Annoyed with self – this is obvious and important and I missed it…

Why is the “PC” thing so bad? Why should it be killed at birth? Outside a general discomfort I could not get to the logic of why it seemed to me such a problem – and irked me so.  He / she is a “modern liberal fool” is not enough.

The answer is now clear (finally to me):

1. The number of false positives is too high. (Screen all males for some deadly disease and find 1 in a thousand have it – more importantly 999 don’t)……. screen a million people getting on a plane lest they be terrorists  and find 1 in 1.0 m is and .99999m are not.

2. Every false positive imposes a cost equal to the cost of preventing one (true) positive on all the true and the false. The one jump in (maybe) 1,000 that breaks a kids arm on a trampoline is a 0.001 chance. The other jumps have a 0.999 chance of causing no harm. But all true and false bear the cost of preventing the  0.001 chance.

3. Apply to a remark saying “Humpty Dumpty should have been able to be put back together and kids will be psychopaths if taught otherwise”. False positives…. high, very high. Maybe at least as high as the trampoline case. Impose cost of all those false positives to catch the 0.001 true and 0.999 bear the cost……..

3. The more “PCness”, the more false positives, the more cost.

4. Original problem costs outweighed by TOTAL false positive costs – PLUS cost of inability to see problem.

5. The net is …… needless, and by definition, rising net cost.

Now apply that to – universal health screening to “you name it”… and you have….. most of the fiscal states of dead Western style health systems, pension regimes and welfare systems.

Persevere with this – the germ of the insight came from Dubner and Levitt's latest “Superfreakenomics”…(p.92) but the expansion (bow to current paranoia re plagiarism) is entirely mine thank you…..

worth a chase and a thought…

Thanks to MR

Abstract: Behavioral scientists routinely publish broad claims about human psychology and behavior in the world’s top journals based on samples drawn entirely from Western, Educated, Industrialized, Rich and Democratic (WEIRD) societies. Researchers—often implicitly—assume that either there is little variation across human populations, or that these “standard subjects” are as representative of the species as any other population. Are these assumptions justified?

Here, our review of the comparative database from across the behavioral sciences suggests both that there is substantial variability in experimental results across populations and that WEIRD subjects are particularly unusual compared with the rest of the species—frequent outliers.

The domains reviewed include visual perception, fairness, cooperation, spatial reasoning, categorization and inferential induction, moral reasoning, reasoning styles, self-concepts and related motivations, and the heritability of IQ. The findings suggest that members of WEIRD societies, including young children, are among the least representative populations one could find for generalizing about humans.

Many of these findings involve domains that are associated with fundamental aspects of psychology, motivation, and behavior—hence, there are no obvious a priori grounds for claiming that a particular behavioral phenomenon is universal based on sampling from a single subpopulation.

Overall, these empirical patterns suggests that we need to be less cavalier in addressing questions of human nature on the basis of data drawn from this particularly thin, and rather unusual, slice of humanity. We close by proposing ways to structurally re-organize the behavioral sciences to best tackle these challenges.

Keywords: external validity, population variability, experiments, cross-cultural research, culture, human universals, generalizability, evolutionary psychology, cultural psychology, behavioral economics.

 http://journals.cambridge.org/BBSJournal/Call/Henrich_preprint

All the chords you know

Coleman Hawkins, Bud Powell, Kenny Clarke…. not a bad version:

All the Things You Are… for the enthusiast. Bud is away up there here. Europe – early on with no prejudice.

Try to get your head around this…

I came across this simple theory of overoptimism recently (though it was published years ago).  Suppose an agent has at least two actions from which to choose.  An action gives either a payoff one or zero.  For each, the agent has a subjective probability that the action gives a payoff of one.   The probabilities  of success are drawn independently from the same distribution G.  Agent A then chooses one his actions, the one with the highest mean, according to his subjective beliefs.  How do his beliefs about this action compare to those of an arbitrary observer?

Here’s where it gets interesting.  The observer’s beliefs are different from agent A’s.  They are drawn from the same distribution G but there is no reason that the observer’s beliefs are the same as agent A’s.  In fact, the action agent A took will only be the best one from the observer’s perspective by accident.  Actually, the observer’s beliefs will be the average of the distribution G which is lower than the belief of  agent A since agent A deliberately took the action which he thought was the best.  This implies that the agent A who took the action is “overoptimistic” relative to an arbitrary observer.

There are two further points.  If there is just one action, this phenomenon does not arise.  If agents have the same beliefs (a common prior), it also does not arise.  So it relies on diverse beliefs and multiple actions.  The paper is called “Rational Overoptimism and Other Biases” and is by Eric Van den Steen.

This is how to do it… two stories

Iceland farewells McDonald's

9:59AM Tuesday Oct 27, 2009
By Gudjon Helgason and Jane Wardell

Iceland's three McDonald's restaurants will close as the franchise owner gives in to falling profits. Photo / AP

REYKJAVIK, Iceland — All three of Iceland's McDonald's restaurants in the capital Reykjavik will close next weekend, as the franchise owner gives in to falling profits caused by the collapse in the Icelandic krona.

"The economic situation has just made it too expensive for us," Magnus Ogmundsson, the managing director of Lyst Hr., McDonald's franchise holder in Iceland, told The Associated Press on Monday.”

And here is an excerpt from a summarised snapshot by a Cornell academic……..

“Iceland is a modern welfare state, in the spirit of its Scandinavian neighbours and cousins. Everybody reaps the benifits of free health care, free education (from the preschool to the University level), guaranteed pension and high standards of living, while paying the price of a near 50% income tax. Illiteracy, poverty, prostitution and violent crime are virtually unknown in modern Iceland, and the nation is one of the wealthiest in the world, with regard to its size. The main industries are fishing, tourism, geo-thermal industries (e.g. Bláa lónið) and increasingly high-tech industries.”

What N.Z. has yet to discover

Thx Greg M.

Wage Control on Wall Street

This is almost too difficult to believe – a testament to the utterly unproductive nature of envy, jealousy and evidence of the lynch mob sickness running amok globally….

Ironically (given the dead men walking “third way” remnants waiting out time as his boss), UK Central banker Mervyn King  sets out the problems as clearly as any in the WSJ.

“As the U.S. political class blames banker pay for the panic (see above), we'd like to salute Bank of England Governor Mervyn King for speaking a larger truth. Mr. King gave a speech in Edinburgh Tuesday in which he said, in effect, that if a bank is too big to fail, it's just too big. This prompted British Prime Minister Gordon Brown to shoot back that breaking up the largest financial institutions wasn't the answer, adding the now obligatory call for global regulation of banker pay.

One can disagree with Governor King's contention Tuesday that the banking system, and the economy, would be better served by a stricter division between investment banking and commercial or retail banking. But more important than Mr. King's solution was his diagnosis of the problem, which shows more understanding of what caused last year's panic than the usual pabulum about bonuses.

"Why," Mr. King asked, "were banks willing to take risks that proved so damaging both to themselves and the rest of the economy?" His answer: "One of the key reasons . . . is that the incentives to manage risk and to increase leverage were distorted by the implicit support or guarantee provided by government to creditors of banks that were seen as 'too important to fail.'" Politicians—and U.S. Federal Reserve Chairmen—hate hearing that it was their subsidies for credit and for the biggest banks that contributed to the problem.

Mr. King wasn't done: "Such banks could raise funding more cheaply and expand faster than other institutions. They had less incentive than others to guard against tail risk. Banks and their creditors knew that if they were sufficiently important to the economy or the rest of the financial system, and things went wrong, the government would always stand behind them." He concluded: "And they were right."

On this essential point, Mr. King is on target, and it's heartening to hear an important public official highlight the real problem so succinctly. Mr. Brown and U.S. politicians would prefer to point to inadequate "global regulation" of finance. But show us the regulator who could have prevented the panic, even with unlimited power, and we'll show you a world without the freedom to succeed or fail.”