Female adolescent's sexual decision-making

What Could You Do? is a theory-based interactive DVD designed to educate young women about sexually transmitted diseases (STDs) such as HIV/AIDS, chlamydia, gonorrhea, genital herpes, genital warts, trichomoniasis, and hepatitis B. The DVD also provides information about how to make less risky sexual choices and how to use condoms correctly. Watching this DVD has been shown to increase abstinence, prevent condom failure, and reduce reported STD diagnosis.

From Center for Risk Perception and Communication.

Assorted World Cup

Understanding Italian football part II - Furbizia

Perhaps nothing has been more influential in determining the popular perception of the Italian game than furbizia, the art of guile. For it is no overstatement to say that Italians enjoy a reputation as the dirtiest players in the game and, dryly put, as cheaters.

Investment Banks and the World Cup

Competition Description: World Cup 2010 - Take on the Quants

The Vuvuzela Externality

Soccer Done Right;

To remove these bizarre incentives, soccer should follow the ice hockey approach to penalties, after correcting for the difference in team size (six players for hockey vs. 11 for soccer) and game length (60 minutes for ice hockey vs. 90 minutes for soccer).

They think it’s all over: National identity, scoring in the last minute, and penalty shootouts

The Carbon Footprint of the 2010 World Cup

Gamesmanship and Collective Reputation

The Diving Champions of the (Football) World

While the anecdotal (and video) evidence against Italy is strong, it would be useful to have a statistical measure of diving on the basis of which international comparisons could be made. One possibility is to use data on fouls suffered. For instance, in the latest game, Italy was fouled 23 times while New Zealand suffered just 10 fouls. Either New Zealand is an unusually aggressive (or clumsy) team, or a number of the "fouls" suffered by Italy were simulated.

Back to the Future in the soccer World Cup: Chile wins 1-0 or 3-1?

Now onto more substance about the evolution of soccer: historically, the 1962 World Cup is an important turning point, since it marks the advent of modern defensive strategies in soccer. Until that World Cup, the average scoring had always exceeded 3 goals per game. In the 1962 World Cup, the goal scoring dropped significantly below 3 goals, to 2.78 goals per game, never to recover.

Defensive strategies have further taken hold. Nowadays we would be satisfied if we were witnessing ‘a mere’ 2.78 goals per game. In the seven World Cups between 1980 and 2006, the average had already dropped further to only 2.53 goals per game.

Podcast of the Day

Robert Barro on Disasters

James Poterba on Insurance Pricing

Region: You've developed a significant body of work on asymmetric information in insurance markets, much of it with Amy Finklestein. In a recent paper with Amy and Casey Rothschild, “Redistribution by Insurance Market Regulation,” you estimate the efficiency costs and distributive impact of regulations that prohibit insurers from looking at buyer characteristics in determining prices. Are the cost and impact quantitatively significant? In an age when genetic testing is growing ever more sophisticated, what is the policy import of such findings?

Poterba: I am fascinated by insurance markets and the contracts that are available to individuals. This strikes me as an important and somewhat understudied area. My work with Amy and Casey tries to understand what happens when regulations preclude insurance companies from using some information to set insurance prices.

There are many examples of such regulations. Many states limit the data that firms can use to price automobile insurance. We consider the market for retirement annuities. In the United States, a firm cannot offer different pension payouts to men and women with the same salary history and years of service, retiring at the same age, even though life expectancy for women is several years longer than that for men at typical retirement ages.

In most settings, a ban on using some information to price insurance transfers resources toward those whom this information would show to be high-risk insurance buyers. In the market for annuities, someone who is expected to live a long time is more expensive to insure than someone who is unhealthy and has a high mortality risk. An insurance company could offer to pay higher monthly benefits to those who are ill or infirm if it could identify them. Sometimes insurance regulations make this difficult or impossible and therefore represent a transfer from one mortality risk group to another.

One of the intriguing questions is the extent to which insurance companies can induce policy buyers to reveal something about their underlying mortality type through the creative design of insurance policies. In Britain, insurers offer both inflation-indexed and nominal annuities. The households who buy the inflation-indexed products, which deliver more of their value at advanced ages than nominal products, tend to live longer than those who buy nominal annuities. This enables insurers to partly distinguish their client base. The extent to which such distinctions can be made is likely to vary across markets and settings.

Read the entire interview on the latest issue of The Region

Link of the Day

Understanding Uncertainty

Science that can blow your mind

Class One Impossibility =Hollywood

Our most advanced computers are currently like retarded cockroaches

Michio Kaku on Science you thought never possible- a fascinating interview

Predict and Prevent

"Errors are not lies"- Doug Feith

War and Decision: Inside the Pentagon at the Dawn of the War on Terrorism
by Douglas J. Feith

Related;
Douglas Feith, undersecretary of defense for fiascoes

Hussein's Prewar Ties To Al-Qaeda Discounted

In case you were sleeping

Cool Visualization

Data from the U.S. Federal aviation administration is used to create animations of flight traffic patterns and density

Related;
In terms of distance, flying to a distant location is much safer than driving to that location. Flying in an airplane, however, remains slightly more dangerous than driving to a nearby airport.

21

Kaplan, Muse of Film `21,' Uses Blackjack Theory at Work

Bill Kaplan, chief executive officer of FreshAddress Inc., and a co-founder of the blackjack team upon which the recent movie ``21'' was based, talks with Bloomberg's Tom Keene about the film, parallels between his life and the movie, and the application of blackjack game theory in business.

Link for the Weekend

Rules of Thumb

Quote of the Day

Yesterday, for example, Ryan Crocker, the U.S. ambassador to Iraq, told a Senate panel that conditions in Iraq were improving, except where they weren't. "Developments which are on the whole positive can still have unanticipated . . . consequences," Crocker said.

-Un-an-tici-pat-ed: adj. Lacking Foresight in Hindsight

Why scientists would love to create a black hole

When Science Goes Wrong
by Simon LeVay

Sheer bravura could account for the vulcanologists who were killed climbing into the crater of an about-to-erupt volcano. Imperfect information and a TV weatherman’s vanity led to misreporting on a hurricane that killed 18 Britons in 1987. Bad geological advice, combined with design changes made by an engineer with a God-like reputation, built a dam in the wrong place in 1920s California. That pounds-to-Newtons mistake that doomed the Mars Climate Orbiter? Faulty software that someone should have caught, but didn’t. The Houston Crime Lab’s errors in DNA testing wrongfully imprisoned a rape suspect for nearly five years, but lab reforms and the work of Innocence Network lawyers give this cautionary tale a moderately happy ending. Research on human subjects provides LeVay with some grim examples: brain surgery using fetal tissue to “cure” Parkinson’s disease; a gene-therapy experiment that killed a teenager with a genetic metabolic disorder; and a 1939 study that tried to determine whether people could be induced to stutter by telling normal children they had symptoms and should try to stop. There is little question that these cases flagrantly violated ethical considerations, primarily because the designers fervently believed their hypotheses and employed questionable methods in order to be “proved” right. In only a few instances does the author suspect coverup or deliberate intent: the horrible story of the release of anthrax spores in a Russian biological warfare factory; the alleged tampering with readouts to show production of a transuranium element; and the unresolved case of a runaway nuclear reaction that killed three scientists. LeVay’s epilogue notes that oversight and regulation have helped, but reminds us that research involves risk-taking

Man-made 'black hole' could end up eating the earth

Forget nuclear annihilation- there's a bigger danger;

None of this nor the rest of the grimness on the front page today will matter a bit, though, if two men pursuing a lawsuit in federal court in Hawaii turn out to be right. They think a giant particle accelerator that will begin smashing protons together outside Geneva this summer might produce a black hole or something else that will spell the end of the Earth — and maybe the universe.

Scientists say that is very unlikely — though they have done some checking just to make sure.

The world’s physicists have spent 14 years and $8 billion building the Large Hadron Collider, in which the colliding protons will recreate energies and conditions last seen a trillionth of a second after the Big Bang. Researchers will sift the debris from these primordial recreations for clues to the nature of mass and new forces and symmetries of nature.

But Walter L. Wagner and Luis Sancho contend that scientists at the European Center for Nuclear Research, or CERN, have played down the chances that the collider could produce, among other horrors, a tiny black hole, which, they say, could eat the Earth. Or it could spit out something called a “strangelet” that would convert our planet to a shrunken dense dead lump of something called “strange matter.” Their suit also says CERN has failed to provide an environmental impact statement as required under the National Environmental Policy Act.

Although it sounds bizarre, the case touches on a serious issue that has bothered scholars and scientists in recent years — namely how to estimate the risk of new groundbreaking experiments and who gets to decide whether or not to go ahead.

Related;
Taking Particle Physics to Court

Optimal Disaster Insurance

On the Optimal Design of Disaster Insurance in a Federation
by Timothy J. Goodspeed and Andrew F. Haughwout

Abstract: Recent experience with disasters and terrorist attacks in the US indicates that state and local governments rely on the federal sector for support after disasters occur. But these same governments are responsible for investing in infrastructure designed to reduce vulnerability to natural and man-made hazards. This division of responsibilities – regional governments providing protection from disasters and federal government providing insurance against their occurrence – leads to the tension that is at the heart of our analysis. We explore these tensions building on the model of Persson and Tabellini (1996). We show that when the federal government is committed to full insurance against disasters, regions will have incentives to underinvest in costly protective measures. We derive the structure of the optimal second-best insurance system when regional governments choose investment levels non-cooperatively and the central government cannot verify regional investment choices. Surprisingly, second-best transfer levels (and the corresponding regional investment levels) can be greater or less than their first-best counterparts, depending on the relative probability of a disaster. If the probability of a disaster is low, secondbest transfers will be designed to reward regions that succeed in avoiding disasters and punish those that do not, thereby giving regions an incentive to increase investment in protective infrastructure. However, this raises the further question of whether the central government can credibly commit to such a scheme, and we find that ex-post an optimizing central government will decrease transfers if a region provides protective infrastructure that increases its expected future income, generating a soft-budget constraint for regions. This provides an additional incentive for regions to underinvest in protective infrastructure. We discuss these results in light of recent disaster policy outcomes in the US.

Book Quote of the Day

One of the salient characteristics of the modern economy is that an amazingly complex web of interactions can develop among agents who barely, if at all, know each other, to produce results that give the impression of a strong and conscious coordination (an “intelligent design”). This is, of course, in essence nothing but Adam Smith’s invisible hand in action, but the complexity of modern-day financial arrangements would have been unthinkable when The Wealth of Nations was written. Accepting that “no one is in charge” but that an intricate network of transactions will, most of the time, work very well remains to this day difficult to accept from an intuitive point of view. “Please understand that we are keen to move toward a market economy,” a senior Soviet official whose responsibility had been to provide bread to the population of Saint Petersburg in its communist days told economist Paul Seabright,∗“but we need to understand the fundamental details of how such a system works. Tell me, for example, who is in charge of the supply of bread to the population of London.” In the industrialized Western world we may have forgotten how astonishing the reply is (“nobody is in charge”), but this does not make it any less so. In a similar vein, looking at a small portion of butter offered as part of an in-flight meal, Thomas Schelling (rhetorically) asks:

How do all the cows know how much milk is needed to make the butter and the cheese and the ice cream that people will buy at a price that covers the cost of maintaining and milking the cow and getting each little piece of butter wrapped in aluminum foil with the airlines’s insignia printed on it?∗

Of all these complex, resilient, self-organizing systems, the financial industry is probably one of the most astonishing. Nobody was “in charge” to ensure that when the couple from Long Island walked into their local bank branch they would get a competitive quote for their mortgage in hours; nobody was in charge to make sure that the depositor who provided the funds needed by the couple to purchase their house would be forthcoming just at the right moment; nobody was in charge when the same depositor changed his mind a week later and withdrew the money he had deposited; nobody was in charge to ensure that a buyer would be willing to part with his money within hours, or minutes, of the security from the pool of mortgages being created and offered on the market; and when, thousands of miles away, a Bank of China official decided to invest some of the Chinese trade surplus in the purchase of the same security, nobody had communicated his intentions and nobody had arranged for a market maker to buy the security itself from the primary investor and hold it in his inventory. Nobody is in charge and yet, most of the time, all of these transactions, and many more, flow without any problems.

There, however, in that innocent “most of the time,” is the rub. The financial system is robust, by virtue of literally hundreds of self-organizing corrective mechanisms, but it is not infinitely robust. This is not surprising because the cornerstone institution of the financial system, the bank itself, is precariously perched on the border of stability: just because nobody is in charge, every day a bank owes its existence to the law of large numbers. How does this happen? The most fundamental activity of a bank is the so-called “maturity transformation”: accepting money from depositors who may want it back tomorrow, and lending the “same money” to borrowers who may want to hold on to it for thirty years. This is all well and good unless all of the depositors simultaneously want their money back. In normal conditions, of course, it is virtually impossible for this to happen, and the statistical balance between random withdrawals from depositors and equally random repayments from borrowers requires a surprisingly small safety buffer of “liquid cash.” And, by the way, many other arrangements in our nobody-is-in-charge industrialized world rely on a similar (apparently fragile and precarious) statistical balance: from the provision of food to the distribution of electricity, the use of roads, telephone lines, petrol stations, etc. As long as all the users make their decisions close-to-independently, only a relatively small safety margin (of spare electricity, spare phone line capacity, petrol in filling stations, food on supermarket shelves, etc.) has to be kept.

-Plight of the Fortune Tellers: Why We Need to Manage Financial Risk Differently
Riccardo Rebonato

Lessons learned on credit gurantees

Partial Credit Guarantee Schemes – Experiences and Lessons

Microinsurance - another fancy idea?

A new health insurance plan will enable the poor in India to buy health insurance for less than 10 cents a month, and it will cover natural disasters including Tsunamis.

-Tsunami insurance for the poor

How prepared is Indonesia for another tsunami

The Indonesian island of Sumatra is bracing itself for a powerful earthquake, after three tremors in as many weeks

Why are Companies piling up cash

One study shows that the average cash ratio doubled from 1998 to 2004 and the median ratio more than tripled, while debt levels fell. According to S.& P., the total cash held by companies in its industrial index exceeded $600 billion in February, up from about $203 billion in 1998.

René M. Stulz, who holds the Reese chair in banking and monetary economics at the Fisher College of Business at Ohio State University, said research he conducted with two other professors on corporate cash levels since 1980 indicated that growing cash holdings over that period most likely reflected the simple fact that the world became a much riskier place for business.

“Companies responded to those rising risks by saving more,” said Professor Stulz, whose study excluded utilities and financial companies because their cash reserves are monitored by regulators.

An even longer savings trend was spotted by Jason DeSena Trennert, managing partner and chief investment strategist at Strategas Research Partners in New York, who said his own rough examination of corporate balance sheets shows that “cash, as a percent of total assets, is as high as it’s been since the 1960s.”

-Companies Are Piling Up Cash