Everybody should know about Berkson’s paradox.

👉 When two positive traits are (spuriously) negatively correlated, in a population *selected on these traits*.

Examples: 1/
“Handsome men are jerks.”
via @anecdatally
“High standardised test scores before entering university do not predict university grades.”

People accepted with low test scores likely have other qualities helping them to succeed at university.
“Good books make bad movies.”

Suppose the movies you can think of are either good movies or movies from good books: it will look like good books end up in worst movies!

by @FryRsquared
“Smart students are less athletic.”
“Height does not correlate with performance in the NBA!”

Why? To have made it, smaller players are likely more skilled than taller players.

👇by @3rdreviewer
“People winning engineering contests are not that good at their job.”
Quirky: In a good restaurant, the least appetizing sounding items likely taste better.

from @tylercowen
Add your examples if you have some!

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More from @page_eco

1 Nov 20
In Italy, fascist groups used violence against political opponents to deter them and prevent them from seating in Parliament.
from Ebner's amazon.com/Ordinary-Viole…
In France, militarised leagues went close to what seems a coup d'Etat in 1934, with riots generated by conspiracy theories around a corruption affair.
from Kalman's amazon.com.au/Extreme-Right-…
Eventually, Germany's and Italy's democracy decayed into dictatorships.
There is definitely a lesson from history: democratic institutions can fail and we should not take them for granted.
Read 6 tweets
13 Oct 20
The Nobel Prize in economics went to theorists who made major contributions to our understanding of how to design auctions.
If it seems far from you, it should not. Auction theory is one of the major successes in economics which had very large real world implications. (Thread)
Economists are known to like markets. Markets are a way to allocate resources. But they are not the only one. Auctions are another way to organise who get what, at what price. You are surely familiar with art auctions, housing auctions, or eBay auctions.
But really the notion of auction is very broad. Contests such as sporting matches, legal battles, political races, grant applications can also be conceived as auctions where contestants bid resources in the hope of securing a prize.
Read 8 tweets
11 Oct 20
Suppose you could improve Twitter as a public platform, what feature would you add (or remove)?
I would suggest for Twitter to give users the freedom to adjust the parameters of the recommendation algorithm. Something like:


🧐—|—————— 😂

Political content:

Why? People may be enticed to click on the posts promoted by the default algorithm. But they may regret wasting their time that way, and they could *prefer* different content.
Read 5 tweets
21 Sep 20
How efficient markets are vs how efficient economists believe they are: our paper looking at more than 600 experimental markets is just accepted at @RevOfFinStudies!

We found economists likely believe markets are much more efficients than they are! 1/n
Markets are “strongly efficients” if prices reflect *all* the private and public information available.
They are “semi-strongly” efficient if they only reflect all the public information.
Economists tend to think that financial markets are fairly informationally efficient. 2/
With my colleague Christoph Siemroth, we had previously found that experimental markets’ prices can have seemingly paradoxical properties: they are on average equal to the fundamental value, but they often differ from the existing information! 3/
Read 15 tweets
20 Jun 20
What are the chances that Biden will beat Trump in November?
That's an important question, but do we even know what it means?
A thread on what it means to forecast probability.
You find forecasts of the chances of Biden to win in many places.
@StatModeling's recently posted about his model which gives a 88% probability for Biden to win.
statmodeling.stat.columbia.edu/2020/06/12/ele… Image
Another prediction is given by betting markets. On Betfair, Biden's odds to win are 1.83. The odds are the inverse of the probability, so according to Betfair's market, Biden has 1/1.83=54.6% chances to win in November. Image
Read 20 tweets
11 Jun 20
An interesting thread (by my old friend @mioana) criticising how economists study discrimination. There are very good points in it.
I'll defend that the economic approach is important to address discrimination. But we should also be careful about how it can be used.
First, let's point that economists are not ignoring discrimination, on the contrary. They study it a lot with the best tools they have such as laboratory and field experiments:
Theoretically, economists typically distinguish two types of discriminations:
- Taste based: "I do not like these people"
- Belief based: "I believe these people are not as good as others" (also called "statistical discrimination")
Read 13 tweets

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