Brad DeLong reminds us of Okun’s Law. Okun’s Law is derived from the following scatter plot showing that typically an increase in unemployment happens in tandem with GDP declines. That in an economy that isn’t running at it’s full potential it seems obvious that everything, consumption, labor, capital equipment, etc. etc. wouldn’t be running at [...]
Cars get into accidents. Adding cars to the system increases the number of accidents. The paper discussed here argues that adding a car in a high traffic state adds about $2,500 worth of additional costs, almost $7 dollars a day! Here in Boston, a bus/subway transit pass costs a bit less than $2/day. My somewhat [...]
In this study[1] the authors manipulated the emotions of their test subjects and then simulated a marketplace. It is not surprising that your mood effects prices, both what your willing to pay and what your willing to accept. They tested two emotions: sad and disgust. Apparently a market should clear faster if everybody is sad. The [...]
The term “platform” misleads people. The metaphor is flawed. It suggests land, and it can be made to work, if you insist. Accepting the metaphor then applications are built on the platform, like houses on the landscape. I read recently a brief summary of why even if you set aside the housing bubble the [...]
In a replied to my posting which ended with the question why EC2′s pricing trends seem uncorrolated with rapid fall in the cost of goods Alex Muffet uses a metaphor: “most EC2 users are not paying for compute performance, but instead to have their time freed up from feeding and watering a farm of computers”. [...]
I suspect a lot of people believe that their state has a progressive tax structure, i.e. that the well off pay a larger percentage of their income and wealth than to the poor. That belief is wrong. There are a very few exceptions, Delaware for example – at least in 2002. Here’s what it really [...]
Tuesday, September 23, 2008
I’m glad to see that somebody is taking my advice.
Wednesday, September 17, 2008
One thing I’m finding particularly hard is getting a sense of scale for what’s unfolding in the markets, but here’s a run at the question. Katrina was maybe a $80 Billion event, and it looks to me like Ike is probably a $30 Billion one. The Iraq war’s direct costs are probably 2 Billion a [...]
Friday, September 12, 2008
In a great posting by Paul Kedrosky explains why the financial industry is just like a traditional mattress. Must educate those exuberant crony capitalists to abstain? Should chill the water bed? Ah platform engineering.
I’ve been trying to think about the financial structures around processes that exhibit highly skewed distributions. The insurance industry is a great place to find the examples. We buy insurance to hedge against the small but awful. Most of our houses don’t burn down, but it does happen. The chance of a fire is scale [...]
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