Organisational Group Think

Isn't it interesting how large firms get so caught up in their own rhetoric some times that they totally fail to appreciate how they look to the outside world. Recently we had the BA cross matryr, but the one that interests me most is the case of the Goldman Sachs cleaners. The point is not whether Goldman should pay its cleaners more as some abstract ethical or industrial relations debating point: the point is that it seems the negative publicity cannot be justified by the cost of fixing the problem. Isn't the rational move in this game simply to make the bad news go away?

Can I have at least one I told you so?

The Olympics are hugely over budget already and we still have 6 years to go? Quelle suprise...

Madrid is broken...

...or at least its transport infra- structure is. After a week of com- muting around this city, I am astonished the locals tolerate the traffic, pollution, and squalor: far too many people drive, and as a consequence neither buses nor taxis are worth taking, at least between 7am and 10am or 5pm and 8 or 9 in the evening. Even at 4pm the traffic is starting to back up, despite the fact that most people don't finish work until 6. The metro system isn't too bad, but it only covers the centre of town and the stations are absurdly close together. How did they let it get this bad? Surely this can't work for anyone (however nice the architecture you get to look at while you are in the jam)?

Through the maths darkly

Seeing a recent Boing Boing post on a talk by Mandelbrot, it occurred to me to blog about a worry I have had for a while about probability...

It's like this. The classical formulation of probability theory due to Kolmogorov is based on the idea of repeated identical experiments. We take many copies of a system, perform a measurement lots of time, and review the distribution of outcomes.

This make sense for many application areas: the most obvious place it works is statistical mechanics. Here we look at a physical system comprised of many many identical units each taking properties from the same distribution. But for everything from the mathematics of poker to the behaviour of random biological mutations, the idea of having samples from the same random process makes sense. If we only have one experiment but we can imagine the possibility of conducting further tests to the same system the set up remains reasonable.

One of Mandelbrot's areas of interest is finance, and here when we are examining the random behaviour of markets, we can think of the underlying as being locally stable. The FTSE is not the same today as ten years ago, nor does it behave in a similar fashion, but it does seem (mostly) similar enough today to yesterday that (at least for short periods of time) we can talk about the random process generating the FTSE. This still makes sense since today's observation is done on a system that is fairly close to that used for yesterday's. (Of course whether that process is Lévy, Fréchet or whatever is another matter entirely, and I am assuming there wasn't a crash today or yesterday.)

The problem comes when we cannot even in principle imagine conducting the same experiment more than once. For instance, one 'theory' of jet lag is that the body clock goes 'chaotic'. The idea here is that if I fly from London to New York, rather than my body clock going from London time to New York time, it becomes disrupted, then eventually settles at the new time. The word 'chaos' is helpful in that it highlights the disruption (and the need for forcing to speed the return to normality) but it is unhelpful in that it suggests that it makes sense to talk about what 'time' my body clock is showing when I am jet lagged. It doesn't since you cannot copy my body clock so you can see how tired I feel in various situations, or when I wake up during various tests on the same jet lag. If you cannot sample the process more than once is this situation really one where the idea of a random variable taking a value is meaningful?

For that matter, one might have a similar philosophical issue with using Poisson (or any other kind of random) processes to model corporate defaults. There are not many corporates that default more than once, so again is this a situation where the idea of an underlying random process makes sense? How do we even know that there is a stable generating process if we cannot even in theory do more than one experiment? Epistemologically it looks dodgy to me...

Random big vs. focussed little

In the last little while I have been lucky enough to visit the Rijksmuseum in Amsterdam and the Prado in Madrid. Due to rebuilding, there is not much by volume on show in Amsterdam: just ten or so rooms. But most of the famous Dutch paintings are there: the Rembrandts, Vermeers and Franz Hals.

(Blog illustrated with a gratuitous view of Madrid from my phone: I love the light on the water.)

At first I was a little irritated to pay ten euros to see this small exhibition, but after going to the Prado, I'm not sure it isn't a really good way to see the collection. You don't have to walk through halls and halls of undistinguished canvasses, as you do in Madrid. You don't have to search for the gem hidden in the rough. One might disagree with some the details of the Rijksmuseum's selection, but seeing those three Vermeers on the same wall, intimately: that was wonderful. In the Prado in contrast, there are lots of indifferent Velazquez, with the great pictures separated (or in London for the National Gallery show) and without context. Perhaps having twenty of someone's favourite canvasses from a big collection can be better than having all of it?

My phone is still more artistic than me...

...at least in direct sunlight. This was taken in the grounds of the Sue Ryder home in Cheltenham, where my mother is currently being looked after. It's a sad time, but at least she is surrounded by caring people and the beauty of the countryside. The black hole at the heart of the sun seems appropriate too in the circumstances.

Poll games

Aren't the mid-terms fascinating? The polls indicate a democratic landslide, and yet... And yet. We know people lie to the polls. There is a natural human tendency to tell people what we think they want to hear, or what casts us in a positive light. The more moral opprobrium we perceive there is associated with a belief, the less likely we are to reveal it: the BNP consistently receives more votes than the polls suggest, for instance.

It is worse because the polls are themselves part of the political process. Some people are reluctant to vote if they think that they cannot influence outcome: others come out anyway. So correcting for poll error is not straightforward. My suspicion is that the midterm error will be bigger than usual as voters become more sophisticated and more mendacious in their responses. Let's see...