Marty Weitzman on the equity premium

Brad de Long points to a piece on the equity premium by Marty Weitzman and says,

Marty Weitzman is smarter than I am …This is brilliant. I should have seen this. I should have seen this sixteen years ago. I almost saw this sixteen years ago.

Weitzman’s idea¹ is the replace the sample distributions of returns on equity and debt with reasonable Bayesian subjective distributions. These have much fatter tails, allowing for a higher risk premium, lower risk free rate and higher volatility, in the context of a socially optimal market outcome. Here are some of the reasons why this is important

My immediate reaction is the same as Brad’s. Something like this has occurred to me too, but I’ve never thought hard enough or cleverly enough about it how to work it out properly. This is a very impressive achievement, and Marty Weitzman is very, very smart (which we already knew).

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Conferencing

I don’t know when “conferencing” became a verb, but I guess I’m doing it all the same. I’m at the ASA Meetings in San Francisco, where the keynote speakers include well-known sociologist Paul Krugman. I’m off to the Economic Sociology Section reception soon, but I am nevertheless tempted by the Section on Alcohol Drugs and Tobacco reception. Meanwhile, the storm damage in Florida reminds me of the answer to the stupidest question in the world.

Time Machine

It seems to be funny facts day here at CT (except it’s sad that Julia Child died, although 92 is not so sudden for someone so stuffed with butter and cream.) Anyway, via Colby Cosh, I found my way to this NY Times election 2000 Florida recount-o-matic web tool, allowing you to set different rules for ballot acceptability to see how it might have all gone differently.

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Julia Child dies

Just a few days short of her 92nd birthday, Julia Child died this week. You did not need to be a cooking fanatic to have watched her shows although you may have ended up as one after doing so. And a kitchen is hardly complete without one of her books. I also got quite a bit of exposure to her name while studying at Smith College as she was one of those alums such a school could be very excited about. Hat tip to ms.musings who links to all sorts of interesting sites for more background info. Here’s one nice little interview with Child last year in Ms. Magazine where Child is quoted as saying: “I was a Republican until I got to New York and had to live on $18 a week. It was then that I became a Democrat.”

Language in the Blogosphere

Wandering around the blogosphere, I came across this rather interesting page. It seems to be a little outdated, but it provides an approximate count of the relative importance of different languages in the blogosphere. English comes first, unsurprisingly, then French. Portuguese is third, and Farsi fourth. This may seem a little surprising to those who aren’t familiar with the proliferation of Portuguese and Farsi blogs - both linguistic communities have also made substantial inroads into social network services like Orkut.com too. This leads to an interesting sociological question - why these communities and not other linguistic communities of similar size - have reached takeoff in the blogosphere. Equally interesting is the lack of any Arab language blogs on the list. This may be a result of how the authors have seeded their survey or parsed their results - but it may also quite possibly reflect reality. As far as I know, there are less than 70 Iraqi blogs (many of which are in English). I’m not aware of any substantial blogging communities in other Arabic-speaking countries - but I’m happy to be enlightened if I’m wrong. The root causes may perhaps include cultural factors - but I would bet that restrictions on Internet access and poor technological infrastructures also play a very important role.

Love is a Battlefield Spanning-Tree Network with no 4-Cycles

Quick, in high school were you ever told not to date your old girlfriend’s current boyfriend’s old girlfriend? Or your old boyfriend’s current girlfriend’s old boyfriend? Probably not. But I bet you never did, either. This month’s American Journal of Sociology has a very nice paper (subscription only, alas) by Peter Bearman, Jim Moody and Katherine Stovel about the structure of the romantic and sexual network in a population of over 800 adolescents at “Jefferson High” in a midsized town in the midwestern United States. They got a pretty well-bounded population (a high school included in the AddHealth study) and mapped out all the connections between the students. Read on for the lurid details.

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I Hate NBC

As most of you reading this outside America will know, the 2004 Olympics have begun. Of course in America none of this has been seen yet, because it is technologically impossible or something to broadcast live from Greece. So the film of the opening ceremony is being sent by carrier pigeon to New York, where it will arrive in a few hours to be shown.

Now I don’t really care when or where the opening ceremony is shown. But I do care about when and where they show Olympic events in which Australians have a decent chance of doing well, especially swimming. And if one is stuck in the televisual hell-hole that is the United States, the answer is “Nowhere live, and unknown time and location on tape delay.” Because NBC refuses to show any swimming events live, and refuses (as far as I can tell) to say just when it will show events on tape delay, it is practically impossible to tell how much of a commitment will be needed to actually see Australians (or anyone else you might be interested in) in action. If you’re lucky NBC will, just like a cable company, say that the event you want will turn up sometime in a 4 hour interval. Just why Americans tolerate this kind of behaviour from a TV station is a little unclear, but I can’t imagine it would be possible to get away with such behaviour anywhere else in the western world.

Sensitive

Liberal Oasis has a good collection of quotes from our sensitive Republican friends.

Julian Sanchez adds,

I swear, stuff like this is almost enough to make me want to become one of those partisan Democratic hacks that Matt refuses to be. It ought to be crystal clear to everyone—it surely is to Cheney—that Kerry meant by a “more sensitive” war on terror exactly what Bush did when he used the same word: It’s a point about more deft diplomacy, not a suggestion that we watch Steel Magnolias with Osama and talk about our feelings.

Via Tapped, who point out the shoddy job that the press has done in pointing out the dishonesty in Cheney’s remarks. The Washington Post, the New York Times and the Los Angeles Times all fail to print Kerry’s entire quote in their articles about Cheney’s attack. With these guys, it doesn’t matter if what they’re saying is true; it only matters if it’s useful. It would be nice if the major media outlets didn’t keep falling for it.

Mommsen's death

Prominent German historian, Wolfgang Mommsen has died while swimming in the Ostsee. He was the scion of an astonishingly prolific family of German historians and thinkers (his great-grandfather, Theodor Mommsen, won the Nobel Prize; Max Weber was a relation by marriage). He is likely to be remembered for his prominent and honorable role in the Historikerstreit (historians’ controversy), in which he along with several others (Jurgen Habermas, Kaiserreich historian Hans-Ulrich Wehler, social historian Jurgen Kocka) battled with conservatives who seemed to be trying to normalize the Nazi period of German history. See Rhine River blog for more. Thanks to Nathanael Robinson for letting us know.

Right to know

Jeff Jarvis makes a decent point:

Apparently, everyone else in New Jersey media knew McGreevey’s secret. And if that’s so, it raises lots of questions. I’m not saying they should have outed him; I long for the day when a politician’s personal life is just that. But if he indeed hired his lover for a state job for which that reputed lover was in no way qualified… well, that’s a crime. Why didn’t we know?

It’s great that McGreevey came right out and told the world that he was gay without apologizing for it. But if the charges about cronyism for his lover are true, they’re much more serious than Jack Ryan’s trips to sex clubs.

I understand that the specific comparison is meaningless; the individuals who make up the press corps in New Jersey don’t have to answer for the Chicago Tribune, or vice versa. There’s no one to point to, other than the imaginary beast called “the media.” Still, the public right to know is self-evident in the case of McGreevey, and not at all evident in the case of Jack Ryan. This isn’t right.

Rawls against desert

Will Wilkinson has a column up at TechCentralStation on desert . This very fact is regrettable, since Wilkinson is smarter, saner, and more interesting that the average TCS columnist and hence will serve to cover-up — somewhat — the nakedness of this astroturf operation. Anyway, the real issue is what he says, which is aimed at Matthew Yglesias , Max Sawicky and others who attack the concepts of meritocracy. Wilkinson credits their argument — that we don’t really deserve anything — to John Rawls. The argument Wilkinson (mis)attributes to Rawls is, in a nutshell, that although, superficially, it may seem that we deserve praise or reward for our efforts, in some deeper sense we don’t, because the attributes that enabled us to strive (such as our genetic makeup and our upbringing) were not themselves deserved. Given the moral arbitrariness of of our natural endowments — including the capacity for hard work — those with more talent can be legitimately taxed, as necessary, to support those unfortunate enough to have less.

[I’m putting the rest of this below the fold as it gets into technical Rawlsiana]

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Get well soon

According to this AP report in the NY Times, Moqtada al-Sadr has been wounded by US shelling in Najaf. Sadr is an irresponsible demagogue, his political agenda is reactionary and authoritarian and his militia has been guilty of many acts of thuggery and violence. And we should all wish for his complete and speedy recovery from his wounds.

Update There is a ceasefire and negotiations have started for a truce. This is welcome news, and I hope the talks are successful. However, it only points up the fact that the bloody campaign to destroy Sadr was both morally indefensible (as well as being politically stupid). I restate the point I made when the fighting was at its peak.

Almost certainly, the current fighting will end in the same sort of messy compromise that prevailed before the first campaign started. Nothing will have been gained by either side. But 2000 or so people will still be dead. Sadr bears his share of the guilt for this crime. The US government is even more guilty.

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11D

Laura has moved and renamed her blog simply 11D. She now has comments, which presumably has the upside that she doesn’t have to have millions of mini-email conversations; on the other hand it means she won’t have as many nice email conversations. Since I link to her every other post, this affects me more than most: I’ll have to start thinking of things of my own to say. Most impressive is that she has, thus far, only one blog on her blogroll — guess which one? No, don’t guess — go and see.

Imagine

WASHINGTON- In an unusual joint press conference, President Bush and Senator John Kerry announced the nomination of Rep. Christopher Cox of California to serve as director of the CIA. The joint nomination virtually ensures Cox’s confirmation, at a time when Administration officials have warned the public to expect attacks. “In this time of uncertainty, we need stability in our intelligence agencies. I promised to reform our intelligence capabilities, and I intend to keep that promise,” said President Bush. “That’s why I’ve been in communication with Senator Kerry on this nomination…”

If you don’t like Christopher Cox, pick someone else. I wouldn’t dream of any President extending this kind of consideration for most appointments, but the CIA director is an unusual case. Porter Goss is a poison pill in a position where we can least afford one. There seems to be some agreement that Porter Goss’s open partisanship makes it almost inevitable that he will be dismissed in the event of a Kerry victory. That’s not good.

Maybe Goss will turn out to be an excellent head of the CIA. But his nomination has more than a whiff of positioning, and he’ll have no traction until November (if Bush wins) or January (if Kerry wins). If we’re sincerely expecting attacks, and we’re sincere about wanting to reform our intelligence, then we’ve got to have CIA leadership that can get to work, regardless of which way the votes fall.

Maybe I’m daydreaming, but it seems like we’ve missed a great opportunity for statesmanship. You may say that I’m a dreamer. But I’m not the only one.

Spelling

Whilst English speakers doughtily plough on with our archaic and tough spellings, and have to acquire a tolerance for the inconsistencies between British English and American English (to name but two), the German authorities have fought to implement a thorough spelling reform. But it seems that implementation faces a major hiccough as some of the major German newspapers have had second thoughts. Scott Martens gives a rough but excellent account of developments and rationales over at Fistful of Euros. (In other news, I shall be travelling to Loughborough this weekend.)

Here's your fucking latte, sir

I looked this one up for an argument in comments to Belle’s post below, and I’ve been laughing and crying ever since. It’s a useful way to think about the extent to which “trickle down” economics has worked for the poorest in society. As we all know because people who know we’ve read Rawls keep telling us, the poorest benefit from economic growth. How much do they benefit?

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