Thomas Gilovich, the Cornell University psychologist who conducted the experiment, said this is why a lot of water-cooler conversations among NCAA office-pool participants feature people explaining to others why their predictions went wrong. People don't talk very much about predictions that went right, Gilovich said, because they automatically chalk up those results to brilliant insight. Wrong calls, however, are invariably seen to be caused by fluke events -- which is why they need explaining.
The psychological truth here goes beyond sports fans and NCAA office pools. Our ability to blame fluke events for our errors in judgment affects many aspects of our lives. This phenomenon is perhaps most vividly on display when policymakers and pundits remain endlessly confident about their pronouncements even after they have been proved breathtakingly wrong on major questions such as the outcome of the war in the Iraq. (You know who you are.) "People have explanations for the things that went badly so they can be set aside -- 'I made the right prediction but for that fumble in the fourth quarter' -- so they walk out with their confidence intact," Gilovich said. Experts say, "Okay, I was wrong about the Soviet Union, but everything I said makes perfect sense if it wasn't for this one unpredictable factor."
"Experts are very wrong, but they don't think they are wrong because a lot of mistakes are coded as near misses," the psychologist added. "So their intuitive hit rate is higher than the actual hit rate."
Friday, March 30, 2007
The U.S. ignored a ruling that found it discriminates against foreign gambling companies by banning payments to gaming Web sites while allowing bets on its own soil, the World Trade Organization's highest judges said.Info on the original ruling here.
I have fun with Tradesports, but am really hoping that the Intrade contracts can attract liquidity and serve public policy and risk management with ever greater effectiveness.
Wednesday, March 28, 2007
Former Mayor Rudy Guliani has been on a tear throughout all 2007. The chart only confirms what what the RCP polling averages have been saying all along. Rudy has been considered the front-runner from the very beginning despite the MSM trying to state otherwise (that is McCain being the favorite). I know I went on record not too long ago saying McCain would walk away with the nomination if Iraq went well. I ,like everybody else addressing this subject, spoke too soon. Iran has since been stirring up trouble, the Fairness Doctrine nonsense was brought up by Kucinich which also brought up McCain-Feingold, and there seems to be more flip-flopping by literally every candidate in both parties except for Rudy. There seems to be speculation that conservatism is dead. I, for one, do not believe that because George W. Bush was never and will never be a true conservative. Rush says it best, "There appears to be a lack of leadership in the Conservative movement". People that see Conservatism on the ropes may want to think back to the 2004 election when many people began to write off liberalism. However, since then liberalism/populism has since roared back. Arguments can be made why this is so, but every conservative I know, acknowledges that the conservatives in Congress ceased to be conservative (and I don't mean social conservative, to me, social conservatism was a reaction to the 90s multiculturalism, relativism, etc). I believe people want government to be efficient, the amount of inconsistencies/scandals that get reported I think are symptoms of the disease of bureaucracy. With Steve Forbes backing Guliani today, we see an ideal candidate who has been there before and cleaned up a mess many deemed impossible.
A few things that could come into play during debates/primaries/elections that I have noticed. 1) How will the media treat Guliani's stuttering? If it were Bush, they would be all over it. Has he proved himself "intelligent"?
2) I noticed this while watching the news in Austin (the same time Barack Obama was down there campaigning). The man is LANKY! Jim Geraghty of The Hillary Spot at National Review noticed this as well. During the debates, will the media try to hide the fact or expose it? Remember, JFK beat Nixon on appearances in debates.
3) Speaking of appearances, Hillary supposedly does not look good in HD. I do not have HD but it does through a wrinkle in there. Right now she seems to be walking to the Dem nomination untouched but the general election is where I believe she will have trouble.
Feel free to leave any comments or observations. Speculation is the grease that skids the tracks (not sure if that is a real saying but it sounds good).
Tuesday, March 27, 2007
Apparently not. Steve Conover has his latest national debt chart up as well. That $9 trillion sounds like a scary number, until one takes a closer look. The $60 trillion in aggregate household wealth also makes our debt look sanguine.
If you are missing the bears that used to haunt the Tradesports pit, it turns out they are not quite extinct. Scroll down to Conover's commenters, and see how he handles the shrill bear called "gunthestops" in neat order.
Sunday, March 25, 2007
-America’s lowest-earning one-fifth of households receives roughly $8.21 in government spending for each dollar of taxes paid. Households with middle-incomes receive $1.30 per tax dollar, and America’s highest-earning households receive $0.41 per tax dollar
-As is clear from the figures, defense, Social Security, Medicare, Medicaid and various other types of transfer payments dominate federal spending. At the state and local level, spending on public schools, police and fire protection, general government administration and the state portion of Medicaid dominates government
-state and local government spending generally tracks state and local tax burdens
much more closely than federal taxes and spending. In other words, the more taxes people pay to state and local governments, the more spending they generally get back in return.
-For example, many lawmakers favor sharply progressive taxes—that is, they favor taxes that fall more heavily on high earners than those with low incomes. These lawmakers usually oppose any tax reform plan that cuts the level of tax progressivity—such as a single-rate income tax or a retail sales tax—despite the economic benefits of those tax reforms.
-But once we see that tax progressivity is only half the picture, and that progressivity can be achieved through either taxes or spending, these lawmakers’ opposition to economically efficient tax reforms no longer makes sense. Any amount of progressivity can be achieved by some mix of tax and spending changes. That means it’s possible to move toward a flatter, more economically neutral tax code, without reducing the progressivity in the fiscal system.
Read the rest for yourself here
Thursday, March 22, 2007
Over at OvercomingBias, Hal Finney was reflecting on how Truth is distributed across the whole of human grasp. The nice picture he provided is here, where T=Truth. One powerful conclusion from his reflections is that the majority of people can improve their proximity to Truth by reverting to the majoritarian thought.
While I found this totally interesting, I think it has its limits. For one thing, this only applies to continuous truth, i.e. it stops where Einstein stopped and does not address what Schrodinger was saying. So I cannot find its relevance on the contracts we trade on Intrade, which expire at 0 or 100, never somewhere in between.
Some of you readers know that, unlike most of the economists to whom I link, I do have a spiritual faith beyond the empirical. And the Reason why that is so, is I am under the belief that not everything can be measured, and what cannot be measured requires a measure of Faith.
Here's hoping that you and I figure out how to expire ourselves at 100.
Wednesday, March 14, 2007
Frank Facts About Fred Thompson is one of the funniest things I've read since the stock market coughed up 5% of it's value. Some of my favorites:
* Fred Thompson took over what was Al Gore's Senate seat, thereby dramatically reducing the Senate's carbon footprint. Fred Thompson then created carbon offset offsets by wastefully burning hippies.
* Fred Thompson once ended a filibuster by ripping out a Senator's heart and showing it to him before he died.
* The actual cause of global warming: Fred Thompson's burning rage.
* At a campaign stop, a Belgian Hound tried to hump Fred Thompson's leg. That breed of dog no longer exists.
* Fred Thompson can know both the exact position and momentum of a particle. Furthermore, he knows Schroedinger's cat is dead because he personally strangled it.
(Hat tip to Ann Althouse).
Tuesday, March 13, 2007
The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 4.95 percent of all loans outstanding in the fourth quarter of 2006 on a seasonally adjusted (SA) basis, up 28 basis points from the third quarter, and up 25 basis points from one year ago, according to MBA's National Delinquency Survey.
The increase was driven by increases in delinquencies for all major loan types, most notably for subprime and FHA loans. Delinquency rates for prime, subprime, FHA, and VA loans increased on a seasonally adjusted basis relative to the third quarter. The delinquency rate for FHA loans reached a new record in the fourth quarter.
The percentage of loans in the foreclosure process was 1.19 percent of all loans outstanding at the end of the fourth quarter, an increase of 14 basis points from the third quarter of 2006, while the SA rate of loans entering the foreclosure process was 0.54 percent, eight basis points higher than the previous quarter and a record high. Compared with the fourth quarter of 2005, the percentage of loans in the foreclosure process was up 20 basis points while the percentage of loans entering the foreclosure process was up 12 basis points.
The SA delinquency rate increased during the fourth quarter for all loan types. The delinquency rate increased 13 basis points for prime loans (from 2.44 percent to 2.57 percent), 77 basis points for subprime loans (from 12.56 percent to 13.33 percent), 66 basis points for FHA loans (from 12.80 percent to 13.46 percent), and 24 basis points for VA loans (from 6.58 percent to 6.82 percent).
All adjustable rate (ARM) as well as fixed rate (FRM) loans had higher SA delinquency rates compared to the third quarter of 2006. Delinquency rates in the fourth quarter increased 33 basis points for prime ARM loans (from 3.06 percent to 3.39 percent) and increased 122 basis points for subprime ARMs (from 13.22 percent to 14.44 percent). The SA delinquency rate for prime fixed loans increased 17 basis points (from 2.10 to 2.27 percent), while the rate increased 50 basis points for subprime fixed loans (from 9.59 percent to 10.09 percent).
During the fourth quarter of 2006, the foreclosure inventory rate increased for prime loans and subprime loans and decreased for FHA loans and VA loans. The foreclosure inventory rate increased six basis points for prime loans (from 0.44 percent to 0.5 percent) and 67 basis points for subprime loans (from 3.86 percent to 4.53 percent). The foreclosure inventory rate decreased nine basis points for FHA loans (from 2.28 percent to 2.19 percent) and eleven basis points for VA loans (from 1.12 percent to 1.01 percent).
By loan type, the foreclosure start rate increased five basis points for prime loans (from 0.19 percent to 0.24 percent), 18 basis points for subprime loans (from 1.82 percent to 2 percent), 14 basis points for FHA loans (from 0.79 percent to 0.93 percent), and two basis points for VA loans (from 0.32 percent to 0.34 percent).
In the fourth quarter of 2006, the percent of loans that were seriously delinquent, which is defined as the NSA percentage of loans that are 90 days or more delinquent or in the process of foreclosure, was 2.21 percent, 21 basis points higher than for the third quarter of 2006. This measure is designed to account for inter-company differences on when a loan enters the foreclosure process.
Now is it any surprise subprime companies are losing their shirts faster than a stripper in Vegas? The statistic that outshined everything else was the astronomical difference in rates between similar subprime vs prime loan types. This has not been accounted for in the media nor the markets as everyone is throwing the baby out with the bath water. When is it news that people that didn't pay bills in the past can't pay them now? Ah, before we provide any solutions, please click on the link and read the section in bold on the MBA page. The pure golden truth.
I would love your expert feedback. I am picking Ohio St over Florida in the finals, in each of my entries.
Monday, March 12, 2007
Yes, China holds a lot of our bonds. But Japan holds more. Yes, we run a big trade deficit with China. But that lets us buy lots of inexpensive stuff instead of having to make it for ourselves. Yes, there are more than a billion Chinese. I guess that means they can take all of our jobs four times! But our economy keeps growing. We have more jobs than ever before. And contrary to popular belief, the American standard of living and the American middle class are thriving.
We were told that at a minimum China (and India with its own billion-strong population) would take all our high-tech jobs. But the high-tech sector bounced back from its downturn (a downturn that had nothing to do with outsourcing) and is growing again, partly because we can get some of the simplest database and programming tasks done so cheaply by Indians and Chinese.
So why can politicians still make China scary? Why didn't Americans learn from the previous sky-is-falling episodes? The simple answer is that if you don't understand economics, you might be convinced by a politician who says that trade with China is bad for America.
My Final Four:
(I know... boring= someone unexpected gets in)
No. 11 Winthrop over ND, Oregon, and then Wisconsin
No. 10 Creighton over Nevada and Memphis
No. 9 Michigan State over Marquette and UNC
Who I will be cheering for:
No. 5 Butler
No. 7 UNLV
No. 11 Winthrop
No. 7 Indiana
Ohio State over Florida
Good luck to all!
Thursday, March 08, 2007
"I think people should have a right to be stupid and, if they have that right, the market's going to respond by supplying as much stupidity as can be sold."-- Greg Burch
This quote resonates across so many dimensions ... Hat tip to Robin Hanson.
UPDATE: The august Prof. Hanson has graced this blog with a comment, and told me to tip my hat to Eliezer Yudkowsky. Apologies and thanks to both!
The executives at American Airlines must be crazy. I heard a rumor — and I believe it is true — that they have made the decision to replace plastic knives with honest-to-God metal table knives in the first class cabin.
Are they crazy? Metal table knives were banned after 9-11 for good reason! Those things are dangerous. They could poke an eye out. There is no way the government, or whoever got rid of metal table knives after 9-11, would have banned them unless it was absolutely necessary to fight terrorism. This horrible decision to allow metal on the plane is simply an invitation to terrorists that they can come right on the plane unarmed, gather up these knives, and poke people at will. No honest citizen in his or her right mind would take the risk of flying on American in this new regime.
The next thing you know, TSA is going to allow me to fly with my 4.1 oz deodorant instead of throwing it in the garbage and rightly demanding that next time I limit myself to 3 oz. From what I hear, that extra 1.1 oz of deodorant is just the extra amount that terrorists need to turn deodorant into nuclear weapons from scratch on the plane. Apparently, though we have completely lost our will to fight terrorism in the sky.
Sunday, March 04, 2007
Sound like something being talked up rather recently? Yes, but the above exchange is from the late 1970s in the Jimmy Carter era. The major difference between the reactions of the oil executives before Congress now and then: the oil executives then took the lashing; the oil executives now were not afraid to stick up for private enterprise. A very interesting note, one of the few people to publicly stick up for private enterprise and opppose the government's intentions was.....if you guessed Donald Rumsfeld, Congratulations! I am reading "Free to Choose" by Milton Friedman and all of the above info comes from his book. It is eerily relevant even to this day.
Friday, March 02, 2007
Here we have a major American politician who is calling for policies that would impose huge costs on society but appears to be profiting handsomely himself; who is leading an extravagant lifestyle while demanding sacrifices from ordinary people; and who is calling on the media to suppress the views of those with whom he disagrees, while at the same time urging more government regulation in the name of "fairness" to his partisan and ideological allies.
In other news, George Soros supports Dick Cheney, or at least Cheney's old company otherwise know as Halliburton.
PULLING AN OBAMA: McCain puts his foot in it.
Is it my imagination, or is his campaign unravelling all of a sudden?
Peggy Noonan thinks:
Why did he do the Letterman show? To get his name in the paper, or rather to get his name in the paper followed by the word "announces" as opposed to the word "over." A year ago he was pretty much on top, the past few months he's lost steam.
Why was he once so hot and now so not?
Politics is like show business: Nobody knows anything. Everyone's guessing. Everyone's waiting to find out. Then, when it's over, they tell you at great and knowing length why it happened.
Maybe the McCain story is as simple as what he's always known, what he was taught, and what he experienced in war: The more time you spend in the air, the more you get dinged.
It's appears a lot easier to scoop some 2008.GOP.NOM.MCCAIN now than in all of 2006. (I am long a little Rudy, Newt, Dick & Jeb).
Thursday, March 01, 2007
And the herd has the blues. Despite the reassuring personal consumption numbers and benign employment figures, the market is looking for any reason to sell. When people have their umbrellas out, it always rains.
Longer term, real GDP growth, while easing, continues to trend higher. Which is why I remain short a few of these: