Often times I hear an argument for the existence of God that goes as follows: "You can't explain how we got here so I'm going to believe in God."
Yes, it's true that scientists at this time can not offer a concrete explanation on where the universe came from or how life arose from non-life. They have hunches for sure and are working on the problems, but nothing has been proven yet. For example, many Chemists believe that if the right chemicals are mixed together under the right conditions over time then simple life will eventually appear. Unfortunately, this process likely took billions of years to happen naturally on Earth so it's not something that can be replicated & verified so simply in a lab. Similarly, our universe is a very difficult place to explore. It's very big and very old, so it's impractical to send probes to locations outside our solar system. There are hypotheses which show how the universe may have originated from nothing, but at this point while plausible they're really just educated speculation.
However, none of this really matters because the original argument is incredibly logically flawed anyway. This is important. Just because there is no explanation for something doesn't mean a God had to be the cause. For example, we have absolutely no clue why an otherwise healthy middle-aged person who lived a clean life would all of a sudden get pancreatic cancer. Does that mean God caused cancer in that individual? What an absurd thought! There are numerous mysteries we don't understand yet. That doesn't mean a God is the cause of each one.
What we do know for sure is that there have been hundreds of phenomena over history which humans once thought were caused by God but today with our increasing scientific and mathematical knowledge can now easily explain without the need to invoke the supernatural. For example, just a few thousand years ago it was thought that rainbows, lightning storms, and solar eclipses were caused by God. There were even specific gods named after each one (e.g., Iris, Zeus, Helius, etc.). Today we know better!
Another thing we do know with 100% certainty is that in terms of the origin of the universe and the origin of life, the Bible's explanation in Genesis is completely wrong. We know that Earth didn't form before the first stars. We know it took longer than a few days for life to appear after the first stars formed. We know birds did not appear before the first land animals. We know the first human didn't appear out of a whirlwind of dirt. We know the first woman didn't form from a man's rib. We know there wasn't a global flood, and so on.
One last thing we are certain of is that there has not been one phenomenon that we didn't know the cause of in the past but today we know for sure it's God. I'm not sure of the exact score now but it's probably like Physics 1000 and God 0 in terms of things that can be explained today that we didn't know in the past.
So, which the more likely explanation of how we got here, natural or supernatural? The odds would say that there's a physical explanation to the origins of the universe and life but just haven't figured it out yet. Science and math have done a pretty good job so far of explaining our world. On the other hand God hasn't explained anything how he did it, and the Bible has a good track record of being wrong!
My money is going on the side of physics rather than in a church collection bin.
Tuesday, November 26, 2013
Saturday, November 23, 2013
Lies, Damn Lies, and Statistics (1)
This will be the first installment of many to come where I talk about bogus statistics and their numerical flaws. Today's post will be about crime rate statistics.
After vacationing in Myrtle Beach, SC, from 1979 to 2005 and living in the town full-time from 2005 to 2011, never once did I feel unsafe and at no time was I under the impression that I was living in one of the most dangerous cities in America ... until the following rankings appeared:
http://www.neighborhoodscout.com/neighborhoods/crime-rates/top100dangerous/
Are you kidding me? Myrtle Beach ranked the 21st most dangerous city in the country? More dangerous than Newark, NJ (51st) or Philadelphia, PA (50th)? Surely you can't be serious (I am serious and please don't call me Shirley, LOL).
I grew up in NJ, just minutes away from Newark. No way (and I really mean no way) is Myrtle Beach more dangerous. Not even close. So what gives, how can the statistics lie?
Quite simple. Crime rates are computed as total # of crimes divided by population of the city (i.e., crime rate = total crimes / population). The problem is that Myrtle Beach only has a steady population of 35,000 people; however there are millions of tourists that visit the city through the year. In the Spring and Fall hoards of golfers visit from the north where it gets too cold to play golf and tees up in the warmer climate on one of Myrtle's 100+ golf courses. In the summer, throngs of families visit the coast to enjoy the beach. However, the crime rates don't include this transient population! Therein lies (no pun intended) the flaw of crime rate statistics, they do not include the number of tourists in the denominator.
If the crime rates were computed like this: crime rate = total crimes / (population + tourists) then the true crime rate of Myrtle Beach would drop substantially relative to Newark because, let's face it, not too many people spend a nice family vacation in Newark, LOL. Residents in Myrtle Beach can now sleep easier!
After vacationing in Myrtle Beach, SC, from 1979 to 2005 and living in the town full-time from 2005 to 2011, never once did I feel unsafe and at no time was I under the impression that I was living in one of the most dangerous cities in America ... until the following rankings appeared:
http://www.neighborhoodscout.com/neighborhoods/crime-rates/top100dangerous/
Are you kidding me? Myrtle Beach ranked the 21st most dangerous city in the country? More dangerous than Newark, NJ (51st) or Philadelphia, PA (50th)? Surely you can't be serious (I am serious and please don't call me Shirley, LOL).
I grew up in NJ, just minutes away from Newark. No way (and I really mean no way) is Myrtle Beach more dangerous. Not even close. So what gives, how can the statistics lie?
Quite simple. Crime rates are computed as total # of crimes divided by population of the city (i.e., crime rate = total crimes / population). The problem is that Myrtle Beach only has a steady population of 35,000 people; however there are millions of tourists that visit the city through the year. In the Spring and Fall hoards of golfers visit from the north where it gets too cold to play golf and tees up in the warmer climate on one of Myrtle's 100+ golf courses. In the summer, throngs of families visit the coast to enjoy the beach. However, the crime rates don't include this transient population! Therein lies (no pun intended) the flaw of crime rate statistics, they do not include the number of tourists in the denominator.
If the crime rates were computed like this: crime rate = total crimes / (population + tourists) then the true crime rate of Myrtle Beach would drop substantially relative to Newark because, let's face it, not too many people spend a nice family vacation in Newark, LOL. Residents in Myrtle Beach can now sleep easier!
Monday, November 18, 2013
Improving Weather Forecasts
How you can improve weather forecasts ...
By far the biggest source of error in 1-2 day weather forecasting is in the communication of the forecast from the meteorologist to the user. That is, the computer models could get it right but the information gets garbled in the communication process resulting in error.
The communication errors stem from two sources. One is that a significant percentage of meteorologists do a very poor job of presenting the forecast. On a typical 3 minute weather segment, the meteorologist may spend 2:50 of that time talking about local temperatures, past weather, current weather, frontal boundaries, and pressure systems. Then the last 10 seconds they flash the 7-day forecast filled with stupid icons that don't accurately convey the actual forecast, and they expect the user to digest the entire forecast in those closing seconds of the segment.
And then there's the National Weather Service forecasters who absolutely butcher the meaning of precipitation probability. Every day in the summer the forecast includes an "XX% chance of showers and thunderstorms". Well the XX% is not the probability of having at least two showers and two thunderstorms at the user's location. It's the probability that 0.01" of rain will fall on your head. Quite the difference.
However, the meteorologist isn't the only one to blame in the communication process. Oh no, you're likely at fault too. Why? Because most people hear the weather forecast in passing or from someone else, and have a hard time remembering the actual forecast if called upon. Ask 10 people on the street what the weather forecast says for the next few days you'll likely get 10 different responses. When I taught an intro meteorology class at Penn State, one day I played the recording of the campus weather service forecast at the beginning of class. At the end of class I asked them to write down the forecast. Almost 90% couldn't. People generally have selective memories.
So what can you do to improve weather forecasting? Three things. One is if tomorrow's weather is very important to you for planning, then don't listen to what your friend says what the weather will be. Information will only get garbled in the extra transmission process. Only listen to the forecast directly from a meteorologists mouth. Second, be sure to listen to the forecast carefully (and maybe listen a couple of times) so that you can recall the forecast an hour or two later if you need it. Third, if forecast accuracy is important, then listen to the forecasts of several meteorologists and take the average. Numerous studies have shown that the consensus opinion will outperform the individual forecasters nearly every time.
As for improving the National Weather Service in this regard, well, I pointed out their probability problem over 15 years ago and it fell on deaf ears. Sad to say they're kind of stuck in their ways. As for the TV side, the door is wide open for a meteorologist to break the mold and present weather in a different, more intuitive manner that reduces the potential for miscommunication error.
By far the biggest source of error in 1-2 day weather forecasting is in the communication of the forecast from the meteorologist to the user. That is, the computer models could get it right but the information gets garbled in the communication process resulting in error.
The communication errors stem from two sources. One is that a significant percentage of meteorologists do a very poor job of presenting the forecast. On a typical 3 minute weather segment, the meteorologist may spend 2:50 of that time talking about local temperatures, past weather, current weather, frontal boundaries, and pressure systems. Then the last 10 seconds they flash the 7-day forecast filled with stupid icons that don't accurately convey the actual forecast, and they expect the user to digest the entire forecast in those closing seconds of the segment.
And then there's the National Weather Service forecasters who absolutely butcher the meaning of precipitation probability. Every day in the summer the forecast includes an "XX% chance of showers and thunderstorms". Well the XX% is not the probability of having at least two showers and two thunderstorms at the user's location. It's the probability that 0.01" of rain will fall on your head. Quite the difference.
However, the meteorologist isn't the only one to blame in the communication process. Oh no, you're likely at fault too. Why? Because most people hear the weather forecast in passing or from someone else, and have a hard time remembering the actual forecast if called upon. Ask 10 people on the street what the weather forecast says for the next few days you'll likely get 10 different responses. When I taught an intro meteorology class at Penn State, one day I played the recording of the campus weather service forecast at the beginning of class. At the end of class I asked them to write down the forecast. Almost 90% couldn't. People generally have selective memories.
So what can you do to improve weather forecasting? Three things. One is if tomorrow's weather is very important to you for planning, then don't listen to what your friend says what the weather will be. Information will only get garbled in the extra transmission process. Only listen to the forecast directly from a meteorologists mouth. Second, be sure to listen to the forecast carefully (and maybe listen a couple of times) so that you can recall the forecast an hour or two later if you need it. Third, if forecast accuracy is important, then listen to the forecasts of several meteorologists and take the average. Numerous studies have shown that the consensus opinion will outperform the individual forecasters nearly every time.
As for improving the National Weather Service in this regard, well, I pointed out their probability problem over 15 years ago and it fell on deaf ears. Sad to say they're kind of stuck in their ways. As for the TV side, the door is wide open for a meteorologist to break the mold and present weather in a different, more intuitive manner that reduces the potential for miscommunication error.
Financial Transactions Tax
Talking about potential Government money grabs ...
Former labor secretary Robert Reich wants to see a 0.5% financial transaction tax (FTT) imposed on all stock market trades. This FTT has been proposed before by several politicians and just never seems to go away. The quick skinny is it's bad law and won't provide the benefits that supporters purport. Here's why.
As a private equity manager, when I make a stock trade my broker charges me 0.5 cents commission on every share of stock traded. So if I buy a stock that costs $50 per share, the brokerage earns 0.01% commission on that transaction ($0.005 / $50). In return for the commission, the brokerage executes and clears the trade through the exchange, pays any exchange fee, provides trade and accounting reporting, provides real-time market data, provides trading platform software, and provides technical support. All those nice services for just 0.01% commission per trade.
Now Reich and others want Government to impose a tax that amounts to 50 times what brokerages work their asses off to collect for the transaction!!! I'll repeat that because it's important. The Government wants to impose a tax in an amount that is 50 times greater than the total money that all brokerages collect for processing the transaction. Sorry, but in my opinion that's beyond draconian. More importantly, however, the tax won't increase revenues as planned. The problem is you can't just impose a tax and expect everybody to behave in the same manner. Imposing a huge 0.5% tax each trade will eliminate all short- and medium-term trading, not just the so-called "high-frequency" or "day-traders". These type of trades amount to at least 75% of all trading on the exchanges.
Why would the 0.5% tax dramatically reduce the amount of trading? Well, quite simply if you had a strategy that made 12% annual profit and changed the portfolio just once each month, under the proposed FTT you would now make 0% profit since the FTT is imposed on both the buy side and sell side (0.5% x 24 = 12% hurdle). Why would anyone continue trading a strategy that doesn't make any money?! So if all the day-traders, short- and medium-term traders are obliterated, then the amount of commissions & profits collected by the brokerages and exchanges will be reduced significantly which will then result in lower corporate tax and/or personal income tax payments to the IRS. So yeah, technically the FTT would gain revenue off the transactions, but that would be offset by the reduced taxable revenue collected from the brokerages, exchanges and their employees.
However, the results would be even more chilling as thousands of private equity managers and proprietary traders would be put out of business since their trading strategies wouldn't be able to produce gains after the tax is imposed. So the government would lose out on income taxes of their revenues in addition to those of their investors. Additionally, with reduced commissions & profits, the brokerages and exchanges would likely have to lay-off some employees. These are not the 1% type either, we're talking about IT people, customer support, etc, which would also result in reduced income tax payments to the IRS. The reduced trading on the exchanges would widen the bid-ask spread and increase transaction costs for those who are still trading on the exchanges, which of course those costs feed through to anyone owning an IRA or 401k.
Proponents of the FTT want to penalize the financial industry for causing the financial collapse of 2008-09 and want to create a mechanism to slow trading on the exchanges so that there is less volatility. Well, this is horrible thinking IMO. By imposing the tax they are penalizing people and firms that had absolutely nothing to do with the financial meltdown of 5 years ago and creating all sorts of other problems as stated above. Moreover, there is no evidence that reducing algorithm or high-frequency trading on the exchanges will reduce volatility. In fact, the volatility in the last decade with the growth in electronic trading has been no different than the trading over the previous 80 years. If the government wants to prevent another financial collapse there are better avenues ... like limiting the leverage banks & financial institutions may utilize when purchasing derivatives. Leverage kills. That's why the SEC wisely restricts leverage to 2x equity balance on overnight stock holdings, which means if you have 100k in the cash account you can own 200k of stock. In contrast, the institutions that collapsed in the financial meltdown had leverage ratios over 30x in 2007 owning derivatives. Well, if you utilize 30x leveraging power than what is actually in your equity account and the derivative drops just 3.3% in price, then you've just lost all your money!
Sorry, but the financial transactions tax is an over-reach and will accomplish nothing but curtail freedom. What's next, a transaction tax every time you deposit and withdraw money from your bank?
Former labor secretary Robert Reich wants to see a 0.5% financial transaction tax (FTT) imposed on all stock market trades. This FTT has been proposed before by several politicians and just never seems to go away. The quick skinny is it's bad law and won't provide the benefits that supporters purport. Here's why.
As a private equity manager, when I make a stock trade my broker charges me 0.5 cents commission on every share of stock traded. So if I buy a stock that costs $50 per share, the brokerage earns 0.01% commission on that transaction ($0.005 / $50). In return for the commission, the brokerage executes and clears the trade through the exchange, pays any exchange fee, provides trade and accounting reporting, provides real-time market data, provides trading platform software, and provides technical support. All those nice services for just 0.01% commission per trade.
Now Reich and others want Government to impose a tax that amounts to 50 times what brokerages work their asses off to collect for the transaction!!! I'll repeat that because it's important. The Government wants to impose a tax in an amount that is 50 times greater than the total money that all brokerages collect for processing the transaction. Sorry, but in my opinion that's beyond draconian. More importantly, however, the tax won't increase revenues as planned. The problem is you can't just impose a tax and expect everybody to behave in the same manner. Imposing a huge 0.5% tax each trade will eliminate all short- and medium-term trading, not just the so-called "high-frequency" or "day-traders". These type of trades amount to at least 75% of all trading on the exchanges.
Why would the 0.5% tax dramatically reduce the amount of trading? Well, quite simply if you had a strategy that made 12% annual profit and changed the portfolio just once each month, under the proposed FTT you would now make 0% profit since the FTT is imposed on both the buy side and sell side (0.5% x 24 = 12% hurdle). Why would anyone continue trading a strategy that doesn't make any money?! So if all the day-traders, short- and medium-term traders are obliterated, then the amount of commissions & profits collected by the brokerages and exchanges will be reduced significantly which will then result in lower corporate tax and/or personal income tax payments to the IRS. So yeah, technically the FTT would gain revenue off the transactions, but that would be offset by the reduced taxable revenue collected from the brokerages, exchanges and their employees.
However, the results would be even more chilling as thousands of private equity managers and proprietary traders would be put out of business since their trading strategies wouldn't be able to produce gains after the tax is imposed. So the government would lose out on income taxes of their revenues in addition to those of their investors. Additionally, with reduced commissions & profits, the brokerages and exchanges would likely have to lay-off some employees. These are not the 1% type either, we're talking about IT people, customer support, etc, which would also result in reduced income tax payments to the IRS. The reduced trading on the exchanges would widen the bid-ask spread and increase transaction costs for those who are still trading on the exchanges, which of course those costs feed through to anyone owning an IRA or 401k.
Proponents of the FTT want to penalize the financial industry for causing the financial collapse of 2008-09 and want to create a mechanism to slow trading on the exchanges so that there is less volatility. Well, this is horrible thinking IMO. By imposing the tax they are penalizing people and firms that had absolutely nothing to do with the financial meltdown of 5 years ago and creating all sorts of other problems as stated above. Moreover, there is no evidence that reducing algorithm or high-frequency trading on the exchanges will reduce volatility. In fact, the volatility in the last decade with the growth in electronic trading has been no different than the trading over the previous 80 years. If the government wants to prevent another financial collapse there are better avenues ... like limiting the leverage banks & financial institutions may utilize when purchasing derivatives. Leverage kills. That's why the SEC wisely restricts leverage to 2x equity balance on overnight stock holdings, which means if you have 100k in the cash account you can own 200k of stock. In contrast, the institutions that collapsed in the financial meltdown had leverage ratios over 30x in 2007 owning derivatives. Well, if you utilize 30x leveraging power than what is actually in your equity account and the derivative drops just 3.3% in price, then you've just lost all your money!
Sorry, but the financial transactions tax is an over-reach and will accomplish nothing but curtail freedom. What's next, a transaction tax every time you deposit and withdraw money from your bank?
Retiring Wealthy
How to retire very wealthy ...
The answer is to start young, as early as 14 or 15. Get a summer job and start investing the money. If you start young and remain disciplined, you will have 10-20 times more money at retirement age than if you wait until you are 40 to begin investing (and you'd have way more money than Uncle Sam will give you in Social Security). That's the difference between retiring with 75k in your IRA and retiring a millionaire. Then when you're at retirement age you can live comfortably off the interest while leaving a nice nest egg for your kids. The beauty is anybody (and I really mean anybody, regardless of income level) can do this who has the right mind-set and discipline level.
Why we don't teach the miracle of compounding interest to kids in school is beyond me (in addition to other aspects regarding money). There should be a course all about money, and students should be required to take it just like algebra, and I'm not talking about an esoteric economics or finance class where they teach BS theory. This would be a "get your hands dirty" course about how to manage money, how to balance a checkbook, what kind of retirement accounts are there, how the financial markets work, how to buy shares of stock, how to start a business, and so on.
If you're 40+, it's never too late to start investing, but at least try to get your kids or your grandkids to start today.
The answer is to start young, as early as 14 or 15. Get a summer job and start investing the money. If you start young and remain disciplined, you will have 10-20 times more money at retirement age than if you wait until you are 40 to begin investing (and you'd have way more money than Uncle Sam will give you in Social Security). That's the difference between retiring with 75k in your IRA and retiring a millionaire. Then when you're at retirement age you can live comfortably off the interest while leaving a nice nest egg for your kids. The beauty is anybody (and I really mean anybody, regardless of income level) can do this who has the right mind-set and discipline level.
Why we don't teach the miracle of compounding interest to kids in school is beyond me (in addition to other aspects regarding money). There should be a course all about money, and students should be required to take it just like algebra, and I'm not talking about an esoteric economics or finance class where they teach BS theory. This would be a "get your hands dirty" course about how to manage money, how to balance a checkbook, what kind of retirement accounts are there, how the financial markets work, how to buy shares of stock, how to start a business, and so on.
If you're 40+, it's never too late to start investing, but at least try to get your kids or your grandkids to start today.
Resurrection of Jesus
To all those who believe in the resurrection of Jesus ...
Suppose a person (named Trevor) was recently arrested and placed on trial for a crime committed 40 years ago. Let's say the charge was that Trevor murdered someone as they left a night club. At the trial the prosecutor sums up the case as follows:
- There is NO physical evidence, no DNA evidence, no smoking gun, no fingerprints, no tire tracks, no footprints, and no pictures or security tapes which link Trevor to the crime;
- There are NO eyewitnesses to provide direct testimony in the case;
- However, there is a note that says Trevor was the one who shot the victim;
- The author of the note was not an eyewitness, but was written down by an anonymous author who knew somebody that knew someone else who was around 40 years ago when there were rumors around town that Trevor might have shot the victim;
- The note was not the original document, but rather a 4th generation copy that was created from scratch by another anonymous writer who claimed to be copying the original;
- The only other piece of evidence was a letter that some person wrote (named Paul, who has since passed away) which claimed that the ghost of the victim appeared to Paul in a vision and told him that Trevor was the person who shot the victim.
If you're on this jury would you vote guilty or not guilty for Trevor? I think a vast majority of rational people would vote not guilty and would only take about 2 seconds to even think about the decision because the case was so ludicrous.
So it boggles my mind that, with equivalent scant evidence, a reasonable person would strongly believe in the resurrection of Jesus. There is certainly no physical evidence available (no security camera footage, no DNA evidence, etc). Additionally, the accounts in the New Testament would never be considered evidence in a court of law because they are hearsay. In fact, they are very bad hearsay because the Gospel writers were anonymous and were not eyewitnesses. In fact, they were not even written by Matthew, Mark, Luke and John; those names were assigned hundreds of years later by the Church out of tradition. Moreover, the alleged accounts were not written about until decades after the events were thought to occur, followed by centuries of likely manipulation from other anonymous authors. Contrary to the popular view, the accounts in the Bible are not like newspaper reports. Instead, what's written in the New Testament Gospels was based on oral gossip and rumors that got passed around for decades before they were finally written down, which makes them subject to embellishment and opens up the potential for fabrication of ancient history.
Two-thousand years ago there were no TV cameras to record events, no news reporters, and no forensic scientists to validate bizarre claims. Moreover, there were very few skeptical thinkers and the scientific method would not be fully developed until centuries later. Furthermore, ancient people were highly superstitious, believing in demons, ghosts, magic, fortune telling, and astrology. So combining all these factors it is easy to see how myths and legends could arise so easily among ancient people, and how stories about empty tombs, resurrections and postmortem appearances could arise and spread.
Just something to think about the next time you decide to put money in the collection bin at church ...
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