FM Waves

Once, during a seminar in Brazil I was questioned about ethics just because I said I didn’t want to (of course, anyone like myself would consider that a provocation for reaction…). Then, I said, I’m not a philosopher, but I won’t talk about it just because ethics and values are subjective so then not discussable.

Nowadays, trying to summarise my values and having read something about corporate responsibility I can say I’d have so a better anwser, based on ethinomics could be. I won’t discuss about my ethical views because they are probably so business-orientedly-distorted that everyone would consider them irrational. And I say: NO!, THEY AIN’T IT!. Why?: because of my value system, my moral code, and my view of making business. However, don’t get me wrong, I’m no angel (but no devil…).

 I remember my first years at the University, trying to get a global idea of how was going to be my life as a professional after college, so I decided to take a look to some jokes. I’ve got a degree in economics, I can’t hide it, so it was easy to find loads of jokes (I specially liked Jokec at the time). Afterwards, when the virus of operations research got into my veins I tried to do the same (how am I going to spread the word if I can’t do it with a smile?); this wasn’t going to be an easy task though.

NO ONE HAS SPECIFIC JOKES ABOUT OR-ers!!!

You can find jokes about mathematicians, engineers, computer scientists, statisticians, and even economists , but there’s no "Unified Theory" for us when related to humor. Such it is the variety of sciences that are grouped into OR that we’ve lost our definition, so consider this as a proposal to create a repository of OR-ers jokes.

Don’t remember now what I was looking for that I stopped by the side of this article:

Brans & Gallo (2007). "Ethics in OR/MS: past, present and future". Annals of Operations Research, 153, pp.165-178.

It addresses the tricky issue of ethics within the practice of OR and how it has evolved through the times, involving relationships between the OR-er, the clients, society, and the models (!!!). This made me think about politics; as an economist (as well as an OR-er; is this genetically possible?) I always think about the impact of any individually made decision on the whole economy (where’s politics then?), and how politics will affect the decision, the decision-maker, and the effects (from the one to the all). Then I remembered my last read book ("Tonterias Economicas", from Carlos Rodriguez Braun), and it made me think about the political spectrum. Please let me jot down a table barely adjusted from that one appearing in the Wikipedia, which will broke my motto "don’t talk about politics, you’ll always be wrong!".

PS If you were looking for an explanation about a mystical experience revealing the relationship between ethics and politics…, I’m very sorry.

This week I read my copy of “The Economist” August 18th-24th, and I found some articles about the most recent financial turnmoil which I’d like to comment, since there’s some info related to something I wrote here and here.

The Game is up (pp.63-64)

“Quantitative funds have been hardest hit [...]. Goldman Sachs admitted as much when it said that its funds had been hit by moves that its models suggested were 25 standard deviations away from normal. [...] That is silly.”

Of course is silly!, however, ex-post the probability of this whole thing happening is 100% (as the article explains, probability 1 is certainty).

Behind the veil (pp.65-66)

Talking about hedge funds:

“Insiders say losses were caused by a mixture of human and computer-driven error.”

How’s the split???. Was the error to use them models? (as a math believer, I want to believe NOT).

“…the complex models that drive them were up ended by the extreme market volatility. [...] the models went awry.”

Of course, they already said 25-sigma!!!.

“The saga has damaged the image of computer-driven funds.”

It’s a pity this could damage the image of whole OR as well. But that’s not the case…

“People aren’t going to give up their computers and go back to insider information and tips.”

And, I’d like to add up, at the end of the day the models were right, at least ex-ante ; ) .

Or not?:

“…highly unusual gyrations were ‘way out of whack’ with their models. Clearly the models were flawed.”

Hopefully, in another section of the magazine we can find an article about statistics and climatology; nothing seemingly related to these events but for a good insight about the difference between Bayesian statistics and Pascal statistical concept. Thought’d be interesting for understanding were the models could failed.
Remember the small print: “Historical performance does not assure future performance”. What a pitty!.

I’m not such a YouTube scubadiver, however sometimes I browse a little inside it. When I was trying to find something about game theory (remember my last post on Mr Smith vs Mr Nash) it came to my attention (not just to me but to an excess of 200k people) this funny…, what I’m saying?, hilarious video about the 10 basic economics principles from Mankiw.

YouTube

However, I have to say that what most godsmacked me was the resume of the guy: he’s actually an economist! (and as he says: baker & troublemaker). What the hell!, a real FUNNY ECONOMIST!!!. Congratulations mate!.