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Notes from the notes on the “Black Swan” April 8, 2007

Posted by Sharath Rao in economics, humor, life, statistics.
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Black Swan is a theory and a book now. Here are some of the lots of interesting thoughts that Gelman puts together from his reading of Naseem Taleb’s latest work : “Black Swan”.

1.

It reminds me of the saying that I heard once (referring to Donald Trump, I believe) that what matters is not your net worth (assets minus liabilities), but the absolute value of your net worth. Being in debt for $10 million and thus being “too big to fail” is (almost) equivalent to having $10 million in the bank.

Like they say – if you owe the bank 200 bucks and can’t repay, you are in trouble. On the other hand, if you default on $ 200 million, the bank is in trouble. Applies very well to some loss making public sector units in India – a corporation like the ONGC which makes over 2000 crores in profits alone is valuable to the government. But another entity that makes equal losses is also valuable because should it have to be closed and the employees losing jobs, there will be political backlash and electoral setbacks. By the way, just in case you wondered, the total losses of the State Electricity boards in India was over Rs. 10,000 crores in 1999.

~~~

2.
Quoting Naseem Talib again,

On page 16, Taleb asks “why those who favor allowing the elimination of a fetus in the mother’s womnb also oppose capital punishment” and “why those who accept abortion are supposed to be favorable to high taxation but against a strong military,” etc.

Strange, isn’t it. Though Gelman presents counterpoints to this, its weird. Does it mean that for most people, once they realize that their strongest stand or two on select issues are supported by a certain party, they would embrace every stand that the particular party takes on all issues.

But how does the party conjure up these ‘inconsistent’ stands in the first place ? Or is the idea of inconsistency subjective !! I know, I know its not just the left and right, there are several shades in between. But nevertheless, I have wondered why the liberals who support civil rights don’t consider the right of a person to trade freely as a civil right ? Or the conservatives who uphold the right of the person to trade freely also not support the right of any two consenting adults to marry.

Or is consistency not a virtue anymore ? Or was it never ?
~~~
3.

Three types of conversations :

This reminds me of a distinction I came up with once when talking with Dave Krantz, the idea of three levels of conversation. Level 1 is personal: spouse, kids, favorite foods, friends, gossip, etc. Level 2 is “departmental intrigue,” who’s doing what job, getting person X to do thing Y, how to get money for Z–basically, level 2 is all about money. Level 3 is impersonal things: politics, sports, research, deep thoughts, etc.

Over the months, my level 1 conversations have tended to zero. Level 2 have been flat hovering around zero and Level 3 have been progressing upward sans abandon.

~~~

4.
Funny story today from Gelman.

where I used to work, there was a guy who carried his bike up the stairs to the 4th floor. This always irritated me because it set an unfollowable example. For instance, one day I was on the elevator (taking my bike to the 3rd floor) and some guy asked me, “You ride your bike for the exercise. Why don’t you take the stairs?” (I replied that I don’t ride my bike for the exercise.)

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Comments»

1. Steeptemids - December 10, 2009

Cool post, did not thought reading it was going to be so amazing when I looked at the title!!


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