The really gutsy lottery wonks focus on other games where situations arise that make huge bets nearly a sure thing.  For example, see this Boston Globe heads-up on “a game with a windfall for a knowing few”.  Imagine showing up at your corner gas station with $100,000s in cash for lottery tickets—that would be a great day for the own, especially given the seller earns a commission that can grow to $100,000 for some jackpots.

“Bettors like the Selbees, who spent at least $500,000 on the game, had almost no risk of losing money.”

- Mark Kon, a professor of math and statistics at Boston University

• Edge Perspectives
• Unfolding Leadership
• Noop.NL (Hank)

See us hosts and the blogs we’ve chosen to review at this site coordinated by John and background on the carnival itself here.

I will start off our part in this Carnival with my take on Edge Perspectives.  The author is John Hagel — a fellow with a background in law and management who caught my fancy for his passion about embracing change.  I live by Apostle Paul’s advice (1 Thes. 5:14-22) to “Test all things; hold fast what is good.”  However, as Hagel explains in his blog on Cognitive Biases in Times of Uncertainty uncertainty breeds fear for new technologies that offer big benefits.  It’s amazing to see how much people vary in interest/aversion to new technology.  For example, I recently made an impulse purchase of Sony’s Internet TV Blu-ray disc player.  When I asked Hank to help me set it up in our master bedroom, he got really keyed up about how this device streams content controlled by a nifty remote with all the functions of a full-size keyboard.  But then my wife tried to turn the TV on – not a good scene.  She just needs a lot more time to embrace technological change than Hank or me.

A number of the 2011 blogs in Edge Perspectives provide in-depth reviews of books by other big  thinkers offering their prescription for how Americans can regain their edge.  To be honest, I am just too busy dealing with everyday life to work up the necessary energy to get a grasp on these huge issues.  My attention gets re-engaged when Hegel delivers thoughts from the heart such as his Revolution from the Edge entry.  Here he reports back from TED, nonprofit devoted to “Ideas Worth Spreading” that draws top thinkers from around the globe, one of whom is invited to turn the world inside out – aided by a $100,000 award.  Hagel focuses his thoughts on the uprisings in the Middle East and North Africa, where a well-educated younger generation broke free of old ways enforced by rigid and repressive dictators.  Having just come away from India, where democracy fosters technological innovation (if only the infrastructure could catch up!), I am keen on Hagel’s call for those in developed nations to do everything possible for removing the barriers of corruption, debt and environmental degradation that stand in the way of further progress by emerging countries.

“As a man changes his own nature, so does the attitude of the world change towards him. … We need not wait to see what others do.”

Mahatma Gandhi

Meanwhile, the United Nations declared this summer that tomorrow, October the 31^st, the 7 billionth baby will be born.  They may be overly precise on the timing, yet this is a very compelling statistic.  Breaking down the world’s wealth by this population will continue to keep economists busy, but you can be sure it will maintain a “predictable imbalance” as observed by their colleague Pareto.  Along those lines, I suggest you measure how Halloween candy gets distributed to your neighborhood population of trick-or-treaters.  If a few big kids don’t take the lion’s share, I will eat my monster mask..

*The American Society of Quality (ASQ) provides a detailing of the Pareto Chart here.

Kahneman examined the illusion of skill in a group of investment advisors who competed for annual performance bonuses.  He found zero correlation on year-to-year rankings, thus the firm was simply rewarding luck.  What I find most interesting is his observation that even when confronted with irrefutable evidence of misplaced confidence in one’s own ability to prognosticate, most people just carry on with the same level of self-assurance.

The bottom line is that you shouldn’t swallow everything said by assertive and confident people who advise on highly-variable systems such as financial markets.  Heeding what an experienced physician suggests is one thing, but going with the most boastful money manager is another.

“True intuitive expertise is learned from prolonged experience with good feedback on mistakes.”

– Daniel Kahneman

“It’s what you learn after you know it all that counts.”

– John Wooden

* Posted earlier under a different title here.

“People die at a biblical scale because of such stupidity.”

- Ben Goldacre, author of Bad, Science: Quacks, Hacks and Big Pharma Flacks.

On a lighter (?) note, this tendency by people to attribute cause-and-effect relationships to random ups-and-downs explains why some teachers, coaches and instructors hold back praise and only berate their pupils.  A case in point is the flight instructor who lavishes praise on a training-pilot who makes a lucky landing. Naturally the next result is not so good.  Later the pilot bounces in very badly — again purely by chance (a gust of wind).  The instructor roars disapproval.  That seems to do the trick — the next landing is much smoother.  So now you know why coaches yell so much: It’s their regression to the mean.

* “Wanted: BS Detectors” – 11/8/10.

**First brought forward by France Galton in 1886 via this essay on “Regression towards Mediocrity in Hereditary Stature”

“Lottery: A tax on people who are bad at math.”

-          Ambrose Bierce

PS. Did you hear about the wannabe-winner of the lottery who prayed and prayed and prayed to hit the jackpot.  Finally an exasperated God responded with this request: “Could you at least just buy one ticket?”

*This paperback book lists for $40 on Amazon, but I will not provide the link because I do not recommend it.  However, you may find it amusing to read the customer reviews.

Every now and then this KISMIF approach hits the spot, such as it did with Lara Marlin Hull, a Marketing and Social Media Consultant at Red Funnel Consulting.   Before becoming a communications specialist, Lara worked for a number of years as a research scientist in the pharmaceutical industry – just the sort of person that we aim to please.   As you can see in her January 19 blog for How to Sell Scientists (Does Your Newsletter Grab Scientists’ Attention? Here’s One that Does ), Lara and her scientist friend really liked my latest article for our newsletter, which details a fun kitchen experiment* by my son Hank.   She passes along this interesting insight: “People forget that scientists are people too.”

I am reminded of a time early in the days of Stat-Ease when I put together a survey of our software users.  Wanting to incent responses, I suggested to Pat and our programmer Tryg that we consider offering a free pen.  They both scoffed at the idea of a technical professional being swayed by “swag” (that is, a bribe!), going so far as to say that such a gift would create insult and cause less of a return!   My reaction was that “experimenters are people too!”  Putting our own tools to practice, I then split up our user list at random and sent only half the offer for the free pen.  Believe it or not, these lucky ones responded at a significantly higher rate with completed surveys.

If people don’t have a good sense of humor, they are not very good scientists either.

-          Nobel prize-winning physicist Andre Geim

PS.  Ms. Hull followed up her initial accolade for the Stat-Ease “Statistics Made Easy” approach with further praise (The Secret Product Your Customers Want) for the way our Stat-Ease home page invites browsers needing immediate help.   It is wonderful to receive unsolicited third-party endorsements like this, even though it’s not for our products and services per se, but, rather, how we go about doing our business.

*”Tumbler Rumbles with a Mugger,” December 2010 Stat-Teaser

“Next time you’re stuffed and the waiter wheels around the dessert cart, know that the odds are against you. Just cross your fingers that the chocolate cakes under a glass dome, to help you resist the urge.”

- Christopher Intagliata, Scientific American reporter (from text of podcast here)

PS. While researching Rangel, I came across this article in the Caltech News on another study he did on buying behavior – in this case the propensity to confuse price with quality for wine.  Here you can learn why Rangel is a “neuro” economist – he directly measures brain activity, which provides more reliable measures of consumer response than what they might admit when asked how they feel about something.  See how MRI signals change in student brains confronted with money, trinkets versus snacks (can you guess which turns them on the most?) at this web-page detailing research by the Rangel Neuroeconomics Laboratory.