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Today's Book Quote

From Perry Mehrling's Fischer Black and the Revolutionary Idea of Finance; at Goldman Sachs in the 80s, in the DOS days, the buttoned up theorist puts together an app for traders in a way that anticpates web designers:

He insisted that all words on the screen be spelled out completely (no abbreviations), that everything fit on a single screen, and that calculation be as fast as possible. [pg.249]

Firing Rockets Into Israel

Michael Totten continues doing great freelance pieces like this one entitled "Eyeless In Gaza".

Interestingly, he is told that Islamic Jihad has cut down on firing rockets from Gaza into southern Israel because all the journalists have gone to northern Israel to cover the conflict there:

“How many rockets are hitting the city right now?” I said.

“Not as many today,” he said. “Because of the war in Lebanon.”

“What does Lebanon have to do with it?” I said.

“All the journalists forgot about us during the Lebanon war. So the terrorists are waiting for the media to come back before firing rockets again. They don’t want to waste those they have.”

Some Economics of Sexual Harassment "Training" II

Yesterday I discussed sexual harassment "training". I pointed out that this is likely to be more common amongst salaried workers because the decision-makers regard it as having low marginal cost.

Of course ... some will poo-poo this argument, and claim that there is no way that rational economic thinking can help us understand such a vital part of modern life.

Ahem. If that is the case, why are the videos they show in those seminars both old, and rarely updated?

I'll tell you why: because there is a significant marginal cost to having them redone.

Everyone has to go because the marginal cost is low, and the presentation is outdated because its marginal cost is high.

Some Economics of Sexual Harassment "Training" IV

Welcome to the last post on this topic. So far we've learned that:

1. "Training" is likely to be imposed more commonly upon salaried employees because the marginal cost visible to the decision-maker is small.
2. That "training" methods are unlikely to be updated because the marginal costs are high.
3. That we could probably make this a whole lot cheaper if we focused on the nodes rather than the branches of transmission.

Note that # 3 is in direct conflict to the first two items, suggesting that optimality is not part of the decision-making process.

 

Today's Book Quote

From Perry Mehrling's Fischer Black and the Revolutionary Idea of Finance, on a common problem:

Other distortions creep in from other sources, most importantly the tendency of human beings to have excessive faith in the results of complicated calculations rather than asking whether and how they make sense. A case in point is the Black-Scholes options formula. [pg. 248]

Getting the Point

Kyra Phillips - a CNN anchor - left her mic on during the broadcast of a live speech by the President.

Little Green Footballs gets the problem here: everyone cares about what she said about her sister-in-law, but no one cares that this happened on a news network and nobody was paying attention to what the President said.

What, pray tell, were they paying attention to?

And ... if they don't care about the President in New Orleans on the anniversary of Katrina, do you think this is somewhere you should go for news about things you care about?

SUU Advertising

The School of Business at SUU has new postcard mailers out (click to show full size).

These crow about our recent AACSB accreditation.

The scene shows a MAcc alumnus posing up in the mountains, with the snows of late Spring around her, and Brian Head - the highest peak in the area - in the background.

Sadly, the photo also shows the damage wrought by bark beetles on the stands of Engelman Spruce. The process is natural, but we are at the peak of a multi-century cycle - soon the forest will die off, then the bark beetles, and a new forest will grow up temporarily free of predation.

GDP Growth Update

There was an update to second quarter real GDP growth today - it's up to 2.9% from 2.5%.

This isn't big enough to change my letter grade: C on my scale, and a B on the scale common at U.S. colleges.

Sexual Harassment "Training" I

I did my mandatory sexual harassment seminar before school started: two hours, and it is required every other year for all employees.

I wonder what the cost-benefit decision looks like to spend 1/8 of a days' salary budget on this every year?

I can envision what the marginal thinking was like. From the perspective of a public institution where most of the employees are salaried, the marginal cost of offering this sort of "training" is close to zero. The rational thing to do is then to "buy" a lot of this nonsense.

It would be an interesting economic study to see if this sort of thing is less common with hourly employees. If it is, I'd say we've got a mandate that needs to be changed.

Today's Book Quote

From Perry Mehrling's Fischer Black and the Revolutionary Idea of Finance, about how Black's job on Wall Street at Goldman Sachs amounted to an academic position without the academic nonsense:

He was, said a former student from

Chicago

days who also wound up on Wall Street, the only person who ever had fun working on Wall Street. He enjoyed an enviable position, and people who were working harder than he was naturally resented it. [pg. 242]