All of Clownfish's Comments + Replies

good summary but i want to comment on the accounting part. generally accountants aim to create financial statements that are useful to most readers under normal circumstances. fuzzy concepts like "useful", "readers" and "normal" mean this goal is complicated and involves trade offs. accountants recognize these trade offs and financial statements include notes to try and explain how they were created and include numbers that help users create different statements for different circumstances. a few related points:

- there are several financial statements that... (read more)

i'm not sure if you're disagreeing with me, i too would like technology to be defined properly. i think the common understanding of technology would be confined to things like gadgets, software, automation. economists seem to use more of a civ version of the word, which includes things like writing, buddhism, plastic. if technology is not framed as "everything else", i'd be curious to know what kinds of things are used in the production function but don't fall in one of the three buckets. however, i'm more curious to know which bucket ai ends up in. i think most people would call it a technology, but i could be persuaded to stick it in capital (tool) or labor (brain).  

this is an interesting topic, thanks for the great post. i find it frustrating that economists use some non-standard definitions for common words (i'm not looking for precise definitions but consistent definitons would be helpful). in the context of the solow-swan model, i think the definitions/buckets would be something like:

input: raw materials, energy, time
capital: tools, infrastructure, liquid assets
labor: people, effort, skills
technology: everything else (including things like research, entrepreneurship, political institutions)
output: consumption goods, services

is this right? i think "technology" is the term that's farthest from its common usage.

I'll add that for competitive games, you want to encourage your opponent to use more luck and less skill, for example by praising his superior dice rolling abilities, and reframe your skillful moves as totally lucky, no way that could happen again!

In poker, you'll sometimes see a player get upset and criticize his opponent if he loses a hand because the opponent made a lucky draw or call (how could you call that, only one card could help you!) Rational players understand that having the opponent call with a bad hand is the only way they make money, so they'll praise the lucky draw (great call, I just can't seem to beat you!)

Thanks, I loved this post. Its obviously hard to distinguish luck from skill when it comes to investment returns, I don't think focusing on money and track record would be enough to convince me of skill. I think I would need to also rationally evaluate the investment strategy to determine if it can be reasonably expected to beat the market. Common strategies like "we do what everyone else does but better", or "we invest in value/growth" would probably not convince me (risk premiums, liquidity premiums, animal spirits probably affec... (read more)