Monday, February 8, 2010

Your Tax Money at Work

Stop the presses, newsflash, groundbreaking research unveiled: people are afraid of losing money, and it has something to do with their brains.

The scientific feat has been achieved by studying 2 (yes, that is indeed two) subjects - both female, both with a serious genetic defect - and comparing their behavior in a lab test with that of 12 (yes, that's twelve) other people.

You know, it does not matter that economists have suspected something like that since Harry Markowitz proposed the portfolio selection theory in 1952. It matters even less that statisticians have developed this weird concept of representative samples in order to deal with inference from anecdotal evidence. What does matter is that you can get a nice grant and career advancement opportunities by documenting quasi-research that shows support of a well-known fact on OPM (other people's money). Considerations such as, say, the subjects' incomes and wealth (actually, full financials - balance sheet, income statement, and cash flow ) - known to affect risk aversion - are just trifling, nitpicking details. Why should we correct for exogenous variables, if the "research" will create buzz anyway? Just read the damn paper, and clap, rubes. Oh, yeah, and write a check for a follow-up study - who knows, we may discover something even crazier - say, that people (probably because of their brains, but you never know) enjoy winning money...

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