Tuesday, February 25, 2014

Law students should take corporate finance



Law students might want to consider taking classes on accounting, corporate finance, and financial statement analysis, according to a survey of major law firms published last week by several faculty at Harvard Law School.

The study—which was conducted by Law School professors John C. Coates IV, Jesse M. Fried, and Kathryn E. Spier—found that 83 percent of the practicing attorneys interviewed believe students should take “Accounting and Financial Reporting” classes. Only 10 percent of attorneys, however, suggested taking a class entitled “Leadership in Law Firms.”

“The large law firms that hire Law School students have always generated most of their revenues by assisting businesses in structuring and litigating over complex financial transactions,” Fried wrote in an email. “What's different today, perhaps, is that law firms are under increasing pressure from clients to be more efficient, and so the bars for hiring and promoting associates have been raised.” ...

Mark A. Weber, the assistant dean for career services at the Law School, said that students should not let the study go unnoticed.
--Tyler Olkowski, Harvard Crimson, on why law students should take my class

Tuesday, February 18, 2014

The Swiss air force only works from 8 to 5

When an Ethiopian Airlines Enterprise aircraft carrying 202 passengers entered Swiss airspace today after being hijacked by the co-pilot en route to Rome, Switzerland’s Air Force remained on the ground. That’s because the incident occurred outside normal office hours. Instead, French and Italian fighter jets escorted the Boeing 767 to a safe landing in Geneva.

“You have a budget and you have to prioritize,” said Swiss Air Force spokesman Juerg Nussbaum. While Switzerland monitors airspace around the clock, intervention only occurs during routine business hours starting at 8 a.m., he said.
--Benedikt Kammel and Jan-Henrik Foerster, Bloomberg, on work-life balance in the Swiss military. HT: Marginal Revolution

Sunday, February 16, 2014

The problem with reducing Wall Street compensation to decrease inequality

It is certainly true that there has been a dramatic increase in the number of highly paid people in finance over the last generation. Recent studies reveal that most of the increase has resulted from an increase in the value of assets under management. (The percentage of assets that financiers take in fees has remained roughly constant.) Perhaps some policy could be found that would reduce these fees but the beneficiaries would be the owners of financial assets – a group that consists mainly of very wealthy people.
--Lawrence Summers, Financial Times, on Robin Hood returning money to the rich. HT: Marginal Revolution

Wednesday, February 12, 2014

The pro-U.S. bias in economics publishing

Considering the 20-year span (1985 to 2004) and the top-five economics journals together the published articles comprised:
  • 39 papers on India,
  • 65 papers on China, and
  • 34 papers on all of Sub-Saharan Africa; and
  • 2,383 papers on the US.
Here the top-5 is The American Economic Review, Econometrica, The Journal of Political Economy, The Quarterly Journal of Economics and The Review of Economic Studies.
--Jishnu Das and Quy-Toan Do, Vox, on economics research for the rest of us

Tuesday, February 11, 2014

Pleasure from ordinary experiences increases with age

The report, scheduled for publication this year in The Journal of Consumer Research, finds that the kinds of experiences that make people happy tend to change over time.

When we’re young and believe we have a long future ahead, the authors found, we prefer extraordinary experiences outside the realm of our day-to-day routines. But when we’re older and believe that our time is limited, we put more value on ordinary experiences, the stuff of which our daily lives are made.

Why? For young people trying to figure out who they want to become, extraordinary experiences help establish personal identities and are therefore prized, said Amit Bhattacharjee, the lead author of the study and a visiting assistant professor of marketing at Dartmouth College. As people become more settled, ordinary experiences become central to a sense of self and therefore more valued. ...

This is consistent with studies by Laura Carstensen, a professor of public policy and psychology at Stanford University, which posit that older adults’ sense that time is limited alters their emotional perspective, causing them to invest energy in what is most meaningful to them.
--Judith Graham, NYT, on diminishing returns to novelty

Child-rearing culture in Sweden

Is Sweden raising a generation of brats?

The country has built a child-friendly reputation on its mandates for long parental leave and provision for state-funded day care from age 1. But a new book paints an ugly underbelly to Scandinavia's child-centric ways. Youngsters here—deemed "competent individuals" by the state and legally protected from spanking—are becoming the chief decision makers in homes at very young ages in what some Swedes think is an alarming trend. ...

One example Dr. Eberhard cites: A teacher who confiscates the cellphones of children who text or play games in the classroom will later have to answer to parents who say their children's rights have been violated. Some Swedish teachers end up spending time reasoning with the children to try and get them to put away their cellphones. The same scenario may play out with sending children out of class for talking.

Dr. Eberhard notes that Swedish children routinely make family decisions like what to eat for dinner, what to watch on TV, and where to go on vacation. ...

Strict child-welfare laws may make parents more hesitant to discipline children. Allegations of physical discipline are investigated by a team of police, psychologists and prosecutors, and fines can be steep, reaching the equivalent of $1,000. Arrests are rare.
--Jens Hansegard, WSJ, on anti-Tiger parents

Heroic extrapolation: The case of anachronistic domesticated camels in the Bible

There are too many camels in the Bible, out of time and out of place.

Camels probably had little or no role in the lives of such early Jewish patriarchs as Abraham, Jacob and Joseph, who lived in the first half of the second millennium B.C., and yet stories about them mention these domesticated pack animals more than 20 times. Genesis 24, for example, tells of Abraham’s servant going by camel on a mission to find a wife for Isaac.

These anachronisms are telling evidence that the Bible was written or edited long after the events it narrates and is not always reliable as verifiable history. ...

For two archaeologists at Tel Aviv University, the anachronisms were motivation to dig for camel bones at an ancient copper smelting camp in the Aravah Valley in Israel and in Wadi Finan in Jordan. ...

The archaeologists, Erez Ben-Yosef and Lidar Sapir-Hen, used radiocarbon dating to pinpoint the earliest known domesticated camels in Israel to the last third of the 10th century B.C. — centuries after the patriarchs lived and decades after the kingdom of David, according to the Bible.


Now there was a famine in the land, and Abram went down to Egypt to live there for a while because the famine was severe. As he was about to enter Egypt, he said to his wife Sarai, “I know what a beautiful woman you are. When the Egyptians see you, they will say, ‘This is his wife.’ Then they will kill me but will let you live. Say you are my sister, so that I will be treated well for your sake and my life will be spared because of you.”

When Abram came to Egypt, the Egyptians saw that Sarai was a very beautiful woman. And when Pharaoh’s officials saw her, they praised her to Pharaoh, and she was taken into his palace. He treated Abram well for her sake, and Abram acquired sheep and cattle, male and female donkeys, male and female servants, and camels.
--Genesis 12:10-16 on the source of Abraham's camels


Georg Schweinfurth, a recognized authority on petroglyphic art, described rock-carvings near Aswan and Gezireh in Upper Egypt where one of the panels contained seven hieratic characters and a figure of a man leading a dromedary by a rope (see fig. 2). Gustav Moller, working on the inscription, assigned it to the Sixth Dynasty [2345 B.C. - 2181 B.C.], whilst Schweinfurth attributed the camel and the man, on the basis of desert varnish and style, to the same period as the inscription.
--Michael Ripinsky, "The Camel in Dynastic Egypt," Journal of Egyptian Archaeology, on evidence that camels were domesticated in Egypt in the time of the patriarchs

Optimal Jeopardy! question-choosing strategy

It didn’t take long for Arthur Chu to become Public Game Show Enemy No. 1. Within days of his Jan. 28 debut on Jeopardy!, the 30-year-old Cleveland-area insurance analyst was making America very, very angry. ...

Arthur Chu’s signature technique: bopping around the game board seemingly at whim, rather than choosing the clues from top to bottom, as most contestants do. This is Chu’s great crime, the kind of anarchy that hard-core Jeopardy! fans will not countenance. ...

In any game of Jeopardy!, three clues have been secretly earmarked as Daily Doubles. The player who finds each one can bet any or all of her winnings on responding to it correctly. By and large, Jeopardy! players are a risk-averse bunch. Unless a player is in need of a big comeback, the Daily Double wager is usually a smallish one.

Strategically, this is crazy. Like a poker player trying to increase the size of the pot when he has a good hand, Jeopardy! contestants should maximize their upside when the odds are in their favor. Historically, the odds of getting a Daily Double correct are very good: Between 65 and 70 percent. Too many players instead let games come down to Final Jeopardy, where conversion is much less predictable. (Fewer than half of all Final Jeopardy responses are correct.) Finding the Daily Doubles becomes more important the stronger a player you are, since it lowers the influence of chance on the outcome. Crunching some numbers, I see that my own Daily Double conversion during my Jeopardy! run was about 83 percent. In hindsight, my wagers were almost always too small.

So when Arthur Chu bobs and weaves around the board, he’s chasing those game-changing Daily Doubles. (The Jeopardy! contestant coordinators recommend playing the game in top-to-bottom order, mostly to make life easier on Alex Trebek and the techs who run the game board, but it’s not a requirement.) Hunting is possible because Daily Doubles may be hidden, but they’re not distributed randomly. For example, they’re much more likely to be in the fourth row of clues (36 percent of the time, in recent years) than the second row (just 10 percent). Roger Craig even discovered that Daily Doubles are distributed nonrandomly by column as well, and played accordingly.
--74-time Jeopardy! winner Ken Jennings, Slate, on Moneyball-hacking Jeopardy!

Monday, February 10, 2014

The first JPE citation of prospect theory didn't happen until 2005

Kahneman and Tversky’s (1979) Prospect Theory (.pdf), with its 9,206 citations, is the most cited article in Econometrica, the prestigious journal in which it appeared. In fact, it is more cited than any article published in any economics journal. ...

The Journal of Political Economy is considered a top-4 journal in economics. It has, nevertheless, a well known bias towards evidence consistent with rationality (ironic for rationality requires the unbiased evaluation of evidence). No JPE paper cited Prospect Theory until 2005… a 26 years lag. The authors could have been born the year Prospect Theory was published! The AER first cited it in 1982. In econ time that translates into immediately.
--Uri Simonsohn, Data Colada, on tribalism in economics

Sunday, February 9, 2014

Maybe the hot hand in sports really does exist

In the early 1980s, Tom Gilovich, then a graduate student at Stanford University, began to wonder which effect we were seeing in basketball when a player suddenly began scoring a lot of points: true hot hand or just random streakiness. ...

But the results showed that their previous shots had no effect on future shots—not even in free throws, with no defender in the way, or in a controlled shooting experiment involving 26 college basketball players. The stat line from future Hall of Famer Julius Erving, a member of that 76ers team that Gilovich studied, seemed to say it all. After missing three shots, he shot 52 percent from the floor on his next shot. And after making three, he shot 48 percent on his next attempt—four percentage points lower. ...

The two new studies, however, are poking holes in the long accepted findings. First, there is one conducted by two finance professors, focusing on baseball. The authors—Brett Green, at the Haas School of Business at the University of California Berkeley, and Jeffrey Zwiebel, at the Stanford University Graduate School of Business—analyzed a mountain of data for their study: 12 major league baseball seasons, or roughly 2 million at-bats. They controlled for variables, like the abilities of the batter and the pitcher, the stadium in which the at-bats took place, and even matchups like lefty versus lefty. And their findings, laid out in a working paper, show that a baseball player on a hot streak is batting 15 to 20 points higher than a teammate who is cold. Home run rates also went up while strikeouts fell—and pitchers enjoyed similar advantages on the mound. ...

[John] Ezekowitz and his coauthors, on the other hand, can say exactly why they’ve been able to identify a hot hand effect in their new basketball study: modern technology. They analyzed 83,000 shots from the 2012-13 NBA season, with the help of cameras that NBA teams had installed at 15 arenas to, according to the study, “provide precise three-dimensional image tracking of the players, referees, and ball every 1/25th of a second.”

With the Harvard graduates able to know the position of the players on the court, they could see that players with recent success in shooting were more likely to be taking shots from further away, facing tighter defenses, and throwing up more difficult shots. “They were more likely to just jack it up,” Ezekowitz said. “Shoot more often.”

So the researchers controlled for these variables—and found what players and fans have long believed: The hot hand does exist. At least a little. According to the new research, players enjoying the hot hand are 1.2 to 2.4 percentage points more likely to make the next shot. Not exactly en fuego, but still.
--Keith O'Brien, Boston Globe, on on fire

Saturday, February 8, 2014

The intellectual pettiness of Einstein

Not long afterward, though, relativity got away from Einstein, and here's where [the book] "The Perfect Theory" really gets interesting. Other scientists had their own ideas about the universe, distinct from Einstein's, and almost from the day he published his paper on relativity they started pushing "his" theory in new directions, prodding and twisting it until all sorts of unexpected things popped out—the Big Bang, black holes, time travel. ...

Did Einstein applaud these brave new developments? Not even close. Although his sacred intuitions had gotten him pretty far, these ideas violated his sense of how nature must work, and he loathed them. Here Mr. Ferreira shows us an Einstein we don't see often—a petulant and petty man, someone not above using his celebrity to squash "ugly" ideas. And, boy, he made some blunders. When Georges LemaĆ®tre, a Belgian cosmologist and priest, laid out the first evidence for an expanding universe, Einstein groused that, "although your calculations are correct, your physics is abominable." Eventually, Einstein's intransigence pushed him to the margins of general-relativity research, and he accomplished virtually nothing in the last decades of his life.
--Sam Kean, WSJ, on the imperfection of all humans

Everybody is expected to look the same in Korea

Looks are expected to be so homogeneous in Korea that many women’s clothes have no sizes, explained Charlotte Cho, founder of Soko Glam, which sells Korean beauty products to American women.

Friday, February 7, 2014

Do traditional gender roles lead to better sex in marriage and less divorce?

A study called “Egalitarianism, Housework and Sexual Frequency in Marriage,” which appeared in The American Sociological Review last year, surprised many, precisely because it went against the logical assumption that as marriages improve by becoming more equal, the sex in these marriages will improve, too. Instead, it found that when men did certain kinds of chores around the house, couples had less sex. Specifically, if men did all of what the researchers characterized as feminine chores like folding laundry, cooking or vacuuming — the kinds of things many women say they want their husbands to do — then couples had sex 1.5 fewer times per month than those with husbands who did what were considered masculine chores, like taking out the trash or fixing the car. It wasn’t just the frequency that was affected, either — at least for the wives. The more traditional the division of labor, meaning the greater the husband’s share of masculine chores compared with feminine ones, the greater his wife’s reported sexual satisfaction. ...

[Study author Julie] Brines believes the quandary many couples find themselves in comes down to this: “The less gender differentiation, the less sexual desire.” In other words, in an attempt to be gender-neutral, we may have become gender-neutered. ...

A study put out last year by the National Bureau of Economic Research shows that if a wife earns more than her husband, the couple are 15 percent less likely to report that their marriage is very happy; 32 percent more likely to report marital troubles in the past year; and 46 percent more likely to have discussed separating in the past year. Similarly, Lynn Prince Cooke found that though sharing breadwinning and household duties decreases the likelihood of divorce, that’s true only up to a point. If a wife earns more than her husband, the risk of divorce increases. Interestingly, Cooke’s study shows that the predicted risk of divorce is lowest when the husband does 40 percent of the housework and the wife earns 40 percent of the income.
--Lori Gottlieb, NYT Magazine, on politically incorrect correlations

Tuesday, February 4, 2014

Being the surgeon general nominee doesn't shield you from vaguely racially insensitive comments

For reasons I completely understand, the confirmation hearing of surgeon general nominee Vivek Murthy has not gotten a ton of attention. Factor one: The filibuster reform of late last year will let Murthy be confirmed by a simple majority vote. Factor two: It's the nomination for surgeon general. So not many people were paying attention when Kansas Sen. Pat Roberts told [surgeon general nominee Vivek] Murthy, with measured pride, that Dodge City was home to some wonderful Indian-American doctors.

"I'm going to invite you, because we have a lovely doctor from India," said Roberts (roughly 1:37:30 in the video). "She's in her mid-30s, and she's highly respected by the community. And another doctor from India who did a carpal tunnel when I did a stupid thing. And so, I think you'd be right at home, and we would welcome you."

Sunday, February 2, 2014

Lessons from building your own coffin

I have incurable Stage 4 prostate cancer... As we used to say in the medical business, I’m starting to circle the drain.

Yes, but why build your own coffin? ... The idea came to me at the funeral of an 18-year-old boy. ... Creating something of beauty and purpose would be both a celebration of life and an acceptance of my death. ...

I knew immediately whom to contact: Peter, a beautifully untethered soul and a talented artist who works in wood. ...

We’d made a stunningly beautiful pine box, and a stunningly beautiful friendship. But we knew that neither could last, and that this was the very reason to celebrate them.

Something else has happened, too. The project has smoothed the rough edges of my thoughts. It’s pretty much impossible to feel anger at someone for driving too slowly in front of you in traffic when you’ve just come from sanding your own coffin. Coveting material objects, holding on to old grudges, failing to pause and see the grace in strangers — all equally foolish. While the coffin is indeed a reminder of what awaits us all, its true message is to live every moment to its greatest potential.

When the sum of many individually significant effects becomes frivolous

There is an odd divide here. Ask why one person had an unproductive day at work, and lack of sleep often seems an obvious answer. But ask why national productivity has fallen, and reduced sleep can appear to be a frivolous answer. Yet what is total output but the sum of all individuals’ work? ...

One careful study found that the number of “short sleepers” — those who got fewer than six hours of sleep a night — rose 22 percent from 1975 to 2006, a trend that was most pronounced and significant among full-time workers.

Saturday, February 1, 2014

What determines whether faith is passed on from parents to children?

In 1969, shortly after being hired at U.S.C., [Vern] Bengtson began a study of 350 families, whom he interviewed regularly until 2008. In some families, he interviewed four generations. In all, his respondents were born in years spanning 1878 to 1989. ...

In “Families and Faith: How Religion Is Passed Down Across Generations” (Oxford; $29.95), written with two colleagues, Professor Bengtson argues that families do a pretty good job of passing religious faith to their children. ...

According to Professor Bengtson, parents have as much hold as ever on children’s souls. “Parent-youth similarity in religiosity has not declined over 35 years,” from 1970 to 2005, he writes. Denominational loyalty is down — kids feel free to ditch the Baptists for the Presbyterians — but younger generations are no less likely to inherit core beliefs, like biblical literalism, the importance of church attendance or, for that matter, atheism.

As to why some children follow their parents, spiritually speaking, Professor Bengtson’s research confirmed some common-sense assumptions. For example, it helps if parents model religiosity: if you talk about church but never go, children sense hypocrisy. And intermarriage doesn’t help. If you’re Jewish (or Mormon, Catholic, etc.), and want your child to share your religion, it helps to marry someone of the same faith.

But Professor Bengtson’s major conclusion is that family bonds matter. Displays of parental piety, like “teaching the right beliefs and practices” and “keeping strictly to the law,” can be for naught if the children don’t feel close to the parents. “Without emotional bonding,” these other factors are “not sufficient for transmission,” he writes.

Professor Bengtson also found that one parent matters more than the other — and it’s Dad. “But what is really interesting,” he writes, “is that, for religious transmission, having a close bond with one’s father matters even more than a close relationship with one’s mother.” ...

Professor Bengtson also found that grandparents have a strong influence on children’s religious development, and that freedom to leave can encourage children to stay. “Allowing children religious choice can encourage religious continuity,” he writes.
--Mark Oppenheimer, NYT, on the important role of dad