Earlier quoted context omitted.
If insurance was cost effective in the long run, insurance companies wouldn't be profitable
You aren't protecting against the expected value though, you are protecting against variance.
No argument there
Efficiency is dangerous and slowing down makes life better
301–310 of 314 posts
Re: Efficiency is dangerous and slowing down makes life better
#302Earlier quoted context omitted.
Even better, why not get the company to borrow against those 10 years of income, and pay you your profit now? Even better, since you now don't actually even need to keep the company alive for 10 years since you've already got your profit, you can sell the company's assets now and increase your profit! Except there's not a company in the world that this logic doesn't apply to (at some point). Asset-stripping has kille…
The key difference here is that the “communities” are not recognized with any particular ownership interest. Does the owner of the company have a right to take risks with the business? It is a serious impairment of ownership if not, and will likely lead to more-stagnant societies. The entire engine of America’s superior prosperity (even at the individual level) has been based on risk taking, while stagnant systems ha…
The option to take risks with the business is not a right, but a privilege. It brings prosperity only if exercised carefully. It is done less and less so, with more and more arrogant excuses, and sadly, it will be USA's undoing.
Re: Efficiency is dangerous and slowing down makes life better
#303Earlier quoted context omitted.
Not my impression. The kind of outlier-culling technique suggested by civilized is not recommended these days because it adds unprincipled choice points to what Andrew Gelman calls the 'Garden of Forking Paths' [1, 2]. Thus they are bad for hypothesis testing, which tends to be what most statisticians care about. Additionally the technique obscures the relationship between the variance of the sample and the populatio…
This post seems to be conflating a few different things: 1. Trimming for mean estimation, which removes extreme values in an algorithmic fashion 2. Subjective removal of outliers based on researcher judgment (this is the garden of forking paths Gelman talks about) 3. Estimating other distributional properties, such as the variance, with trimmed estimators These are all different things and come with different theoret…
I made two separate points.
The choice of N used in cutting out the N% most extreme results is not determined by widely accepted statistical best practice. Hence it is a source of forks. The algorithm might be deterministic but the choice of this parameter isn't.
My discussion of distributional properties was another issue concerning this technique. You seemed to have missed the point that dropping extreme points can also lead to biased estimates of the mean.
Ten years ago, dropping outliers was considered good practice in the social sciences. Today, it has become a reason for rejection in peer review. There are better techniques for dealing with noisy data, such as adding measurements to data points to measure "badness" that can then be adjusted for in a multi-level model.
Re: Efficiency is dangerous and slowing down makes life better
#304Earlier quoted context omitted.
> Only if you define local interest as purely financially motivated social status is not only dependent on wealth For an awful lot of people, it basically is - I mean, practically the entire field of finance and professional management would look at the example I gave and say, "that's exactly the right thing to do." Mitt Romney's entire professional career follows that principle, and it's largely seen as a net positi…
Could you help me understand this a little better and define what you mean by local interest?
I'm not using a rigorous definition, but essentially, consider two outcomes, each affecting 100 people:
1. Every person accrues $10
2. One person, "Bob", accrues $100, everyone else accrues $1
This is what I mean by local vs global interest - roughly, "in the interest of a given individual" vs "the best outcome across all individuals."
Re: Efficiency is dangerous and slowing down makes life better
#305Earlier quoted context omitted.
Even better, why not get the company to borrow against those 10 years of income, and pay you your profit now? Even better, since you now don't actually even need to keep the company alive for 10 years since you've already got your profit, you can sell the company's assets now and increase your profit! Except there's not a company in the world that this logic doesn't apply to (at some point). Asset-stripping has kille…
The key difference here is that the “communities” are not recognized with any particular ownership interest. Does the owner of the company have a right to take risks with the business? It is a serious impairment of ownership if not, and will likely lead to more-stagnant societies. The entire engine of America’s superior prosperity (even at the individual level) has been based on risk taking, while stagnant systems ha…
> The entire engine of America’s superior prosperity (even at the individual level) has been based on risk taking
This is a story that America tells itself. It's not necessarily true.
And currently the USA in in enormous debt, partly because of the vast cost of bailing out its financial institutions and large corporations. "Risk-taking" is increasingly only being done by private individuals. Large American businesses are certainly not being exposed to the results of their risks - they're being bailed out, socialising the risk but privatising the reward.
In this case, if the community is shouldering the responsibility of bailing out companies that are in danger of collapsing, shouldn't there be some "impairment of ownership" as you put it? Aren't those communities entitled to ask that the company is run for their benefit too?
Re: Efficiency is dangerous and slowing down makes life better
#306I've found "efficiency as the opposite of stability" a very powerful concept to think about - even though it's fairly simple, it seems to be almost a fundamental law. Whether it's about the economy at large, your own household, a supply chain, what have you - as soon as you optimize for efficiency by removing friction, you take all the slack/damping out of the system and become instantly more liable to catastrophic f…
That makes sense. If efficiency is achieving maximum ROI, then the best ROI activies are generally the highest risk ones, which have the most chance of failing and are thus least stable.
Re: Efficiency is dangerous and slowing down makes life better
#307Earlier quoted context omitted.
This post seems to be conflating a few different things: 1. Trimming for mean estimation, which removes extreme values in an algorithmic fashion 2. Subjective removal of outliers based on researcher judgment (this is the garden of forking paths Gelman talks about) 3. Estimating other distributional properties, such as the variance, with trimmed estimators These are all different things and come with different theoret…
I made two separate points. The choice of N used in cutting out the N% most extreme results is not determined by widely accepted statistical best practice. Hence it is a source of forks. The algorithm might be deterministic but the choice of this parameter isn't. My discussion of distributional properties was another issue concerning this technique. You seemed to have missed the point that dropping extreme points can…
All but the simplest statistical estimators have researcher degrees of freedom (certainly including multilevel models) so it seems arbitrary to criticize the trimmed mean in particular for that "fault".
Similarly, any estimator can be biased if its assumptions are violated, so I'm not sure why the potential bias of the trimmed mean in particular is an interesting point.
I'm sure that social science peer reviewers have their reasons for their methodological preferences, but trimmed means are great workhorses in other areas of science, like signal processing.
The critique strikes me as potentially valid in its subfield but a bit parochial if it is attempting generality.
Re: Efficiency is dangerous and slowing down makes life better
#308Earlier quoted context omitted.
I made two separate points. The choice of N used in cutting out the N% most extreme results is not determined by widely accepted statistical best practice. Hence it is a source of forks. The algorithm might be deterministic but the choice of this parameter isn't. My discussion of distributional properties was another issue concerning this technique. You seemed to have missed the point that dropping extreme points can…
All but the simplest statistical estimators have researcher degrees of freedom (certainly including multilevel models) so it seems arbitrary to criticize the trimmed mean in particular for that "fault". Similarly, any estimator can be biased if its assumptions are violated, so I'm not sure why the potential bias of the trimmed mean in particular is an interesting point. I'm sure that social science peer reviewers hav…
I don't deny the technique has its uses. The point is it is a poor technique to use if your goal is hypothesis testing, which, as I said, is what most statisticians care about.
I didn't reply to you, but to goodsector, who claimed that statisticians cared focus on efficiency at the expense of reliability. I dispute this.
Re: Efficiency is dangerous and slowing down makes life better
#309Earlier quoted context omitted.
All but the simplest statistical estimators have researcher degrees of freedom (certainly including multilevel models) so it seems arbitrary to criticize the trimmed mean in particular for that "fault". Similarly, any estimator can be biased if its assumptions are violated, so I'm not sure why the potential bias of the trimmed mean in particular is an interesting point. I'm sure that social science peer reviewers hav…
I don't deny the technique has its uses. The point is it is a poor technique to use if your goal is hypothesis testing, which, as I said, is what most statisticians care about. I didn't reply to you, but to goodsector, who claimed that statisticians cared focus on efficiency at the expense of reliability. I dispute this.
I agree! Statisticians have largely led the development of robust methods, so I don't see how they can be characterized as ignoring the concern.
Re: Efficiency is dangerous and slowing down makes life better
#310Earlier quoted context omitted.
Only if you define local interest as purely financially motivated. I am not even talking about the ethics, but even social status is not only dependent on wealth. We are much more than a bank account number, thinking that we are is more or less a pathological disease, because rationally it makes no sense.
> Only if you define local interest as purely financially motivated social status is not only dependent on wealth For an awful lot of people, it basically is - I mean, practically the entire field of finance and professional management would look at the example I gave and say, "that's exactly the right thing to do." Mitt Romney's entire professional career follows that principle, and it's largely seen as a net positi…
I don‘t know, I am not a fan of Mitt Romney but his social status seemed to be more dependent on being a successful governor and managing the olympics. Both are net positives for society, his business record actually was his weakness.