The Not Unreasonable Podcast

This episode is an experiment. Actuaries need to attest to having done 30 hours a year of continuing education and three of those need to be in what we call "professionalism" which can loosely be thought of as ethics for actuaries. Satisfying these is often boring work so I thought I'd try to make it interesting.

In this conversation with Don Mango, we discuss a series of cases (see webtrough.com for show notes) that I thought might be interesting to interpret in the context of the actuarial code of conduct. Quite unexpectedly I had more fun with this one than maybe any of the previous interviews, which is saying quite a lot!

I won't pretend this is for everyone but I suggest to give it a listen, even if only to hear our thoughts on Bitcoin, what a stock trader is to do if choosing between lying and screwing their client and many other examples. (to actuaries: I promise it's about actuaries!)

I'm looking into a dedicated podcast for professionalism CE credits. If you're interested, go to notunprofessional.com to sign up to a mailing list about that project.

Disclaimer: actuarial members, you of course need to use your own judgement on whether this podcast satisfies the CE guidelines. I'm counting it for mine, though!
youtube link: https://youtu.be/mjXrVXVesTg

music by bensound.com

Twitter: @davecwright
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Social Science of Insurance Essays

Amy Finkelstein is Professor of Economics at MIT. Amy’s research focuses on market failures and government intervention in insurance markets and she has won numerous awards include a MacArthur Fellowship and the John Bates Clark Medal. Amy is co-author with Liran Einav and Ray Fisman of the forthcoming book: “Risky Business: Why Insurance Markets Fail and What to do about it”.
Buy the book
https://www.amazon.com/Risky-Business-Insurance-Markets-About/dp/0300253435/
Amy on wikipedia
https://en.wikipedia.org/wiki/Amy_Finkelstein
episode on youtube: https://youtu.be/nvVlNSolE3s
show notes: https://notunreasonable.com/?p=7706
When is government compelled insurance a good idea? 0:02
How the public option or the mandate can create two different equilibria in the market. 8:53

Dental insurance isn’t really an insurance product. 13:27

The subsidy is not an objective, it’s a problem. 19:18

How do we choose whether to pay attention to some of these issues or not? 25:47

Why do we feel compelled to act when people are suffering from chronic conditions? 29:53

What are the benefits of giving people cash instead of insurance? 33:44

The problem of moral hazard in insurance. 39:51

The concept of affinity and intermediation. 45:28

Insurance can be learned the hard way. 51:02

What happens when the price of insurance gets too high in compulsory markets. 54:46

Why nobody ever wants to buy insurance. 1:01:06

Some of the studies that contradict what you think you know. 1:05:23

Twitter: @davecwright
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This week's guest, Cathy O'Neil, wrote a book called Weapons of Math Destruction, which explores how pervasive predictive modeling is becoming and also how bad models influence, sometimes direct, big decisions. Bad in this case means models that are, to the trained eye, laughably inappropriate for their task. Take for example teacher testing, which will make hire/fire decisions on teacher performance based on an absurdly small and biased data set.

We of course also discuss the potential of algorithms and how Cathy set up a company, ORCAA, to audit algorithms to ensure they aren't, as she calls them WMDs! We also dive deep into the why of bad modeling, what it's like to be a math professor on and off airplanes and insurance risk.

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This conversation gave me such a feeling of humility yet hope about our world. It's an awful place sometimes but some people are truly awesome at making it better.
Jen Brady is the Executive Director of Oasis, a non-profit serving women and children in Paterson, NJ and this is her second appearance on the show. In the first show we talked about COVID and the poor. This time we're digging right onto Oasis and its mission and how it's doing.
Charity is incredibly similar to insurance. As I half joked once in comparing them: "One of them supplies resources to those in desperate need and hopefully enables them to pull themselves out of their difficult circumstances to lead a successful life. So does the other one." Insurers could do well to learn from Jen. And she has a remarkable track record, doubling the size of Oasis during her tenure and initiating many fascinating experiments and new initiatives in Paterson, NJ.
We discuss:
* How self-belief is the most important factor in women lifting themselves out of poverty
* How that feeling of self-belief is constructed, influenced and nurtured in and out of Oasis
* The difference between generational poverty and immigrant poverty
* What is the drop out rate (I was astonished) and how do they manage drop-outs
* Do the problems feel endless?
* What did they learn by extending Oasis into housing development?
* How to not create bureaucracy in solving problems
* How they handle the cultural complexity of women and children from 26 different countries (plus Paterson natives!)
* How the social consequences of COVID (lockdowns, etc) impacted poor families
* How much talent there is hidden in places like Paterson
show notes: https://notunreasonable.com/?p=7567
youtube: https://youtu.be/aWS7tSIe68Q

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My guest for this episode is Alex Tabarrok, the Bartley J. Madden Chair in Economics at the Mercatus Center and Professor of Economics at George Mason University, blogger at Marginalrevolution.com, co-founder of Marginal Revolution University and co-author with Eric Helland of "Why Are The Prices So Damn High?" which is short, free book and which we discuss on the show.
Alex has written many other books and papers and there is a theme of thinking about innovation throughout his work. Several years ago he wrote a book on the topic called "Launching the Innovation Renaissance" which we also touch on as well as how the era of a country's birth affects its institutional makeup, how national rivalries can generate positive externalities (pop quiz: what was NASA's budget as a % of US GDP at its peak?), whether and why there has been a decline in innovation (and what's the difference between innovation, entrepreneurship and economic growth?), where we might look for a model of education reform and how we might get there (what would a hollywood-style investment in education reform look like?) including Alex's own observations in launching his own education platform (marginal revolution university!), and much more!
Show Notes:
https://notunreasonable.com/2022/01/07/alex-tabarrok-on-innovation-and-the-baumol-effect/

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