## Saturday, 23 May 2009

### Aid Watch: reader survey (updated)

At his blog Aid Watch Bill Easterly has a very short Reader survey running. He asks
Please tell me which you think is more probable:

(A) a country succeeds at economic development, or
(B) a country succeeds at economic development with a wise and capable leadership.
I went with A on the grounds that in many cases economic development takes place despite rather than because of "wise and capable leadership". Such leadership may be useful but seems to be neither necessary nor sufficient for development.

Anyway, go vote!

Update: Given the bet discussed in the comments section the following comes from Bill Easterly's blog:
On one level, A is the right answer, because B is a subset of A. A contains all successes, both (1) those achieved with wise leadership, and (2) those achieved with any other means. B only contains (1), and so is less likely than A. Well known psychology experiments find the same thing -- that many people have what is called the “conjunction fallacy” (again from my continuing Mlodinow and Kahneman obsession) that would cause them to choose (B). A set of outcomes that fits a plausible story is thought to be larger than one unrestricted by ANY story, even though ANY restriction on the set of possible outcomes always makes that set less likely than an unrestricted set. An explanation usually trumps no explanation, even if it gets the probabilities wrong!
But he then writes

Crampton said...

Paul, it's a math problem. Think about it. Say X is economic development and R is wise leadership. Then

p(X)> p(X)*p(R)

Paul Walker said...

What if, what Easterly is trying to get at is p(X)+p(R). It depends on the relationship between X and R.

Crampton said...

Nah, it's a math problem. He didn't say "conditional on", he said "with". \$50 bet if you're up for it.

X|R>X|~R but p(X) >> p(X)*p(R)

Paul Walker said...

How do we determine a winner?

Matt Burgess said...

Contract on iPredict.

"This contract pays \$1 if Paul is right"

Closing price is the last traded price at a set date.

I wonder if it'd work.

matt b said...

Isn't the correct formulation:

1) P(succeed | randomly picked leader wisdom/capability from distribution); vs
2) P(succeed | wise leader)

Perhaps the forumulation debate is Easterly's point.

Paul Walker said...

Contract on iPredict.

"This contract pays \$1 if Paul is right"

Then pay the dollar now! I'm always right!!! :-)

Crampton said...

I'm sure Easterly will reveal the answer. If he doesn't, no resolution to bet. If Easterly says it's just a math problem, I win.

Matt: The first I read as unconditional probability; the second, conditional.

matt b said...

Crampton: but since every country has a leader, the first is also implicitly conditional.

And shouldn't your formulation be:

p(X) >> p(X|R)*p(R)

p(X) >> p(X)*p(R)

If so, then >> is not true.

Crampton said...

Matt: your version's better than mine, yup.

p(X) >> p(X|R)*p(R)

especially since p(R)=lim x-->0

Crampton said...

http://en.wikipedia.org/wiki/Conjunction_fallacy

http://www.overcomingbias.com/2007/09/conjunction-fal.html

Crampton said...

So either I win the bet or the wording was too ambiguous for it to be called.