The Buffett difference, derivatives edition | FT Alphaville

The Buffett difference, derivatives edition | FT Alphaville: "The derivatives also showcase other Buffett skills — selling risk when many others are buying (pushing the price beyond what is rational) and the confidence that he will be able to invest the additional float successfully over time to make the whole enterprise worthwhile."

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The Buffett difference, derivatives edition | FT Alphaville

The Buffett difference, derivatives edition | FT Alphaville: "The derivatives also showcase other Buffett skills — selling risk when many others are buying (pushing the price beyond what is rational) and the confidence that he will be able to invest the additional float successfully over time to make the whole enterprise worthwhile."

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Microfoundations

A discussion of microfoundations with Stephen Williamson: New Monetarist Economics: Microfoundations:

 "I've never much liked the word "microfoundations," which comes from the title of the Phelps volume. When the Phelps volume came out in 1970, micro and macro looked like they came from people living on different planets, and you had to convince people that it made sense to take ideas from Mars and use them on Venus. We know better now, of course, and economics is one unified whole. People who call themselves macroeconomists make liberal use of game theory, mechanism design, information theory, optimal growth theory, etc., etc. Solid economists worked all that stuff out for us to use, and it would be wasteful to leave it on the shelf."

and a reply by Nick Rowe
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Microfoundsations that we like vs microfoundations that we can solve

A summary of the evidence that most published research is false | Simply Statistics

A summary of the evidence that most published research is false | Simply Statistics:

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"Hold to maturity" or "Available for Sale"

FT.com has a story about the effect of Volcker Rule.  It does not make clear why the rule requires the re-classification.  In any case, it highlights one way that accounting classification can affect the value of assets and the capital required to support those assets:

"financial officer, told analysts on a conference call, the bank is reclassifying the CDOs from “held to maturity” (HTM) to “available for sale” (AFS). Gains and losses on securities that are held as AFS feed into financial companies’ regulatory capital ratios under incoming Basel III rules.  Zions estimated that reclassifying its portfolio of CDOs to AFS would result in its tier one common equity ratio falling from 10.47 to 9.74 per cent."

Raising the Minimum Wage: Old Shibboleths, New Evidence - NYTimes.com

Raising the Minimum Wage: Old Shibboleths, New Evidence - NYTimes.com:

 "For a good overview, look to a paper by Arindrajit Dube of the University of Massachusetts, Amherst; T. William Lester of the University of North Carolina, Chapel Hill; and Michael Reich of the University of California, Berkeley. Using two decades of data and side-by-side comparisons of bordering counties in the United States, they find that higher minimum wages raise the earnings of low-wage workers and have negligible effects on employment levels. According to their estimates, an increase of 10 percent in the minimum wage would have a statistically negligible effect on employment in industries and occupations employing minimum-wage workers."

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Bubbles

Worthwhile Canadian Initiative: We know the economy needs a bubble; but how big?: "Mr Ponzi issues a financial asset. Assume that the demand to hold that asset grows at the same rate as GDP. If people are willing to hold that asset at a rate of return less than the growth rate of GDP, Mr Ponzi can run a sustainable Ponzi scheme. He can issue new assets to pay the interest on the existing assets, and still issue a few more to provide some income for himself. Another name for a sustainable Ponzi scheme is a rational bubble."

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Tim Harford Fairness is shared by our environment

Tim Harford — Article — Fairness is shared by our environment:

 "Kaplan teamed up with other researchers, including Vernon L Smith, a winner of the Nobel memorial prize for economics, to test this idea. They concluded that sharing accompanies “unsynchronized variance in resource availability” – researcher-speak for “You never know who’ll be next to bag a monkey.”
Megan McArdle, in her fascinating forthcoming book The Up Side of Down, observes that modern societies can’t make up their minds whether to adopt the morality of farmers or of hunters. The idea that hard work needs to be rewarded is a farmer’s view of fairness. The claim that “we’re all in this together” is hunter-thinking"

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Can robots write sports previews? |

Can robots write sports previews? |:   Yes

"If we can now plug in team-specific names, places and data wherever there’s one of those blue-bracketed placeholders above, we could customize a game preview so specifically to a given event that I’m confident 95% of the reading public couldn’t tell if those sentences were composed by a human writer or an algorithm, like the one I pseudo-reverse-engineered and highly simplified below:"

The government is the only reason U.S. inequality is so high

The Washington Post The government is the only reason U.S. inequality is so high:

"But it's worth noting that you can get U.S. inequality down to the levels seen in extremely egalitarian societies like Sweden by doing nothing but changing tax and transfer policies. Pre-tax/transfer inequality in the U.S., as the above chart by the Luxembourg Income Study’s Janet Gornick shows, is about equal to that of Sweden, Norway, and Denmark. Finland, Germany, and Britain actually have higher pre-tax/transfer inequality than the U.S. does. The only reason these countries enjoy such low levels of inequality is that their tax and transfer systems reduce inequality much, much more than the U.S. system does."

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Environmental Economics: Env-Econ 101: Hotelling's Rule Part 1

Environmental Economics: Env-Econ 101: Hotelling's Rule Part 1:

 "That's Hotelling Rule in its simplest form.  For a non-renewable, exhaustible resource with completely known stock, no discoveries possible, no alternatives, no recycling, private ownership and constant costs of extraction, the price of the resource will increase at the interest rate over time."

Looking forward to part 2.

A statistical review of 'Thinking, Fast and Slow' by Daniel Kahneman - Burns Statistics

A statistical review of 'Thinking, Fast and Slow' by Daniel Kahneman - Burns Statistics: "I failed to find Kahneman’s book in the economics section of the bookshop, so I had to ask where it was.  ”Oh, that’s in the psychology section.”  It should have also been in the statistics section."

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