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	<title>Kevin Hoffberg&#039;s Blog &#187; Decision Quality</title>
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	<link>http://kevinhoffberg.com/blog</link>
	<description>The search for good decisions continues</description>
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		<title>Investors and Uncertainty, a Bad Mix</title>
		<link>http://kevinhoffberg.com/blog/2010/11/23/investors-and-uncertainty-a-bad-mix/</link>
		<comments>http://kevinhoffberg.com/blog/2010/11/23/investors-and-uncertainty-a-bad-mix/#comments</comments>
		<pubDate>Tue, 23 Nov 2010 19:44:29 +0000</pubDate>
		<dc:creator>kevin</dc:creator>
				<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Behavioral Economics]]></category>
		<category><![CDATA[Decision Quality]]></category>
		<category><![CDATA[John Cassidy]]></category>
		<category><![CDATA[Paul Woolley]]></category>

		<guid isPermaLink="false">http://kevinhoffberg.com/blog/?p=1127</guid>
		<description><![CDATA[The foundation to behavioral economics is the idea that investors are not rational actors: That they overreact to uncertainty, are influenced by immaterial information, and act for all manner of reasons not consistent with their best interests (utility). I found a paper the other day published by The Paul Woolley Centre for the Study of Capital Market [...]]]></description>
			<content:encoded><![CDATA[<p></p><div>
<p>The foundation to behavioral economics is the idea that investors are not rational actors: That they overreact to uncertainty, are influenced by immaterial information, and act for all manner of reasons not consistent with their best interests (utility). I found a paper the other day published by <a href="http://www.business.uts.edu.au/qfrc/pwc/index.html">The Paul Woolley Centre for the Study of Capital Market Dysfunctionality</a> called <a href="http://www.business.uts.edu.au/qfrc/pwc/research/workingpapers/2010/wp8.pdf">How Do Investors React Under Uncertainty?</a> that reinforces this point.  Here&#8217;s a clip from the conclusion:</p>
<blockquote><p><em>It is proposed that uncertainty, rather than risk, provides a much more realistic representation of the setting that we face when we come to pricing asset, and particularly corporate equities. We have gone a long way down the path of developing pricing models that incorporate risk (e.g. CAPM, APT, Fama and French empirical three-factor model) but comparatively little work has been done on the role (if any) that uncertainty plays in asset pricing. In order for uncertainly to affect pricing, it must have some influence on how investors incorporate information into pricing. Our contribution is to evaluate whether uncertainty influences the way by which investors respond to earnings announcements which will provide us with valuable insights as to the role that uncertainty plays in asset pricing.</em></p>
<p><em>In particular, we evaluate the proposition that investors will follow maxmin expected utility and so will progressively overweight bad news and underweight good news as they become more uncertain. Using VIX as a proxy for market uncertainty and earnings announcements as our information signal, we find that there is an asymmetric response to good and bad earnings news at high levels of uncertainty which is consistent with uncertainty breeding pessimism in the minds of investors. However, we do find evidence to suggest investors might have a more optimistic bent than is allowed under maxmin expected utility as indicated by how they react to earnings announcements when uncertainty is at the lower end of the scale.</em><br />
<em><br />
</em></p></blockquote>
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		</item>
		<item>
		<title>The Numbers Are Against Good Government</title>
		<link>http://kevinhoffberg.com/blog/2010/08/16/the-numbers-are-against-good-government/</link>
		<comments>http://kevinhoffberg.com/blog/2010/08/16/the-numbers-are-against-good-government/#comments</comments>
		<pubDate>Tue, 17 Aug 2010 00:00:52 +0000</pubDate>
		<dc:creator>kevin</dc:creator>
				<category><![CDATA[Current Affairs]]></category>
		<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Decision Quality]]></category>
		<category><![CDATA[Dodd-Frank]]></category>
		<category><![CDATA[H.R. 3590]]></category>
		<category><![CDATA[H.R. 4173]]></category>
		<category><![CDATA[Patty Murray]]></category>
		<category><![CDATA[Word Count]]></category>

		<guid isPermaLink="false">http://kevinhoffberg.com/blog/?p=1028</guid>
		<description><![CDATA[I have been in a running debate with a friend and colleague generally about the topic of whether or not our elected officials are able to vote knowledgeably given the large number of bills they need to track, the size of their staff, and the competing need to raise money and attend to constituents. It [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>I have been in a running debate with a friend and colleague generally about the topic of whether or not our elected officials are able to vote knowledgeably given the large number of bills they need to track, the size of their staff, and the competing need to raise money and attend to constituents. It got me to wondering about what kind of numbers are we really talking about so I went looking.</p>
<p>Here are the raw numbers for the 111th Congress according to the <a href="http://thomas.loc.gov/home/Browse.php?n=bills&amp;c=111">Library of Congress</a>:</p>
<ul>
<li>House Bills: 6097</li>
<li>House Concurrent Resolutions: 100</li>
<li>House Joint Resolutions: 95</li>
<li>House Resolutions: 100</li>
<li>Senate Bills: 3751</li>
<li>Senate Concurrent Resolutions: 71</li>
<li>Senate Joint Resolutions: 38</li>
<li>Senate Resolutions: 100</li>
</ul>
<p>That&#8217;s a lot of bills and resolutions, particularly given our legislators spend only about 140 days a year on the business of the people. Obviously there is a big difference between the number of things that are introduced and the number that our elected officials need to pay attention to. So let&#8217;s check out a couple of those.</p>
<p>One of the bills that has gotten a lot of attention lately is H.R.4173 &#8211; Dodd-Frank Wall Street Reform and Consumer Protection Act: &#8220;A bill to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end &#8220;too big to fail&#8221;, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.&#8221;</p>
<p>Bills go through a number of iterations from the time they are introduced to the time they get passed. Checking in over at <a href="http://www.opencongress.org/bill/111-h4173/text">OpenCongress</a> here&#8217;s what we find:</p>
<table class="simple-table2" cellspacing="0" width="100%">
<tbody>
<tr>
<th align="left" scope="col">Version</th>
<th align="left" scope="col">Word #</th>
<th align="left" scope="col">Changes From Previous</th>
<th align="left" scope="col">% Change</th>
</tr>
<tr>
<td style="padding-left: 2px;">Introduced in House</td>
<td>223,783</td>
<td>n/a</td>
<td>n/a</td>
</tr>
<tr>
<td style="padding-left: 2px;">Engrossed in House</td>
<td>301,214</td>
<td><span style="margin-right: 20px;">2,502</span></td>
<td>43%</td>
</tr>
<tr>
<td style="padding-left: 2px;">Referred in Senate</td>
<td>299,585</td>
<td><span style="margin-right: 20px;">8</span></td>
<td>0%</td>
</tr>
<tr>
<td style="padding-left: 2px;">Engrossed Amendment Senate</td>
<td>283,985</td>
<td><span style="margin-right: 20px;">9,370</span></td>
<td>90%</td>
</tr>
<tr style="background: #D9D9F3;">
<td style="padding-left: 2px;">Enrolled Bill</td>
<td>383,013</td>
<td><span style="margin-right: 20px;">4,478</span></td>
<td>50%</td>
</tr>
</tbody>
</table>
<p>The big health reform bill is H.R.3590 - Patient Protection and Affordable Care Act. As passed it weighs in at 327,911 words. Keep in mind that both of the bills cited contain vast tracts of language the direct the relevant regulator or agency to promulgate hundreds of thousands more words in the form of rules and regulations to sort out what those original 700,000 words really mean.</p>
<p>Just as an aside on this one, check out this link if you want to see the <a href="http://www.opencongress.org/bill/111-h3590/money">stunning amounts of money</a> that were given to various of our elected officials, I assume in order to influence their votes (could there be another explanation?). The one I like the best is Senator Scott Brown from Massachusetts. He managed to be on the job for a few weeks before role call. That didn&#8217;t stop him from taking in $997,923 from parties specifically interested in this bill.  But I digress.</p>
<p>Those seem like pretty hefty numbers to me.  All those bills. Two big ones adding up to 700,00 words all by themselves. But surely our elected officials have a big staff to help? So off I went to <a href="http://www.legistorm.com/member/73/Sen_Patricia_Lynn_Murray/68.html">check out one of my senators, Patty Murray</a>.</p>
<h4>Displaying salaries for time period: 10/01/09 &#8211; 03/31/10</h4>
<table class="salary">
<thead>
<tr>
<th id="sf_user_list_th_staffer"><a href="/member/73/Sen_Patricia_Lynn_Murray/68/staffer/asc.html">Payee Name</a></th>
<th id="sf_user_list_th_start_date"><a href="/member/73/Sen_Patricia_Lynn_Murray/68/start_date/asc.html">Start date</a></th>
<th id="sf_user_list_th_end_date"><a href="/member/73/Sen_Patricia_Lynn_Murray/68/end_date/asc.html">End date</a></th>
<th id="sf_user_list_th_salary_title_id"><a href="/member/73/Sen_Patricia_Lynn_Murray/68/salary_title_id/asc.html">Position</a></th>
<th id="sf_user_list_th_salary"><a href="/member/73/Sen_Patricia_Lynn_Murray/68/salary/asc.html">Amount</a></th>
</tr>
</thead>
<tbody>
<tr>
<td><a href="/person/Stephanie_S_Arnold/61715.html">Stephanie S. Arnold</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Aide</td>
<td class="text-right">$19,500.00</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Jared_E_Axelrod/68804.html">Jared E. Axelrod</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Mail Administrator</td>
<td class="text-right">$20,070.13</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Sheila_M_Babb/5933.html">Sheila M. Babb</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Deputy State Director</td>
<td class="text-right">$39,666.64</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Sherri_A_Berdine/129839.html">Sherri A. Berdine</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Staff Assistant</td>
<td class="text-right">$16,333.28</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Jennifer_M_Berg/129841.html">Jennifer M. Berg</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Constituent Services Representative/Grants Coordinator</td>
<td class="text-right">$19,666.64</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Steven_F_Bergsbaken/5374.html">Steven F. Bergsbaken</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Mail Manager</td>
<td class="text-right">$22,833.28</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Shawn_L_Bills/5921.html">Shawn L. Bills</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Northwest Washington Regional Director</td>
<td class="text-right">$27,999.92</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Jeff_E_Bjornstad/14528.html">Jeff E. Bjornstad</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Chief of Staff</td>
<td class="text-right">$78,833.33</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Sarah_W_Bolton/50900.html">Sarah W. Bolton</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Aide</td>
<td class="text-right">$18,499.92</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Kim_A_Brown/50479.html">Kim A. Brown</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Constituent Services Representative</td>
<td class="text-right">$20,999.92</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Paula_J_Burg/37255.html">Paula J. Burg</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Assistant</td>
<td class="text-right">$44,666.60</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Mary_J_Conway/5903.html">Mary J. Conway</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Community Outreach Representative</td>
<td class="text-right">$22,333.28</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Carole_S_Cory/5908.html">Carole S. Cory</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Systems Administrator</td>
<td class="text-right">$25,333.28</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Sergio_R_Cueva_Flores/68805.html">Sergio R. Cueva Flores</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>King County Director</td>
<td class="text-right">$22,999.96</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Carrie_E_Desmond/5907.html">Carrie E. Desmond</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Assistant</td>
<td class="text-right">$25,124.95</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Alexandra_S_Glass/5916.html">Alexandra S. Glass (Alex)</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Communications Director</td>
<td class="text-right">$60,333.28</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Mary_Kay_Glenn/5934.html">Mary Kay Glenn</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Front Office Coordinator</td>
<td class="text-right">$18,666.64</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Adam_S_Goodwin/61720.html">Adam S. Goodwin</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Staff Assistant</td>
<td class="text-right">$16,666.64</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/David_M_Hodges/147309.html">David M. Hodges</a></td>
<td>12/16/09</td>
<td>03/31/10</td>
<td>Constituent Services Representative</td>
<td class="text-right">$10,602.91</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Joshua_D_Jacobs/5953.html">Joshua D. Jacobs</a></td>
<td>10/01/09</td>
<td>10/02/09</td>
<td>Legislative Assistant</td>
<td class="text-right">$2,999.99</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Geoff_Kirkwood/37247.html">Geoff Kirkwood</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Aide</td>
<td class="text-right">$18,499.92</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Amaia_P_Kirtland/3430.html">Amaia P. Kirtland</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Office Manager</td>
<td class="text-right">$7,166.65</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Brian_L_Kristjansson/5928.html">Brian L. Kristjansson</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>State Director</td>
<td class="text-right">$52,166.64</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Samuel_Kussin_Shoptaw/147310.html">Samuel Kussin-Shoptaw</a></td>
<td>03/30/10</td>
<td>03/31/10</td>
<td>Staff Assistant</td>
<td class="text-right">$77.77</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Grant_W_Lahmann/33108.html">Grant W. Lahmann</a></td>
<td>10/01/09</td>
<td>01/15/10</td>
<td>Legislative Aide</td>
<td class="text-right">$10,997.17</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Travis_T_Lumpkin/2700.html">Travis T. Lumpkin</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Assistant</td>
<td class="text-right">$43,166.60</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Jennifer_C_Martinez/129840.html">Jennifer C. Martinez</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Eastern Washington Representative</td>
<td class="text-right">$17,749.92</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Matthew_W_McAlvanah/25176.html">Matthew W. McAlvanah (Matt)</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Press Secretary</td>
<td class="text-right">$38,000.00</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Mary_E_McBride/5911.html">Mary E. McBride</a></td>
<td>10/01/09</td>
<td>02/26/10</td>
<td>Sounth Sound/Olympic Peninsula Director</td>
<td class="text-right">$24,944.36</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Rebecca_L_Mengelos/50475.html">Rebecca L. Mengelos</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Central Washington Director</td>
<td class="text-right">$21,666.64</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Evan_D_Miller/147306.html">Evan D. Miller</a></td>
<td>10/28/09</td>
<td>03/31/10</td>
<td>Director, Specialty Media</td>
<td class="text-right">$11,124.93</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Miriam_D_Mina/68803.html">Miriam D. Mina</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Constituent Services Representative</td>
<td class="text-right">$17,749.92</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Sean_James_Murphy/45785.html">Sean James Murphy</a></td>
<td>03/01/10</td>
<td>03/31/10</td>
<td>Regional Director, South Puget Sound</td>
<td class="text-right">$4,000.00</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Carey_R_Nickels/147307.html">Carey R. Nickels</a></td>
<td>11/04/09</td>
<td>12/04/09</td>
<td>Staff Assistant</td>
<td class="text-right">$2,411.08</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Edward_J_O_Neill/5927.html">Edward J. O&#8217;Neill (Ed)</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Deputy State Director</td>
<td class="text-right">$36,500.00</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Lauren_R_Overman/61718.html">Lauren R. Overman</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Aide</td>
<td class="text-right">$19,166.64</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Jason_A_Park/25177.html">Jason A. Park</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Assistant</td>
<td class="text-right">$40,833.28</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Maribel_Peralez/147308.html">Maribel Peralez</a></td>
<td>12/08/09</td>
<td>01/13/10</td>
<td>Staff Assistant</td>
<td class="text-right">$2,877.06</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Nathanael_David_Prestwood/20706.html">Nathanael David Prestwood (David)</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Senior Policy Adviser</td>
<td class="text-right">$6,500.00</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Kristine_M_Reeves/75797.html">Kristine M. Reeves</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Kitsap and Olympic Peninsula Director</td>
<td class="text-right">$22,583.30</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Stacy_L_Rich/447.html">Stacy L. Rich</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Leadership Adviser</td>
<td class="text-right">$6,500.00</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Grace_E_Rooney/34607.html">Grace E. Rooney</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Executive Assistant/Scheduler</td>
<td class="text-right">$7,499.99</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Andrew_Rowe/37249.html">Andrew Rowe (Andy)</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Aide</td>
<td class="text-right">$19,499.96</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Evan_Tyler_Schatz/27903.html">Evan Tyler Schatz</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Director</td>
<td class="text-right">$77,250.00</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Jaime_L_Shimek/5939.html">Jaime L. Shimek</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Assistant</td>
<td class="text-right">$41,666.64</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Neely_Marcus_Silbey/33027.html">Neely Marcus Silbey</a></td>
<td>01/14/10</td>
<td>03/31/10</td>
<td>Legislative Assistant</td>
<td class="text-right">$17,111.09</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Michael_D_Spahn/225.html">Michael D. Spahn (Mike)</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Press Secretary</td>
<td class="text-right">$6,861.44</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Anna_K_Sperling/75798.html">Anna K. Sperling</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Deputy Scheduler</td>
<td class="text-right">$17,166.60</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Erin_K_Vincent/129842.html">Erin K. Vincent</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Eastern Washington State Director</td>
<td class="text-right">$22,999.96</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Anne_Walden_Newman/143616.html">Anne Walden-Newman (Annie)</a></td>
<td>02/01/10</td>
<td>03/31/10</td>
<td>Staff Assistant</td>
<td class="text-right">$4,666.64</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Theresa_Weil/30739.html">Theresa Weil</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Southwest Washington Director</td>
<td class="text-right">$27,999.92</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Erika_A_O_Whinihan/61719.html">Erika A.O. Whinihan</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>State Scheduler</td>
<td class="text-right">$25,499.96</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Bethany_R_Works/75796.html">Bethany R. Works</a></td>
<td>10/01/09</td>
<td>01/06/10</td>
<td>Southwest Washington Regional Representative</td>
<td class="text-right">$8,666.62</td>
<td> </td>
</tr>
<tr class="even">
<td><a href="/person/Kathryn_H_Young/37254.html">Kathryn H. Young</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Legislative Assistant</td>
<td class="text-right">$41,833.28</td>
<td> </td>
</tr>
<tr>
<td><a href="/person/Eliezer_O_Zupnick/129838.html">Eliezer O. Zupnick</a></td>
<td>10/01/09</td>
<td>03/31/10</td>
<td>Deputy Press Secretary</td>
<td class="text-right">$27,333.28</td>
<td> </td>
</tr>
</tbody>
<tfoot>
<tr>
<th colspan="6">55 results</th>
</tr>
</tfoot>
</table>
<p>Keep in mind that this is half the term so the payroll for a fiscal year is roughly double. A couple of things stand out on this one.</p>
<p>Ms. Murray spent n<a href="http://www.komonews.com/news/local/100075759.html">early $4 million in one month in her campaign for reelection</a>. Not to worry, she still has another $3.2 million in the bank. If I were more ambitious I would go looking for her total campaign spend but those two numbers are impressive enough . . . and they&#8217;re trivial in comparison to some of the big bucks campaigns going on in California and Connecticut. Juxtapose that against her total pay of $174,000 and her entire payroll of about $2.6 million. Representative Scott Murray of New York took in half that amount of money just from spenders with an interest in one bill relating to health care reform.</p>
<p>On purely dollars and cents basis, Senator Murray spends considerably more money to get the job than she does on doing the job.</p>
<p>Of the 55 names I count just 15 with the word &#8220;legislative&#8221; in the title. The highest paid is the Legislative Director who is raking in $145,000 which is less than a first year associate makes at a front line law firm.  There are a couple of others who make $80,000ish, and the rest are making less than $20 an hour. The staff of the various House and Senate committees are paid similar (low) dollars and are stretched every bit as thin . . . the ones I know work punishing hours, don&#8217;t take vacations, and don&#8217;t get outside nearly enough.</p>
<p>I&#8217;m not picking on Senator Murray. She is no worse than representative of the other 99 Senators when it comes to the size of her staff, what she pays, how much money she raises, and how much she spends on her own election as well as those of her Democratic colleagues. In fact, she probably comes off as cheap.</p>
<p>Maybe it&#8217;s just me, and I say this with all due respect to the smart, motivated, hard working members of our legislators&#8217; staffs, but this doesn&#8217;t seem like the kind of firepower you need to deal with the blizzard of bills and resolutions yet alone face off against all the big money players who are trying to influence the direction, course, and outcome of legislation.</p>
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		<title>The Summer of Numerical Discontent</title>
		<link>http://kevinhoffberg.com/blog/2010/07/28/the-summer-of-numerical-discontent/</link>
		<comments>http://kevinhoffberg.com/blog/2010/07/28/the-summer-of-numerical-discontent/#comments</comments>
		<pubDate>Wed, 28 Jul 2010 18:28:33 +0000</pubDate>
		<dc:creator>kevin</dc:creator>
				<category><![CDATA[Current Affairs]]></category>
		<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Bush]]></category>
		<category><![CDATA[Clinton]]></category>
		<category><![CDATA[Decision Quality]]></category>
		<category><![CDATA[Obama]]></category>
		<category><![CDATA[Reagan]]></category>

		<guid isPermaLink="false">http://kevinhoffberg.com/blog/?p=805</guid>
		<description><![CDATA[I went walking with a friend last night and we got to talking about Obama&#8217;s polling numbers and the general uselessness of trying to project forward to 2012 and his political fortunes. So I went looking. John Woolley and Gerhard Peters have an excellent site where they publish their work on The American Presidency Project. [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>I went walking with a friend last night and we got to talking about Obama&#8217;s polling numbers and the general uselessness of trying to project forward to 2012 and his political fortunes.  So I went looking.</p>
<p>John Woolley and Gerhard Peters have an excellent site where they publish their work on <a href="http://www.presidency.ucsb.edu/data/popularity.php">The American Presidency Project</a>. It&#8217;s an absolute treasure trove.  To the subject of approval ratings, we find that Obama&#8217;s numbers have moved from a high of 69 points early in his administration to the mid 40s 19 months in (currently 44%).</p>
<p><a href="http://kevinhoffberg.com/blog/wp-content/uploads/2010/07/Obama-Approval.jpg"><img class="aligncenter size-medium wp-image-807" title="Obama Approval" src="http://kevinhoffberg.com/blog/wp-content/uploads/2010/07/Obama-Approval-300x205.jpg" alt="" width="300" height="205" /></a></p>
<p>And what of W?  He entered office with much lower approval numbers, due in large part to the legal fracas surrounding his losing the popular vote but winning the Supreme Court vote: 9/11 handed him a popularity coup sending his approval ratings soaring to 89%.  19 months in his approval ratings had settled back to 68% and by the mid-term elections were closer to Obama&#8217;s current numbers at 48%.  At the end, only 34% approved of Bush&#8217;s performance.</p>
<p><a href="http://kevinhoffberg.com/blog/wp-content/uploads/2010/07/W-Approval.jpg"><img class="aligncenter size-medium wp-image-810" title="W Approval" src="http://kevinhoffberg.com/blog/wp-content/uploads/2010/07/W-Approval-300x209.jpg" alt="" width="300" height="209" /></a></p>
<p style="text-align: left;">Clinton, despite his manifest personal troubles entered office with a 58% approval rating and left with a 66% rating, astonishing given the rise of the conservative attack machine during his administration. Only Reagan and Bush the Elder managed the same trick. 19 months in his approval rating had also dropped, oddly to 42%, essentially the same as Obama&#8217;s.  At the time of his re-election, his approval ratings stood at 58%.</p>
<p style="text-align: left;"><a href="http://kevinhoffberg.com/blog/wp-content/uploads/2010/07/Clinton-Approval.jpg"><img class="aligncenter size-medium wp-image-811" title="Clinton Approval" src="http://kevinhoffberg.com/blog/wp-content/uploads/2010/07/Clinton-Approval-300x210.jpg" alt="" width="300" height="210" /></a></p>
<p style="text-align: left;">Bush Senior&#8217;s popularity curve looks like a roller coaster.  He entered office at 51% and left at 56%.  As was true with his son, his ratings soared to 82% during Desert Storm, seemingly proving that America loves a tough guy, at least for awhile.</p>
<p style="text-align: left;"><a href="http://kevinhoffberg.com/blog/wp-content/uploads/2010/07/Bush-Approval.jpg"><img class="aligncenter size-medium wp-image-812" title="Bush Approval" src="http://kevinhoffberg.com/blog/wp-content/uploads/2010/07/Bush-Approval-300x206.jpg" alt="" width="300" height="206" /></a></p>
<p>And what of the Lion of the Right?  Reagan took over from a President suffering 34% approval ratings, due to many things not the least of which was the Iranian Hostage Debacle.  Despite the fact that Reagan won the electoral vote going away, he entered office with an approval rating of 51%.  At the 19 month mark his approval ratings stood EXACTLY where Obama&#8217;s do, 44%.  At his re-election, his popularity stood at 61%, roughly the same as Clinton&#8217;s.</p>
<p><a href="http://kevinhoffberg.com/blog/wp-content/uploads/2010/07/Reagan-Approval.jpg"><img class="aligncenter size-medium wp-image-809" title="Reagan Approval" src="http://kevinhoffberg.com/blog/wp-content/uploads/2010/07/Reagan-Approval-300x209.jpg" alt="" width="300" height="209" /></a></p>
<p>Conclusions?  The first is what investment prospectuses always tell you: Past performance is not indication of future performance.  This has to be one of the most common, most insidious decision-faults going: looking at data about the past (data, by definition is always about the past) and using it to project the future.  Project is actually an apt descriptor, as it is an exercise in projecting our hopes, dreams, fears, fobias, and preconceptions on the future based on what we see in the past.</p>
<p>A second possible conclusion is the lesson of Bill Clinton: It&#8217;s the economy stupid.</p>
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		<title>Winning The UnWinnable</title>
		<link>http://kevinhoffberg.com/blog/2010/07/02/winning-the-unwinnable/</link>
		<comments>http://kevinhoffberg.com/blog/2010/07/02/winning-the-unwinnable/#comments</comments>
		<pubDate>Fri, 02 Jul 2010 21:50:05 +0000</pubDate>
		<dc:creator>kevin</dc:creator>
				<category><![CDATA[Current Affairs]]></category>
		<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Afghanistan]]></category>
		<category><![CDATA[Decision Quality]]></category>
		<category><![CDATA[Michael Steele]]></category>

		<guid isPermaLink="false">http://kevinhoffberg.com/blog/?p=802</guid>
		<description><![CDATA[At the risk of beating a dead horse . . . Yesterday I blogged on what I regard as the craziness of spending billions of dollars on Afghanistan.  My lens on the problem was primarily the math but mostly it was about the impossibility of success given the frame on the problem. Low and behold [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>At the risk of beating a dead horse . . . Yesterday I blogged on what I regard as the <a href="http://kevinhoffberg.com/blog/2010/07/01/the-madness-of-afghanistan-and-a-little-trick-i-call-math/">craziness of spending billions of dollars on Afghanistan</a>.  My lens on the problem was primarily the math but mostly it was about the impossibility of success given the frame on the problem.</p>
<p>Low and behold the always entertaining GOP Chairman Michael Steele was thinking the same thing.  Sort of.</p>
<p>The story everyone is focusing on his yet another <a href="http://thecaucus.blogs.nytimes.com/2010/07/02/dust-up-over-steeles-view-of-afghan-war">Steele-gaffe</a>.</p>
<blockquote><p>Michael Steele, chairman of the Republican National Committee, drew fierce criticism on Friday after declaring at a party fund-raiser that the United States was on the wrong side of history with its conflict in Afghanistan, a military fight he called “a war of Obama’s choosing.”</p>
<p>“This is not something the United States had actively prosecuted or wanted to engage in,” Mr. Steele said in a speech on Thursday evening in Connecticut in which he offered a strong critique of President Obama’s military strategy.</p>
<p>“It was the president who was trying to be cute by half by flipping a script demonizing Iraq, while saying the battle really should be Afghanistan,” Mr. Steele said, according to a video of his remarks that was circulated by Democrats on Friday. “”Well, if he’s such a student of history, has he not understood that you know that’s the one thing you don’t do, is engage in a land war in Afghanistan?”</p></blockquote>
<p>Wow.  Really? More than enough people have piled on this one so I won&#8217;t bother to comment beyond wondering when the spaceship is scheduled to return to the planet Mr. Steele comes from. No, the part that gets me spouting is what comes next.</p>
<blockquote><p>Mr. Steele, seeking to clarify his remarks, issued a statement on Friday afternoon, saying, “There is no question that America must win the war on terror.”</p></blockquote>
<p>And this . . .</p>
<blockquote><p>“For the sake of the security of the free world, our country must give our troops the support necessary to win this war,” Mr. Steele said. “As we have learned throughout history, winning a war in Afghanistan is a difficult task. We must also remember that after the tragedy of Sept. 11, 2001, it is also a necessary one.”</p>
<p>He added: “That is why I supported the decision to increase our troop force and, like the entire United States Senate, I support General Petraeus’s confirmation. The stakes are too high for us to accept anything but success in Afghanistan.”</p></blockquote>
<p>I have a good friend named John who always kindly reminds me that politicians aren&#8217;t to be listened to, especially when they&#8217;re talking to the true believers as was the case with Mr. Steele. Notions like telling the truth (in all its forms) are really only suggestions in these instances. My issue is more pedantic: You can&#8217;t solve a problem when you define it like . . .</p>
<blockquote><p>“There is no question that America must win the war on terror.”</p></blockquote>
<blockquote><p>&#8220;The stakes are too high for us to accept anything but success in Afghanistan.&#8221;</p>
<p>“As we have learned throughout history, winning a war in Afghanistan is a difficult task. We must also remember that after the tragedy of Sept. 11, 2001, it is also a necessary one.”</p></blockquote>
<p>Can someone please tell me what &#8220;winning the war on terror&#8221; would look like?  I mean really, how would we know?  Who would keep score? How would we verify? How would we enforce it? For how long would the win have to be won for it to be regarded as a real win? This isn&#8217;t meant to be an exercise in rhetoric, but really, words do matter.</p>
<p>The same line of inquiry applies to the concept of &#8220;success.&#8221;  For example, we have successfully burned through nearly $300 billion dollars and 1,000 American war dead.  If that was the objective, and clearly it was not, we succeeded.  Can we go home now?</p>
<p>And &#8220;necessary?&#8221;  Really?  How necessary?  Necessary enough to consider genocide?  That would do the trick.  There would be no more Afghans and by definition, none could engage in terrorist-like activities.</p>
<p>I get it, I get it.  This is political-talk, not decision-talk.  Mr. Steele is in the business of raising money from the faithful and scoring political points, not actually governing or solving real problems. Given the low standards of the job description he can be forgiven for his less that helpful words and thoughts about the trillion dollar black hole that is our foray into Central Asia. As a matter of public policy it would be nice if someone could offer we the people a problem definition that was useful, understandable, and achievable.  Not that I think anyone in Washington is in danger of doing that.</p>
<p>On a smaller scale, think about how you frame the decisions you make on a daily basis. Pay particular attention to the big ones.  Make sure you&#8217;re not declaring the equivalent of war on [fill in the blank].  You&#8217;ll never get there.</p>
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		<title>The Madness of Afghanistan and a Little Trick I Call Math</title>
		<link>http://kevinhoffberg.com/blog/2010/07/01/the-madness-of-afghanistan-and-a-little-trick-i-call-math/</link>
		<comments>http://kevinhoffberg.com/blog/2010/07/01/the-madness-of-afghanistan-and-a-little-trick-i-call-math/#comments</comments>
		<pubDate>Thu, 01 Jul 2010 20:19:16 +0000</pubDate>
		<dc:creator>kevin</dc:creator>
				<category><![CDATA[Current Affairs]]></category>
		<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Afghanistan]]></category>
		<category><![CDATA[Decision Quality]]></category>
		<category><![CDATA[Iraq]]></category>
		<category><![CDATA[Petraeus]]></category>
		<category><![CDATA[war on terror]]></category>

		<guid isPermaLink="false">http://kevinhoffberg.com/blog/?p=797</guid>
		<description><![CDATA[For the past decade I have made a living helping people and corporations make smarter decisions.  I say that by way of disclosing my bias when I think about nearly everything.  Yesterday I blogged about General Petraeus&#8217; testimony before the Armed Services Committee in advance of his taking over as the overlord of the &#8220;not [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>For the past decade I have made a living helping people and corporations make smarter decisions.  I say that by way of disclosing my bias when I think about nearly everything.  Yesterday I blogged about <a href="http://kevinhoffberg.com/blog/2010/06/30/what-i-wish-david-petraeus-said/">General Petraeus&#8217; testimony before the Armed Services Committee</a> in advance of his taking over as the overlord of the &#8220;not war&#8221; in Afghanistan.  You should read it.  It is a marvel of circumlocution.</p>
<p>Good decision making begins with an exam question: The entire rationale for making a decision in the first place; a statement of the problem we&#8217;re trying to solve. Use your favorite search engine and see if you can figure out the answer to the question of why we&#8217;re in Afghanistan. I figure the <a href="http://abcnews.go.com/Politics/State_of_the_Union/state-of-the-union-2010-president-obama-speech-transcript/story?id=9678572&amp;page=4">President&#8217;s own words from his State of the Union</a> are as good as any . . .</p>
<blockquote><p>As we take the fight to al Qaeda, we are responsibly leaving Iraq to its people. As a candidate, I promised that I would end this war, and that is what I am doing as President. We will have all of our combat troops out of Iraq by the end of this August. We will support the Iraqi government as they hold elections, and continue to partner with the Iraqi people to promote regional peace and prosperity. But make no mistake: this war is ending, and all of our troops are coming home.</p></blockquote>
<p>So basically the point is to &#8220;take the fight to al Qaeda&#8221; or more broadly to &#8220;fight terror over there so we don&#8217;t have to fight it here&#8221; or something like that.  I&#8217;m sure that there are more precise thoughts than that but basically that&#8217;s the mission the American people have been sold for the past eight years by two different administrations.</p>
<p>There are lots of ways to think about this, so let&#8217;s pick one: The Math</p>
<p>From the <a href="http://www.state.gov/r/pa/ei/bgn/5380.htm">State Department, here&#8217;s what we know about Afghanistan</a>:</p>
<p style="padding-left: 30px;">Area: 652,230 sq. km. (251,827 sq. mi.); slightly smaller than Texas.</p>
<p style="padding-left: 30px;">Population (July 2009 est.): 28.396 million; slightly smaller than Texas.</p>
<p style="padding-left: 30px;">GDP (2009 est., purchasing power parity): $23.35 billion.</p>
<p style="padding-left: 30px;">GDP growth (2009 est.): 3.4%. GDP growth average between 2004-2009: 11.25% (est.).</p>
<p style="padding-left: 30px;">GDP per capita (2009 est.): $800.</p>
<p>Keep in mind that GDP has been inflated by the US presence since we tossed the Taliban.</p>
<p>So how much have we spent to date on the &#8220;not war&#8221; in Afghanistan.  That&#8217;s a moving target, but here are some numbers that might help you understand. According to the site, <a href="http://">Cost of War</a>, the number to date (depending on when you read this) is $280 billion dollars. Add in the cost of the Iraq &#8220;not war&#8221; and we the people have spent about $1 trillion dollars &#8220;taking the fight to al Qaeda.&#8221;  To get a sense of some alternative uses of $1 trillion dollars, spend some time on the Cost of War site.</p>
<p>Keep in mind that these numbers don&#8217;t include the costs associated with the Obama surge of an additional 30,000 troops.  So what do those cost? One source I found put the figure in 2008 at <a href="http://www.alternet.org/world/102187/the_stunning_costs_of_keeping_a_soldier's_%22boots_on_the_ground%22_in_iraq/">$500,000 per year</a>.  A more recent source puts the figure <a href="http://thehill.com/blogs/blog-briefing-room/news/63121-crs-calculates-cost-of-us-troop-presence-in-afghanistan">much higher</a>.</p>
<blockquote><p>The cost of sending one U.S. soldier in Afghanistan for one year is $1 million versus an estimated $12,000 for an Afghani soldier, according to Steve Daggett, a specialist with the Congressional Research Service. Those numbers fall within the calculations that the Obama administration has been using. The Obama administration is calculating $1 billion per 1,000 troops deployed to Afghanistan.</p></blockquote>
<p>To put the cost of the surge in a different light, US tax payers will spend the entire GDP of Afghanistan to send 30,000 troops there to achieve what?</p>
<p>And how much does it cost the Taliban / Al Queda to fight back? It&#8217;s hard to put a number on that but a simple metric might be the cost of an AK-47.  It turns out that fighting Americans is a growth business.  A few years ago you could get a locally made knock-off for the equivalent of a few hundred dollars . . . so half a year&#8217;s pay.  Today, <a href="http://www.google.com/hostednews/afp/article/ALeqM5jdHnagloGy-t5QRRc5NlT4hmCcxw">the price in Pakistan has bloomed to nearly $1,500</a>. Throw in some ammunition and a year&#8217;s pay and call it $3,000 per annum, half that if you assume the person holding the gun is a variable cost.</p>
<p><strong>This is the time when you need to stop and think about the mission and the math: $1 million vs. $3,000.  One bullet kills either one.</strong></p>
<p>We have been in Afghanistan eight years.  Every year, on average, we spend the entire GDP of Afghanistan chasing after a couple of thousand bad guys that can be equipped and paid for less than one of our soldiers.</p>
<p>The war is unwinable for three reasons, all math related.</p>
<ol>
<li>It only takes one bad guy to do the thing we have spent $1 trillion dollars to prevent: commit a terrorist act on the homeland.  Call it 100.</li>
<li>The other side can replace them faster and cheaper than we can kill them.</li>
<li>We&#8217;re going broke.  The other side can wait.</li>
</ol>
<p>The problem here is the problem statement. It&#8217;s like the war on drugs.  &#8221;Taking the fight&#8221; to the bad guys never ends.  There is no end zone. There is no way of knowing that you&#8217;re winning.  More importantly, the cost of the other side to stay in the game is orders of magnitude lower than what we spend. The other side ALWAYS WINS for the simple reason that all they have to do is stay in the game.  Eventually the high cost player is bled dry. The only way out is to change the question.</p>
<p>Finally, a reminder.  The people voting to keep us in this mess work for us.  You voted for them (or failed to). It&#8217;s time to speak up.  It&#8217;s time to stop the madness.</p>
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		<title>It&#8217;s the Unknown Unknowns that Really Get You</title>
		<link>http://kevinhoffberg.com/blog/2010/06/21/its-the-unknown-unknowns-that-really-get-you/</link>
		<comments>http://kevinhoffberg.com/blog/2010/06/21/its-the-unknown-unknowns-that-really-get-you/#comments</comments>
		<pubDate>Mon, 21 Jun 2010 07:59:08 +0000</pubDate>
		<dc:creator>kevin</dc:creator>
				<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Decision Quality]]></category>
		<category><![CDATA[Unknown Unknowns]]></category>

		<guid isPermaLink="false">http://kevinhoffberg.com/blog/?p=787</guid>
		<description><![CDATA[A wonderful article/interview in the New York Times with David Dunning, one of the rock stars of decision-making . . . you get to be called that, at least by me, if you have an entire principle named after you (Dunning-Kruger Effect).  Donald Rumsfeld said it best but we were too stunned to hear him . [...]]]></description>
			<content:encoded><![CDATA[<p></p><div>
<p><a href="http://opinionator.blogs.nytimes.com/2010/06/20/the-anosognosics-dilemma-1/">A wonderful article/interview in the New York Times with David Dunning</a>, one of the rock stars of decision-making . . . you get to be called that, at least by me, if you have an entire principle named after you (Dunning-Kruger Effect).  Donald Rumsfeld said it best but we were too stunned to hear him . . .</p>
<blockquote><p>“There are things we know we know about terrorism.  There are things we know we don’t know.  And there are things that are unknown unknowns.  We don’t know that we don’t know.”</p></blockquote>
<p>Here&#8217;s a snip from the interview.  Well worth reading the entire thing.  Apparently there are four more parts to come.</p>
<blockquote><p>Dunning and Kruger argued in their paper, “When people are incompetent in the strategies they adopt to achieve success and satisfaction, they suffer a dual burden: Not only do they reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the ability to realize it.  Instead, like Mr. Wheeler, they are left with the erroneous impression they are doing just fine.”</p>
<p>It became known as the Dunning-Kruger Effect — our incompetence masks our ability to recognize our incompetence.  But just how prevalent is this effect?  In search of more details, I called David Dunning at his offices at Cornell:</p>
<p><strong>DAVID DUNNING:</strong> Well, my specialty is decision-making.  How well do people make the decisions they have to make in life?  And I became very interested in judgments about the self, simply because, well, people tend to say things, whether it be in everyday life or in the lab, that just couldn’t possibly be true.  And I became fascinated with that.  Not just that people said these positive things about themselves, but they really, really believed them.  Which led to my observation: if you’re incompetent, you can’t know you’re incompetent.</p>
<p><strong>ERROL MORRIS:</strong> Why not?</p>
<p><strong>DAVID DUNNING:</strong> If you knew it, you’d say, “Wait a minute.  The decision I just made does not make much sense.  I had better go and get some independent advice.”   But when you’re incompetent, the skills you need to produce a right answer are exactly the skills you need to recognize what a right answer is.  In logical reasoning, in parenting, in management, problem solving, the skills you use to produce the right answer are exactly the same skills you use to evaluate the answer.  And so we went on to see if this could possibly be true in many other areas.  And to our astonishment, it was very, very true.</p>
<p><strong>ERROL MORRIS:</strong> Many other areas?</p>
<p><strong>DAVID DUNNING:</strong> If you look at our 1999 article, we measured skills where we had the right answers.  Grammar, logic.  And our test-subjects were all college students doing college student-type things.  Presumably, they also should know whether or not they’re getting the right answers.  And yet, we had these students who were doing badly in grammar, who didn’t know they were doing badly in grammar.  We believed that they should know they were doing badly, and when they didn’t, that really surprised us.</p>
<p><strong>ERROL MORRIS:</strong> The students that were unaware they were doing badly — in what sense?  Were they truly oblivious? Were they self-deceived?  Were they in denial?  How would you describe it?</p>
<p><strong>DAVID DUNNING:</strong> There have been many psychological studies that tell us what we see and what we hear is shaped by our preferences, our wishes, our fears, our desires and so forth.  We literally see the world the way we want to see it.  But the Dunning-Kruger effect suggests that there is a problem beyond that.  Even if you are just the most honest, impartial person that you could be, you would still have a problem — namely, when your knowledge or expertise is imperfect, you really don’t know it.  Left to your own devices, you just don’t know it.   We’re not very good at knowing what we don’t know.</p></blockquote>
</div>
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		<title>Innovation Never Goes Out of Style</title>
		<link>http://kevinhoffberg.com/blog/2010/05/03/innovation-never-goes-out-of-style/</link>
		<comments>http://kevinhoffberg.com/blog/2010/05/03/innovation-never-goes-out-of-style/#comments</comments>
		<pubDate>Mon, 03 May 2010 17:04:02 +0000</pubDate>
		<dc:creator>kevin</dc:creator>
				<category><![CDATA[Business]]></category>
		<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Decision Quality]]></category>
		<category><![CDATA[dot.com]]></category>
		<category><![CDATA[innovation]]></category>

		<guid isPermaLink="false">http://kevinhoffberg.com/blog/?p=761</guid>
		<description><![CDATA[I get emails every week at www.decision-quality.com asking for permission to reprint, quote, and distribute one or more papers I wrote on decision-making.  It&#8217;s been forever since I actually looked at what I wrote so I went back and looked.  Here&#8217;s a snip from a paper on innovation I wrote.  The words seem useful even [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>I get emails every week at <a href="http://www.decision-quality.com/">www.decision-quality.com</a> asking for permission to reprint, quote, and distribute one or more papers I wrote on decision-making.  It&#8217;s been forever since I actually looked at what I wrote so I went back and looked.  Here&#8217;s a snip from a <a href="http://www.decision-quality.com/downloads.php">paper on innovation</a> I wrote.  The words seem useful even today . . .</p>
<p>Having participated in the tail end of it as a go-to-market consultant to a number of incubator companies, I had a ringside seat to both the good and the really ugly of the dot.com excitement. At literally the height of the boom, days before the wall started coming down, I wrote a kind of innovator’s credo that I called the disruptor’s dilemma, which had the following dimensions.</p>
<p style="padding-left: 30px;"><strong>Nothing is Known</strong>. If it really hasn’t been done before, there are few if any known market requirements, and therefore your planning and projections are pretty much guesswork.</p>
<p style="padding-left: 30px;"><strong>What Used To Work, Won’t</strong>.  The strategies and tactics that worked so well in the value system you just left probably won’t work in the market space you’re about to enter.</p>
<p style="padding-left: 30px;"><strong>Half of What You Decide Is Wrong</strong>.  As a result of the first two points, you have to make the assumption that at least half of the decisions you make are probably wrong.</p>
<p style="padding-left: 30px;"><strong>Half Of What You Learn Is Right</strong>.  You’ll spend every waking minute on a massive learning curve, and the feedback you’ll receive will usually be completely contradictory.  You should worry if that’s not the case.  The question is: where is the truth?</p>
<p style="padding-left: 30px;"><strong>All Of What’s Right Is Only Useful For Half As Long As It Used To Be</strong>.  Just because something is true, doesn’t mean it will continue to be true.</p>
<p style="padding-left: 30px;"><strong>Success Is Out There, It’s Just Somewhere Else</strong>.  If you keep learning, adapting, and innovating you might just succeed.  It’s just that success probably won’t lie where you thought it would.</p>
<p>Depending on your point of view, this is either a recitation of the worst of the dot.com hyperbole, or it is a reasonable set of guidelines for nurturing innovation. This led me to articulate what I then saw, and still see, as the “Six Laws of Successful Innovation,” which are as follows:</p>
<p style="padding-left: 30px;"><strong>Your plans won’t hold up so compress your planning</strong>.  Bring the right people to the problem; stress test your thinking, make clear decisions, keep your documentation simple, and launch decisively.</p>
<p style="padding-left: 30px;"><strong>Keep it simple</strong>. Complexity shows up all by itself.</p>
<p style="padding-left: 30px;"><strong>Once you launch, go fast and hard</strong>.  Compress your learning into small segments of time and space. Think in 100-day increments.</p>
<p style="padding-left: 30px;"><strong>Embrace your mistakes</strong>.  Mistakes are good because they tell you what not to do, so don’t cover them up. You’re probably going to make a bunch, so plan how you’re going to learn from your mistakes.</p>
<p style="padding-left: 30px;"><strong>Expect the unexpected</strong>. You’re going to whack some beehives in the process (particularly if you’re really innovating), and the bees are going to swarm.  Don’t expect the market to sit around and watch as you try to redefine reality. Expect pushback.  Expect to be counterattacked from unexpected directions. Expect partners to make silly decisions.  It should all tell you that you’re doing something right.</p>
<p style="padding-left: 30px;"><strong>You’re going to win in unexpected ways</strong> so build your organization, rewards structure, and partnership agreements accordingly.</p>
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		<title>Health Reform is Bad Except that it’s Good. Why and how we are Prisoners of Narrative</title>
		<link>http://kevinhoffberg.com/blog/2010/03/28/health-reform-is-bad-except-that-it%e2%80%99s-good-why-and-how-we-are-prisoners-of-narrative/</link>
		<comments>http://kevinhoffberg.com/blog/2010/03/28/health-reform-is-bad-except-that-it%e2%80%99s-good-why-and-how-we-are-prisoners-of-narrative/#comments</comments>
		<pubDate>Sun, 28 Mar 2010 21:23:37 +0000</pubDate>
		<dc:creator>kevin</dc:creator>
				<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Change How You Roll]]></category>
		<category><![CDATA[Decision Quality]]></category>
		<category><![CDATA[Health Reform]]></category>
		<category><![CDATA[mental models]]></category>
		<category><![CDATA[Narrative Thinking]]></category>

		<guid isPermaLink="false">http://kevinhoffberg.com/blog/?p=740</guid>
		<description><![CDATA[We love a good story. There are lots of reasons this is true. For example . . . We’re raised listening to stories, some read, some told. Most of the media we consume is narrative based. Culture is communicated, instilled, and passed along through stories. We use narrative as a mechanism for processing stimulus and [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>We love a good story.  There are lots of reasons this is true.  For example . . .</p>
<ul>
<li>We’re raised listening to stories, some read, some told.</li>
<li>Most of the media we consume is narrative based.</li>
<li>Culture is communicated, instilled, and passed along through stories.</li>
<li>We use narrative as a mechanism for processing stimulus and memories into something we can use.</li>
</ul>
<p>We non-scientists know this later point to be true simply by observing our own internal dialogs.  For example, when we feel wronged by someone, what do we do?  We replay the story of the wronging over and over again in our heads.  And then what happens?  We change the dialog and the outcome of these stories as we imagine all the devastatingly clever things we should have said.</p>
<p>In the same way, when we think about the future we construct stories that encapsulate our hopes and fears.  Depending on the content of the stories we imagine, and the intensity with which we imagine them, we might call this activity daydreaming, visualizing, or obsessing.</p>
<p>This internal process of story telling doesn’t stop with a single drama. We tell the story over and over, changing bits and pieces as we go. And then we go further. We assemble the stories into a broader meta-story that becomes the narrative of our lives.  If a particular person has wronged us, we might resurrect other tales of being wronged in a similar way by other people. Or we might string together stories about other times that person did something to us we didn’t like. By doing this, we wrap stimulus, response, and specific memories together to create a narrative.</p>
<p>This act of linking stories together, either looking backwards or forwards, is a function of our wiring to use meaning and pattern making as a way of making sense of what goes on around us.  We order our memories and what we perceive to be facts into a pattern that makes sense, a narrative that has meaning.</p>
<p><span id="more-740"></span><br />
Again, we know this to be true when we examine our internal dialogs.  When we tell ourselves things like, “My brother was always smarter than me?” or “I make bad decisions under stress” or “I have always had great instincts about people” we are organizing a life of memories, stimulus and response into a narrative, backed by stories that support the meaning we choose.  We could just as easily find memories to support an alternative narrative.</p>
<p>Here’s a small and silly example. I can remember standing next to a building some years ago and realizing that a bird had just dumped a load on my shoulder from somewhere above me.  And what story did I tell myself? “Birds are always crapping on me.” I supported that conclusion by recalling several other instances I could recall when a bird had either crapped on my, my car, the furniture on my deck, even on other people.  So now I have a narrative, created out of stories I told myself, that supports a meaning and pattern I went looking for.</p>
<p>Does that last point sound harsh?  Then ask yourself this?  How many birds have flown over you in just in the last year, yet along the last ten, or in my case, 53 years?  You can’t count that high.</p>
<p>No, birds don’t always crap on you, me, or anyone. But you can see how easy it is to think such a thing when you realize that we are wired to think in narratives, stories linked to stories that support patterns and meaning on which we have already anchored.  That’s right.  We come to our story telling with the patterns and meaning already in place and interpret the stimulus and memories to fit.  It takes an act of will to change the relationship and observe our situation separate from our wiring to narrate.</p>
<p>We see examples of the power and danger of narratives all around us, most vividly when it comes to lightning rod issues like health care reform.  If you could go back in time a year ago and ask people about health care, you would most likely have heard personal narratives . . . points of view based on personally experienced stimulus and responses.</p>
<p>Twelve months later, there are “sides to the debate.” Health reform haters and supporters are now swept up in powerful narratives that are generally not rooted in personal experience. They come from someplace else.  Almost nobody has read the actual legislation, so we know that the meaning people find here is not rooted in analysis or something that passes for fact.  The meaning has begotten the narrative. People project their hopes and fears onto the narrative and thus become part of it.</p>
<p>There are good reasons for why this happens.  We have amazing cognitive abilities, gated by a relatively small capacity working memory. In a hugely over-stimulated existence, we survive by focusing on a few immediately important pieces of information, and rely on the wealth of pre-stored behavioral scripts, mental models, memories, pre-loaded patterns and meanings, and “proven” narratives to make sense of the rest.  We do this because most of the time the cost of doing so is low and the results we seem to experience are pleasing, or at least tolerable.</p>
<p>Over thousands of generations, we have evolved all manner of thinking tricks that have kept us out ahead of our competitors and circumstances.  Narrative thinking is a useful term for describing how we create, store, and retrieve memories in a complex world . . . a world by the way made complex by our stunning and ever evolving thinking skills.</p>
<p>You can use these wonderful story-telling skills to your advantage.  Two ideas come to mind.</p>
<p style="padding-left: 30px;">If you decide you want to make a change, the first place to start is to construct new narratives. Resurrect old stories into new combinations to support the new meaning you want to find and make.  In other words, when you change your “values” (a fancy word for what you want), actively change the stories you tell yourself about your past and about your future.  Change the meaning first, the narrative second, and the rest will follow.</p>
<p style="padding-left: 30px;">If you find yourself caught up in the passions of the hour, particularly the kind that seem to excite the imagination of lots of people, remind yourself that narratives are not the stories and the stories aren’t the “facts.” You and I can look at exactly the same set of facts or stimulus and find very different meanings.  Things are as they are.  They aren’t supposed to be one way or another.  We are the ones who assign meaning and pattern.  We make that choice.  We can make a different choice.</p>
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		<title>The Perils of &#8220;Groupness&#8221;</title>
		<link>http://kevinhoffberg.com/blog/2010/03/13/the-perils-of-groupness/</link>
		<comments>http://kevinhoffberg.com/blog/2010/03/13/the-perils-of-groupness/#comments</comments>
		<pubDate>Sun, 14 Mar 2010 01:15:46 +0000</pubDate>
		<dc:creator>kevin</dc:creator>
				<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[behavioral scripts]]></category>
		<category><![CDATA[Challenger]]></category>
		<category><![CDATA[Columbia]]></category>
		<category><![CDATA[Decision Quality]]></category>
		<category><![CDATA[Everyday Survival]]></category>
		<category><![CDATA[groupness]]></category>
		<category><![CDATA[Laurence Gonzales]]></category>
		<category><![CDATA[mental models]]></category>
		<category><![CDATA[NASA]]></category>
		<category><![CDATA[O-Rings]]></category>

		<guid isPermaLink="false">http://kevinhoffberg.com/blog/?p=733</guid>
		<description><![CDATA[Decision-making is the means by which we most directly shape our lives. Some decisions we make consciously; many more are “automatic” decisions made in response to stimulus. The first type of decision-making is a distinctly human domain. Other species don’t have the same breadth of cognitive tools, and therefore can’t be described as true decision-makers. [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Decision-making is the means by which we most directly shape our lives. Some decisions we make consciously; many more are “automatic” decisions made in response to stimulus. The first type of decision-making is a distinctly human domain. Other species don’t have the same breadth of cognitive tools, and therefore can’t be described as true decision-makers.</p>
<p>If we want to improve our life results and get more of what we want, we must make different and higher-quality decisions. The other choice is to keep doing the same things over and over or hope that someone or something will come along and help us out.  This is called Magical Thinking.  It isn’t helpful.</p>
<p>Most of us are not as good at decision-making as we think we are. Why not? One of the biggest reasons is our succeptibility to influence by the people around us, something writer Laurence Gonzalez calls &#8220;groupness.&#8221;</p>
<div class="amtap-item" lang="en" xml:lang="en"><a href="http://www.amazon.com/Everyday-Survival-People-Stupid-Things/dp/0393058387%3FSubscriptionId%3DAKIAIPOPBDTYUOVT7IBQ%26tag%3Dleartheworl-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0393058387"><img src="http://ecx.images-amazon.com/images/I/510gZEUk1cL._SL110_.jpg" width="82" height="110" alt=""/></a><br />
<h3><a href="http://www.amazon.com/Everyday-Survival-People-Stupid-Things/dp/0393058387%3FSubscriptionId%3DAKIAIPOPBDTYUOVT7IBQ%26tag%3Dleartheworl-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0393058387">Everyday Survival</a></h3>
<p class="author">Laurence Gonzales.					W. W. Norton &amp; Company 2008, 					Hardcover,				288 pages,				&#36;1.99</p>
</div>
<p><span id="more-733"></span>The idea is simple: When we are in a group setting we tend to turn our brains off and take our clues from the people around us.  Think you don&#8217;t?  You do. Consider Gonzales&#8217;s story about NASA and not one but two space shuttle disasters.</p>
<blockquote><p>After the space shuttle Columbia broke up in flight on February 1, 2003, a commission was formed to investigate the accident. It covered all the mechanical and physical facts of the explosion, but that left a very basic and vexing problem. The accident had been avoidable and had not been avoided. That meant, in effect, that the smartest guys in the world had done the dumbest thing in the world. Twice. The commission’s report sought to explain how this could happen by talking about the very sorts of mental models and scripts, along with group hostilities, that shape the lives of the Rattlers and Eagles of this world and that shaped the experiences of John Tanner and Homo erectus as well.</p>
<p>Managers at NASA had fashioned a psychological framework that allowed them to systematically ignore clear evidence that they were heading into trouble. NASA’s triumphant experiences in putting men on the moon during the Apollo program of the 1960s had led to the formation of mental models and behavioral scripts in the organizational culture that persisted despite drastic changes in the environment, such as greatly reduced budgets and overwhelming evidence that essential pieces of equipment were malfunctioning.</p>
<p>The second force influencing critical decisions at NASA was groupness. The final report of the commission on the Columbia accident said, “External criticism and doubt…reinforced the will to ‘impose the party line vision on the environment, not to reconsider it….’ This in turn led to ‘flawed decision making, self deception, introversion and diminished curiosity about the world outside the perfect place.’”</p>
<p>The report is quoting Garry D. Brewer, a professor of organizational behavior at Yale University, who was attempting to explain how management at NASA could have behaved the way it did. The “external criticism and doubt” came, for example, after the explosion of the space shuttle Challenger in 1986, the first time that NASA made the worst mistake it could have made. That criticism came, significantly, from outside of the in-group.13</p>
<p>The combination of groupness and persistent mental models made for an organization that could not take in new information when that information did not accord with its indelible concept of itself as the “perfect place,” as Brewer called it. Moreover, it could take any contradictory information and reinterpret it as confirming the existing model. This came about through two major influences that made NASA’s models unassailable and made its culture hostile to all outside groups. To begin with, there was the unprecedented investment not just of money but also of personal and emotional effort during the Apollo program. The divorce rate was high, as marriages fell apart under the strain. People literally gave their lives for the effort. Gus Grissom, Roger Chaffee, and Ed White died in a fire during a test on the launch pad in 1967. But following all that sacrifice was an astounding success, arguably the highest achievement of human technical culture, with men walking on the moon while we watched them on television. This has all the ingredients necessary to form robust models and scripts (big investment, big reward). And that experience simply hardened the shell of groupness that already characterized NASA.</p>
<p>NASA’s unspoken and unconscious attitude by that time was: We must be right; after all, we put a man on the moon. There had been many reinforcing steps along the way, too. During Apollo 13, for example, the concept that “failure is not an option” was developed, and the safe return of Apollo 13 served to strengthen the models and the ability of groupness to repel ideas from outside. It also promoted a dangerously wrong idea. For failure, unfortunately, is always an option.</p></blockquote>
<p>The big problem here is that successful outcomes, broadly defined, caused people to ignore disconfirming information, out of spec performance, and dysfunctional decision processes.  Or to put it differently, if nothing bad happens, we must be doing something right. More . . .</p>
<blockquote><p>As the investigating board put it, “Both Columbia and Challenger were lost also because of the failure of NASA’s organizational system…. Both accidents were ‘failures of foresight’ in which history played a prominent role.”</p>
<p>In the case of Challenger, engineers were faced with the fact that fuel in the solid rocket boosters was burning through the rubber O-rings that sealed the seams where sections of the rockets were joined. Groupness dictated that no one outside that immediate culture was fit to judge the fruits of their labors. Confirmation bias is a phenomenon in psychology by which people tend to take any information as confirmation of what they already believe. In addition, they tend to ignore or miss any information that doesn’t confirm what they already believe. This can work to gradually revise a mental model in a one-way direction. Because NASA believed that “we’re the best” and that “failure is not an option,” all information tended to support that conclusion, no matter how contrary it might have seemed to an outsider.</p>
<p>Each time the solid rocket fuel burned the rubber O-rings during launch without an accident happening, the engineers at NASA readjusted their models and scripts slightly to accommodate that as “normal.” Through a subtle progression, a complete failure of design was turned into an acceptable situation. Each time nothing bad happened, they did it again. This confirmed the mental model, even while groupness helped to keep conflicting information from having any effect. The weather was the spinning roulette wheel in this complex system that NASA managers had unwittingly set up for themselves. All they needed was for cold enough weather to coincide with a launch, because cold made the rubber O-rings more brittle and therefore more likely to burn through. It was just a matter of time. The ape-like hierarchy at NASA ensured that those engineers who knew or suspected the truth would not be heard.</p></blockquote>
<p>What makes this whole story especially sad is that NASA learned nothing about decision-making, the root of the problem.</p>
<blockquote><p>The same array of troubles bedeviled Columbia. Insulating foam blew off the main fuel tank and hit the orbiter. The engineers had seen it happen a number of times, but management kept on launching anyway. When nothing bad happened, they took that as confirmation that they were right and reset their mental models to accommodate the malfunction. As the final report on the accident clearly stated, “The initial Shuttle design predicted neither foam debris problems nor poor sealing action of the Solid Rocket Booster joints. To experience either on a mission was a violation of design specifications. The anomalies were signals of potential danger, not something to be tolerated.”</p>
<p>But in the culture that had evolved at NASA, each return from a successful mission was another moon landing. If the world had largely come to ignore space launches, NASA was still hearing applause that was, by the time of Columbia, more than thirty years old. So, instead of peering more deeply into the problem, they gradually revised their models until they were literally interpreting failure as success. The final report of the commission said:</p>
<p><em>Engineers and managers incorporated worsening anomalies into the engineering experience base, which functioned as an elastic waistband, expanding to hold larger deviations from the original design. Anomalies that did not lead to catastrophic failure were treated as a source of valid engineering data that justified further flights.</em></p></blockquote>
<p>The moral of the story . . .</p>
<blockquote><p>And this is precisely how a mental model can be expected to function. It operates on a simple rule: <em>if nothing bad happens, you must be doing something right </em><strong>[emphasis added]</strong>. So influential were NASA’s models and scripts, and so delusional its self-confidence bred of groupness, that even after Columbia broke up, killing all on board, the space shuttle program manager told the press that he was “comfortable” with his previous assessments of risk and didn’t think the foam debris had caused the accident. But remember that a key feature of this system is that, taken one small step at a time, each decision always seems correct.</p></blockquote>
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		<title>Watch Barry Schwartz Talk About Moral Wisdom</title>
		<link>http://kevinhoffberg.com/blog/2010/03/09/watch-barry-schwartz-talk-about-moral-wisdom/</link>
		<comments>http://kevinhoffberg.com/blog/2010/03/09/watch-barry-schwartz-talk-about-moral-wisdom/#comments</comments>
		<pubDate>Tue, 09 Mar 2010 22:20:51 +0000</pubDate>
		<dc:creator>kevin</dc:creator>
				<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Ethics]]></category>
		<category><![CDATA[Barry Schwartz]]></category>
		<category><![CDATA[Character]]></category>
		<category><![CDATA[Decision Quality]]></category>
		<category><![CDATA[Moral Wisdom]]></category>
		<category><![CDATA[Practical Wisdom]]></category>

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		<description><![CDATA[A fine video on the topic of practical wisdom by Barry Schwartz.  I was particularly taken on his point of view on &#8220;practical wisdom.&#8221; &#8220;Practical wisdom,&#8221; Aristotle told us, &#8220;is the combination of moral will and moral skill.&#8221; A wise person knows when and how to make the exception to every rule, as the janitors [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>A fine video on the topic of practical wisdom by Barry Schwartz.  I was particularly taken on his point of view on &#8220;practical wisdom.&#8221;</p>
<blockquote><p>&#8220;Practical wisdom,&#8221; Aristotle told us, &#8220;is the combination of moral will and moral skill.&#8221; A wise person knows when and how to make the exception to every rule, as the janitors knew when to ignore the job duties in the service of other objectives. A wise person knows how to improvise,as Luke did when he re-washed the floor. Real-world problems are often ambiguous and ill-defined and the context is always changing. A wise person is like a jazz musician &#8212; using the notes on the page, but dancing around them, inventing combinations that are appropriate for the situation and the people at hand. A wise person knows how to use these moral skills in the service of the right aims. To serve other people, not to manipulate other people. And finally, perhaps most important, a wise person is made, not born. Wisdom depends on experience, and not just any experience. You need the time to get to know the people that you&#8217;re serving. You need permission to be allowed to improvise, try new things, occasionally to fail and to learn from your failures. And you need to be mentored by wise teachers.&#8221;</p></blockquote>
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