Smoothly runs the Don

Earlier, I wrote something about changing distributions. More recently a couple of examples of this phenomena have come up, so let’s make things concrete. Suppose x(t) is randomly distributed according to N(0,s(t)) [normal distribution with mean zero and standard deviation s(t)] where s(t) is a continuous, bounded and slow function of t. Suppose we sample […]

What is rational?

Someone might not have read their Wittgenstein, let alone their Bakhtin. At Overcoming Bias, we find: [People give] views on risks of nanotechnology even when [...they] know that they do not know much about the subject and these views become strengthened along ideological lines by more facts. Facts do not matter as much as values: […]

American Asymmetry

Foreign Nations Can Be Sued on Property Taxes, U.S. Court Says yet The US embassy owes more than £1m in unpaid congestion charges and fines, according to the London mayor’s office. Pot, kettle anyone? Keeping with the iron mongery theme, the flatiron building, New York.

Errors in Cost Benefit Analysis

A recent Bloomberg article referring to the AEI-Brookings Institute paper Has Economic Analysis Improved Regulatory Decisions? made me think again about cost benefit analysis. The paper condemns both the quality of cost benefit analysis used in determining the impact of regulation and the `tenuous’ use made by policy makers of that analysis. Undoubtedly that is […]

Spread thin can be tasty

Just as pressure groups can sometimes be effective because they are passionately concerned about one view that most people oppose but don’t care much about, so one of the problems with the tax system is that it is easy to see how much an individual would benefit from lower tax, but harder to see who […]

Servicer-related convexity in RMBS

An aban- doned shoe and a banana skin on Old Street to begin a post on the willingness of ABS servicers to abandon their trades if things go badly. Specifically, Tanta on Calculated Risk makes a good point about rising defaults in RMBS: Foreclosure waves create additional losses just by being foreclosure waves. You can […]

Three things to reflect on

Private equity executives are “paying less tax than a cleaning lady”. A study of 25,000 travellers shows that only 40% believe they are getting good value for money from the railway system. (Maybe you would be better off going by barge?) Britain’s energy policy fails to stack up, says expert panel. Just possibly, might it […]

How long does it take a good idea to triumph?

There’s a provocative post on Econlog which raises an interesting question. Suppose someone has a good academic idea. How long does it take to be become part of the canon of accepted wisdom? Clearly some ideas hit quickly: many of these are simple technical improvements which are obviously correct. Some never hit because, although correct, […]