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Archive for Incentives

Paying to Play in High School

Andy Spero | July 22, 2010 | 0 Comment(s) |

That’s the title of the front-page article in the sports section of today’s paper edition of the Pittsburgh Tribune Review.1

As it turns, the article is about budget shortfalls and participation fees, but when we saw the title, we thought it was about something much more disturbing and quite unethical.

While we like to quip that there is no better place to see the Fallen Nature of Man than Catholic school sports, that’s not quite true. We realize it is a bit of an overstatement when referencing the boorish, immature… Read the rest

Information? Knowledge? and Wisdom?

Andy Spero | July 18, 2010 | 0 Comment(s) |

Which One (or more) Is (are) Missing?

Peggy Noonan has an excellent column in this weekend’s edition of The Wall Street Journal: Youth Has Outlived Its Usefulness.

In it, she laments the lack of wise old men (and women) in positions of power or near those in powerful positions.

That’s something that we have written about by asking “where have the grownups gone?” (See the first second and third fourth results; we forgot to consider this post now appears at the top of the search results.) In those posts we lamented the

… Read the rest

On the Use of a Single, Corporate-wide Performance Measure

Andy Spero | July 9, 2010 | 0 Comment(s) |

We have substantially updated and expanded our analysis of a common fallacy of performance measurement and compensation: One (Performance) Measure to Rule them All.

Many firms use overly-gross or general performance measures, and while there may be justifications in some cases, there’s usually not a good motivational reason for doing so.

Our analysis has been updated to include several new graphs that help illustrate the basic concepts that need to be understood to follow the argument.

As always, we look forward to receiving comments or questions from our readers.

Why It’s Difficult to Break Bad Habits

Andy Spero | May 26, 2010 | 0 Comment(s) |

Or, why it’s hard to learn to do it the right way

Coaching softball for girls (eight-and-under) has been an illuminating experience for a number of reasons. We’re writing about one of those today.

Baseball and softball, and sports like tennis, are very much skills-based. Right from the start, those skills require a degree of precision and coordination that is missing in something like beginner’s soccer or cross-country.

In soccer, beginners can run around the field and kick the ball–not necessarily well but it is doable and enjoyable until the… Read the rest

This is So Cool!

Andy Spero | April 21, 2010 | 0 Comment(s) |

Our Dissertation is on-line in Korea

We rarely “Google” our name, but today we did so out of curiosity.

We had thought it had been forgotten; so, we were surprised to find that a scanned version of our doctoral dissertation is available on-line at the library at Pai Chai University in Korea and at Google Docs, too.

We’ve never heard of Pai Chai, but attribute that more to our sheltered existence than anything else. (If we had to guess, we suspect “Pai Chai” means “peaceful tea,” but then we’ve… Read the rest

College Tuition Subsidies and their Costs

Andy Spero | February 19, 2010 | 0 Comment(s) |

Or, The High Cost of Subsidies

A few weeks ago there was an article in The Wall Street Journal, What’s a Degree Really Worth. In it the reporter Mary Pilon discussed the estimated difference in the average lifetime earnings between individuals with and without the college diplomas, and she mentioned a few problems–but only a few of the problems–with some of those calculations.

We don’t have much to say about those bad calculations other than the estimation methods aren’t very sophisticated. The one method involved multiplying some overall difference in average… Read the rest

Solving the Social Security Problem

Andy Spero | February 8, 2010 | 0 Comment(s) |

Actually, a New Idea to Mitigate the Problem

Update: after publishing this post very late Sunday (or very early) Monday, we noticed the column, Toward a Different Fiscal Future, by Glen Hubbard. His essay is sub-titled, tax increases can’t plausibly address the coming entitlement crisis, and that fits very nicely with our proposed mitigation.

We admit that the title is a bit overstated, because we don’t know if any single and feasible idea can solve the bankruptcy problem; so, we’ll look to mitigate it a bit with a… Read the rest

Good (Late) News from the SEC

Andy Spero | January 25, 2010 | 0 Comment(s) |

We Missed It a Few Months Ago

On the front page of the The ‘Money & Investing’ section of today’s edition of The Wall Street Journal, there is an article entitled, At SEC a Scholar Who Saw It Coming.

The article is about Henry Hu, who manages the newly-formed Risk, Strategy and Financial Innovation division at the SEC.

Though he sounds like a good guy, we don’t know much about Mr. Hu, but that’s not why we’re writing. It also mentions that in November, Mr. Wu hired Richard Bookstaber… Read the rest

The Volcker Rule: Obama’s Right…

Andy Spero | January 22, 2010 | 0 Comment(s) |

…To Propose a Ban on Prop Trading at Insured Institutions

We applaud President Obama’s proposal to eliminate proprietary trading at insured institutions. In fact, long-time readers will recall that we first recommended a ban on this site on October 1, 2008–near the height of the financial panic.

Our reasons are simple.

One can argue about the need for federal deposit insurance, but if such insurance exists, we see no reason that tax payers should subsidize risk-taking at insured institutions. If one wishes to benefit as a ward of the state,… Read the rest

Inefficient Bonus Schemes

Andy Spero | January 13, 2010 | 0 Comment(s) |

The Outrage Makes Them Larger

Recently, much has been written about “Wall Street” bonuses. Almost all of those articles mention the same two things: (1) populist and government sentiment against the bonuses, and (2) the composition of the bonuses towards long-term, restricted stock and away from cash. At least some of the drive towards a more stock-heavy composition seems to be management’s attempt to appease the government and the public. In this post, we argue that such moves are needlessly costly, which means inefficient and larger than need be.1… Read the rest

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