A mathematician on Capital Budgeting

Priority-setting and capital budgeting. Allocating a budget often involves the comparisons of diverse projects whose benefits are difficult to directly estimate and then compare. Organizations also often confuse budget items defined by accounting conditions with actionable projects. A good budgeting process is built by creating useful "decision units," robust measurement criteria and a group process for obtaining inputs and finally ranking projects. Such budgeting processes are equally useful in private corporations and governmental organizations. I have developed such ranking processes for Los Alamos National Laboratory, Sandia National Laboratory, ChevronTexaco. Included in the projects are rankings to allocate yearly budgets for contaminated site cleanups, repair priorities for oil pipelines and capital project rankings for electric utilities.

From John Kadvany

Risk: A Very Short Introduction

Table of Contents
1. Risk decisions
2. Defining risks
3. Analyzing risks
4. Risk perceptions
5. Risk communication
6. Reconciling risks
7. Risk, culture and society

Authors: Baruch Fischhoff and John Kadvany

Advice to a pyramid schemer

'Take the human being out of the equation'- Madoff



On MIT Math graduates;

not much use, 'They spend too much time thinking'

Full transcript of the event

U=EV/ID

Chronic procastinators, who make up 20 per cent of the population, are more impulsive and erratic than other people and less conscientious about attention to detail and obligations to others, he says in his forthcoming book, The Procrastination Equation: Today's Trouble with Tomorrow.

The psychologist, from the University of Calgary, has subsequently formed an equation for why people procrastinate, which began by studying 250 college students.

The equation is U=EV/ID.

The 'U' stands for utility, or the desire to complete a given task. It is equal to the product of E, the expectation of success, and V the value of completion, divided by the product of I, the immediacy of the task, and D, the personal sensitivity to delay.

Prof Steel says procrastination is becoming a bigger issue because many more jobs are "self-structured", with people setting their own schedules.

-Academics invent a mathematical equation for why people procrastinate

The Change we deserve

Wisdom from Menzie Chinn;

The "change" we need is not so much ideological in nature, but the return to policy authority of people who have expertise, and are willing to look to past experience and (most importantly to me) analysis to make their judgments about how best to proceed -- in economics as well as in issues of war and peace....

In other words, just like it probably takes more than a hundred thousand troops to stabilize a country the size of Iraq, it probably is true that the elasticity of labor supply and capital is insufficient to yield a tax revenue increase that yields a net tax receipts gain, in response to a permanent tax rate cut holding all else constant...

Rubin's thinking not so probabilistic?

For some of J.F.K.’s best and brightest, Halberstam wrote, wisdom came “after Vietnam.” We have to hope that wisdom is coming to Summers and Geithner as they struggle with our financial Tet. Clearly it has not come to Rubin. Asked by The Times in April if he’d made any mistakes at Citigroup, he sounded as self-deluded as McNamara in retirement.

“I honestly don’t know,” Rubin answered. “In hindsight, there are a lot of things we’d do differently. But in the context of the facts as I knew them and my role, I’m inclined to think probably not.” Since that interview, 52,000 Citigroup employees have been laid off but not Rubin, who remains remorseless, collecting a salary that has totaled in excess of $115 million since 1999. You may be touched to hear that he is voluntarily relinquishing his bonus this Christmas.

Rubin hasn’t been seen in a transition photo op since Nov. 7, and in the end Obama chose Paul Volcker as chairman of his Economic Recovery Advisory Board. This was a presidential decision not only bright but wise

-The Brightest Are Not Always the Best

Related;
Thoughts on Rubinomics

Rubin himself credits as most important his habit of "probabilistic thinking": always asking questions like "what else might happen?", and "what if we're wrong?"; looking at the full range of possible outcomes rather than the most likely or the most comfortable; and recognizing that just because things came out well doesn't necesssarily mean that you made a good decision, and that just because things turned out badly does not necessarily mean that you made a bad one.

Why Was Bob Rubin Such a Good Public Servant?