Wednesday, May 27, 2015

A thought about decision making

The best lack all conviction, while the worstAre full of passionate intensity.THE SECOND COMINGWilliam Butler Yeats

Of course, the best do not lack all conviction. They are as convinced as you and I of the current color of the sky or of their own identity. I think the best recognize two classes of situations:

  • "Hard Problems" in which either there are no outstandingly suitable solutions, or a great deal of work remains to be done to find such a solution;
  • Crises, in which the full set of options have not yet become visible and/or adequate information is not yet available to select the best option.
In such circumstances, the best decision makers would seldom if ever "bet the bank" on a guess. Lacking conviction is often the best means of coming to a good resolution of a situation that one would categorize as a hard problems or a crisis. Indeed, in such situations the best practice is sometimes:
  • To estimate if some action is required immediately:
    • If so, take a modest action, ideally one that can be retracted if it proves important to do;
    • If not, spend some time and effort gaining more information, identifying more options, considering more incremental steps, and evaluating those steps.
Unfortunately, this (which seems to me the best approach) is often termed "muddling through", a term which to many suggests weakness.

Talking heads on television often seems full of passionate intensity, secure in the knowledge that they have the unique understanding of the issues and recognize the best of all responses to the question at hand. These folk may make for good television, but it seems to me that:
  • TV broadcasters find it relatively easy to find two or more people full of passionate intensity who differ radically on their understanding 
  • If you watch for a few years, you begin to understand that the talking heads are often wrong, that situations are often more complex than they realized, that they lacked key items of information, or that they had failed to think about options that eventually proved important and useful.
I note, following Michael Bohn, that presidents in crisis seem to lack all conviction when they make good decisions in crisis situations, but presidential candidates seem full of passionate intensity when they advocate positions or criticize their opponents. Good decision making seems to benefit from listening to all points of view, being open to new information and new options, and deferring decisions until it is worse to do than to act prudently.

Tuesday, May 26, 2015

Arghhh! Why Don't Americans Know More Science?

Direct Source of Chart
From a recent survey done by the National Science Foundation (from this article):
  • “Does the Earth go around the Sun, or does the Sun go around the Earth?” 1 in 4 believed that the Sun orbits the earth.
  • 61% refute the Big Bang, answering “false” when asked if “The universe began with a huge explosion,”
  • 52% oppose evolution, denying that “Human beings, as we know them today, developed from earlier species of animals,”
  • 70% felt government funding for science was adequate or too generous.
Where Creationism Is Taught as Science in the USA

It is no wonder that half the senators get away with voting that Climate Change is not caused by human action, or why the Congress gets away with cutting budgets for research and development, even though our future competitiveness depends on the pump priming of our technological engine by fundamental R&D that has to be supported by government.

The very old are not as poor as once they were, but children are still poor in rich countries

Interesting data for OECD countries from the OECD Secretariat via The Economist
In the 1980s the richest 10% of the population of OECD countries earned seven times more than the poorest decile. Today they earn ten times more. The poor are also more likely to be young. Poverty rates are now highest among 18- to 25-year-olds, having dropped drastically among those aged over 65. This shift reflects both the financial support offered by pension systems in the developed world and the disproportionate effect of the recession on young people. Wealth is far more concentrated than income, with the poorest 40% of people in OECD countries holding just 3% of the wealth.

Sunday, May 24, 2015

Crowd sourcing as an aid to medical diagnosis

There is an interesting article in The Economist describing CrowdMed, a website that uses crowd sourcing to help diagnose rare diseases.
The need for a “crowdsourced” service like this comes from the number of rare diseases around. The National Institutes of Health, America’s medical agency, recognises 7,000—defined as those that each affect fewer than 200,000 people. A general practitioner cannot possibly recognise all of these. Moreover, it may not be clear to him, even when he knows he cannot help, what sort of specialist the patient should be referred to. Research published in 2013, in the Journal of Rare Disorders, says about 8% of Americans—some 25m people—are affected by rare diseases, and that it takes an average of 7½ years to get a diagnosis. Even in Britain, with all the resources of the country’s National Health Service at a GP’s disposal, rare-disease diagnosis takes an average of 5½ years. Also, doctors often get it wrong. A survey of eight rare diseases in Europe found that around 40% of patients received an erroneous diagnosis at first. This is something that can lead to life-threatening complications.
My wife last year went through the process of getting a diagnosis for a rare set of symptoms, and it took a while, involved many tests, and ultimately a referral to a specialist. I am impressed by the problem of diagnosis for such conditions, and I think crowd sourcing could be useful in the right hands.

I would caution that it could be dangerous as well. I think that one should use CrowdMed only under the care of a physician, and should discuss possible diagnoses with the physician.

Still, I find the idea of a website providing an alternative source of ideas to be discussed with one's doctor to be very interesting.

The Backwards Brain Bicycle

Everyone can ride a bike! Or so you thought! A simple change in the bike made it impossible for this man to ride. Moreover, it was much easier for his young son to learn to ride the bike than it was for the adult to do so.

I post this just to point out that a lot of the things we know how to do, we don't consciously know how to do. The brain, and indeed the nervous system is more complex that our conscious mind seems to understand.

Incidentally, the video is a good example of a situation in which our intuition is wildly inaccurate. He thought he could make the obvious adjustment needed to ride the bike instantaneously, and it took eight months for him to do so, at which point he could no longer ride a normal bike!

German History Pre World War II

I have been reading The Scramble for Africa: White Man's Conquest of the Dark Continent from 1876 to 1912 by Thomas Pakenham. (See my first and second posts on the book.)

Specifically, I have been reading about the German war against tribes in German South West Africa in the first decade of the 20th century. An estimated 100,000 members of the tribes revolted against the Germans, pushed too far by a regime of murder, rape and forced labor by the settlers. Troops from Germany, under "extermination orders" attacked the tribes, drove them into deserts, blocked reentry and told them to cross the deserts to other countries. Of course, tribe members realized that was impossible. The Germans eventually took the remaining survivors of the tribes into concentration camps, An estimated 20,000 survived the policy.

In the first decade of the 20th century, there was also a revolt against the Germans in their East African colony (Tanzania), apparently due to forced labor demands that were so high as to prevent tribal members from working their fields enough to feed themselves and their families. The Germans decided that famine was a more practical means to put down the revolt tham military action, especially since the German military were already involved executing the "extermination order" in West Africa. So crops were burned to deliberately create a famine. It is estimated that a quarter million to 300,000 people died -- half of one tribe, more than half of another, and 3/4th of a third tribe that had participated in the revolt.

There were less numerically significant atrocities that also should have alerted the world to the perils of German governance. For example, a lieutenant sent to negotiate a treaty with a native village, instead had his men shoot all the men and women in the village and the 54 children that had survived were put in a basket and drowned.

Yesterday I heard a book talk on TV by Diana Preston about her book A Higher Form of Killing: Six Weeks in World War I That Forever Changed the Nature of Warfare. Preston said that the German strategy in World War I had  been based on the belief that Germany could quickly win the war on the Western Front, before the British, French and Russian Empires could fully mobilize their forces (and while the United States remained neutral). She said that when the Western Front quickly stabilized, the German political leadership and high command looked for ways to advance the war more quickly.

Rules of war had been promulgated in the previous decade prohibiting the use of poison gas as a weapon of war and prohibiting the bombing of civilian populations in the cities of an enemy nation. A long standing rule had been that a war ship might stop a commercial ship serving the enemy and inspect it for contraband (e.g. weapons or munitions); if such were found, the ship could be sunk, but only after civilian passengers and crew were allowed to escape. In six weeks of 1915 the Germans broke all three rules, using chlorine gas against Canadian and French troops on the Western Front, bombing London (using zeppelins to deliver the bombs) and sinking the Lusitania by an unanounced attack by a submarine which killed more than 1100 passengers and crew.

This history adds helps one to evaluate the Holocaust created by Nazi Germany in World War II.

Thursday, May 21, 2015

Growth suffers when there is inequality between different ethnic groups

I quote from an article in the current issue of The Economist:
ECONOMISTS have long recognised that there is an association between inequality and development. Unequal incomes can impair growth if those with low incomes suffer poor health and low productivity as a result. But in a forthcoming paper* in the Journal of Political Economy, three economists look at the question in a new light. What may matter most for development, they argue, is not inequality in itself, but economic differences between different ethnic groups. 
The authors pinpoint the location of 2,129 ethnic and 7,581 linguistic groups in 173 countries. Then, to estimate their wealth, they use data on night-time light intensity from satellites. (If a given area has more lights, it is likely to be richer.) That allows them to produce an “ethnic Gini index”, a measure of inequality between different ethnic groups within a country. They find that sub-Saharan Africa and East and South Asia are the most ethnically unequal regions, thanks to small but prosperous groups such as Arabs in west Africa. Western Europe, by contrast, is the most ethnically equal. 
The authors show that as a country’s ethnic inequality falls, average GDP per person rises. A one-standard-deviation decline in a country’s ethnic Gini index—the equivalent of moving from the level of Nigeria to that of Namibia—is associated with a 28% increase in GDP per person. It seems likely that ethnic inequality leads to low levels of development, not the other way around. After all, in other tests the authors find that ethnic inequality mostly reflects unequal geographical endowments, such as more fertile land and distance to the coast.
The paper by  Alesina, Alberto, Stelios Michalopoulos, and Elias Papaioannou  (“Ethnic Inequality.” Journal of Political Economy.) notes that there is little ethnic diversity measured in the United States according to the measure that the authors use.

I suspect, however, that we treat Blacks, American Indians and Hispanics as ethnic minorities, and the low investment we as a nation make in human capital (health services, education, etc.) in the neighborhoods where these minorities live significantly reduces our overall economic growth and has done so for many decades. Thus I suspect all Americans are poorer for the prejudice that has been endemic in our society.

Wednesday, May 20, 2015

Thinking about the nature of national debt

Immediate Source of Graph
Note that the total debt of the United States is not out of line with that of other countries.

Immediate Source of Graph
While there has been a great deal of discussion of the governmental debt, even combining the local, state, and federal government debt and the government sponsored entities, government debt is estimated to be less than household and corporate debt.

The article in The Economist from which the figures are drawn, "Ending the debt addiction: A senseless subsidy", makes a number of good points. One is that government policies can encourage or discourage debt. Thus, making payment of interest on debt tax deductible, but taxing profits (that belong to those holding equity in companies) can encourage firms to use debt financing rather than equity financing; excessive debt to equity can have serious implications in terms of risk. Here is one quote from the article.
Banks, inevitably, took most advantage, gaming the tax rules with devastating results. Most issued “hybrid” securities that were treated as debt by the taxman but as capital by credulous regulators. In the crisis hybrids did not act as a buffer that absorbed losses. About a third of big Western banks’ capital was made up of these instruments. Had they raised equity instead, fewer banks would have wobbled, says Ruud de Mooij of the IMF. 
I think that making mortgage interest tax deductible for small the poor is good policy, in that it helps the poor to build savings and encourages their commitment to their homes, neighborhoods, etc. On the other hand, I think making mortgage interest tax deductible for the rich simply encourages the construction of mansions for display, and encourages the purchase of MacMansions by those who wanabe rich.

Similarly, I like the idea of helping students borrow money to invest in their own education. Of course, borrowing to buy schooling that is of little personal nor social value (as seems to be done so often) is not good policy. Moreover, a lot of education should be publicly funded because the public rather than the student him/herself appropriates much of the benefit from the investment in human capital. Making the student him/herself pay for such investments that benefit the public by borrowing is bad policy.