Weekly Roundup 122: A Curated Linkfest For The Smartest People On The Web
Handpicked to satisfy your intellectual curiosity!
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Envy is a stronger motivator than admiration – via BPS Research – Having established the contrasting effects of admiration and envy, the researchers turned to the circumstances that tend to elicit one emotion more than the other. Perhaps the effect a successful person has on us depends in part on whether we think their achievements are beyond our reach. In a final study, van de Ven and his colleagues primed half their participants with an ‘effort is futile’ mindset by having them read a fictional biography of a successful scientist who’d enjoyed good fortune all his life. The other participants read a version in which the scientist’s success was all down to effort, not luck. Next, in what they thought was a separate task, the students read about the prize-winning scholar from the previous study, Hans de Groot. The important finding here was that students primed with an ‘effort is futile’ mindset were more likely to say they felt admiration towards de Groot, whereas those primed with an ‘effort pays’ mindset were more likely to say they felt benign envy. Moreover, it was the participants who felt more envy, rather than admiration, who said they planned to work harder in the next semester.
Are The well-known positive consequences of choice for individuals accompanied by an array of previously unexamined and potentially negative consequences for others and for society? – via Geary Behavior Blog- Choice makes North Americans feel more in control, free, and independent, and thus has many positive consequences for individuals’ motivation and well-being. We report five studies that uncover novel consequences of choice for public policy and interpersonal judgments. Studies 1-3 found that activating the concept of choice decreases support for policies promoting intergroup equality (e.g., affirmative action) and societal benefits (e.g., reducing environmental pollution), but increases support for policies promoting individual rights (e.g., legalizing drugs). Studies 4 and 5 found that activating the concept of choice increases victim-blaming and decreases empathy for disadvantaged others. Study 5 found that choice does not decrease Indians’ empathy for disadvantaged individuals, indicating that these effects of choice are culture specific. This research suggest that the well-known positive consequences of choice for individuals can be accompanied by an array of previously unexamined and potentially negative consequences for others and for society.
The Biases That Led to “The Great Recession” – via Brian Lenihan – How did our elites get it so spectacularly wrong? A useful way of looking at the problem is to focus on persistent and enduring cognitive biases and errors leading to faulty decision-making by individuals (political leaders, civil servants, bankers, etc.) and institutions (social systems and organisations: Government departments, banks, churches, etc). Looking for proximate causes in pervasive and enduring cognitive errors by individuals and institutions (the social systems within which collective cognition is organised) provides a route to prevent us persisting in correctable mistakes. Happily, we have a guide from more than fifty years of data in experimental psychology and experimental brain research to understand how human rationality and reason is bounded and error-prone.
Peacocks, Porsches, and Thorstein Veblen: Conspicuous consumption as a sexual signaling system. – via PsycNet- Conspicuous consumption is a form of economic behavior in which self-presentational concerns override desires to obtain goods at bargain prices. Showy spending may be a social signal directed at potential mates. We investigated such signals by examining (a) which individuals send them, (b) which contexts trigger them, and (c) how observers interpret them. Three experiments demonstrated that conspicuous consumption is driven by men who are following a lower investment (vs. higher investment) mating strategy and is triggered specifically by short-term (vs. long-term) mating motives. A fourth experiment showed that observers interpret such signals accurately, with women perceiving men who conspicuously consume as being interested in short-term mating. Furthermore, conspicuous purchasing enhanced men’s desirability as a short-term (but not as a long-term) mate. Overall, these findings suggest that flaunting status-linked goods to potential mates is not simply about displaying economic resources. Instead, conspicuous consumption appears to be part of a more precise signaling system focused on short-term mating. These findings contribute to an emerging literature on human life-history strategies
Wal-Mart CEO Bill Simon expects inflation – via USAToday- Still, inflation is “going to be serious,” Wal-Mart U.S. CEO Bill Simon said during a meeting with USA TODAY’s editorial board. “We’re seeing cost increases starting to come through at a pretty rapid rate.”
Community cuts heart attacks by 24 percent with preventive health – via SciAm- The town of New Ulm, Minn., some 90 miles outside of Minneapolis, is small. With a population of about 15,000, the self-proclaimed polka capital of the U.S. might not seem like the most obvious locale to roll out an aggressive, unconventional attack on heart disease.
All it takes is a few correct forecasts and we become overconfident – via finance professor- We examine whether attribution bias that leads managers who have experienced short-term forecasting success to become overconfident in their ability to forecast future earnings. Importantly, this form of overconfidence is endogenous and dynamic. We also examine the effect of this cognitive bias on the managerial credibility. Consistent with the existence of dynamic overconfidence, managers who have predicted earnings accurately in the previous four quarters are less accurate in their subsequent earnings predictions. These managers also display greater divergence from the analyst consensus and are more precise. Lastly, investors and analysts react less strongly to forecasts issued by overconfident managers”
You vs. temptation: Why self-control has gotten so hard – via Yahoo- If it does, it will only provide further evidence that in the future, for more and more of us, our greatest challenge will be managing our own appetites and addictions in an environment of expanding freedom and affluence. Meeting this challenge won’t be easy. Humans evolved to cope with an environment of relative scarcity and respond powerfully to stimuli – fats and sweets, for example – that were vastly less common in our ancestral landscape than they are today.
Multitasking: Productivity Effects and Gender Differences – via Tinbergen- We examine how multitasking affects performance and check whether women are indeed better at multitasking. Subjects in our experiment perform two different tasks according to three treatments: one where they perform the tasks sequentially, one where they are forced to multitask, and one where they can freely organize their work. Subjects who are forced to multitask perform significantly worse than those forced to work sequentially. Surprisingly, subjects who can freely organize their own schedule also perform significantly worse. Finally, our results do not support the stereotype that women are better at multitasking. Women suffer as much as men when forced to multitask and are actually less inclined to multitask when being free to choose.
The Acid Sea: The carbon dioxide we pump into the air is seeping into the oceans and slowly acidifying them. One hundred years from now, will oysters, mussels, and coral reefs survive? – via National Geographic- Owing to a quirk of geology, the sea around Castello Aragonese provides a window onto the oceans of 2050 and beyond. Bubbles of CO2 rise from volcanic vents on the seafloor and dissolve to form carbonic acid. Carbonic acid is relatively weak; people drink it all the time in carbonated beverages. But if enough of it forms, it makes seawater corrosive. “When you get to the extremely high CO2, almost nothing can tolerate that,” Jason Hall-Spencer, a marine biologist from Britain’s University of Plymouth, explains. Castello Aragonese offers a natural analogue for an unnatural process: The acidification that has taken place off its shore is occurring more gradually across the world’s oceans, as they absorb more and more of the carbon dioxide that’s coming from tailpipes and smokestacks.
Cliff Asness: Man vs. Machine on Wall Street: How Computers Beat the Market – via Atlantic- Wall Street, meet your post-human future. Uber-“quant” Cliff Asness bets that his high-speed computers and trading models can churn billions of dollars in profits in booms and busts alike. But can artificial intelligence really out-smart the market?
The Matchmaker- The Economist Who Stopped Studying The World & Began To Fix It – via boston- One day in 1995, Alvin Roth picked up the phone to discover that someone had finally called his bluff. The economist had spent years writing academic papers about the medical job market — specifically, picking apart the national system that matched young doctors to their first hospital jobs out of medical school. Now the person who actually oversaw that process was suddenly on the other end of the receiver, telling Roth the system was in crisis and asking him to please fix it.
Do we think ahead when we study – via Long Now – A study was published last month that made some interesting conclusions about how the human brain organizes and prioritizes memory. Psychology Today reported on the investigation, which was conducted by a team of researchers under the leadership of University of Lübeck professor Dr. Jan Born. The experiment involved volunteers conducting one of a few memory tests and then being quizzed ten hours later on the tests. Only some of the participants, however, were told that they would be quizzed, and only some of them were allowed to sleep in the meantime. As it happens, we might all be futurists while we’re asleep…
The Problems With Easy Payments (Credit Cards, Cell Phones & Much More) – via Wired – Here’s the problem with credit cards: the insula doesn’t seem to understand how they work. When we pay with plastic, the transaction is abstracted. Instead of forking over cash, we just swipe a thin card. As a result, the usual hurt of spending is diminished – we barely notice that we’ve given something up. (As the scientists note, “The nature of credit cards ensures that your brain is anaesthetized against the pain of payment.”). Because spending money doesn’t feel bad, we spend more money, even when we can’t afford it.
When faced with moral dilemmas, do we do what is ethically right or what is mentally easy? – via Bakadesuyo- We propose that the rule that is cognitively most accessible during the decision making process (e.g., “Save lives” or “Do not kill”) will influence how people solve these moral dilemmas. Three studies are reported that indeed demonstrate that the most accessible rule influences willingness to intervene within footbridge dilemmas. This effect is found even when the accessibility of the rule is induced subliminally.
Johnson & Johnson’s Quality Catastrophe – via Bloomberg- The DePuy crisis is one of more than 50 voluntary product recalls that J&J has issued just since the start of 2010, covering brand names that read like an inventory of the family medicine cabinet. Tylenol and St. Joseph Aspirin were recalled for foul odors people said made them sick. Benadryl and Zyrtec were recalled for botched amounts of ingredients. Rolaids were recalled for containing bits of wood and metal. Most of these drugstore stalwarts come from J&J’s McNeil Consumer Healthcare unit, which has been plagued by dismaying revelations about the conditions and lax controls at its factories in the U.S. It shuttered one factory in Fort Washington, Pa., for a quality overhaul. Under a Mar. 10 consent decree, that plant and two others—in Lancaster, Pa., and Puerto Rico—will remain under Food and Drug Administration (FDA) oversight for five years. J&J/McNeil faces fines of $10 million per year if the agency isn’t satisfied with its progress.Moreover, J&J’s woes aren’t confined to the last couple of years. During the last decade, the company has been repeatedly confronted with claims that it sold a product that was defective, or that carried risks J&J downplayed in its marketing. It has been accused of paying kickbacks and using other financial incentives to promote off-label use of drugs and devices. It has been cited by federal authorities for trying to avoid the publicity of a recall by quietly buying up tainted products. And it frustrated FDA regulators who were urging the company to strengthen quality control at the factories that produced many of the recalled over-the-counter products. J&J has steadfastly denied these claims, but its own annual report for 2010 contains eight pages detailing government criminal and civil investigations and thousands of private lawsuits covering a wide range of drugs, devices, and business practices.
A History Of Bling: Is It In A Black Man’s Soul To Rock That Gold? – via Atlanta Post – According to Dr. Alma Gottlieb, professor of Anthropology and African Studies at the University of Illinois at Urbana-Champaign, in certain African societies, gold plays a critical role in defining prestige. “It is very common among centralized societies for holders of political power to dress in a way that’s meant to symbolize outwardly the kind of power that you employ spiritually and politically.”
Damodaran: Breach of Trust: Bank Valuation after the banking crisis – via Musings on Markets- In relative valuation, I think that the use of price to book ratios, in conjunction with return on equity, still makes sense, but risk now has to be treated as a third dimension. The risk itself can be measured using a variety of measures: regulatory capital ratios (higher ratios are safer), losses on bad loans (higher is riskier) or holdings of toxic securities (higher is riskier). A bargain bank will then be one that trades at a low price to book ratio, has a high return on equity and is well capitalized. I expand on both notions in this paper that I wrote a couple of years ago on valuing banks (which subsequently became a chapter in one of my books):
The new American Dream: It’s no longer about seizing opportunity but about realizing perfection – via Boston.com- Or else. And that’s another thing that a perfectionist society has engendered. It has removed failure as an option because we realize that there are no second chances, that mistakes are usually irrevocable, and that you have to assume there are other people out there — your competition! — whose wives will always be beautifully coiffed and dressed or whose husbands will be power brokers, whose children will score 2,400 on their SATs and who will be playing competitive-level tennis, whose careers will be skyrocketing, whose fortunes will be growing. In a world in which perfection is expected, you must be perfect. Otherwise you are second rate.
Agency Problems in Public Firms: Evidence from Corporate Jets in Leveraged Buyouts – via FED- This paper uses rich, new data to examine the fleets of corporate jets operated by both publicly traded and privately held firms. In the cross-section, firms owned by private equity funds average jet fleets at least 40 percent smaller than observably similar publicly-traded firms. Similar fleet reductions are observed within firms that go private in leveraged buyouts. I discuss assumptions under which comparisons across and within firms provide estimates of lower and upper bounds on the average treatment effect of taking a firm from public to private in a leveraged buyout. Both censored and standard quantile regressions suggest that results at the mean are driven by firms in the upper 30 percent of the conditional jet distribution. Results thus suggest that executives in a substantial minority of public firms enjoy more generous perquisites than they would if subject to the pressures of private equity ownership.
Another last mile problem – vitamin supplements in the developing world – via Nudge Blog- What is needed are little interventions: adding iodine to salt here, doling out vitamin A supplements there. Even relatively small doses work. Yet they also raise one of the great puzzles of development. These are, by some measures, the best investments you could make. When the Copenhagen Business School asked some Nobel-winning economists the best way to spend money to help the world, nutritional projects topped the poll. Vitamin A supplements cost just a dollar or two. Their benefits—preservation from fatal diseases, higher lifetime earnings—so massively outweigh the tiny costs that poor people ought to snap them up. Yet they don’t. Orwell put his finger on why. The poor want something tasty. They may not believe nutritional experts who promote special diets (rich Westerners have been known not to stick to diets, too). Or food itself may not be their priority. As Orwell said, “There is always some cheaply pleasant thing to tempt you.”
The Confidence Man: How Lalit Modi, possessed of inhuman energy, ambition and audacity, built a billion-dollar cricket kingdom—only to be rudely ejected from its throne – via Caravan Magazine- Among people who know Modi, the opinion that he is motivated by money for its own sake or power for its own sake is rare. More frequently, I heard armchair psychological views of Modi’s outsize ambitions, all of which can be condensed into the phrase “I’ll show ’em”. In these narratives, Modi aims for particularly spectacular success because he’s always trying to prove something—trying to banish the memories of his early failures as a businessman, trying to show that he doesn’t need his family’s network of support, trying to create a property superior to anything the Modi group ever built. The steepness of his ambitions came with its own degree of risk, but that was further compounded by his abrasive personality. “Lalit will either be a hero or a zero,” a family friend said KK Modi once told him. “He can never be anything in between.”
A Murder Foretold: Unravelling the ultimate political conspiracy – via New Yorker – Rodrigo Rosenberg knew that he was about to die. It wasn’t because he was approaching old age—he was only forty-eight. Nor had he been diagnosed with a fatal illness; an avid bike rider, he was in perfect health. Rather, Rosenberg, a highly respected corporate attorney in Guatemala, was certain that he was going to be assassinated.
Why Children Often Act Before They Think – via SciAm- Kids may lack self-consciousness because a key network in their brain is not yet synchronized
Do Ipods Change The Way We Listen & Respond To Music – via Slate – Two years ago, at the nadir of the financial crisis, the urban sociologist Sudhir Venkatesh wondered aloud in the New York Times why no mass protests had arisen against what was clearly a criminal coup by the banks. Where were the pitchforks, the tar, the feathers? Where, more importantly, were the crowds? Venkatesh’s answer was the iPod: “In public spaces, serendipitous interaction is needed to create the ‘mob mentality.’ Most iPod-like devices separate citizens from one another; you can’t join someone in a movement if you can’t hear the participants. Congrats Mr. Jobs for impeding social change.” Venkatesh’s suggestion was glib, tossed off—yet it was also a rare reminder, from the quasi-left, of how urban life has been changed by recording technologies.
The MP3: A History Of Innovation And Betrayal – via NPR – The story of the MP3 is the story of how intellectual property became the commodity over which the Internet’s greatest wars would be fought, and also how the work that goes into innovating can be forgotten in the face of a technology’s rapid spread. Google “history of the MP3” today, and you’ll find two options, neither satisfying: brief timelines that privilege the user experience over the process of invention and relentlessly technical, acronym-studded descriptions of the differences between various algorithms.
Personality Psychology and Economics – via Geary Behavior Blog- This paper explores the power of personality traits both as predictors and as causes of academic and economic success, health, and criminal activity. Measured personality is interpreted as a construct derived from an economic model of preferences, constraints, and information. Evidence is reviewed about the “situational specificity” of personality traits and preferences. An extreme version of the situationist view claims that there are no stable personality traits or preference parameters that persons carry across different situations. Those who hold this view claim that personality psychology has little relevance for economics. The biological and evolutionary origins of personality traits are explored. Personality measurement systems and relationships among the measures used by psychologists are examined. The predictive power of personality measures is compared with the predictive power of measures of cognition captured by IQ and achievement tests. For many outcomes, personality measures are just as predictive as cognitive measures, even after controlling for family background and cognition.Moreover, standard measures of cognition are heavily influenced by personality traits and incentives. Measured personality traits are positively correlated over the life cycle. However, they are not fixed and can be altered by experience and investment. Intervention studies, along with studies in biology and neuroscience, establish a causal basis for the observed effect of personality traits on economic and social outcomes. Personality traits are more malleable over the life cycle compared to cognition, which becomes highly rank stable around age 10. Interventions that change personality are promising avenues for addressing poverty and disadvantage.
Should High-Frequency Trading Be Banned? One Nobel Winner Thinks So – via Freakonomics- The IMF recently held a conference entitled Macro and Growth Policies in the Wake of the Crisis. Here’s a video summary from Michael Spence, former Stanford School of Business dean and winner of the 2001 Nobel Memorial Prize in Economic Sciences. It includes Spence’s thoughts about inflation and the coming divergence between growth and employment in the developed world.
New Scientist Plays Benevolent Dictator – via Long Now- New Scientist recently got in touch with a series of experts to discuss a thought experiment they call Civilization 2.0 – If we had the chance to redesign civilization from the ground up, with all our current knowledge (and the agreement of everyone in the world), how would we do it?
Cleaning Up The Muni Market – via Columbia – The value that is being siphoned away through the muni market, Professor Andrew Ang says, can be attributed to two flaws: the market is both highly illiquid and very opaque, costing investors and municipalities billions of dollars every year.
Impact of Denying Temptations @ Work – via HBS – Among the many distractions that keep office employees from their work, surfing the web is arguably the most irresistible time-waster of all. In order to deal with that problem, many companies either prohibit Internet use during working hours, or closely monitor employees’ web activity. This means workers must wait until they get home to get their daily YouTube fix. But does forbidding this distraction actually increase productivity? In this paper, researchers find that the answer is no—and that delaying gratification actually has a negative impact on employee performance.
Microsoft’s Growth of Mobile Marketing – via Cool Infographics-