{"id":67,"date":"2008-04-23T14:21:10","date_gmt":"2008-04-23T19:21:10","guid":{"rendered":"http:\/\/thestormypresent.com\/ocean\/2008\/04\/23\/on-why-you-really-hate-math-and-economics\/"},"modified":"2008-06-11T17:37:19","modified_gmt":"2008-06-11T22:37:19","slug":"on-why-you-really-hate-math-and-economics","status":"publish","type":"post","link":"http:\/\/thestormypresent.com\/ocean\/2008\/04\/23\/on-why-you-really-hate-math-and-economics\/","title":{"rendered":"On Why You Really Hate Math and Economics"},"content":{"rendered":"

“Every man is proud of what he does well; and no man is proud of what <\/span><\/span><\/em>he does not do well. [\u2026] The little he has done, comes to nothing, for want of finishing.” \u2013Abraham Lincoln<\/span><\/span><\/em><\/span> <\/span><\/em><\/p>\n

Economist are driven crazy by humans, and math doesn\u2019t help. <\/span> <\/span><\/p>\n

In a most amazing testament to the past strength of the economy, it resisted not only inflation, but commodity changes as the means of transporting supply for demand around the country (aka, high gas prices) it has absorbed the subprime mess and finally went down under bank runs.<\/span><\/p>\n

<\/span><\/p>\n

FDIC pretty much cut out bank runs, because most people don\u2019t have 100,000 in a bank account and they know their money is insured so they sit tight. <\/span>Financial markets don\u2019t work like that, and never will. <\/span>Being in stock market or using an investment vehicle is pretty much gambling. <\/span><\/p>\n

<\/span> <\/p>\n

Infact, if it wasn\u2019t for the bank runs, I\u2019d say that only paper money was lost. <\/span>Paper money is what you get when I say I\u2019m going to give you $100,000 out of $1,000,000. E<\/span><\/span>conomically speaking you are 100,000 dollars more richer than you were 1 second ago. <\/span><\/span>Realistically speaking potential has more attraction; and why people on DEAL or NO DEAL try to get the million even thou they are offered 100,000. <\/span>It\u2019s Schr\u00f6dinger’s cat, both real and unreal at the same time. <\/span><\/span><\/p>\n

<\/span><\/p>\n

Take a well known problem that drives economist crazy. <\/span><\/span><\/p>\n

\n

A) You have 20 dollars, and go to the store to by a $10 CD you have been waiting weeks for . <\/span>On the way out of the store you the CD and scratch it all to hell. Do you go back into the store and use your last remaining $10. <\/span>(Most people answer no)<\/span><\/p>\n

B) You have 20 dollars, and go to the store to by a $10 CD you have been waiting weeks for. <\/span>When you get to the counter, you realized that you\u2019ve lost $10 somewhere. <\/span>Do you still buy the CD. <\/span>(Most people answer yes)<\/span><\/p>\n<\/blockquote>\n

<\/span><\/p>\n

They are the same problem if you have not yet realized; <\/span>You are still out $20 if you bought the CD, except in one, your marginal satisfaction has already been reached when you walked out of the store, and you do not need it fulfilled again, in the other, marginal satisfaction was not yet achieved. <\/span> <\/span>That\u2019s the easy explanation.<\/span><\/p>\n

<\/span> How about this? <\/span>I give you three doors. <\/span>Behind two doors is a Goat, the other door a car. <\/span>You must choose a door. <\/span>No matter which door you chose, I will open a door that definitely does not have the car. <\/span>Do you switch? <\/span>The answer (contrary to popular belief) is to switch. <\/span>Sometimes you have to let go to win. <\/span>Don\u2019t worry if you got it wrong, that simple problem causes fights <\/a><\/span>among phd’s<\/a>. <\/span>Worse, the problem becomes unwinnable if I say\u2026 , I may open another door<\/em>, or I can open another door<\/em> <\/span>meaning a I can just chose to open your door, and then you lose but only if I already know if it has a car or not. (Assumptions suck. Check the Link<\/a>) <\/span> <\/span><\/p>\n

Back to bank runs:<\/span><\/p>\n

\n

The point is, someone has the information, the perfect information. <\/span>The bank generally. But we don\u2019t trust them. No reason to, and they often times deal in may and can. <\/span>And that\u2019s really why we are now in bad times, <\/span>Lack of confidence in past choices.<\/span><\/p>\n

<\/span><\/p>\n

<\/span><\/p>\n

<\/span><\/p>\n

<\/span><\/p>\n

\n

Then again, <\/span>I\u2019d be pissed if I lost $10; and pissed I wasted time getting that stupid ass CD too.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

“Every man is proud of what he does well; and no man is proud of what he does not do well. [\u2026] The little he has done, comes to nothing, for want of finishing.” \u2013Abraham Lincoln Economist are driven crazy by humans, and math doesn\u2019t help. In a most amazing testament to the past strength […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,8],"tags":[216,294,214,258,215,217],"class_list":["post-67","post","type-post","status-publish","format-standard","hentry","category-commentary","category-life-lessons","tag-cats","tag-cognitive-dissonance","tag-economics","tag-learning","tag-math","tag-money"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/thestormypresent.com\/ocean\/wp-json\/wp\/v2\/posts\/67","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/thestormypresent.com\/ocean\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/thestormypresent.com\/ocean\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/thestormypresent.com\/ocean\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/thestormypresent.com\/ocean\/wp-json\/wp\/v2\/comments?post=67"}],"version-history":[{"count":0,"href":"http:\/\/thestormypresent.com\/ocean\/wp-json\/wp\/v2\/posts\/67\/revisions"}],"wp:attachment":[{"href":"http:\/\/thestormypresent.com\/ocean\/wp-json\/wp\/v2\/media?parent=67"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/thestormypresent.com\/ocean\/wp-json\/wp\/v2\/categories?post=67"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/thestormypresent.com\/ocean\/wp-json\/wp\/v2\/tags?post=67"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}