Friday, June 24, 2011

Intelligence - better for the individual or the collective (answered below)

I thought this was so great I am going to reprint the Marginal Revolution post in its entirety (which is attributed elsewhere.
A recent line of research demonstrates that cognitive skills—IQ scores, math skills, and the like—have only a modest influence on individual wages, but are strongly correlated with national outcomes [emphasis mine]. Is this largely due to human capital spillovers? This paper argues that the answer is yes. It presents four different channels through which intelligence may matter more for nations than for individuals: 1. Intelligence is associated with patience and hence higher savings rates; 2. Intelligence causes cooperation; 3. Higher group intelligence opens the door to using fragile, high-value production technologies, and 4. Intelligence is associated with supporting market-oriented policies. Abundant evidence from across the ADB region demonstrating that environmental improvements can raise cognitive skills is reviewed.
The paper is here and the slides are here.
So fascinating.

Thursday, June 23, 2011

Haiku - Motivation

What motivates me?
Respect via money.
Am I good enough?

(Alternative last line: Do I have enough?)

Supporting my post on doing nothing as an OK response

Two weeks ago I wrote on the topic of not reacting to our feelings to act. Today I believe that is more true then ever. I'll offer up an example:

Today, some low-level know-nothing in my company decided to send a simple request to a distribution list that she didn't really understand. We've all been there. We know what happened. It set off a torrent of reply-all messages saying "take me off this distribution" and, helpfully, "stop hitting reply-all". Except they hit reply-all themselves. You see, it's a catch-22. Everyone who replies thinks to themselves "after I send this email where I specifically say 'stop hitting reply-all' then these emails will 100%, definitely stop". Except they don't, because nobody listens to you if you're not a head honcho like Steve Jobs. If Steve Jobs said STFU the email traffic would stop. That instant. No question.

But they're not Steve Jobs. None of us are. We're all anonymous cogs that are just trying to become bigger and bigger cogs so eventually we can be on top of the machine and get access to the controls. The truth is that we only have influence over our cog neighbors. Nobody else listens to us. Or respects us, because they don't know us. These response emails people write are generally short and to the point. They would be effective if people read them. But no one ever does. Unbeknownst to them, they are just further spreading the virus that was the original email. (Aside: scary when you contemplate extrapolating that example to actual and harmful germs. I could easily imagine how an epidemic is spread quickly. "Aw geez I'm not sick")

Inaction is an appropriate response to this type of situation. I can understand someone's impulse that "I'm going to get this to stop myself and everyone will thank me for it". If that's you, maybe your best option is to sit on your hands. Or if you really have to be pro-active, create a filter that automatically takes emails with that subject line or distribution list to the trash. But, for God's sakes man, don't hit reply all.

*I'm going to continue to document situations where it's best to do nothing. I think this is really interesting.

Friday, June 10, 2011

You don't have to act on every impulse

I got on the elevator this morning after buying my Cherry Coke Zero, the lifeblood of my workweek, at the canteen store in the sub-basement. Another woman gets on. I'm standing in the elevator operator position so I say ask her which floor she wants to go to. She says "lobby". Because our building's elevator software is programmed to always stop on the first floor, instead of pressing the 'L' button, I said "oh, ok. We'll hit that on the way up."  All of the elevators are programmed that way. It is inconvenient, but everyone knows the deal. I think she felt slighted that I didn't act on her request, so instead of just trusting me that the elevator would stop where she wanted, she reaches over to push the button. But it was too late, we were already there, the doors were already opening. Just as I said they would. I think it was less about being correct than it was that my response didn't meet to her expectation that I would act on her request.

This interaction got me thinking - a lot of people demand action. The economy's bad, do something! $787 billion stimulus didn't work, do some more! Oh shit, my portfolio is down 30%, these stocks are no good, I need to sell them!

But that's not the case. When things are happening, you don't have to participate, especially with investing. Sometimes the best course is inaction. If the pain is too unbearable, don't log into the accounts, throw away the monthly statements unopened. By all means, know what's going on with the companies you invest in, but ignore Mr. Market. You don't have to trade with him.

The point is, if you become aware of some of our tendencies as people that you can correct those behaviors. So don't automatically call for something to be done just because you perceive there to be a problem. A lot of the time, things resolve themselves.

Thursday, June 2, 2011