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This post is about two pieces of writing released this week, and how easy it is for even smart people to be wrong.
The story starts with an open letter written to the UK Government signed by 200+ scientists, condemning the government’s response to the Coronavirus epidemic; that the response was not forceful enough, and that the government was risking lives by their current course of action. The letter was widely reported and even made it to the BBC frontpage, pretty compelling stuff. Link [1] The issue is that as soon as you start scratching beneath the surface, all is not quite what it seems. Of the 200+ scientists, about 1/3 are PhD students, not an issue in and of itself, but picking out some of the subjects we’ve got:
So I finally finished Thomas Piketty's book - Capital in the 21st Century, and I thought I'd write up an interesting result that Piketty mentions, but does not elaborate on. Given the book is already 700 pages, it's probably for the best that he drew the line somewhere.
The result is specifically, that under basic models of the development of distribution of wealth in a society, it can be shown that when growth is equal to $g$, and return on capital is equal to $r$, then the distribution of wealth tends towards a Pareto distribution with parameter $r-g$. That sounds pretty interesting right? My notes below are largely based on following paper by Charles I. Jones of Stanford Business School, my addition is to derive the assumption of an exponential distribution of income from more basic assumptions about labour and capital income. Link to Jones's paper [1] |
AuthorI work as an actuary and underwriter at a global reinsurer in London. Categories
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