Showing posts with label coal in the stocking. Show all posts
Showing posts with label coal in the stocking. Show all posts
Wednesday, November 13, 2013
Thursday, June 06, 2013
Financial Journalism 101
Financial journalists are like NFL cornerbacks. They have a very short memory.
No matter what happens, they always have a facile explanation, and little to no concern if the explanation is logically consistent with the explanation for yesterday's events.
I read that the stock market decline yesterday was due to "preliminary bad jobs news" and "bracing for Friday's jobs report".
If the market had surged, it would have no doubt been because the bad news meant the Fed would not be ending its various asset buying programs (the "bad news is actually good news" gambit).
And people, if the market hadn't budged........??
That's right, investors had already "priced in" the news.
Nice work if you can get it and don't mind the smell.
No matter what happens, they always have a facile explanation, and little to no concern if the explanation is logically consistent with the explanation for yesterday's events.
I read that the stock market decline yesterday was due to "preliminary bad jobs news" and "bracing for Friday's jobs report".
If the market had surged, it would have no doubt been because the bad news meant the Fed would not be ending its various asset buying programs (the "bad news is actually good news" gambit).
And people, if the market hadn't budged........??
That's right, investors had already "priced in" the news.
Nice work if you can get it and don't mind the smell.
Sunday, March 18, 2012
Eyes wide shut
A big trend in economics these days is the Randomized Control Trial (RCT), often referred to by its enthusiasts as the "gold standard" of evidence. An intervention is tested by randomly assigning it across a chosen sample and computing the average treatment effect. An analogy is often made to clinical trials in medicine, but there is (at least) one important difference. Most drug trials are "double blind", where participants do not know if they are in the "control" group or the "treatment" group. By contrast, most RCTs are not double blind. Participants know what group they are in.
And, as a fascinating new paper points out, this knowledge can produce "pseudo-placebo effects" in RCTs. That is to say, the expectation of receiving the treatment can cause people to modify their behaviors in a way that produces a significant "average treatment effect" even if the actual intervention in not particularly effective.
The paper illustrates the point by undertaking two different RCTs on cowpea seeds in Tanzania. One is a traditional study where the control group knows they are getting traditional seeds and the treatment group knows they are getting modern seeds. The second is double blind; neither group knows what seed it is getting.
The traditional RCT shows a significant over 20% increase in yields from the modern seed. But the double blind RCT shows that virtually all of that improvement comes from changed behavior, not from any inherent effectiveness of the modern seed.
Specifically, the average treatment effect in the double blind RCT was zero! And when the harvests in the control groups across the two RCTs were compared, the blind control group showed a significant over 20% increase over the traditional RCT control group which knew they were getting the traditional seeds. This is the "pseudo-placebo" effect and it explains the entire average treatment effect in the traditional RCT.
Wow!
In other words, the significant effect found in the traditional RCT was not due to better seeds, it was due to actions taken by the farmers who thought they were getting better seeds (they planted them in larger plots with more space between the plants on better quality land). These farmers' expectations were wrong (in post experiment surveys, over 60% of them said they were disappointed in the yields), and the significant effect in the traditional RCT would not survive over time because the farmers, having adjusted their expectations downward would stop taking the actions that produced the "success".
People, can I get a "YIKES"?
Hat tip to Justin Sandefur.
And, as a fascinating new paper points out, this knowledge can produce "pseudo-placebo effects" in RCTs. That is to say, the expectation of receiving the treatment can cause people to modify their behaviors in a way that produces a significant "average treatment effect" even if the actual intervention in not particularly effective.
The paper illustrates the point by undertaking two different RCTs on cowpea seeds in Tanzania. One is a traditional study where the control group knows they are getting traditional seeds and the treatment group knows they are getting modern seeds. The second is double blind; neither group knows what seed it is getting.
The traditional RCT shows a significant over 20% increase in yields from the modern seed. But the double blind RCT shows that virtually all of that improvement comes from changed behavior, not from any inherent effectiveness of the modern seed.
Specifically, the average treatment effect in the double blind RCT was zero! And when the harvests in the control groups across the two RCTs were compared, the blind control group showed a significant over 20% increase over the traditional RCT control group which knew they were getting the traditional seeds. This is the "pseudo-placebo" effect and it explains the entire average treatment effect in the traditional RCT.
Wow!
In other words, the significant effect found in the traditional RCT was not due to better seeds, it was due to actions taken by the farmers who thought they were getting better seeds (they planted them in larger plots with more space between the plants on better quality land). These farmers' expectations were wrong (in post experiment surveys, over 60% of them said they were disappointed in the yields), and the significant effect in the traditional RCT would not survive over time because the farmers, having adjusted their expectations downward would stop taking the actions that produced the "success".
People, can I get a "YIKES"?
Hat tip to Justin Sandefur.
Saturday, December 18, 2010
Last minute Christmas deals!
KPC has used its considerable influence to negotiate the following deals for its readers (just enter KPCROCKS as the promotional code when doing online check out):
Tuesday, November 23, 2010
Markets in everything: Holiday gift card edition
Mrs. Angus suggested I title this post, "for the woman who has everything"! But I figured, why be sexist?
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