Cliff Asness is a hedge fund manager (basically, an investment advisor for people with a lot of money to put in one place).
I don’t think too highly of investment advisors: people think they get paid for beating the market, while what they really get paid for is selling services to the customer. If markets are efficient, there should be little room for investment advisors at all.
Asness is a little bit different. He’s a believer that markets are pretty damn efficient, but that there are inefficiencies brought about … usually because investors do dumb stuff and you can bet against them.
Bottom line, you can learn some finance from this one.
And, since a Tyler Cowen interview, it will be very wide ranging. This one includes discussion of their favorite Heinlein novella, and why you should watch reality shows with your tweens.
… To a group of people who feel completely ignored and disrespected by their government, it makes sense for them to say I oppose a policy that tells me what I have to do with my money.
It’s just a different, very different way of seeing it. But it’s not being hoodwinked.
That’s such a wonderful example. I think it really shows that people are pretty self-aware. They aren’t ignorant of Obamacare’s benefits. But they also recognize the costs. And to them, the costs — to their freedom, for instance — feel like they outweigh the benefits.
Exactly. Part of the cost is not just the money, right? It’s the cost of having this additional burden put on them by this very distant force that, in their minds, has shown them no regard.
To an economist, this is hugely insightful. We talk all the time about how not all benefits and costs are monetary. Personally, I emphasize to students that monetary benefits and costs are just an easier way to keep score. I don’t ignore the non-monetary stuff, but students often do.
So what I draw out of this part of the interview is that Obamacare supporters my be limiting themselves by thinking about monetary costs and benefits.
There’s more to it than that. Obviously, right?
The thing is, the motivation for restricting your thinking to just the monetary part may well be that they’re perfectly aware of the non-monetary part, and don’t care to admit how significant it is.
If that’s true, it adds support to the idea that the Democrats believed their own BS, or drank the Kool-aid, or whatever metaphor you prefer for this year.
* In my case, I freely admit to being biased and simply not thinking very seriously about anything Trump has said.
… The result is a position that is subjectively sincere, earnest and well-meaning — and objectively racist. … demonstrating, once again, that with the possible exception of handguns and tequila, the most dangerous combination on Earth is passion and ignorance.
The mechanism is an easy one for economists to understand. There’s two dimensions working at cross purposes here.
Condoms do contribute to safety. No one is arguing that point.
But there’s a second point we suppress at our peril: condoms make potential users feel flush/rich with safety. So they’re more likely to undertake risky behaviors.
Economists call these substitution and income effects. Everything we see is a combination of both. Usually the substitution effect is dominant. But the income effect can either enhance or reduce and perhaps even overwhelm the substitition effect. When weird outcomes, like the one with condoms occur, economists look to strong income effects as the expanation.
But, income effects are tough to spot without training. And the casual policy analyst is far too likely to assume that the substitution effect is always dominant.
Oooh, now this is interesting (emphasis is original):
… You mentioned many of your subjects liked Obama because they saw him as an agent of change. Looking at this past election, it was stunning to see how many counties flipped from Obama to Trump. It really does seem that some people voted for Obama and for Trump. I think they saw in both of them, maybe, a potential to shake things up in Washington.
That’s absolutely spot-on. I remember going around to some groups [in rural Wisconsin] right after the Iowa caucuses in 2008, and asking people, “Were you surprised at the outcome?” And many groups would say, Actually, I can see a black president or a woman president. It’s about time we had something different in there! I heard that in a lot of places. Not universally, but in a lot of places. They really did see the possibility that the first African American president could offer something different.
It’s not surprising to me that people would vote for both Obama and Trump — they both promised some kind of change. It just goes to show, too, just why Hillary Clinton was so distasteful to so many people.
So I’m in the ranch store looking at winter outdoorwear, about 7 pm, just before Christmas.†
And I overhear half a conversation: there’s one other guy in the section on his cell phone. You can fill in the blanks.
“Yeah, I guess I’m free.”
“Of course I’ll help. Whadya’ need?”
“No, I don’t got a cougar permit this year. You?”
“Well if he was after your stock why don’t you take care of him?”
“Whadya’ mean your dogs sorta’ have him?”
“Junipers or piñons?”
“Well it don’t sound like you’re taking care of him if you need my help.” [good natured laughter]
“But you got no shot?
“Can you and your dogs hold him in that draw?”
“But you can’t close the deal ‘cause he’s playing you off against your dogs?”
“Smart cat to keep moving back and forth like that.”
“You want me to get on the other side of this cougar, in the dark, with you pointing your gun my way?”
“Hell yes I’d like it better if I was the one who’ll do the shooting.” [more laughter]
“I don’t give a shit if I don’t have a permit. I’ll use mine anyway, but I’m still not coming out there unless it’s me shootin’ in your direction.”
“OK. Yeah, my rifle’s in my truck. I got some lights too.”
“Yeah, I know that road. How many miles off of 56 are you?”
“And you’ll be able to see my headlights?”
“You just keep flashing and I’ll hike up there.”
“If I leave the store now, I should be out there in about an hour and forty minutes.”
You can imagine the vivid mental picture this painted as I eavesdropped from the glove section.
Utah 56 is the road leading west to the Nevada border. That’s about an hour away. Now I’m speculating, but that far out, dirt roads lead off of it north into the Indian Peak Range and south into the Bull Valley Mountains. There’s a lot of cows out there, and some sheep too. This time of year they’d probably be fairly close in near the ranchhouse, close enough to the main road to truck your stock in and out.
Can you imagine sitting out in the dark, waiting for 2 hours, in late December, in the middle of nowhere, with a cougar pinned down a few feet away? All because he came down near your house all hungry, and you set the dogs on him, and gave chase a couple of miles up into the hills?
And yet it’s the 21st century and somehow there’s cell coverage out there? (Analog remained in use here for longer than other parts because it gave better reception out in the sticks).
The vXteens told me last week that while they’re from the country, they’re not country themselves.
That’s me too: I’m just a college town professor. It just happens that I’m close enough to the open range that I saw a buck and a coyote in my suburb this month. We’ve had cougars, cows, and badgers within walking distance of the house too.
And I hear stories like this once in a while.
* I wrote this post several years ago, and saved it to provide some anonymity.
† Most of you have never seen a ranch store. It’s like a department store for people who come to town once a month: clothing heavy on studs and rhinestones, lariats, corral stuff, salt/malt licks, toy tractors, guns and ammo, cowboy hats, and so on. People drop a lot of money there, so it can be a cool place to shop, with good deals on a lot of useful stuff.
Where I live, there are few gated communities. But, they seem to be quite popular with immigrants from Cali. The thing is, they don’t seem to see that there’s not much misery to get away from in deep red Utah.
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