Two Toronto teens launch a weather balloon carrying that fearless adventurer LEGO man into space.
Pretty cool, here is the news report.
Tuesday, January 31, 2012
Tuesday, January 24, 2012
Friday, January 20, 2012
Thursday, January 19, 2012
Gambler's Fallacy
The gambler's fallacy, also known as the Monte Carlo fallacy, is the belief that in a series of chance events, runs of a particular outcome will be balanced by a tendency of the opposite outcome. For example, if I flip a coin 7 times and each time it comes up heads, one falling prey to the gambler's fallacy may predict a higher chance of the coin coming up tails on the next flip. But in reality the likelihood of a (fair) coin coming up either heads or tails is always 50%. Each flip is independent. All prior flips have no influence on the next.
One of the reasons people may fall prey to the gambler's fallacy is that they misapply the law of large numbers. The law of large numbers is a mathematical theorem that states that if you repeat a random experiment a large number of times, your outcomes should on average be equal to the theoretical average. The key point here is that the experiment is done many, many, many times and as such this theorem is no basis of support for the gambler's fallacy. For instance, if I flip a coin 10 times (small sample size) I may or may not come close to the theoretical average 50% heads. If I flip a coin 100 times, it is more likely that I would end up with something close to the 50% heads but may still have a large degree of variance. If I flip a coin 1000 times, I am going to end up with something close to 50% heads. If I flip it 10,000 times, I should be very close to the theoretical average.
The most famous example of this fallacy happened on August 18, 1913 in a casino in Monte Carlo. The roulette table had landed on black 10 times in a row. People were convinced that the likelihood of it landing on black again was very low, so they increased their bets. But again the ball landed on black. It did so on the next spin, and the next, and again next. Each time the gamblers were more convinced of the near impossibility that the next spin could land on black and so they continued to increase their bets. But the ball continued to land on black. It did so for a total of 26 consecutive spins. It was indeed a very profitable night for the casino.
One of the reasons people may fall prey to the gambler's fallacy is that they misapply the law of large numbers. The law of large numbers is a mathematical theorem that states that if you repeat a random experiment a large number of times, your outcomes should on average be equal to the theoretical average. The key point here is that the experiment is done many, many, many times and as such this theorem is no basis of support for the gambler's fallacy. For instance, if I flip a coin 10 times (small sample size) I may or may not come close to the theoretical average 50% heads. If I flip a coin 100 times, it is more likely that I would end up with something close to the 50% heads but may still have a large degree of variance. If I flip a coin 1000 times, I am going to end up with something close to 50% heads. If I flip it 10,000 times, I should be very close to the theoretical average.
The most famous example of this fallacy happened on August 18, 1913 in a casino in Monte Carlo. The roulette table had landed on black 10 times in a row. People were convinced that the likelihood of it landing on black again was very low, so they increased their bets. But again the ball landed on black. It did so on the next spin, and the next, and again next. Each time the gamblers were more convinced of the near impossibility that the next spin could land on black and so they continued to increase their bets. But the ball continued to land on black. It did so for a total of 26 consecutive spins. It was indeed a very profitable night for the casino.
Monday, January 16, 2012
Make mine liberty 1948
Produced by Harding University in 1948 in it's efforts to counter the appeal of communism.
Friday, January 13, 2012
Check A Fact Before It's A Fact
'Check a fact before it's a fact' is a phrase I read in some detective novel when I was a kid. To me it simply means that when faced with a problem, we should thoroughly check the reliability of our information and recognize our assumptions before we make an attempt to solve it.
Checking on the reliability of our information means evaluating the credibility of its source. Does the information come from an acknowledged authority in the subject? What are their credentials? Do they have any bias? Do they cite there work? Is the information current ? If the information comes from a witness to an event, can it be corroborated? Etc. The point is that we should not assume information provided to us is factually true without first doing a little investigating and evaluating.
Recognizing our assumptions means finding those things we may take for granted to be true and evaluating whether or not they are reliable.
The following is a classic (though somewhat dated) example of a problem which demonstrates the tendency to gloss over assumptions:
A father and a his son are involved in a car accident, as a result of which the son is rushed to the hospital for emergency surgery. The surgeon looks at him and says "I can't operate on him, he's my son".
I remember first hearing this riddle when I was a kid and not being able to immediately grasp the obvious answer. Of course the surgeon is the boy's mother. As a culture we are less sexist than we were in my younger years and as such this may no longer be the best example. Lets try another.
A bus driver was heading down a street in Colorado. He went right past a stop sign without stopping, he turned left where there was a “no left turn” sign and he went the wrong way on a one-way street. Then he went on the left side of the road past a cop car. Still – he didn’t break any traffic laws. Why not?
How could the bus driver not be breaking the traffic laws with his apparently reckless actions? Simple; he was walking. Nothing in the riddle says that he was driving but because he is referred to as a bus driver, we tend to first form a mental picture of him or her driving a bus.
Checking on the reliability of our information means evaluating the credibility of its source. Does the information come from an acknowledged authority in the subject? What are their credentials? Do they have any bias? Do they cite there work? Is the information current ? If the information comes from a witness to an event, can it be corroborated? Etc. The point is that we should not assume information provided to us is factually true without first doing a little investigating and evaluating.
Recognizing our assumptions means finding those things we may take for granted to be true and evaluating whether or not they are reliable.
The following is a classic (though somewhat dated) example of a problem which demonstrates the tendency to gloss over assumptions:
A father and a his son are involved in a car accident, as a result of which the son is rushed to the hospital for emergency surgery. The surgeon looks at him and says "I can't operate on him, he's my son".
I remember first hearing this riddle when I was a kid and not being able to immediately grasp the obvious answer. Of course the surgeon is the boy's mother. As a culture we are less sexist than we were in my younger years and as such this may no longer be the best example. Lets try another.
A bus driver was heading down a street in Colorado. He went right past a stop sign without stopping, he turned left where there was a “no left turn” sign and he went the wrong way on a one-way street. Then he went on the left side of the road past a cop car. Still – he didn’t break any traffic laws. Why not?
How could the bus driver not be breaking the traffic laws with his apparently reckless actions? Simple; he was walking. Nothing in the riddle says that he was driving but because he is referred to as a bus driver, we tend to first form a mental picture of him or her driving a bus.
Problem Solving Process
The following is the skeleton of a basic problem solving process which I intend to periodically add meat and flesh to.
1. Problem Definition
Provides the foundation for solving the problem. Write a formal problem statement. "If I had one hour to save the world I would spend fifty-five minutes defining the problem and only five minutes finding the solution." Albert Einstein
- 5W2H
-Flowcharts
-Check A Fact Before It's A Fact
2. Identifying & Verifying Root Cause
Analyze for “Root Cause” of the problem. Identify and verify the Escape Point
- Brainstorm the possible causes of the problem
- 5 Whys
-Flowcharts
-Check A Fact Before It's A Fact
3. Develop Solution(s).
Confirm that the selected corrective actions will resolve the problem and not cause negative side effects.
-Flowcharts
-Check A Fact Before It's A Fact
4. Implement The Solution.
If necessary, create an Action Plan. The Action Plan simply oulines the steps needed to implement the solution.
5. Evaluate The Solution.
Posted:
10/31/11
11/22/11
01/13/12
1. Problem Definition
Provides the foundation for solving the problem. Write a formal problem statement. "If I had one hour to save the world I would spend fifty-five minutes defining the problem and only five minutes finding the solution." Albert Einstein
- 5W2H
-Flowcharts
-Check A Fact Before It's A Fact
2. Identifying & Verifying Root Cause
Analyze for “Root Cause” of the problem. Identify and verify the Escape Point
- Brainstorm the possible causes of the problem
- 5 Whys
-Flowcharts
-Check A Fact Before It's A Fact
3. Develop Solution(s).
Confirm that the selected corrective actions will resolve the problem and not cause negative side effects.
-Flowcharts
-Check A Fact Before It's A Fact
4. Implement The Solution.
If necessary, create an Action Plan. The Action Plan simply oulines the steps needed to implement the solution.
5. Evaluate The Solution.
Posted:
10/31/11
11/22/11
01/13/12
Tuesday, January 10, 2012
Fairness?
A friend of mine posted this on his facebook page. I thought my response might be too long so I am making it into a blog entry.
The first thing that jumps out at me is the obvious cherry picking going on. The chart seems to indicate the average salaries of the fire fighter, teacher, police officer and doctor but then instead of using the average salary of all hedge fund managers it only looks at the salary of the top 25. I have no idea how many hedge fund managers there are but after doing a quick Google search I found this list you can purchase from BarcayHedge which says it tracks 23,700 different funds. Of course the people who mad the chart know this but they were skewing the numbers on purpose to try and illicit a stronger emotional response from people.
The second thing that comes to mind is the response people seem to have to this sort of thing, which is that 'the government needs to do something about this' and 'that's not fair, where is my piece of the pie'. I think it is important to step back and remember why these people are able to make the kind of money that they do. In my mind it is due to the basic constitutional rights to life, liberty and property within the framework of a (semi) free market economy. It is our system of property rights and freedom which not only enables some to become incredibly wealthy but also allows our standard of living to be one of the highest in the world. Here is a link to the Wikipedia article on GDP per capita. As you can see it places the US at number 7 per the International Monetary Fund and the World Bank.
To sum it up, my concern is that the more people start to see the economy as a giant pie that the government can slice up and hand out to people, the more power we give them to do so and the more reliant upon it we become. There is also an argument to be made for spontaneous order through the free market being superior to that of a centrally controlled economy but I don't have the time to get into it. Here is a video I found that touches on it.
Monday, January 9, 2012
A cool sketch from artist Andrew Paul. It is a concept design for an illustrated story he is working on. Besides being a great artist, Andrew is a childhood friend of mine. You can catch his blog here for updates.
Sunday, January 1, 2012
How The Federal Reserve Screws You
I went to the bank yesterday to make a deposit and out of curiosity I asked what the interest rate was on a basic savings account. The teller told me that it was 0.2%. Pretty pathetic right. Of course savers who have money parked in savings/money market accounts aren't too happy about the puny returns but the situation is actually much worse than many people understand. To illustrate what I mean, lets look at a simple example. Say we have an emergency fund of $10,000 in a savings account which earns 0.2% annually (we'll compound annually for the sake of simplicity). At the end of the year we end up with a scrawny return of $20. But hey, its better than nothing. At least we are now ahead by $20, right? Unfortunately no, that isn't the case. We forgot that the income is taxable interest (at ordinary interest rates). So lets say were in the 25% bracket. With this in mind we have to subtract $5 from our $20 leaving us with a return of $15. Now that is a pathetic return on investment. But hey, at least we got something and are ahead by $15, right? Well, no, because we still need to calculate the effect of inflation on our investment. As of the end of November, the average inflation rate for 2011 was about 3.2%. So if we take our original investment of $10,000 plus our return of $15 and multiply that by 3.2% we see that we have actually lost purchasing power of about $320. Yep, our money is now worth about $9695 in real dollar terms.
Of course part of the reason interest rates are so low is because of the federal reserves attempts to get the economy moving again. The hope is that with such low rates, people will start borrowing and spending money again. But the flip side of this sort of policy is that it punishes savers.
So to sum it up, the government promotes a policy that punishes the responsible savers through inflation and taxes in hopes that it will get the irresponsible spenders to start borrowing and spending again. Hmm, does this sound like a solid plan to you?
Of course part of the reason interest rates are so low is because of the federal reserves attempts to get the economy moving again. The hope is that with such low rates, people will start borrowing and spending money again. But the flip side of this sort of policy is that it punishes savers.
So to sum it up, the government promotes a policy that punishes the responsible savers through inflation and taxes in hopes that it will get the irresponsible spenders to start borrowing and spending again. Hmm, does this sound like a solid plan to you?