You hear 'ancient wisdom' on how to lead the good life all the time. These ancient aphorisms came from a time before the scientific method and the idea of testing your hypotheses. Tradition has acted a sort of pre-conscious filter on the advice we get, so we can expect it to hold some value. But now, we can do better.
Haidt is a psychologist who read a large collection of the ancient texts of Western and Eastern religion and philosophy, highlighting all the 'psychological' statements. He organized a list of 'happiness hypotheses' from the ancients and then looked at the modern scientific literature to see if they hold water.
What he finds is they were often partially right, but that we know more. By the end of the book, you have some concrete suggestions on how to lead a happier life and you'll know to the studies that will convince you they work.
Haidt writes with that pop science long windedness that these books always have. Within that structure, he's an entertaining writer so I didn't mind.
This book is my favorite non-fiction book. It is hard to reduce it back to what it is about, but it is filled with very useful insight into how the mind works. The metaphor of the rider and the elephant finally let me explain differences between what I consciously decided and what I actually did.
It's a metaphor he also puts to good use in his later book, the Righteous Mind. It's useful to seeing through your own righteousness and recognizing patterns in others. I enjoyed that one too, but it didn't have the same life impact as the Happiness Hypothesis.
Not surprisingly, the qz.com article distorts the meaning of the original paper and looking at the comments, they seem to follow the false, but suggested interpretation of the paper that qz gives.
It's useful to note the title of the paper: What’s your (sur)name? Intergenerational mobility over six centuries. This paper is not tracking wealth, it's tracking income via tax records. It notes things like people who are lawyers or bankers now were more likely to share surnames with people in similar professions in the 15th century. It is not tracking inter-generation transfers of wealth.
In fact, qz even drops the most interesting conclusion in the article, which is their measurement of changing intergenerational income mobility overtime. They measure inelasticity at > .8 in Renaissance Florence and a generally static society until the industrial revolution, with inelasticity coming down starting in the 20th century.
The article isn't about secret trusts set up by the Medici, but the more prosaic fact that if you father and grandfather were lawyers, you're more likely to be one too. Still interesting, but it's not evidence that families were "able to maintain their wealth" through revolutions at all.
This also looks like it's more work in the same direction as the "The Son Also Rises" ( http://amzn.to/2jFnUmZ ).
There are actually a lot of studies of this nature, across Europe, Asia and the Americas. This result is not unique to Florence - you get much the same result everywhere in the world.
Furthermore, this result seems primarily driven by factors intrinsic to the people/families themselves and not to the society they live in. There are a number of invisible subgroups (e.g. "New France", or people with names like Bauchau) which underperform or overperform across the generations. And when people shift from one society to another (e.g. West Bengal to America), the effects persist.
But, but... the Medici rule the entire planet from their throne in outer space, Assassin's Creed told me so! (I didn't play much of the series, this is probably not legit). How dare your facts get in the way of my supernaturally attracted perception?
Actually, I think the studies generally show that active mutual funds do beat the market, but before fees. Their alpha, while real, is tiny and more than eaten by their fees.
Yet remember that active mutual funds manager fees are close to 1%. If you pay $60M on $900B, we're talking about paying less than 1 bp! So if you have an average active mutual fund manager running your $900B fund for $60M, you might hope to beat the market by a few basis points.
What you also have to appreciate is that the fee scales you mention are for you investing $10,000 with an active manager. If you're investing billions you won't be paying anything close to that. If you have the world's largest sovereign wealth fund you're operating at a scale even larger than that.
Matt Levine gives a great rundown of this https://www.bloomberg.com/view/articles/2016-09-09/wells-far... ; you're exactly right, this wasn't Wells Fargo cheating customers. It was Wells Fargo putting some pressure on their employees who turned around and gamed the system in a way that earned the bank almost no money and mostly didn't cost their customers anything. Yes, some of the customers got some fees charged to them, but they were mostly small and most of the customers with accounts opened didn't lose anything.
That this should cause the CEO, who was several layers up the org chart from the person who came up with a bad retail bank employee performance metric, to go to jail is madness.
The previous Wells CEO gave a talk at stanford GSB in 2009 in which he explained the company's core strategy in consumer financial services: distributing decentralized products and services through cross-selling. [1]
Since cross-selling has been core to the Wells Fargo business model for many years, and proven an effective growth mechanism over that time, it wouldn't make much sense to just go round firing people over pursuing that mechanism responsibly. What does make sense is adjusting course sternly when that pursuit starts to look irresponsible, and it appears the current leadership is doing that.
If Elizabeth Warren had the brains to understand the financial services industry, she wouldn't have time to fling baseless legal allegations at dinosaur incumbents like Wells Fargo. She would be too busy disrupting them.
With an institution as old and large as Wells Fargo, the problem isn't that their strategy is bad. "How can it be bad when it's been good all these years?" It's actually much deeper than that: their strategy is yesterday's strategy, and that can be a big problem when you have the kind of organizational inertia Wells does.
I've only ever been robbed in Italy, but I've been back a lot in the hope of meeting my robber again (he was Italian, he had dark hair, medium height, and was somewhat unshaven - anyone know him?).
No, no penalty needed. We shouldn't worry whether individuals are scientific or not, we should worry about whether our institutions are scientific.
Just like in politics, people are people. If your solution to political problems is for politicians to start always acting ethically in the interests of the greater good, you've already lost. The challenge is to design institutions that can take in people as they are and still function.
Scientists are people. They are going to have confirmation bias when they look at results. If they've worked on something for forty years, they (probably) aren't going to change their minds. Luckily, physics doesn't care what Gross thinks. It moves on. The journals start preferring other papers, young scientists don't look to make their careers in the same old stuff.
I think the institution of physics is fine. Well, except for the fact that the LHC hasn't found anything new yet and everyone is left hoping they build that really big accelerator in China.
Except that individuals do have a lot of power in academia. Gross's papers will be published because he is who he is. The papers of the unknown kid who comes up with a better explanation will not get published because they disagree with the establishment, even though the establishment know they're probably wrong.
I'm not involved, but it seems to me a more intellectually honest approach would be to start actively helping the unknown kids with weird but plausible explanations get some attention.
I'd have more respect for academia if it could collectively say "OK, super-symmetry didn't pan out. Who's got a better idea?" and start looking at the weird ideas. One of those weird ideas is going to be the next orthodoxy.
If the institutions' only methods for checking the insanity of men is experimental data, and that data only arrives on multi-decade timescales, then the institutions are broken. Furthermore, there are several intuitional changes physics could make to make better use of the meager data they have, but they do not. For example: forcing physicists to go on the record specifically and publicly about predictions (not just the one-off bet), and making hiring decisions based on it.
Making hiring decisions based on bets may not work: time horizons are long and you may decrease bold experimental work. (There is a 1 in 100 that this works...)
I do agree about your underlying idea of having them put skin in the game. That forces better thinking in most fields though even financial markets are susceptible to irrational thinking.
Yes - an odds bet. But you need to make an awful lot of them to get one that hits. This is similar to why it is hard for employees to get the benefit of power law returns. There isn't enough career time to work for 100 companies. (Easier to invest in the outsize outcomes than work your way in)
They aren't absolutely infertile, but in hunter gather societies this is handled by infanticide. When it isn't possible for a mother to support two children under the age of four, the only solution was to kill one, which is what they did.
In the _Wandering God_ by Morris Berman, there is a story of a story of a girl (maybe 19th or early 20th century?) in a nomadic society in Africa. Her mother got pregnant again and was going to kill the baby, but the three year old child protested and agreed to go with being breast fed to try to save her newborn sibling. It wasn't possible to breastfeed two children at once, so her mother was going to kill the infant.
Miraculously the child managed to survive, but it was by no means guaranteed and she had to figure out to be self sufficient to some degree. It was considered such an odd occurrence that the relevant anthropologist reported the story.
I think we forget that infanticide wasn't uncommon that long ago. It was one of the major 'moral' victories of Christianity to make infanticide uncommon. And it could only do that because it wasn't necessary anymore.
I've often thought the same thing. If I'm ever in an old cemetery, I walk through the graves and whisper names that are still legible to give the forgotten people one more time when someone said their names.
It doesn't look like the article is not about HFT in particular or even trading professionals in general. It's about academic articles, where the incentive is to publish a paper, not to make money. I recall (but cannot find) a paper that looked at the sort of strategies published by academics. Younger, non-tenured professors sometimes published results that were actually interesting, because they needed to get a job and built a reputation. Older professors don't do that. If they find an effect that's real, they take it to a hedge fund. There isn't too much incentive to publish a paper about something that will really make you money.
You hear 'ancient wisdom' on how to lead the good life all the time. These ancient aphorisms came from a time before the scientific method and the idea of testing your hypotheses. Tradition has acted a sort of pre-conscious filter on the advice we get, so we can expect it to hold some value. But now, we can do better.
Haidt is a psychologist who read a large collection of the ancient texts of Western and Eastern religion and philosophy, highlighting all the 'psychological' statements. He organized a list of 'happiness hypotheses' from the ancients and then looked at the modern scientific literature to see if they hold water.
What he finds is they were often partially right, but that we know more. By the end of the book, you have some concrete suggestions on how to lead a happier life and you'll know to the studies that will convince you they work.
Haidt writes with that pop science long windedness that these books always have. Within that structure, he's an entertaining writer so I didn't mind.