Book Bits |16 July 2016

Heads I Win, Tails I Win:
Why Smart Investors Fail and How to Tilt the Odds in Your Favor

By Spencer Jakab
Summary via publisher (Portfolio)
According to Wall Street Journal investing colum­nist Spencer Jakab, most of us have no idea how much money we’re leaving on the table—or that the average saver doesn’t come anywhere close to earning the “average” returns touted in those glossy brochures. We’re handicapped not only by psychological biases and a fear of missing out, but by an industry with multimillion-dollar marketing budgets and an eye on its own bottom line, not yours.

Viking Economics: How the Scandinavians Got It Right-and How We Can, Too
By George Lakey
Review via The Atlantic
Liberals in the United States wistfully regard Scandinavia as a kind of social utopia, while conservatives denounce it as a socialist state where government overreach is ubiquitous. Yet across the political spectrum, Americans believe it would be impossible to adopt the Nordic model.
That’s the starting point for Viking Economics: How the Scandinavians Got it Right—and How We Can, Too, a new book from George Lakey, a former Eugene M. Lang visiting professor for issues of social change at Swarthmore College. Lakey, however, rejects that premise, arguing instead that Americans can adapt the Nordic model to fit the United States, reducing the wealth gap and improving the quality of life for all Americans as a result.

Innovation and Its Enemies: Why People Resist New Technologies
By Calestous Juma
Summary via publisher (Oxford University Press)
The rise of artificial intelligence has rekindled a long-standing debate regarding the impact of technology on employment. This is just one of many areas where exponential advances in technology signal both hope and fear, leading to public controversy. This book shows that many debates over new technologies are framed in the context of risks to moral values, human health, and environmental safety. But it argues that behind these legitimate concerns often lie deeper, but unacknowledged, socioeconomic considerations. Technological tensions are often heightened by perceptions that the benefits of new technologies will accrue only to small sections of society while the risks will be more widely distributed. Similarly, innovations that threaten to alter cultural identities tend to generate intense social concern. As such, societies that exhibit great economic and political inequities are likely to experience heightened technological controversies.

The Mandibles: A Family, 2029-2047
By Lionel Shriver
Review via The New York Times
This future is only 13 years away, as Lionel Shriver depicts it in “The Mandibles: A Family, 2029-2047,” her searing exemplar of a disquieting new genre — call it dystopian finance fiction. When the novel opens, America is perched on the cusp of catastrophe, though no one knows it yet. The population is still reeling from the aftershocks of “the Stonage” (an abridgment of Stone Age), the technology blackout in 2024 that brought the entire country to a halt, an event at least as traumatic for this generation as Sept. 11 was for their parents. China has already established itself as the world’s superpower, a position cemented by its usurpation of the number 1 as its international calling code. (The move is largely symbolic: Phone calls have become so rare that the sound of a ringtone triggers the fear that someone must have died.) The European Union has already dissolved, with the euro replaced by local currencies like the “nouveau franc.” Then the United States defaults on its loans; Treasury bills are rendered worthless. Overnight, the dollar crashes, supplanted on the international market by the “bancor,” a currency controlled by the New IMF. The stock market follows suit, taking the Mandible family fortune with it.

The Econometric Analysis of Recurrent Events in Macroeconomics and Finance
By Don Harding and Adrian Pagan
Summary via publisher (Princeton University Press)
The global financial crisis highlighted the impact on macroeconomic outcomes of recurrent events like business and financial cycles, highs and lows in volatility, and crashes and recessions. At the most basic level, such recurrent events can be summarized using binary indicators showing if the event will occur or not. These indicators are constructed either directly from data or indirectly through models. Because they are constructed, they have different properties than those arising in microeconometrics, and how one is to use them depends a lot on the method of construction. This book presents the econometric methods necessary for the successful modeling of recurrent events, providing valuable insights for policymakers, empirical researchers, and theorists. It explains why it is inherently difficult to forecast the onset of a recession in a way that provides useful guidance for active stabilization policy, with the consequence that policymakers should place more emphasis on making the economy robust to recessions.