The first foreign editions of How Not To Be Wrong are coming out! Italy is first, this week:
And after that, Brazil in June:
In 2009, police in Long Branch, New Jersey, were alerted to the presence of an “eccentric-looking old man” wandering around a residential neighborhood in the rain and peering into the windows of a house marked with a “for sale” sign. When the police arrived, the man introduced himself as Bob Dylan. He had no identification; the officer, Kristie Buble, then twenty-four, suspected he was an escaped mental patient. It “never crossed my mind,” she said, “that this could really be him.”
The funny part is, it was actually Jonah Lehrer!
In today’s Wall Street Journal, Jason Zweig frets about the popularity of index funds:
If investors keep turning their money over to machines that have no opinion about which stocks or bonds are better than others, why would anyone want to become a security analyst or portfolio manager? Who will set the prices of investments? What will stop all stocks and bonds from going up and down together? Who will have the judgment and courage to step in and buy during a crash or to sell during a mania?
First of all, it hardly seems like the entire stock market is liable to become one big Vanguard fund: as Zweig says later in the piece, “indexing accounts for 11.5% of the total value of the U.S. stock market.” Big institutional actors have special needs which give them reason to actively manage their funds. And an institution like Wisconsin’s pension fund, which manages about $100b, isn’t giving away 2% of its money per year to a manager, the way you or I would. (This document says we spent $52.5 million in external management fees in 2013; percentagewise, that’s less than I give Vanguard for my index. Update: I screwed this up, as a commenter points out. Our external management fees increased by $52.5m. They present this as a substantial percentage of the total but I can’t find the actual amount of the fee.)
But second: am I supposed to be upset if it becomes less attractive to become a portfolio manager? One out of six Harvard seniors goes into finance. Is that a good use of human capital?
(By the way, here’s a startling stat from that Harvard survey: “None of the women going into finance said they would earn $90,000 or more, compared to 29 percent of men in finance.” Is that because men are overpaid, or because we lie about our salaries the same way we lie about sex?)
A thought experiment touched off by Cathy’s latest post on value-added modeling.
Suppose I’m in charge of a big financial firm and I made every trader who worked for me fill out an NCAA tournament bracket. Then, every year, I fired the people whose brackets ended up in the lowest quintile.
This makes sense, right? Successful prediction of college basketball games involves a lot of the same skills you want traders to have: an ability to aggregate information about uncertain outcomes, fluency in quantitative reasoning, a certain degree of strategic thinking (what choices do you make if your objective is to minimize the probability that your bracket is in the bottom 20%? What if your fellow traders are also following the same strategy…?) You might even do a study that finds that firms whose traders did better at bracket prediction actually ended up with better returns 5 years later. Even if the effect is small, that might add up to a lot of money. Yes, the measure isn’t perfect, but why wouldn’t I want to fire the people who, on average, are likely to make less money for my firm?
And yet we wouldn’t do this, right? Just because we think it would be obnoxious to fire people based on a measure predominantly not under their control. At least we think this when it comes to high-paid financial professionals. Somehow, when it comes to schoolteachers, we think about it differently.
Got the Sunday Times, which I don’t usually do, and in the Book Review letters section I saw a familiar name: David English, of Somerville, MA. I started noticing this guy when I was in grad school. He writes letters to the editor. A lot of letters to the editor. Google finds about 10 pages of hits for his letters to the Times, starting in 1993 and continuing at a steady clip through the present. He wrote to the New Yorker and New York Magazine, too. And I thought I remembered him showing up in the Globe letter column, too, but Google can’t find that.
Who is David English of Somerville, MA? And has he actually had more letters to the New York Times published than anyone else alive?
March Math Madness is here! Presenting the 2015 math bracket, as usual prepared by our crack team of handicappers here at the UW math department. As always, remember that the math bracket is for entertainment purposes only and you should not take offense if the group rated your department lower than the plainly inferior department that knocked you out. Under no circumstances should you use the math bracket to decide where to go to grad school.
I discovered yesterday, three nested directories down in my math department account, that I still had a bunch of files from my last desktop Mac, which retired in about 2003. And among those files were backups from my college Mac Plus, and among those files were backups from 3 1/4″ discs I used on the family IBM PC in the late 1980s. Which is to say I have readable text files of almost every piece of writing I produced from age 15 through about 25.
Very weird to encounter my prior self so directly. And surprising that so much of it is familiar to me, line by line. I can see, now, who I liked to rip off: Raymond Carver, a lot. Donald Barthelme. There’s one poem where I’m pretty sure I was going for “mid-80s Laurie Anderson lyrics.” Like everyone else back then I was really into worrying about nuclear war. I produced two issues of a very mild-mannered underground newspaper called “Ground Zero” with a big mushroom cloud on the front, for the purpose of which my pseudonym was “Bogus Librarian.” (I really liked Bill and Ted’s. Still do, actually.) Anyway, there’s a nuclear war story in this batch, which ends like this: “And the white fire came, and he wept no more.” Who is “he”? The President, natch.
But actually what I came here to include is the first thing I really remember writing, which is a play, called “Strawberries and Cream.” I wrote it for Harold White’s 9th grade English class. The first time I met Mr. White he said “Who’s your favorite author?” and I said “I don’t know, I don’t think I had one,” and he said, “Well, that’s terrible, everyone should have a favorite author,” and I probably should have felt bullied but instead felt rather adult and taken seriously.
A central element of his English class was writing imitations of writers, one in each genre. So I wrote an imitation John Cheever story, and I think an imitation Edna St. Vincent Millay poem (I can’t find this one, tragically.) But the thing Mr. White asked me to read that really sang to me was The Bald Soprano. Was it that obvious, from the outside, that it was mid-century Continental absurdism I was lacking? Or was it just a lucky guess?
Anyway: below the fold, please enjoy “Strawberries and Cream,” the imitation Eugene Ionesco play I wrote when I was 15.
CJ had a vision for dinner. I don’t know where he came up with this. But he said he wanted mashed potatoes with green beans and chopped up hardboiled eggs. OK I said but you know what it needs, some Penzey’s toasted onions and we can put some chunks of gruyere in there and it’ll melt. In the end I was suspicious of the hardboiled eggs so we had them on the side. The final product was something I think could easily be sold in the grocery store hot case at $8.99 a pound. I know this looks kind of like barf, but it works. (See also: the Israeli electoral system.)
I bought today’s State Journal at Victor Allen’s.
Barista: Newspaper. Victor Allen’s.
Barista: We were talking about how maybe we could draw a younger, more college-age crowd if we got people to post that they were here on Instagram, so like if you bought a newspaper you’d take a picture and caption it “Newspaper. Victor Allen’s.”
Me: Sorry, I’m in the old category, I don’t use Instagram.
Barista: Maybe you could post it on your Myspace.
One chapter of How Not To Be Wrong, called “More Pie Than Plate” (excerpted in Slate here) is about the perils you are subject to when you talk about percentages of numbers (like “net new jobs”) that may be negative.
Various people, since the book came out, have complained that How Not To Be Wrong is a leftist tract, intended to smear Republicans as being bad at math. I do not in fact think Republicans are bad at math and it sort of depresses me to feel my book reads that way to those people. What’s true is that, in “More Pie Than Plate,” I tear down an old Mitt Romney ad and a Scott Walker press release. But the example I lead with is a claim almost always put forward by liberal types: that the whole of the post-recession rebound has accrued to the 1%. Not really true!
Long intro to this: I get to polish my “calling out liberal claims” cred by objecting to this, from the Milwaukee Journal-Sentinel:
UW-Madison, the fourth-largest academic research institution in the country with $1.1 billion of annual research spending, has helped spur strong job growth in surrounding Dane County. In fact, employment gains there during the last 10 years far outstrip those in any other Wisconsin county, accounting for more than half of the state’s 36,941 net new private-sector jobs.
I’m pro-UW and pro-Dane County, obviously, but people need to stop reporting percentages of net job gains. What’s more — the reason job gains here outstrip other counties is that it’s the second-biggest county in the state, with a half-million people. Credit to the Journal-Sentinel; at least they included a table, so you can see for yourself that lots of other counties experienced healthy job growth over the decade.
But just as I was ready to placate my conservative critics, Rick Perry went to Iowa and said:
“In the last 14 years, Texas has created almost one-third of all the new jobs in America.”
Dane County and Rick Perry, you both have to stop reporting percentages of net job gains.