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

Randomised Trials for PFM Reforms?

Not quiet. Tim Harford has an interesting column urging governments to adopt randomised trials more widely.

Is Jamie Oliver right to emphasise healthy school meals? Run a trial. Should young offenders be sent to boot camp, or to meet victims of crime? Run a trial. What can we do to persuade households to use less electricity? Run a trial...

When the UK government recently introduced the “synthetic phonics” method of teaching young children to read, they were told by Carole Torgerson, an evaluation expert at the University of York, that they could easily bolster the slim evidence base by randomising which schools joined the programme first. They didn’t. (More encouragingly, Ms Torgerson has been commissioned to evaluate maths teaching.)

Some people feel queasy at talk of “experimentation” in the classroom, prison or benefit office – but politicians experiment on us all the time with their latest policy wheezes. We learn little or nothing because the experiments are badly designed.

What is missing is the political demand for tests of what really works. Too many policies on education, welfare and criminal justice are just so much homeopathy: cute-sounding stories about what works leaning more on faith than on evidence. Politicians and civil servants, faced with some fancy new idea, should get into the habit of asking for a proper randomised trial. And we, as citizens, should be equally demanding....

Trial registers also feed into systematic review bodies such as the Cochrane Collaboration, which is an international offshoot of a National Health Service initiative. In less than two decades, the Cochrane Collaboration has published 4,000 systematic reviews of medical treatments, digging up data from unpublished trials, and providing the information to save many lives. A parallel body for social policy has far fewer trials to evaluate

For Discussion: What are typical training programs on randomised trials for policy makers?

Related:
There is a smarter way to cut public spending

Executive Training: Evaluating Social Programs

Assorted

The Physics of Curling

What’s Wrong with the Obama Job Loss Graphic?

Keep testing the kids

Welcoming the National Commission on Fiscal Responsibility and Reform

The simple money supply multiplier model and simple keynesian multiplier model

Using Simple Statistics to Detect Cheating

How to write an essay

CPI + Velocity = Trouble

Beauty’s Daughter

Assorted

Landsburg's Heroes of All Time

66 percent of the time

And it also occurred me that while students see the professor while he or she is teaching, they only witness about 66% of what goes into teaching.

Medical Statistics Don't Always Mean What They Seem to Mean

Paul Romer's Errors

Experiments in industrial policy

As much as fixed costs matter, the real barrier to firm growth in poor countries could be management. A good manager is partly one with training, experience, and a sense of best practice. A lot of a factory’s success comes down to management as a technology, though. Organizing a production floor, ensuring quality and efficient production: these are less a product of a single manager’s talent and more the product of decades of trial and error in manufacturing plants around the world. The problem: if you are running a firm in India or Mexico or elsewhere, the best practices probably haven’t filtered through.

2009 Quality of Life Index

Balance of Payments

Schumpeter quote of the day

On his own, he performed daily exercises in calculus and tried to master advanced techniques such as matrix algebra. He even raised the question of a new type of math that would capture the dynamic changes he saw as the heart of capitalism. One diary entry of 1948 mentions, with a question mark "Evolutionary math?" - a tool that could do for his own system what conventional math had done for Walras's static equilibrium. But there was no evolutionary math at that time in sense that Schumpeter meant, and there is still not enough today to "operationalize" his system thoroughly. Schumpeter knew that he had little talent in mathmenatics, but he continued to challenge himself and enjoy the chase. "Whatever other advantages math may have," he wrote in his diary, "it is certainly the purest of human pleasures."

via Twenty Cent Paradigms

This n That

Russian Debt And The Euro

Education Is All in Your Mind

Mostly Harmless Econometrics

I just read the new book, "Mostly Harmless Econometrics: An Empiricist's Companion," by Joshua Angrist and Jorn-Steffen Pischke. It's an excellent book and, I think, well worth your $35. I recommend that all of you buy it.

Adjustments downward

The reshaping of the stimulus: public choice thoughts

Enlightened research, fuelled by the dark stuff;

From the outset, Gosset’s focus was practical – as the economist and historian Steve Ziliak has discovered through his work in the Guinness archives. To produce beer to a high standard on an industrial scale, Gosset needed to sample and experiment with hops, malt and barley. But experiments are expensive and Gosset developed his small-sample methods because he wanted to understand how many experiments were necessary to be confident of his results. That was a clear trade-off: how much confidence is “enough” depends on the costs of further research and the benefits of extra precision.

Ziliak and his co-author Deirdre McCloskey argue in a recent book, The Cult of Statistical Significance, that most academic disciplines have forgotten this trade-off. Instead, they use an artificial standard propagated not by Gosset but by the famous statistician and mathematical geneticist Ronald Fisher, who took Gosset’s calculations and turned them to his own devices. Fisher proposed ignoring any finding that failed to reach the 95 per cent confidence level. In other words, until the odds against a pattern having emerged by chance are 19 to 1 against, disregard the pattern completely.

The paradox of thrift

Explainer of the Day

The maths of the credit crunch

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