Smile, the world is not as bad as you think! :)

Here’s a positive note on which to end 2015:

Having recently moved to Sweden, I have inevitably become more exposed to “Made in Sweden” products, be it consumer goods or ideas.

Today, I’d like to highlight some of the recent work of Hans Rosling, which can briefly be summarised as

The world is not as bad as the majority of us think. But is not really our fault for being wrong.  We are wrong about the world because we are biased, misinformed and our education is outdated

Aside from an accomplished Medical Doctor at the top Scandinavian medical institution, Karolinska Institutet, Hans Rosling is also the CEO of Gapminder, a fascinating non-profit organisation that organises (publicly available) statistics showing how the world has improved in so many different ways, be it from an education, health or income distribution perspective. This is the video that caught my eye and it uses the tools created by that organisation.

If you like this sort of thing, I recommend that you also check out the IMF DataMapper tool, which is also quite insightful, even if it lacks the very appealing time lapse feature.

In what follows, I go through some of things I thought about while watching this video. If you are interested in cognitive biases, prejudices, alienation income distribution and economic growth, you may want to have a look at this post. It says nothing new really and mainly praises the work and ethic of Gapminder. The point, some part of which I combed through in some detail to make sure there was no mistake, is that we are fortunate and should be happy to be alive at this moment in the history of our planet and that where exactly we were lucky to be born in exactly has never mattered as little as it does now. And that’s not nothing given recent developments across Europe and the middle east.

Continue reading Smile, the world is not as bad as you think!🙂

Correcting the Probability of Roman Emperors – Data, Empirical CDF, Exponentional Functions, Kolmogorov-Smirnov Test, Confidence Levels and Critical Values

The idea that we can use distributions to describe political systems really stuck with me. Sure, it’s not the only one way to do so, but it seems to offer a particularly interesting and unbiased approach to measuring the survival of political systems. Unfortunately, when I discussed this fact with an example of the Roman Empire, I got it wrong. Not the general conclusion. Just the detail. The way I did it was wrong… which is embarrassing. But there you go, now there’s going to be a record of how I did it wrong and how you do it right, which was kind of what I wanted to do with this blog in the first place.

The rest of this post is organised under the following headings:

  • How did I figure I was wrong?
  • I counted duration in approximate (integer) years not in days
  • I made a mistake calculating the Kolmogorov-Smirnov Test
  • Getting accurate data
  • My Final Say – Data, Procedure and Results

 If you are just interested on how it gets done, scroll through to the end, where I’ve actually posted the excel file with the correct solution to the problem.  I hope this helps and somewhat redeems my mistake.

Continue reading Correcting the Probability of Roman Emperors – Data, Empirical CDF, Exponentional Functions, Kolmogorov-Smirnov Test, Confidence Levels and Critical Values

Economists, Quants and Traders

When I started working in finance as a fixed income analyst I realised I had some insight about the macro and the political drivers of financial markets, but I knew very little about finance, formally at least, in the sense I had never really studied it. More importantly, as I came to realised reading financial markets-trader oriented media, I knew nothing about what or how the market itself thought about how it worked. Having been trained in New Keynesian economics, I was accustomed to rational agents, micro-founded models and what I would otherwise describe as the rational  choice approach to social sciences. What I eventually realised was that quants and traders couldn’t really care less about those things. Quants looked at probabilities mainly and traders used technical analysis for the most part. So what are their relationships?

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Roman Empire Roads, New Trade Theory and the history of Europe’s Economic Core

In preparing some tutorial notes on trade and geography, I was trying to convey some of the interesting agglomeration insights of New Trade Theory and got stuck on whether I should mention the Roman Empire and its network of roads and the effect it may have had on establishing Europe’s economic core. Ultimately, I decided against it because I thought it would confuse students and because I didn’t find any reference that said that is a cause of Europe’s core. Also, this is a group of people of whom I cannot assume any prior knowledge of the Roman Empire and I might just end up confusing them. So for practicality’s sake I’ll stick to the typical examples about financial services in the City and in Wall Street and about Silicon Valley.

However, and mostly for my own sake I wanted to highlight the following two maps:

The first is a map of the EU with shades of GDP/capita by subnational economic (NUTS) regions. Notice the axis running from Flanders to northern Italy.

The second is a map of Roman Empire Roads.Notice how the darker region in the EU NUTS map coincides with the region in the northern European part of the Roman Empire that had a lot of roads, mainly connection border garrisons protecting the Rhine frontier.

 

Clearly, the relationship is not linear. If roads were all there was to it, Italy would have been the most developed region in Europe. I am not suggesting we ignore the remaining and very substantial developments of European economic history that took place in the intervening 15 centuries after the fall of the Western Roman Empire. Clearly, the trade integration of northern Europe, human capital development, the right policies and industrialisation conspired to make that axis even richer.

But I like to think about the Roman Empire and I would venture the guess that the overlap described above is not without its merits, tiny though they might be. One interesting thing would be to test the pervasiveness of that Flanders to Northern Italy axis throughout history. May be Angus Madison has relevant data.. ?

Oh and if you are unhappy with the amateurish nature of the map of Roman roads, or if you are just interested in such things, I would point you to the “ORBIS” project of Stanford University which has very detailed road data for the Roman Empire.

Latent factors of the term structure of yield curve

This post is a brief summary of how I found myself trying to learn how to model the term structure of the yield curve and the struggles that I faced.

If google brought you to this page in the late moments of your despair and agonising confusion with this model, I recommend you scroll straight to the bottom. The last six paragraphs might shed some light on the problems you are facing.

Continue reading Latent factors of the term structure of yield curve

The Probability of Roman Emperors

In my previous post I discussed how I came to be interested in probabilities, after having spent about a decade (which refers to a period of time of 10 years, and is not in any way associated with decadence… O_O (12’20”) ) making use of tools that assumed or did some calculations with probabilities. I mentioned it because it was interesting for me to realise what had made me care about it and seek out to learn more and because it might be interesting for other people. Who knows, may be you are struggling to find the motivation or interest in the topic necessary to really dig down into it, like I did. In that case may be going through those same things will help you find the focus you need.

If you’ve been one of the 150 or so people who make daily visits to my other website, Place du Luxembourg, you’ll also  have heard me go on about the Roman Empire. You’ll have noticed that I posted something about the evolution of the Roman Republic towards the Empire. You may have also read in other posts that I have not been writing because I’m trying to figure out some things about the fall of the Roman Empire. I’m still working (sporadically) on a final draft of that post, which after this much time cannot possibly measure up to my expectations, but anyway, I digress…

Nevertheless, I came across some interesting facts about autocrats and their regime. As it turns out it’s a pretty accidental lifestyle, characterised by an exponential distribution. But more importantly: Why and to what effect?

Continue reading The Probability of Roman Emperors

Why I do a PhD and What it is about

Because I just started writing, I feel the need to do some explaining. In this case, as I mentioned, I’m doing a PhD. Let me explain where and why. If you are considering doing a PhD this and other related posts might be useful. It’s a fun enterprise but it can definitely be a bit franctinc

Continue reading Why I do a PhD and What it is about

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