Pretty interesting panel via DLD on innovation and search.
Introduction (via Fora)
DLD is an inspiring community for the 21st century which features digital innovation, science and culture and brings together thought leaders, creators, entrepreneurs and investors from Europe, the Middle-East, the Americas and Asia. This session on Web search features Blaise Aguera y Arcas (Bing), Ben Gomes (Google), Ilya Segalovich (Yandex) and Conrad Wolfram (Wolfram Alpha). Jochen Wegner (Focus Online) moderates.
Introduction (Via Fora.tv)
A discussion of regulation and the current financial crisis: Is it at the root at the problem or is it the answer?
Charlie McCreevy, the European Commissioner for the Internal Market and Services, is the perfectly-placed person to speak about this from the Europe-wide perspective. About The Speaker (Via Fora.tv)
Charlie McCreevy – Charlie McCreevy is a qualified chartered accountant. In 1977 he was first elected to Dail Eireann (Irish Parliament) for the constituency where he was born – County Kildare, Ireland. From 1992 he held various cabinet posts in Fianna Fail-led governments including: Minister for Social Welfare, Minister for Tourism and Trade and latterly (1997) Minister for Finance. Since 2005 he has been the EU’s Commissioner for Internal Market and Services.
Why do members of the public disagree – sharply and persistently – about facts on which expert scientists largely agree? We designed a study to test a distinctive explanation: the cultural cognition of scientific consensus. The “cultural cognition of risk” refers to the tendency of individuals to form risk perceptions that are congenial to their values. The study presents both correlational and experimental evidence confirming that cultural cognition shapes individuals’ beliefs about the existence of scientific consensus, and the process by which they form such beliefs, relating to climate change, the disposal of nuclear wastes, and the effect of permitting concealed possession of handguns. The implications of this dynamic for science communication and public policy-making are discussed.
Favorite Bit (Via SSRN)
We present evidence in support of a novel explanation for the limited policy-shaping power of scientific opinion: the cultural cognition of expert consensus. The cultural cognition of risk is a theory that helps to explain public disagreement about the significance of empirical evidence generally (Kahan, Slovic, Braman & Gastil 2006). The theory posits a collection of psychological mechanisms that dispose individuals selectively to credit or dismiss evidence of risk in patterns that fit values they share with oth-ers. We designed a study, including both correlational and experimental elements, to test the hypothesis that mechanisms of cultural cognition extend to evidence of what scientific expert opinion is on climate change and other risks.
Here’s a fascinating profile on radical Santa Fe Institute economist Samuel Bowles, an empiricist who says his research doesn’t support the Chicago School efficient marketplace hypothesis. Instead, Bowles argues that the wealth inequality created by strict market economics creates inefficiencies because society has to devote so much effort to stopping the poor from expropriating the rich. He calls this “guard labor” and says that one in four Americans is employed to in the sector — labor that could otherwise be used to increase the nation’s wealth and progress.
Favorite Excerpt (Via Santa Fe Reporter)
And so here, in plain English, is the implication of Bowles’ basic ideas: The US and New Mexico will keep falling behind until they learn to share the wealth.
More numbers, for your consideration:
45.7
23
The first number is the “Gini coefficient” for New Mexico. The Gini is an expression economists use to measure equality or inequality in a society.
Zero describes the ultimate level playing field, a nonexistent land in which everyone has all the same stuff. A completely unequal society, in which one person has sole control of literally everything, would have a Gini of 100. New Mexico’s Gini score (45.7) reveals this state is more unequal than most. Utah is the most egalitarian state (with a 41.3 Gini), while the District of Columbia (53.7) is the most economically polarized, according to the most recent Census report, from 2006.
The second figure, 23, is the Gini for Sweden, the world’s most egalitarian country. Whereas most of Europe, Canada and Australia have Ginis in the low 30s, the US has over the past several decades developed inequalities usually found only in poor countries with autocratic governments.
So what? Isn’t inequality merely the price of America being No. 1?
“That’s almost certainly false,” Bowles tells SFR. “Prior to about 20 years ago, most economists thought that inequality just greased the wheels of progress. Overwhelmingly now, people who study it empirically think that it’s sand in the wheels.”
Bowles can take some credit for that shift, but he hasn’t won the battle. Many economists don’t study things empirically—that is, by looking at things in the real, physical world. Instead, they stay safely within the land of theory.
Theoryland may be the only place the “equality-efficiency trade-off” really works. Just to prove it wrong, Bowles charts the concept on a whiteboard at SFI.
People often do not realize they are being influenced by an incidental emotional state. As a result, decisions based on a fleeting incidental emotion can become the basis for future decisions and hence outlive the original cause for the behavior (i.e., the emotion itself). Using a sequence of ultimatum and dictator games, we provide empirical evidence for the enduring impact of transient emotions on economic decision making. Behavioral consistency and false consensus are presented as potential underlying processes.
Additional Excerpts (Via Andrade & Ariely)
In contrast to this view, this article shows that the influence of mild incidental emotions on decision making can live longer than the emotional experience itself. Given that people often do not realize they are being influenced by the incidental emotional state, decisions based on a fleeting incidental emotion can become the basis for future decisions and hence outlive the original cause for the behavior (i.e., the emotion itself).
As the former attorney general and later governor of New York, Spitzer prosecuted some of the most notorious white-collar crime and securities fraud on Wall Street. He now questions whether we have what it takes to regulate and reform the banking industry.
Does “too big to fail” mean too big? Without successful financial regulatory reform, are we just waiting for the next economic meltdown? Spitzer will examine whether the Obama administration is up to the task or whether taxpayers may be on the hook for the next crisis.
Someone is talking sense…..
Introduction (Via Telegraph)
Gold is now “the ultimate bubble”, billionaire investor George Soros has declared, sparking fears that prices for the precious metal may soon suffer a tumble.
Gold prices last month reached a record level of just over $1,225 per ounce, having risen around 40pc last year. Investors are piling into the metal amid fears both of potential inflation and fading faith about the stability of previously-assumed safe assets such as government debt. However, the chairman of Barrick Gold, the world’s biggest producer, Peter Munk, said he expected the metal’s upward march to continue.
Mr Soros added that by proposing imminent “exit strategies” from the unprecedented support handed out to troubled banks and consumers, governments around the world could be in danger of triggering a double-dip in the global economy. In comments which will reinforce Labour’s plan to fight the next election on promises not to start raising taxes or cutting spending too soon, he said that it was still too early to slash budget deficits.
He said: “I think that since the adjustment process to the recession is incomplete, there is a need for additional stimulus. Some countries, like the US and European countries, have plenty of room to increase their deficits. The political resistance to doing so increases the chances of a double dip in the economy in 2011 and after that.”
Karen Pence, who runs the Federal Reserve’s household and real estate finance research group, argues at the American Economic Association’s meetings this week that homes are actually a terrible investment.
Putting aside the fact that home prices have fallen dramatically, she says several factors make homes a lousy investments:
It is an indivisible asset. If you own stocks and bonds and suddenly need a little cash, you can sell some of your stocks or bonds but not all. With a home, on the other hand, “you can’t just slice off your bathroom and sell it on the market.”
It is undiversified. You can buy stocks or bonds in industries or countries all over the world. A home is a bet on one single neighborhood.
Transaction costs are very high when you buy or sell a home because of real estate agent fees, mortgage fees and moving costs.
It is asymmetrically liquid, meaning it’s easy to get money out when home prices are going up. (You just take out a bigger mortgage.) But it’s hard to take money out when prices are going down because refinancing becomes more difficult. Put another way, the leverage that you have in your house with a large mortgage means your investment does well in good times but could be lousy in bad times.
It is highly correlated to the job market, meaning that home prices in a neighborhood tend to rise when the job market is improving in the area and fall when the job market is worsening. This means that your main financial asset provides the smallest cushion to you when you might need it most.
Maybe Washington policy makers shouldn’t work so hard to promote ownership with mortgage interest deductions and other federal subsidies to homeowners. Ms. Pence has been a Washington renter for many years. Ironically, though, she says she’s considering buying a house herself. The reason: Her husband wants a dog and wants to start gardening. That means moving out of the apartment.
Ms. Pence emphasized that she was speaking on her own behalf, and not for the Fed.
For generations, Harvard psychology students were treated to a jaw-dropping classroom experiment. With the aplomb of a magician, Professor S.S. “Smitty” Stevens (1906-1973) would darken the room and reveal a white disk. Then Stevens turned a spotlight on the disk. Instantly, it turned black. Unless you’re seen it, the sense of logic turned upside is hard to convey. Perhaps Chico Marx said it best: “Who you gonna believe, me or your own eyes?”
The secret was marvelously simple. The “white” disk was actually gray. Stevens made sure it was the brightest thing in a dark room, and that made it look white. Then Stevens illuminated a ring of (truly) white paper around the gray disk. The white paper was so more reflective that it made the gray look black by contrast.
As Stevens put it in his textbook, Psychophysics, “black is white with a bright ring around it.” The Orwellian tone of that must have been intentional. In Orwell’s 1984, Big Brother convinces everyone that war is peace, freedom is slavery, and black is white. Stevens managed the same feat (with lighting rather than a cage of rats). His point was that human perception is sensitive to contrasts, not absolute values. Subjectively, it’s all relative. (This too is a chilling talking point of Big Brother’s minions.)
