Wednesday, May 28, 2014

Impact of Regulation

In a classic case of the left being at war with itself, the very parties who called for the RBNZ to impose regulation on mortgage lending now suddenly find themselves asking for restrictions of rates to be lifted. The impact of regulation was nothing if not consistent with its centuries old reputation – it hurt the very people it was designed to help – but it made a few people “pulling the levers” “feel good” and feel as if they were “doing something”.  And they were. So now people such as the Mayor of Auckland want the ability of Pasifika communities to be able to take on a bit more risk to be restored. Some financial education, lowering of local body rates and a commitment not to intervene again would reduce that risk – at least at the margin but there is no sign of that.

I suppose the best one can say is that the learning turnaround has been reasonably swift.

See the Radio New Zealand article Here (browser back button to return to Eye2theLongRun)

Tuesday, May 27, 2014

Not so fast champ–one single doesn’t make an album even in rock econ

People have been quick to dub Thomas Piketty a “rockstar economist” – the latest in NZ being (predictably) The Listener – though even they have a healthy dose of “balance” in their recent review.

The Financial Times is less forgiving with a heavily researched demolition job….. and not just on the advocacy but on the argument and evidence.

The following though – from socialist HQ France is even more damaging given that France starts well down the track in his favour.

Sunday, May 25, 2014

Impounding–a badly misunderstood concept

Notice that:

  • if a house costs $200,000 and you make a grant of $25,000 free to everybody pretty soon that house will cost $225,000
  • if a doctors visit costs $50 and you make a grant of $5.00 free to everyone pretty soon that visit will cost $55.00

You can try to hide it behind “criteria”, “targets”, ages, genders, ethnicities – anything you like to dream up…… and worst of all votes (vote for my party and we will “fix” housing, doctors visits…. you name it by giving you “free” whatever to the value of $xxxx…..) but it will be impounded into the price.

Notice too that even if the “free” money is available to only a few then the price will still be impounded…..

World wide there are various subsidies are made so people can buy hearing aids more cheaply…. result? Costs are in the several thousands for a piece of equipment which is less complex than an iPhone at $300 – $500.

Truly there is no free lunch. Giving away lunch drives the price up.

Monday, May 12, 2014

Type I and II Errors–the Visual

Further to my post on our site, here is the visual for those who are still struggling with Type I and II errors.

Type-I-and-II-errors1-625x468

Thanks to Marginal Revolution.

Sunday, May 11, 2014

Saturday, May 10, 2014

What engineers think of themselves…. and what the rest of us think

I read today in Phil Rosenzweig’s brilliant new book Left Brain, Right Stuff that in one study of performance and reward systems, 37% of engineers rate themselves in the top 5% of all professionals.

The stat is quoted in part of an explanation of why such numbers (including the very common assertion that “x” (being some number well over 50%) of drivers rate themselves as better than average drivers – plainly an arithmetic impossibility, but not necessarily surprising or irrational.

Rosenzweig is ever worth reading since his analysis is careful and thorough. He is never afraid to knock so called gurus with cute stories, statistics or Nobel prizes.

I am confident that I am not being overconfident in asserting that the statistic about engineers will come as no surprise to more than 37% of non engineer readers.

Thursday, May 8, 2014

Some stats on being bumped off–Dicing with Death

 

A 2012 study published on the 10th April by the UN Office on Drugs and Crime provides some interesting statistics. 437,000 people around the world whose lives ended in murder were studied. Here are some of the results:

     
  • The average person around the world had roughly a one in 16,000 chance of being murdered.
  • Murder rates in the Americas or Africa (one in 6,100 and one in 8,000 respectively) are more than four times as high as the rest of the world.
  • Western Europe and East Asia are the safest regions.
  • The safest country was Liechtenstein (population 36,600) which recorded no murders at all in 2012.
  • Singapore with 5.31million people clocked up just 11 murders in 2012, or one killing per 480,000 people.
  • In Honduras, the world’s most violent country, one in every 1,100 residents was killed and one man in every 599.
  • Your chance of being murdered if you are a woman will be barely a quarter what it would be were you a man.
  • Nearly half of all female murder-victims are killed by their partner or another (usually male) family member.
  • In Japan and South Korea slightly over half of all murder victims are female.
  • From the age of 30 onwards, murder rates fall steadily in most places.
  • However European women over 60 years of age are more likely to be murdered than those aged 15-29.
  • Alcohol featured in half of murders in Australia, Finland and Sweden, making it a more common factor than any weapon.
  • Worldwide only 43% of murders result in someone being put behind bars.
  • Europe’s police solve eight out of ten murders; those in Asia nearly half and three-quarters of killers in the Americas escape justice (a smaller share in North America)
  • Over a lifetime (assuming a life expectancy of 71 years and a stable murder rate), a Honduran man’s risk of being killed accumulates to a horrifying one in nine.