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Can we ever knock down the walls of the wealthy ghetto?
Jul. 15, 2017 | The Globe and Mail | DOUG SAUNDERS.

Fifty-two years ago, sociologist John Porter demonstrated, in his bestseller The Vertical Mosaic, that Canada's economy, its politics and its culture were controlled by a cloistered elite from the same schools and neighbourhoods, and only 3 per cent of Canadians had any access to this circle. Social mobility has improved dramatically thanks to half a century of immigration, growth and better social policies. But the top ranks remain closed and self-protective.

There are two factors in particular that make Canada's cycle of privilege a closed loop that excludes outsiders.

The first is Canada's lack of an inheritance tax. Estates (including houses) are taxed as income upon their owner's death, then can be passed on to children – removing incentives to put that wealth to better and more productive use. As a result, the higher rungs on the ladder are less open to people who have developed creative, profitable companies and ideas, and more so to people who have simply had the right parents.

The second is Canada's lax policy on private schools. The 6 per cent of Canadians who attend fee-charging schools are overwhelmingly there because their families are wealthy (studies show that their advantages are entirely found in their connections, not in their academic performance).
Canada  Canadians  high_net_worth  privilege  Doug_Saunders  cumulative  social_mobility  social_classes  private_schools  inheritance_tax  elitism  compounded  inequality  geographic_sorting  college-educated  super_ZIPs  self-perpetuation  upper-income 
july 2017 by jerryking
Some of the Wisest Words Ever Spoken About Investing - MoneyBeat - WSJ
By JASON ZWEIG
Nov 25, 2016

Investing is often portrayed as a battle between you and the markets. Instead, Graham wrote, “the investor’s chief problem — and even his worst enemy — is likely to be himself.”

Evaluating yourself honestly is at least as important as evaluating your investments accurately. If you don’t force yourself to learn your limits as an investor, then it doesn’t matter how much you learn about the markets: Your emotions will be your undoing....Nobel Laureate Daniel Kahneman with his book Thinking, Fast and Slow.
I’m especially grateful that he taught me this: “The most important question is, ‘What is the base rate?’”....Michael Mauboussin, a strategist at Credit Suisse, has taken that hint and compiled base rates for all sorts of corporate measures, so investors can readily check a company’s projections against reality.....From the economist and investing writer Peter Bernstein, who died in 2009, I learned about Pascal’s wager: You must weigh not only the alluring probabilities of being right, but the dire consequences of being wrong....Finally, Mr. Bernstein never tired of emphasizing that we can never know the future — least of all at the very moments when it seems most certain....Richard Dawkins pointed out in a lecture in 1996, many of us today know more about the world around us than Aristotle, the greatest mind of his age, did more than 2,300 years ago: “Science is cumulative, and we live later.”

Investing knowledge is also cumulative, and we all benefit from those who have already learned — and taught — how it works.
investing  investors  gratitude  Peter_Bernstein  wisdom  economists  Jason_Zweig  ETFs  books  Benjamin_Graham  pretense_of_knowledge  base_rates  Michael_Mauboussin  self-awareness  self-analysis  self-reflective  proclivities  probabilities  Pascal’s_wager  Daniel_Kahneman  delusions  self-delusions  emotions  Achilles’_heel  cumulative  Nobel_Prizes 
november 2016 by jerryking
The Most Important Question You Can Ask
APRIL 25, 2014 | NYT | By TONY SCHWARTZ.

The answer to “In the service of what?” is to add more value to the commons than we take out, and not to discount any good that we can do.

“We must not, in trying to think about how we can make a big difference,” said the children’s rights advocate Marian Wright Edelman, “ignore the small daily differences we can make, which, over time, add up to big differences that we cannot foresee.”

Personal accomplishments make us feel good. Adding value to other people’s lives makes us feel good about ourselves. But there is a difference. The good feelings we get from serving others are deeper and last longer. Think for a moment about what you want your children to remember about you after you’re gone. Do more of that.
work_life_balance  Tony_Schwartz  serving_others  hedge_funds  questions  slight_edge  legacies  values  life_skills  compounded  personal_accomplishments  foundational  cumulative 
april 2014 by jerryking
Do we really want elite youth to get more elite? | mathbabe
December 16, 2013 Cathy O'Neil,

Finally, let me just take one last swipe at this idea from the perspective of “it’s meritocratic therefore it’s ok”. It’s just plain untrue that test-taking actually exposes talent. It’s well established that you can get better at these tests through practice, and that richer kids practice more. So the idea that we’re going to establish a level playing field and find minority kids to elevate this way is rubbish. If we do end up focusing more on the high end of test-takers, it will be completely dominated by the usual suspects.

In other words, this is a plan to make elite youth even more elite. And I don’t know about you, but my feeling is that’s not going to help our country overall.
education  PISA  elitism  meritocratic  Cathy_O’Neil  compounded  self-perpetuation  Matthew_effect  opportunity_gaps  privilege  high-end  cumulative  unfair_advantages 
december 2013 by jerryking
The need for an analytical approach to life
November 3, 2013 | FT.com | By Rebecca Knight.

Risk analysis is not about predicting events; it’s about understanding the probability of possible scenarios, according to Elisabeth Paté-Cornell, professor at the Stanford School of Engineering.
In her latest research, she argues that expressions such as “black swan” and “perfect storm”, which have become journalistic shorthand when describing catastrophes, are just excuses for poor planning. Managers, should “think like engineers” and take a systematic approach to risk analysis. They should figure out how a system works and then identify the probable ways in which it could fail.
So does a black swan event exist?
The only one that I can think of is the Aids epidemic. In the case of a true black swan, you cannot anticipate it.
And what about ‘perfect storms’?
A combination of rare events is often referred to as a perfect storm. I think people underestimate the probability of them because they wrongly assume that the elements of a perfect storm are independent. If something happened in the past – even though it may not have happened at the same time as something else – it is likely to happen again in the future.
Why should managers take an engineering approach to analysing the probability of perfect storms?
Engineering risk analysts think in terms of systems – their functional components and their dependencies. If you’re in charge of risk management for your business, you need to see the interdependencies of any of the risks you’re managing: how the markets that you operate in are interrelated, for example.
You also need imagination. Several bad things can happen at once. Some of these are human errors and once you make a mistake, others are more likely to happen. This is because of the sequence of human error. When something bad happens or you make a mistake, you get distracted which means you’re more likely to make another mistake, which could lead to another bad event. When you make an error, stop and think. Anticipate and protect yourself.
How can you compute the likelihood of human error?
There are lots of ways to use systems analysis to calculate the probability of human error. Human errors are often rooted in the way an organisation is managed: either people are not skilled enough to do their jobs well; they do not have enough information; or they have the wrong incentives. If you’re paid for maximum production you’re going to take risks.
So in the case of a financial company I’d say monitor your traders, and maybe especially those that make a lot of money. There are a lot of ways you can make a lot of money: skill, luck, or through imprudent choices that sooner or later are going to catch up with you.
So you can do risk analysis even without reliable statistics?
We generally do a system-based risk analysis because we do not have reliable statistics. The goal is to look ahead and use the information we have to assess the chances that things might go wrong.
The upshot is that business schools ought to do a better job of teaching MBAs about probability.
+++++++++++++++++++++++++++++++++
“Numbers make intangibles tangible,” said Jonah Lehrer, a journalist and
author of “How We Decide,” (Houghton Mifflin Harcourt, 2009). “They
give the illusion of control. [Add "sense of control" to tags]
engineering  sense_of_control  black_swan  warning_signs  9/11  HIV  Aids  business_schools  MBAs  attitudes  interconnections  interdependence  mindsets  Stanford  imagination  systems_thinking  anticipating  probabilities  pretense_of_knowledge  risk-management  thinking_tragically  complexity  catastrophes  shorthand  incentives  quantified_self  multiple_stressors  compounded  human_errors  risks  risk-analysis  synchronicity  cumulative  self-protection  systematic_approaches 
november 2013 by jerryking
To risk or not to risk? Where (and when) should be the question
Sep 3, 2007 |The Globe and Mail pg. B.6 | Daniel F. Muzyka, Glen Donaldson

First, risk can sometimes be asymmetric: bad news being more "bad" than good news is "good". For example, while a business project that goes particularly well might deliver slightly ahead of expectations, a bad project that goes off the rails may far exceed its time and budget...Second, risk is often interconnected: the knee-bone is connected to the shin-bone is connected to the foot-bone.
...Third, risks can be multiplicative, with a series of small risks combining to produce large outcomes....The good news is that advancements in risk management can help produce insight and can deal with some of the risks. One can consider four steps to managing risk: identification, measurement, mitigation, and monitoring.
ProQuest  Daniel_Muzyka  risk-management  insights  large_payoffs  measurements  compounded  interconnections  risk-mitigation  multiplicative  risks  network_risk  asymmetrical  cumulative  risk-assessment  bad_news 
october 2011 by jerryking
The Many Trials of 'Spider-Man' - Speakeasy - WSJ
March 11, 2011 WSJ By Peter Schneider
Looking back, he realizes that it was not one big mistake of judgment.
Instead, it was 10 little decisions that seemed inconsequential along
the way but, in retrospect, turned out to have led him into a precarious
and nearly fatal situation. At some point, the cumulative impact of all
those wrong decisions makes it impossible to regain your bearings.
theatre  post-mortems  failure  decision_making  producers  playwrights  cumulative  compounded 
march 2011 by jerryking
Seth's Blog: Information about information
Posted by Seth Godin on July 15, 2010.

information about information. That's what Facebook and Google and Bloomberg do for a living. They create a meta-layer, a world of information about the information itself.

And why is this so valuable? Because it compounds. A tiny head start in access to this information gives you a huge advantage in the stock market. Or in marketing. Or in fundraising.

Many people and organizations are contributing to this mass of data, but few are taking advantage of the opportunity to collate it and present it to people who desperately need it. Think about how much needs to be sorted, compared, updated and presented to people who want to choose or learn or trade on it.

The race to deliver this essential scalable asset isn't over, it's just beginning.
information_flows  Information_Rules  Seth_Godin  data_driven  competingonanalytics  overlay_networks  sorting  metadata  slight_edge  compounded  inequality_of_information  multiplicative  cumulative 
july 2010 by jerryking
Op-Ed Columnist - Drilling for Certainty - NYTimes.com
May 27, 2010 | NYT | By DAVID BROOKS. "...the real issue has
to do with risk assessment. It has to do with the bloody crossroads where complex technical systems meet human psychology...we’ve come to depend on an ever-expanding array of intricate hi-tech systems. These h/w & s/w sys. are the guts of financial markets, energy exploration, space exploration, air travel, defense programs and modern production plants. These sys. which allow us to live as well as we do, are too complex for any single person to understand. (1) people can't
imagine how small failings can compound into catastrophic disasters. (2) people acclimate to risk (3) overconfidence in backup sys. and safety devices. (4) people match complicated technical sys. with complicated governing structures. (5) people tend to spread good news and hide bad news.(6) people in the same field suffer groupthink...Overlooks incentives that distort choices.
David_Brooks  oil_spills  complexity  risk-assessment  cognitive_skills  biases  Malcolm_Gladwell  certainty  overconfidence  psychology  incentives  catastrophes  groupthink  compounded  financial_markets  energy_exploration  space_exploration  air_travel  multiplicative  risk-perception  optimism_bias  risk-acclimatization  Richard_Feynman  cumulative  bad_news 
may 2010 by jerryking
Take Smart Risks
09.21.09 | Wired Magazine | by By William Gurstelle. "Done
artfully and wisely, living dangerously engages our intellect, advances
society, and even makes us happier. It is possible to work consciously
toward joining the "golden Third": Just get in there and start pitching.
As with knife-throwing, unicycle-riding, and whip-handling, one gets
better mainly by practice. Make your choices smart ones. It's not
difficult to discriminate between a good, soul-enriching risk and one
that's just plain nuts."

A comment:

That study of risk takers vs. non risk takers is probably
biased. The random sample of people interviewed most likely didn't
include people that were dead or in prison as a result of the risks they
took.

And it is very true, but sometimes risks are compounding and other times
they are isolated. It's important to distinguish when something that
appears to be isolated is really starting to compound.
category_errors  risk-taking  risks  self-actualization  isolation  compounded  discernment  risk-assessment  dangers  psychology  soul-enriching  practice  dedication  multiplicative  survivor_bias  cumulative 
october 2009 by jerryking

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