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16 June 2005

Expectancy Theory

From the 2004 accounting exam solutions:

Evaluate the effectiveness of Denethor's incentive scheme

Expectancy: no extrinsic reward and no intrinsic reward as the manager was yelled at and not valued

COQ

From my accounting lecture notes: Early state of quality improvement: COQ for attention getting

It stands for Cost of Quality. It's not really that funny.

Averages

Libby and I were talking yesterday about being obsessed by marks. I don't know if I am. I have been urgh this week because I've been watching my average go down with every day I don't do enough study. As of this minute my average is 86. In 24 hours I'm guessing it will be a chunk less. And in a week another chunk less than that. And then I get the results from my essay so who knows what will happen then. I did get 83 for social science which I'm really happy about. That's the only subject I've got a final mark in.

Maybe I do take the numbers too seriously. I think at some point I realised that having a proper job at the Reserve Bank was conceivable. And I got a bit excited by that thought. It's made the numbers relevant too me for the first time because the Reserve Bank cares about the numbers. I'd so love to work there. Such clever bank chaps. Such good experience. Such a good starting bit to lots of other things that would be really fun to do. Like save the world.

14 June 2005

Burnt Foot

We all went camping last night. We had yummy sausages in bread. I burnt my foot on some airborn hot water. Now it's red and I have to put stuff on it. But it's not very dramatic looking sadly, so it doesn't make a very good prop for the story. I'd post photos, except I don't have a camera, and it would only be to show everyone that nothing that bad really happened.

Update: There are actually some pretty good blisters coming up today, so I'm happy about that.

10 June 2005

Reserve Bank

I emailed the Reserve Bank a couple of days ago asking if I'd be eligible to join their cadetship program. A woman replied that said "Yes. You are eligible. And we strongly encourage you to apply." I was scared at first, but since she was so friendly it now seems much more fun.

Social Sciencey Goodness

I just found out that I got an HD for my big social science assignment. I'm so happy because I always do super-crap in social science. So yay.

Growth and Sustainability

... is proud to support GFUSA in its effort to accelerate growth and sustainability in the microfinance industry. A guy who just donated a lot of money to Grameen

That's what I've always said - growth and sustainability are inseparable.

Spade a spade

I love it. Whether its serious or not. I won't say what newspaper it's from just in case it is serious.

Mercy and compassion for homosexuals is of course desirable and justice essential. However, unless we as a society start calling a spade a spade and openly declare homosexual acts are [sic] the perversions they truly are, and the promoters of such acts, whether individuals or governments, are [sic] evil, the young and innocent will continue to be seduced and betrayed. Philip Pocock, Turner, ACT

6 June 2005

Neighbors as Negatives: Relative Earnings and Well-Being

This is really interesting, if you can get through it. It's the conclusion of an econometric study on the influence neighbours' wealth has on a person's happiness. It found that the neighbour's income increasing reduced "self-reported happiness" by the same amount as an equivalent drop in a person's own income. Pretty amazing stuff.

This paper shows that increases in neighborhood earnings negatively affect self-reported happiness. By looking at alternative outcome measures, such as frequency of financial worries, I provide evidence that this finding is not simply an artifact of the way people report happiness. I investigate the concern that the finding could be driven by omitted variables, but find no evidence of selection in a number of specification tests including ones with individual fixed effects. Though the mechanism by which increases in neighbors’ earnings reduce happiness is hard to identify precisely, I provide suggestive evidence that interpersonal preferences are likely to be responsible for them. Increased neighbors’ earnings by and large reduce satisfaction with material (rather than immaterial) aspects of one’s life and have the strongest negative effect on happiness for those who socialize more in their neighborhood. I therefore conclude that the negative effect of neighbors’ earnings on well-being is real and that it is most likely caused by a psychological externality, i.e. people having utility functions that depend on relative consumption in addition to absolute consumption.

The size of the effect is economically meaningful. An increase in neighbors’ earnings and a similarly sized decrease in own income each have roughly about the same negative effect on well-being. This suggests that an increase in own income leads to a negative externality on neighbors’ well-being that is of the same order of magnitude as the positive effects on own well-being. Unless one chooses to disallow these negative externalities on ground that they appear to stem from an interpersonal preference component that is morally questionable, externalities of this size in principle offer considerable food for thought for the design of policies.

Erzo Luttmer

3 June 2005

Smell of tax evasion in the morning

If you have a capital gain, then by creating a loss you may be able to cancel it out. True, losing money to get a tax break is self-defeating. But if, for example, you have a dud share why not sell it for the tax break? If you think it still has potential, buy it back the next day. Sydney Morning Herald

It took me a moment to grasp the idea. But it's pretty crazy. If you have a reasonable sized portfolio of highly variable stocks (or any asset) you can basically put off paying any capital gains tax for as long as you like. The timing is mildly tricky, but it would be enormously useful in smoothing out "profits". I can't believe it's legal. And I'm suprised SMH were happy to publish it.

I'm reading about the history of capitalism and imperialism at the moment. It's made me a little prone to sudden bouts of moral anxiety.

1 June 2005

Rwanda GDP Growth

This seems so innocent and statistical. But those 1994 figures are pretty significant. Partly because they show how a country was destroyed in one year. But mostly because the drop in GDP was so much lower than the drop in GDP per capita. The only reason those two figures can be different is if population increases, or in this case drops.

Rwanda GDP Growth 1994-1998

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