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Utilitarianism

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Today, I am going to talk about Utilitarianism. So, I spend my time thinking about morality. About what makes actions morally right or morally wrong? And I wanted to talk today about a very simple, quite popular answer to that question.

A moral theory that goes by the name of Utilitarianism. Utilitarianism has a lot going for it, but also raises some very interesting worries, and I’m going to talk a bit about some of those. So utilitarianism is the view that actions are morally permissible if and only if they produce at least as much net happiness as any other available action.

In other words, the more happiness and less suffering that results from our actions,  the better the action is, and the right action is the one that produces the greatness balance of happiness over sufforing

In fact, according to utilitarianism, any other action is morally wrong. This utilitarian principle is supposed to be absolute and all-encompassing. It will tell you of any decision whatsoever, exactly what you should morally do. And it admits of no exceptions.

Utilitarianism has been around for a long time, but it gained a lot in prominence and popularity in the late eighteenth century, due in part to the work of a British philosopher named Jeremy Bentham. He published the “An Introduction to the Principles of Morals and Legislation” in 1789. But he was also a very political and social active guy. In fact, he was an defender of Economic Liberalisation, Freedom of Expression, The separation of church and state, Women’s right, animal rights, the right to divorce, the abolition of slavery, the abolition of capital punishment, the abolition of corporal punishment, prison reform, and even the decriminalization of homosexual acts. Remember this was 1789. Many pf which are now uncontroversial. In this, he was well ahead of his time, and in large part, I would think, because of his embrace of utilitarianism.

That for me, counts heavily in favor of it as a moral theory. And in fact aspect of utilitarianism can look very hard to resist. We can break the utilitarian thesis up into two parts: A theory of what is valuable, and a theory of right action given what’s valuable.

First, the theory of what is valuable

It says that the only thing that’s valuable in its own right is happiness and the absence of suffering.

Other things, like money, might be derivatively valuable, because it helps us get happiness.

Second, the theory of right action. The right action is the one that maximises, produces the most of, what’s valuable, or if that’s uncertain, that produces the most expected value. If you put those two pieces, the theory of what’s valuable and the theory of right action given what’s valuable, together, you get utilitarianism.

Macroeconomists

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Like astronomers studying the evolution of stars or biologists studying the evolution of species, macroeconomists cannot conduct controlled experiments in a laboratory. Instead, they must make use of the data that history gives them. Macroeconomists observe that economies differ across countries and that they change over time.

 

Learn everything you need to know about Advanced Macroeconomics here.

3 Statistics very important Economist use are:

  1. Gross Domestic Product – GDP = National Total Income and the total expenditure
  2. Consumer Price Index – CPI = Measure the level of prices
  3. The Unemployment Rate

Judgmental Forecasting

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Human judgment permeates forecasting processes. In economic forecasting, judgment may be used in identifying the endogenous and exogenous variables, building structural equations, correcting for omitted variables, specifying expectations for economic indicators, and adjusting the model predictions in light of new information, official announcements, or “street” talk. Forecasters appear to be highly satisfied with judgmental approaches, preferring them over quantitative techniques due to reasons of accuracy and difficulties in obtaining the necessary data for quantitative approaches.

Judgmental biases argued to be especially relevant to forecasting include: illusory correlations, hindsight, selective perception, attribution of success and failure, underestimating uncertainty, optimism, overconfidence, and inconsistency in judgment. These biases could also be related to the organisational incentive system. For instance, forecasters mostly prefer to underforecast, justifying this tendency typically by their motivation to look better if the stated goals are surpassed, or by the choice to be conservative.

Judgmental forecast on the other hand, benefit from human ability to evaluate information that is difficult to quantify, as well as to accommodate changing constraints and dynamic environments. Extensive implications of judgmental forecasting performance necessitates detailed analysis targeted at educating the users and providers of forecasters to recognize those elements of the task which are best delegated to a statistical model and to focus their attention on the elements where their judgment is most valuable.

‘times of uncertainty and danger’

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Uncertainty is on the raise and under our eyes. Everybody can feel it. Even a small dose of it. Perhaps, it is due to a huge list of ongoing activities that we might explain slow through the week:

Restrictions travel to and from the United States

Protests around the world, including in American soil and European soil

Inflation and Deflation at the same time

Rise of Corruption involving private companies – The oher side of the capitalism

Lobbying – Isn’t the same as corruption?

Increase cost of Health Care – We will all pay for it

Insurance

Heat Waves

Lack of Transparency

Baby Boomers retaining their jobs

Unemployment

House price crisis

 

All these things together, and even isolated, are increasing our level of uncertanty on a daily basis. It is changing the way we are thinking and trusting in companies, enterprises, schooling and in our financial. A new approach is in need to start soon as the old fashion Chicago school does not work anymore to us. Good Luck to all of us. And, always remember that the world was not made only for you maintaining one’s faith above the torment of doubts.

 

 

Everything about forecast

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I am going to outline forecast following 11 fundamental questions:

  • What is forecast?
  • What can be forecast?
  • How confident can we be in forecasts?
  • How is forecast done in generally?
  • How is forecast done by economists?
  • How can one measure the success or failure of forecasts?
  • How does one analyse the properties of forecast methods?
  • What special data distinct attributes matter most?
  • What are the main problems with forecasting?
  • Do these problems have potential solutions?
  • What is the future of economic forecast?

Let’s go deeper in our analysis and find out some answers in how to understand a forecast. Just click in the link below:

Understanding Forecast

 

 

A guide to models

The Underground Economy

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Individuals and firms sometimes conceal the buying and selling of goods and services. In which case their production won’t be counted in GDP. Individuals and firms conceal what they buy and sell for three basic reasons:

  • They are dealing with illegal goods and services, such as drugs or prostitution;
  • They want to avoid paying taxes on the income they earn;
  • They want to avoid government regulations.

Estimates of the size of the underground economy in Australia vary widely, but a study by ABS estimated it to be 1.3% of GDP, or over $17 billion. The underground economy in some poor countries such as Peru and Zimbabwe may be more than half of measured GDP. I wonder how big it is the underground economy in Thailand.

 

In the link bellow, you can find the entire piece of work done by ABS:

http://www.abs.gov.au/ausstats/abs@.nsf/featurearticlesbytitle/B129068549B24F82CA257694001290C1?OpenDocument

http://www.bloomberg.com/ss/10/07/0729_worlds_biggest_shadow_economy/8.htm

 

Why Occupy Wall Street Failed? – Interview

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Wall Street occupation had become a US phenomenon. The president is interested, celebrities are popping by, and pizza shops are adding the OccuPie to their menus. There is even an Occupy video game in development. The movement has spawned hundreds of Occupy locales in a national Occupy Together network. And now there is talk of going global: Occupy the World. However, it turned out totally different.

Let’s check the last interview Micah White, the creator of Occupy Wall street, had to say to a Brazilian newspaper, Folha de Sao Paulo on the May 26th 2015 :

“Folha de São Paulo: How would you analyze Occupy Wall Street today? What went wrong?

Micah White: This is the big question and of course I’ve been thinking about it since the end of Occupy. For me, the Occupy movement was a “constructive failure,” which basically means it was a failure that taught us something about activism.

The real benefit of Occupy Wall Street is that it taught us the contemporary ideas and assumptions we have about protests are false. Occupy was a perfect example of how social movements should work. It accorded with the dominant theories of protest and activism: it was a historical event, joined millions of people across demographics from around the world around a series of demands, there was little violence. And yet, the movement failed. So my main conclusion is that activism has been based on a series of false assumptions about what kind of collective behavior creates social change.

F: What are these assumptions?

MW: First, the central idea of contemporary activism: urban protests, with large numbers of people in the streets, primarily secular, and that revolve around a unified demand. The idea is basically, “Look, if we get a million or ten million or a hundred million people in the streets, finally our demands will be met.” However, if you look at the last ten, fifteen years, we have had the biggest demonstrations in history. And the protests continue to grow in size and frequency, and yet they have not resulted in political change.

F: Now what?

MW: What we learned from Occupy, and also with the Arab Spring, is that revolutions happen when people lose their fear. So I think the main trigger for the next revolutionary movement will be a contagious mood that spreads throughout the world and the human community.

For me, the main thing we need to see is activists abandoning a materialistic explanation of revolution—the idea that we need to put people in the streets—and starting to think about how to spread that kind of mood, how to make people see the world in fundamentally different way. That’s about it. The future of activism is not about pressing our politicians through synchronized public spectacles.

F: It’s not about pressuring politicians?

MW: No. I think the standard forms of protest have become part of the standard pattern. It’s like they are expected. And the key is to constantly innovate the way we protest because otherwise it is as if protest is part of the script. It is now expected to have people in the streets, and these crowds will behave in a certain way, and then the police will come and some of the people will be beaten up and arrested. Then the rest will go home. Our participation in this script is based on the false story that the more people you have in the streets the higher your chances of getting social change.

F: Can you explain better what you’re proposing?

MW: What I am proposing is a type of activism that focuses on creating a mental shift in people. Basically an epiphany. In concrete terms, I think there is much potential in the creation of hybrid social movement-political parties that require more complex behaviors of people like running for political office, seeking votes, participating in the city administration.

F: The use of social networks is quite controversial among contemporary activists. Some say it is a key tool to increase the reach of the protests, others say it exposes the movement to monitoring by the authorities. What’s your opinion?

MW: This is one of the key challenges. Social media is one of the tools that activists have, and we need to use it in some way. But in fact, social media has a negative side, which goes beyond police monitoring.

During Occupy, we experienced it: things started to look better on social networks than in real life. Then people started to focus on social media and to feel more comfortable posting on Twitter and Facebook than going to an Occupy event. This to me is the biggest risk: to become spectators of our own protests.

F: What do you think of the Black Lives Matter protests that are happening in the United States since last year, the result of racial tension in the country?

MW: Of course I fully support this movement. I am black, I have experienced the discrimination that they are protesting. But thinking strategically, I believe it is very important never to protest directly against the police. Because the police are actually made to absorb protest—the objective of the police is to dissipate your energy in protesting them so you’ll let alone the most sensitive parts of the repressive regime in which we live: politicians and big corporations. We must protest more deeply.

F: What do you think of the use of violence in protests?

MW: Studies suggest that protesters who use violence are more effective than those that do not. I think violence is effective, but only in the short term, because you end up developing a kind of organized structure that is easy for police to infiltrate. In the long run, it is much better to develop nonviolent tactics that allow you to create a stable and lasting social movement.

F: But doesn’t violence exclude the public from the movement?

MW: People become alienated and become frightened when they see the black bloc tactic because they do not understand and can not imagine doing it. And movements work when they inspire people, when they are positive, affirmative and make people lose their fear.

It’s a difficult balance, because you also do not want to be on the other side and only support forms of activism that are tepid and tedious—you have to find a middle ground that excites people and also leaves them with a little fear. No one really has a remedy to resolve the issue.

F: Your book THE END OF PROTEST decrees the end of the protest as we know it. Can we reinvent protest?

MW: Protest is reinvented all the time. Every generation experiences its own moments of revolution. The main thing is that we are now living through a time when tactical innovations are happening much more often because people can see what others are doing around the world and innovate in real time.

I think the future of revolution starts with people promising themselves that they will never protest the same way twice. This is very difficult for activists because they like to follow patterns. But when we are committed to innovation, we will invent totally new forms of protest. People did not expect to see something like Occupy when it emerged. And now we do not expect the next big movement… but it will come.”

Now…. you can make your own conclusions!!!

Get the opportunity and check this articles which summarises the story, progress and the fall of the movement:    Occupy Wall Street

 

Reference: http://occupywallst.org/

Z-Test

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Z-test2

 

 

 

 

If  is true then:

z

 

This is our test statistic.

We reject H0 if the calculated value of our test statistic is less than -zα/2 or greater than +zα/2 (i.e., if it takes a value sufficiently far out in the tails of the standard normal distribution for us to think  is unlikely to be true).

 

Example:

The weights of fish in an aquaculture pond are considered to be normally distributed with a mean of 3.1Kg and a standard deviation of 1.1Kg. A random sample of size 30 is selected from the pond and the sample mean is found to be 2.37Kg. Is there sufficient evidence to indicate that the mean weight of the fish differs from 3.1Kg? Use a 10 level of significance.

hypoteses z test example

 

 

 

 

 Conclusion: The mean weight of the fish differs from 3.1Kg (at the 10% level of significance).

 

 

 

 

 

Hypothesis Testing

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  • A hypothesis is a statement (assumption) about a population parameter
    • population mean (Example: The mean monthly cell phone bill of this city is  μ = $42)
    • population proportion (Example: The proportion of adults in this city with cell phones is  π = 0.68)
  • Null Hypothesis
    • The hypothesis that assumes the status quo – that the old theory, method or standard is still true; the complement of the alternative hypothesis
    • Always contains ‘=‘ , ‘≤’ or ‘³’ sign
    • May or may not be rejected
    • Is always about a population parameter, ,not about a sample statistic
  • Alternative Hypothesis
    • The hypothesis that complements the null hypothesis.
    • Usually it is the hypothesis that the researcher is interested in proving
  • The Null and Alternative Hypotheses are mutually exclusive
    • e. only one of them can be true
  • The Null Hypothesis is assumed to be true
  • The burden of proof falls on the Alternative Hypothesis
  • Example: investigate if the mean monthly cell phone bill is $42
    • H0: μ = 42
    • H1: μ ≠ 42

Level of Significance and rejection region

 

 

 

 

 

 

 

 

 

 

 

Steps for the hypothesis test…

  1. State the null hypothesis, H0 and the alternative hypothesis, H1
  2. Choose the level of significance, a, and the sample size, n
  3. Determine the appropriate test statistic and sampling distribution
  4. Determine the critical values that divide the rejection and non-rejection regions
  1. Collect data and compute the value of the test statistic
  2. Make the statistical decision and state the managerial conclusion
  • If the test statistic falls into the non-rejection region, do not reject the null hypothesis H0.
  • If the test statistic falls into the rejection region, reject the null hypothesis
  • Express the managerial conclusion in the context of the real-world problem

 

  • p-value: Probability of obtaining a test statistic more extreme ( ≤ or ³ ) than the observed sample value given H0 is true
    • Also called observed level of significance
    • Smallest value of a  for which H0 can be rejected
    • Obtain the p-value from a table or computer
  • If p-value  <  a ,  reject H0
  • If p-value  ³  a ,  do not reject H0

Two populatio means tail test

 

 

 

 

 

 

 

 

 

 

 

Rules to follow:

Hypotheses:

Decision Rule:

Test Statistic:

Decision:

Conclusion: