the monthly rent. Looking on the Foxtons' website reveals that similar apartments are renting for about £775/wk, which would imply a rental yield of about 4%. That's not all that great in my opinion, and I don't think I'd be a buyer at that level for a landlord investment, but it's not what I'd call a bubble, is it?

Felix actually notes this! "On the other hand, the UK avoided two aspects of the US bubble: the originate-to-distribute business model, which destroyed underwriting standards; and the soaring ratio between the cost of buying and the cost of renting"

Well yes. Except "the soaring ratio between the cost of buying and the cost of renting" is hardly a minor technical detail and it's not "an aspect" of a bubble - it's the exact definition of what the difference is between a bubble (when valuations become detached from the cash flows underpinning them), and a period of strong economic growth combined with low interest rates (which is what the UK actually had).
23 comments this item posted by the management 2/08/2010 01:09:00 AM

Friday, February 05, 2010

In your face, Superfreakonomics

I'm not just saying that the finance/business-school/institutional approach to understanding economics is better than the price theory and regressions approach. I'm saying that even if I were to share Levitt & Dubner's seeming fixation with prostitutes, this blog would do it a lot better, and we wouldn't need to go around looking for "counterintuitive" data sources either - the details of the British prostitution industry are publicly available to anyone who reads VAT tribunal decisions for fun. Thanks very much to Richard in comments, who notes "My personal favourite humanising detail is Statement 57 in the second case".
4 comments this item posted by the management 2/05/2010 05:12:00 AM
Thursday music link a day late

There is more real emotion, insight into life and consideration of mortality and the value and fragility of human relationships in a thirty minute financial advisor's fact-find than in most of the stuff on telly today. Harold Pinter would have made a fucking brilliant life assurance salesman.

Psycho Candy. I've lost the reference to an excellent essay on the JAMC which pointed out that the cornerstone of their success was a technological advance - they were the first band to realise that reverb and feedback could allow one to combine the two rock cliches of "making a huge noise" and "standing around impassively and sneering", thus allowing them to be louder and more deafening than Iron Maiden without jumping around like a load of hairy twats. (Edit: with regard to the preceding sentence, the management do not propose to enter into correspondence with Velvet Underground fans, unless said VU fans are members or ex-members of the Jesus and Mary Chain).
25 comments this item posted by the management 2/05/2010 12:11:00 AM

Thursday, February 04, 2010


All good fun for the sceptics, who are having a go at the homepaths again. Entirely appropriate to mock these people, but I do worry that the general attack on woo has got caught up a bit with our national pastime of saying that "that money could have been spent on the NHS!". As far as I can see, a lot of people who feel uncomfortable in simply having a go at woo for being woo, have decided to hang their outrage on the peg of the fact that it costs money, and that this money is coming from our household god. It all seems a bit depressingly financially illiterate to me; another example of the truism that very few people actually know how much money a million dollars is.

A finger exercise to show you what I mean. The most often quoted cost of homeopathy to the NHS is £12m. That's a lot of money, but is it a lot of money to the NHS? Specifically, how many GPs could you buy for that[1]?

Average salary of a GP is £110,000[2], so £12m a year will buy you just under 110 doctors. Assuming a 50 week year and 45 hour workweek, that's 247,500 man/hours of GP time per year.

Divided by the c30,000 general practitioners in the UK[3], that's almost exactly 8 hours and 15 minutes of extra GP-time per doctor.

Assuming that an average GP consultation takes 15min[4], this means that if you cancelled £12m of woo and factors of production were completely fungible, you could put in 33 more appointments per doctor per year.

Or in other words, if the ability to prescribe homeopathic medicine saves the average doctor slightly less than 0.6 appointments per week, it's breaking even.

Does it beat this bogey? Who knows, I certainly don't. Does it make a big difference either way? Clearly not. The amounts of money spent here are just too small to move the dial. I would guess that on plausible assumptions, the NHS is spending more or less the right amount of money on woo.

[1]GPs are the most relevant substitute I think; although even one is too many, very few people take woo pills for cancer, and if they had a mind to, I think I'd rather they went to an NHS homeopathic practice because it would presumably send them on to a proper hospital quicker. I've done the same calculation using community nurses and it's not qualitatively different.

[2]Normally I would multiply by a factor of 1.5 to 2 to get the fully loaded cost, but the convention when discussing NHS costs is to quote the "salary" of a GP as the headline payment made, out of which the GP has to pay his own NI and overhead costs.

[3] I'm using out of date figures, which conveniently means I'm also not dealing with the devolution to Scotland and Wales.

[4] The last DoH study reckons about 11.5min for a consultation, but there is overhead here that has to be allocated.
17 comments this item posted by the management 2/04/2010 02:43:00 AM

Wednesday, February 03, 2010

When elephants dance, mice make puerile jokes

Obama to meet Dalai Lama? I think that this may end up demonstrating the difference between transatlantic headline-writing cultures.

The New York Times or similar, if going for a jokey caption, will probably stretch for "A beloved but largely ineffectual figurehead of a country owned by the Chinese, meets a Nobel Peace Prize winner" or some such.

The UK press will simply be hoping for any sort of minor argument, simply so that the meetings can be described as an Obama-Lama-ding-dong.


4 comments this item posted by the management 2/03/2010 12:04:00 AM

Tuesday, February 02, 2010

Repeating material from comments sections

Somewhere between a parable and a koan ...

If you're doing a PhD in Applied Statistics, specialising in sampling theory, how many times do they make you write your dissertation?

(This was the basis of an actual conversation between me and a colleague, where we were arguing over what I believed to be an entirely sensible generalisation from a single case. He pointed out that he had a degree in statistics and thus could be assumed to have expertise in the area; I countered that he only had a single degree in statistics and would have to take his finals at least 30 times before I could be confident he hadn't passed them by luck).
8 comments this item posted by the management 2/02/2010 05:02:00 AM

Monday, February 01, 2010

Strings and picks, a minor irritation

Just thinking idly about buying a guitar, and consequently picking up a couple of guitar magazines. I note that something that irritated me about them fifteen years ago is still a problem. That is to say, that when writing about an guitarist with a distinctive tone, they will go into loving detail on the amplifiers, speakers and effects pedals used, but will (often) neglect to specify the make and gauge of strings he uses and (nearly always) omit the kind of plectrum.

Not only that, but they will actually discuss this amazingly annoying ommission in a jokey way, implying strongly that only the world's worst anorak could possibly care about it. If you think about it for a minute, though, it's crystal clear that while different electronic components are more or less interchangeable in their effect on an electric signal, the type and thickness of the actual guitar strings is going to make a massive difference to the signal itself, which no amount of subsequent processing is going to be able to reproduce. It's somewhat less obvious that a plectrum is going to make a big difference, but when you think about it, a) a string is going to make a different sound when plucked with a hard item than with a softer one, and b) you attack the strings and hold your wrist very differently when playing with a large plectrum from playing with a small one.

Not only that, but guitar-magazine journalists will swoon in mystical awe about the fact that good players sound "like themselves", even when playing different instruments through different amplifiers! Of course you can "hear their distinctive tone from a few notes", fool, they're playing with the same strings and the same plectrum!

I presume that the reason for this policy is that plectrums cost 50p, and so it would be economically ruinous to the advertisers to accidentally let it slip that you are never going to sound like Yngwie Malmsteen if you don't use the thick bevelled plectra which are to his taste. But even so, grrr.
30 comments this item posted by the management 2/01/2010 12:43:00 PM

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