America may have the most geniuses, but that doesn't affect the average

Is the US media making Americans stupid? That's the question posed by this article at the Daily Clarity. My initial response would be "stupider, certainly, but maybe not stupid". It's a perfectly fine article, not terribly informative but certainly has some food for thought. My only problem is this point:

Firstly, let us state up front, we do not think Americans are a race of low intelligence or by nature intrinsically stupid. This is a common assertion from international critics of the US, but one that is easily countered by examining the history of technological innovation, medical research breakthroughs, and the alumni of America’s better universities.

Ummm, so what? Where are the statistics on average US IQ vs. other countries? How about our scores on international standardized tests? The point is that a few outliers don't represent a statistical mass. Put another way, the fact that a large number of highly intelligent and productive come from the US* isn't relevant when trying to assess the nation as a whole. Especially in elections, where all votes matter the same amount.

So just becase we may have produced some of the greatest technological breakthroughs in the US doesn't mean the whole country is smarter. Nor does the fact that Palin was so popular among some make the whole country dumber. Can't judge the whole by a few outliers.

Error rating: 4. Relatively minor error to the point of the article, but it's a big logical error.

-Enginerd

*For this to matter at all, one would at least need to show that there are a disproportionately large number of advances coming from the US. This might be the case, but it doesn't mean we're smarter. Just do a better job of fostering/funding new technologies.

Madoffs victims may deserve to lose their money, but not necessarily respect

I haven't posted for a while, mainly because nobody anywhere in the world has done anything stupid in the past month.  I guess people get smarter around the holidays.   Go figure.

The BBC has an article blasting rich people, mainly to the effect of "how much money does one person need?".  It's a good question, and I think one that deserves to be asked, but I take particular issue with their treatment of the Maddoff scandal.  Specifically, his clients:

But most of them had got their money the same way, by promising vast returns on money from other people who were trying to make money out of nothing.

Well, he didn't promise them vast returns.  What he promised was steady returns.  He promised (and claimed to have delivered in the past) 8-12% annual returns, each and every year.  That is pretty impressive, but it's the same returns your financial advisor will tell you the S&P 500 returns each year.  They're lying, but over a 30 year average it's true.  

So, with options, shouldn't you be able to establish a strategy which averages the stock market returns?  Well, maybe over a few years (LEAPS, long term equity options, last 3 years), but certainly not over 30 without establishing private contracts.  But hey, he's a hedge fund, maybe that's what he did.  It's not, it's not even what he claimed to do.  I've been looking around and I still can't find information on his alleged strategy, just that it was so complicated that nobody seemed to understand it.  

This is a sure sign that you shouldn't invest, but then, the people who invest in biotech of software startups don't necessarily know any chemistry or programming themselves.  The late investors just saw past results, and took it for granted that he couldn't just be making them up. Can't argue with results, right?  

Investors need to be aware of the risk of fraud, so I'm not saying they should be bailed out.  Or even deserve sympathy.  But that doesn't make them idiots.  Maddoff didn't promise vast returns, just steady ones.  In retrospect this seems just as outlandish, but the total returns after a few decades wouldn't be much different than the stock market.  So if his scheme is money for nothing, so is $15 trillion in assets of our economy.  

Error rating: 3.  I know it's fashionable to take joy in the pain of the rich, but really, they weren't being too greedy. Just too trusting.

-Enginerd

In a controlled, unrealistic setting, people behave differently

The Sydney Morning Herald had an interesting story a few days ago. Everybody knows that thin models are the way to sell things. But apparently, empirical evidence disagrees:

Phillippa Diedrichs created a series of mock ads, using regular models - typically size eight - and so-called "plus size" models, about size 12. She then presented three ads - for a hair-care product, a party dress and underwear - to 400 young people. She found there was no difference between their responses, with those who viewed the larger models reporting themselves just as interested in buying the goods as those who were presented with the skinnier women.

Got that? People rated themselves as no more likely to buy something? Well I guess that settles that.

Anybody who's ever had to study people knows that what they say they're going to do is different than what they actually do. The Bradley Effect is one example, Malcolm Gladwell in The Tipping Point also documents a case where showing people the effects of rabies made them say they were more likely to go to the health center to get a shot, but not more likely to actually do it.

The idea behind the experiment is a good one, but it would have to be structured in such a way as to see whether test subjects actually would spend money on the products. This is a faulty experiment from the get-go.

Error rating: 2. Hearts in the right place, but come on now. This is just a rookie mistake.

-Enginerd

There's a reason to date your articles

Apologies about the unusually long delay between postings

By now the story about United Airlines going into bankrupty is old news; both the fact that it happened 6 years ago, and the fact that through a series of unfortunate events, Bloomberg reported that it was happening again last week. Anytime something like this happens, the SEC usually stomps around a few times to find out what went wrong, and assure people that it will never happen again (lol). WaPo reports:

Now, the WSJ reports, the SEC has opened a preliminary investigation into how the story resurfaced. It may not turn into a full investigation but a lot of investors felt the impact Monday and those trades aren't being reversed.... The Tribune says the story made it into the current news flow because of one person visiting the article at 1 a.m. Sunday morning and that pushed the story into the business section's "most viewed" list, which is where Google News found it Sunday afternoon after someone else clicked on the link. In an interesting insight into Google News, the first inbound link came in three minutes later. But the major trouble began when Income Securities Advisors put it on Bloomberg News?and getting it there had nothing to do with bots.

There is an astonishingly simple way to solve this problem forever. Date your news articles. Print newspapers don't do this because the paper itself is dated, and dating every article would be redundant, but if you're going to post articles online, all you have to do is include a tag with the date. Ideally, the tag would be in format easily readable to both humans and computers (i.e., make 2, one in html unseen by humans and one at the top just below the headline) so that crawling newsbots could easily figure out what's new, and so could any human who read the article. In fact, most news articles you find online do this already, on account of not being idiots. It might be hard for a computer to easily figure out the date of the article, but that's where the html date stamping comes in.

Seriously, this is not a complicated problem. Error rating: 6. SERIOUSLY, THIS IS NOT A COMPLICATED PROBLEM. Nothing irritates me more than easily solved problems which have not been solved.

-Enginerd