I read on Paul Krugman's blog about this initiative from the Dallas Fed for high school students. Here is a suggestion from the "No county for old men", just reviewed.
This is an example of decision-making under uncertainty. The theory says that if there are two coin toss lotteries, let's say A, and B, which have both known probabilities (50-50) and known pay-offs, a person will choose to participate in the lottery which has the highest expected utility-which is the payoffs coming from head or tails times their respective probabilities.
If you are offered to participate in a lottery in which the probabilities are known but the payoffs are not, you may decide to participate according to your degree of risk aversion: the lower it is, the smaller the payoff increase needs to be to induce you to participate.
In the scene that follows, the shop owner is "offered" to take part in a lottery whose outcome is based on a coin toss. Initially he does not want to bet, because he does not know the payoffs, but then....well, let's see how this works in practice...
Tuesday, February 26, 2008
Monday, February 25, 2008
The Oscar goes to...
The latest Cohen bros.' movie, "No country for old men", is exceedingly brilliant and it fully deserved the 4 academy awards it received last night. It is the movie of maturity for the two brothers since it eloquently combines features already seen in some of their previous works. As in the Big Lebowski, we are introduced to the local events of an American region (this time it's Texas), through the external narration of the local sheriff , Tom Bell (a superb Tommy Lee Jones). As in Fargo, a modest person and Vietnam veteran with a passion for hunting, Llewelyn Moss (Josh Brolin), is trying to change his life forever, until his masterplan becomes too complicated for him to handle. Unlike in Fargo, this time the character is accidentally induced to a change in his life. He happens to find a suitcase full of money during a hunting session, which is the leftover of an unsuccessful drug deal involving some brutally killed mexicans (we are right on the border). As he finds the money, he announces to his wife that their life is gonna change. But then, he commits a mistake. Pulled by mercy for a wounded drug dealer he saw on the crime scene, he goes back there at night to bring him some water (remember the guy is a veteran from 'Nam). He is then almost caught by the criminals and from then on he himself becomes paradoxically the pitiful prey of some obnoxious criminals: not only the mexican drug-dealers, but also another, more dangerous person.
The movie then starts to be centred mainly on the complex personality of this serial killer hired to lead the big man-hunt: Anton Chigarh (Javier Bardem), whose name sounds like "sugar" with Texas accent, but who is everything but sweet. Like a modern Cerberus, he decides the destiny of his own victims, either by his own grand-scheme or, more sadically, by a simple toss of a coin. He brutalizes his victims with a sort of weird gun used to kill animals. But before doing that, he engages them in uncomfortable dialogues, which are supposed to find inconsistency in attitudes and motivations behind their lives' choices. For example, when facing another man-hunter , Carson Wells (Woody Harrelson), just before finalizing his execution, he asks him the following question: "If the rule you followed brought you to this, what good is the rule?".
No country for old men explicitely adopts a violent filming language, but this is a necessity given the content of the movie. It anyhow soon departs from it, moving on a higher narrative record when it starts to give preponderance in the last part to the thoughts and actions of the Sheriff. He suddenly ceases to be the narrator, as he himself is a fundamental part of the tragedy which is happening. We come to know that he is frustrated by the increasing amount violence which is shaking his community, and thus he had planned to retire. The more violence happens, the more he tries to bring order into town, but what we see is just him constantly missing the targets of his investigation plans. Like an inescapable consequence of his decision, we come to understand why what we see is "No country for old men". The movie engages with an end which is appropriately metaphysical, but, intentionally, it does not leave any precise message, which I guess it's the reason why, although breath-taking but sometimes too harsh, the Cohen brothers' movies are so highly enjoyable! A must-see!!
The movie then starts to be centred mainly on the complex personality of this serial killer hired to lead the big man-hunt: Anton Chigarh (Javier Bardem), whose name sounds like "sugar" with Texas accent, but who is everything but sweet. Like a modern Cerberus, he decides the destiny of his own victims, either by his own grand-scheme or, more sadically, by a simple toss of a coin. He brutalizes his victims with a sort of weird gun used to kill animals. But before doing that, he engages them in uncomfortable dialogues, which are supposed to find inconsistency in attitudes and motivations behind their lives' choices. For example, when facing another man-hunter , Carson Wells (Woody Harrelson), just before finalizing his execution, he asks him the following question: "If the rule you followed brought you to this, what good is the rule?".
No country for old men explicitely adopts a violent filming language, but this is a necessity given the content of the movie. It anyhow soon departs from it, moving on a higher narrative record when it starts to give preponderance in the last part to the thoughts and actions of the Sheriff. He suddenly ceases to be the narrator, as he himself is a fundamental part of the tragedy which is happening. We come to know that he is frustrated by the increasing amount violence which is shaking his community, and thus he had planned to retire. The more violence happens, the more he tries to bring order into town, but what we see is just him constantly missing the targets of his investigation plans. Like an inescapable consequence of his decision, we come to understand why what we see is "No country for old men". The movie engages with an end which is appropriately metaphysical, but, intentionally, it does not leave any precise message, which I guess it's the reason why, although breath-taking but sometimes too harsh, the Cohen brothers' movies are so highly enjoyable! A must-see!!
Tuesday, February 19, 2008
Some advice from Gandhi to the school's administration
“A Customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is a part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”
Saturday, February 16, 2008
The Quarterly Journal of Economics
I am surprised at the direction taken by economics these days. Obama is asking behavioural economists policy advice, development is only studied through randomized experiments, and happiness is becoming more important than GDP! If you look at what was published in the Quarterly Journal of Economics in the last years you might indeed be surprised.
According to its website, “The Quarterly Journal of Economics is the oldest professional journal of economics in the English language. Edited at Harvard University's Department of Economics, it covers all aspects of the field—from the journal's traditional emphasis on microtheory, to both empirical and theoretical macroeconomics. QJE is invaluable to professional and academic economists and students around the world”.
While there are still articles about inflation and exchange rates, most are really different from the public’s perception of economics. For example, they look at how Preschool Television Viewing affects Adolescent Test Scores, at how Fox News affects Voting, at how Large are the Effects from Changes in Family Environment (by studying Korean American Adoptees), at how hard it is to obtain a Driver's License in India, at how beliefs are formed, at the effect of Birth Weight on Adult Outcome, at how Friendships Form, at The Political Economy of Hatred , at how to explain sexual behaviour and at the Gender Differences in Mate Selection in a Speed Dating Experiment.
I wonder if it’s the same thing in the leading journal of the profession, the American Economic Review. Probably, with articles like "Fatal Attraction: Salience, Naïveté, and Sophistication in Experimental “Hide-and-Seek” Games"!
Wednesday, February 13, 2008
Translatantic lessons from Mr. Obama
What the super exciting and always interesting election for the Presidency of the United states and the always boring and pathetic n-th election (for another short-lived legislature) in Italy have in common is the following fact: the age distance between the two contenders for the presidency on both sides of the Atlantic is at least 20 years (wow!).
John Mccain, (71), I heard on BBC today, could be the oldest president ever elected. His contender (fingers crossed) Barack Obama, being 46, if elected, would not be that far from Kennedy's record (43 when he was elected). In Italy, Mr Berlusconi is 71, while is contender, Mr. Veltroni is 52. This generational gaps are a timid signal that political campaigns may in the future become more polarized.
I read here that Obama's investment on the votes of the <=25 has been intense. This is good news since it seems to me a major break with the past. The conventional wisdom is that betting on young people's vote is a political disaster. This is a wisdom that assumes young people do not participate, do not vote, do not care... Of course this is a flawed conjecture, I would say a typical example of self-fulfilling prophecy: young people do not vote because they have never found somebody willingto represent them politically. Why would young people invest their time in politics if nobody is listening to them?Actually, that young people are not involved in politics is also dismissed by anecdotal evidence: just look at how strong has been their support to the no-global movement. The way politicians have neglected the youths in the past has produced a terrible side effect: a generation of frustrated voters animated (correctly) by anti-politics rhetoric.
Somebody may see this development as a sort of recurring cycle. The resurgent interest in politics from the young people we see today may in fact come as a response to the terrible political mistake of the Iraq war (just as the 68's movement was with the Vietnam war). If you accept this parallel (and the paradigm that history comes in circle then), somebody has to bear the responsibility to improve on it (remember Kundera?). It seems like Obama, the man of Change, is the man. He is making a coreageous bet, something that may be politically costly, but to which he must be given enormous credit. Reconciling young people with politics is a valueless legacy for every society, and I am sure the US will benefit from it (especially so if Obama gets elected, fingers crossed!!).
I see that somebody in my country (Mr. Veltroni), is trying to learn from Obama's lesson. Unfortunately, he seems to be timedely doing it, but still...
John Mccain, (71), I heard on BBC today, could be the oldest president ever elected. His contender (fingers crossed) Barack Obama, being 46, if elected, would not be that far from Kennedy's record (43 when he was elected). In Italy, Mr Berlusconi is 71, while is contender, Mr. Veltroni is 52. This generational gaps are a timid signal that political campaigns may in the future become more polarized.
I read here that Obama's investment on the votes of the <=25 has been intense. This is good news since it seems to me a major break with the past. The conventional wisdom is that betting on young people's vote is a political disaster. This is a wisdom that assumes young people do not participate, do not vote, do not care... Of course this is a flawed conjecture, I would say a typical example of self-fulfilling prophecy: young people do not vote because they have never found somebody willingto represent them politically. Why would young people invest their time in politics if nobody is listening to them?Actually, that young people are not involved in politics is also dismissed by anecdotal evidence: just look at how strong has been their support to the no-global movement. The way politicians have neglected the youths in the past has produced a terrible side effect: a generation of frustrated voters animated (correctly) by anti-politics rhetoric.
Somebody may see this development as a sort of recurring cycle. The resurgent interest in politics from the young people we see today may in fact come as a response to the terrible political mistake of the Iraq war (just as the 68's movement was with the Vietnam war). If you accept this parallel (and the paradigm that history comes in circle then), somebody has to bear the responsibility to improve on it (remember Kundera?). It seems like Obama, the man of Change, is the man. He is making a coreageous bet, something that may be politically costly, but to which he must be given enormous credit. Reconciling young people with politics is a valueless legacy for every society, and I am sure the US will benefit from it (especially so if Obama gets elected, fingers crossed!!).
I see that somebody in my country (Mr. Veltroni), is trying to learn from Obama's lesson. Unfortunately, he seems to be timedely doing it, but still...
Sunday, February 10, 2008
Who cares about inflation?
Ignorant pseudo-academics who proclaimed themselves to be leftist, alter-globalists and "in touch with people's real problems" often dismiss economists for saying that it is more important to fight inflation than unemployment. In reality, no economists like price stability for the sake of it, and unemployment is the real thing that everybody wants to fight. If Central Banks around the World have decided to focus their monetary policy on controlling inflation, it is because it is the best tool to avoid the serious problems of the economy: recessions, people coming out of universities looking for jobs for 5 years before deciding to shift vocations, people not having enough money to buy basic necessities, criminality, homelessness, closing of theatres, cinemas, libraries covered with dust, trees cut down, people hating each other, war.
To correct this misinformation, the European Central Bank (ECB) has designed this "information kit" for young teenagers and teachers in all the official languages of the European Union. According to one of Geneva's leading macroeconomists who prefered to remain anonymous, this is one of the best propaganda ever. Entitled "Price stability: why is it important for you?", it consists of "of an eight-minute animated film, leaflets for pupils and a teachers' booklet. The film features two secondary school pupils, Anna and Alex, finding out about price stability. The leaflets provide an easy-to-understand overview of the topic, whereas the booklet covers it in greater detail."
All in all, controlling inflation is super important and most people don't get why. This is economists's fault.
To correct this misinformation, the European Central Bank (ECB) has designed this "information kit" for young teenagers and teachers in all the official languages of the European Union. According to one of Geneva's leading macroeconomists who prefered to remain anonymous, this is one of the best propaganda ever. Entitled "Price stability: why is it important for you?", it consists of "of an eight-minute animated film, leaflets for pupils and a teachers' booklet. The film features two secondary school pupils, Anna and Alex, finding out about price stability. The leaflets provide an easy-to-understand overview of the topic, whereas the booklet covers it in greater detail."
All in all, controlling inflation is super important and most people don't get why. This is economists's fault.
Monday, February 4, 2008
What your policy Barack?
On the eve of Super Tuesday, while 4 people are still in the race, I am still wondering how different Hillary’s policies are from Obama’s so I went on the New York Times website and here is what’s important:
On Iraq, while Barack was the only one against from the start, both Democrats want a phased withdrawal to start soon while both Republicans are in favour of troop increase.
On healthcare, Hillary wants compulsory insurance for everyone, a.k.a. universal coverage. Obama wants a bit more flexibility while the Republicans are for more free markets.
On abortion, the Republicans are, well, crazy (against it all together). Obama is even more liberal than Hillary on this.
On Climate Change, the Democrats want compulsory cap and trade and so does McCain. Romney wants a global program (or is this an excuse?)
On immigration, the Republicans disagree. McCain, as both Democrats, supports a path to legalization that includes learning English while Romney wants none of this; he wants to build a more efficient fence. What’s crazy is that they all voted for the fence along the Mexican border.
On Iran, none of them put the war option off the table. Barack is the only one that would engage in direct diplomacy while Romney is the only one that would invade without asking Congress. They all want sanctions.
On "the economy", the Republicans want the Bush tax cuts to become permanent while the Democrats want none of that for the riches (250 000$ a year) but tax relief for the poorer to stabilize the economy.
On free trade, Hillary is now a hardcore protectionist. She wants “smart, pro-American trade because NAFTA has hurt workers”. She’s against CAFTA and wants more American agriculture exports!!! McCain and Romney are pro-free trade, in a good way. Obama is also protectionist: he wants labor & environmental standards in trade agreements and affirms that people don't want cheaper T-shirts if it costs their job. He also wants to reinvest in communities that are burdened by globalization, as most economists suggest.
All in all, this in no way helps in choosing one. Watching them talk on TV helps much more.
On Iraq, while Barack was the only one against from the start, both Democrats want a phased withdrawal to start soon while both Republicans are in favour of troop increase.
On healthcare, Hillary wants compulsory insurance for everyone, a.k.a. universal coverage. Obama wants a bit more flexibility while the Republicans are for more free markets.
On abortion, the Republicans are, well, crazy (against it all together). Obama is even more liberal than Hillary on this.
On Climate Change, the Democrats want compulsory cap and trade and so does McCain. Romney wants a global program (or is this an excuse?)
On immigration, the Republicans disagree. McCain, as both Democrats, supports a path to legalization that includes learning English while Romney wants none of this; he wants to build a more efficient fence. What’s crazy is that they all voted for the fence along the Mexican border.
On Iran, none of them put the war option off the table. Barack is the only one that would engage in direct diplomacy while Romney is the only one that would invade without asking Congress. They all want sanctions.
On "the economy", the Republicans want the Bush tax cuts to become permanent while the Democrats want none of that for the riches (250 000$ a year) but tax relief for the poorer to stabilize the economy.
On free trade, Hillary is now a hardcore protectionist. She wants “smart, pro-American trade because NAFTA has hurt workers”. She’s against CAFTA and wants more American agriculture exports!!! McCain and Romney are pro-free trade, in a good way. Obama is also protectionist: he wants labor & environmental standards in trade agreements and affirms that people don't want cheaper T-shirts if it costs their job. He also wants to reinvest in communities that are burdened by globalization, as most economists suggest.
All in all, this in no way helps in choosing one. Watching them talk on TV helps much more.
Friday, February 1, 2008
Obama for President!
Who says ordinary americans don't like Obama? Hulk Hogan just endorsed him!!!
But I'm still wondering which economist is for whom...Krugman seems to be for Hillary, Paul Volcker endorsed Obama, Glaeser of Harvard endorsed McCain, Mankiw seems to agree...I think most American economists are Republican cuz it's more market oriented...But I'll check that more carefully...
But I'm still wondering which economist is for whom...Krugman seems to be for Hillary, Paul Volcker endorsed Obama, Glaeser of Harvard endorsed McCain, Mankiw seems to agree...I think most American economists are Republican cuz it's more market oriented...But I'll check that more carefully...
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