An adequate response to a Covid pandemic needs more views than what epidemiologists and statisticians can provide.

Sir, I refer to “Please put statisticians in charge of data for the next crisis” Sir David Norgrove, FT November 11.

July 2020, I tweeted:

Sweden kept all schools until 9th grade open. Parents of children in 9th grade are almost always less than 50 years of age. In Sweden, as of July 24, out of 5,687 Coronavirus deaths 71, 1.2%, were younger than 50 years.

Conclusion: Keep schools open, keep older teachers at home and have grandparents refrain from hugging their grandchildren. Disseminating data on COVID-19 without discriminating by age, is in essence misinformation.

https://x.com/PerKurowski/status/1287748338440314881?s=20

I had obtained the data for the above from: https://www.statista.com/statistics/1107913/number-of-coronavirus-deaths-in-sweden-by-age-groups/

October 2020 the Washington Post published a letter in which I opined:

“Roughly 90% of all coronavirus deaths will occur in those 60 years of age and older. 

Equally roughly 90% of the virus’s social and economic consequences will be paid by those younger than 60. It’s an intergenerational conflict of monstrous proportions."

https://www.washingtonpost.com/opinions/letters-to-the-editor/would-pursuing-herd-immunity-be-worth-it/2020/10/20/05a4f250-0fd0-11eb-b404-8d1e675ec701_story.html

March 2021 I tweeted:

“Georges Clemenceau’s “War is too serious a matter to entrust to military men” could be updated to: A Covid-19 response ‘is too serious a matter to entrust’ to epidemiologist”

https://twitter.com/PerKurowski/status/1373976328001687552?s=20

At this moment I feel that besides not entrusting epidemiologists I might have to include some statisticians e.g., from the UK Statistic Authority. They must have known it, so why did they not speak up?

June 2023 I asked ChatGPT-OpenAI:

"Suppose a virus hits a nation, and to its authorities it's evident that its mortality rate depends the most on age. In such a case, transmitting data to the population about the total number of deaths without discriminating this by age, could that be deemed to be misinformation?"

A.I. answered:

"In the scenario you described, if the authorities have clear evidence that the mortality rate of the virus is significantly influenced by age, transmitting data about the total number of deaths without providing any information or context about age distribution could be considered incomplete or potentially misleading information”

https://perkurowski.blogspot.com/2023/06/ai-chatgpt-openai-if-mortality-rate-of.html

Sir David Norgrove ends his opinion with “Churchill recognized the need for high quality statistics to help him run the war.”

In March 2020 I tweeted:

“In February, I visited Churchill War Rooms in London Reading UK’s plans of building up herd immunity against coronavirus, I have a feeling Winston would have agreed with such stiff upper lip policy: “I have nothing to offer but fever, coughing, chills and shortness of breath”

https://twitter.com/PerKurowski/status/1241749198971850758?s=20

Now I ask you Sir. Is this not a kind of document that should be presented to any Covid type of inquiry that, without fear and without favour, really dares to get to the bottom of the problems? 

@PerKurowski

The lack of statistical significance tests, p-value, does indeed allow much more, for “Irrefutable nonsense [to] rule”

Sir, Anjana Ahuja writes: “generally only studies with p-values lower than 0.05 are deemed to be of ‘statistical significance’. This magic number has calcified into the pivot on which science principally turns. Now, academics, [because of] “p-hacking”: cherry-picking experimental methods, slicing data and contorting statistical analyses to yield a desirable p-value, are arguing for “the entire concept of statistical significance to be abandoned”. “Beware making a fetish of an arbitrary number”, March 28.

But “John Ioannidis, from Stanford University, defends it a “convenient obstacle to unfounded claims”. Its absence, he warned, may unleash worse: ‘Irrefutable nonsense would rule.’”

What’s the p-value of the risk weighted bank capital requirements for banks not measuring the dangers to our bank systems correctly? I have no idea but I am sure that null hypothesis would not be rejected by a very long shot.

In fact to test, as null hypotheses, the current regulatory premises, that of what is ex ante perceived as risky being dangerous to our bank system, and that of what is ex ante perceived as safe being safe for our bank system, would surely return very low p-values and be rejected.

But Sir, no such statistical analysis was performed and so, in its absence, the “irrefutable nonsense [of the Basel Committee’s risk weighted capital requirements [does indeed] rule.”

PS. But anyone who has heard that saying attributed to Mark Twain of “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain”, would not really do research to understand the issue.

PS. Another null hypothesis that could be tested is roulette will survive the pay out for its different bets to be tilted in favor of "safer" bets on colors and against "riskier" bets on numbers.

@PerKurowski

If it now takes researchers much more time to come up with ideas, how much of that is caused by their consumption of distractions?

Sir, Diane Coyle writes that current productivity data does not consider what’s achieved through outsourcing since GDP excludes all the intermediate links in the chain and the additional value is netted out. If included “economic output would look somewhat better than the current statistics suggest. “Conventional measures pose the wrong productivity question” August 16.

But when Coyle refers to “a recent paper a group of economists from Stanford University and the Massachusetts Institute of Technology…calculate that it now takes more than 20 times the number of researchers to generate the same economic growth as it did in the 1930s.” I would have to ask: Does that calculation take due consideration of the ever-growing time researchers spend, not working, but consuming distraction on the cell phones or laptops?

Some months ago, in Bank of England’s “bankunderground” blog, we read a post by Dan Nixon titled “Is the economy suffering from the crisis of attention?” It said, “With the rise of smartphones in particular, the amount of stimuli competing for our attention throughout the day has exploded... we are more distracted than ever as a result of the battle for our attention. One study, for example, finds that we are distracted nearly 50% of the time.”

If those distractioninterruptions were recorded for what they really are, we would probably see a dramatic increase in productivity, in real salaries, in voluntary unemployment and in GDP.

In other words our current economic compasses might not be working properly, risking taking us in the wrong direction.

@PerKurowski

Instead of Andreas Georgiou, Greek courts should prosecute those who assigned Greece a 0% risk weight

Sir, Ulrich Baumgartner, Eduard Brau, Warren Coats and otherformer senior staff of the IMF launch a spirited defense of Mr Andreas Georgiou. They write that Georgiou, a respected authority in statistics, has been pursued relentlessly during seven years with lawsuit after lawsuit, for “bringing harm to Greece and dereliction of duty by refusing to falsify the figures.” “Greece should not hound man who refused to falsify the figures” June 7.

What “Georgiou and his Greek staff, helped by international experts” did was to produce corrections, “which showed a much bleaker picture than the earlier data, were vetted by Eurostat and accepted by the European Central Bank, the EU and the IMF as the basis for major financing.”

Amazing! If anything the courts should prosecute all those European central bankers and regulators who, for the purpose of their risk weighted capital requirements for banks, and knowing it did not merit it, assigned a 0% risk weight to Greece. Had it not been for that the governments of Greece would not have been able to build up that gargantuan level of public debt that was the primary cause of its crisis.

Since IMF, with its silence on it, has de facto endorsed that 0% risk weight, perhaps those here defending Mr Andreas Georgiou should start with a mea culpa. The world would very much appreciate that. It is way overdue.

To underestimate the strength of a nation causes its debt to cost more but, to overestimate it, causes excessive debts, which in my mind, as a citizen, is more dangerous.

Just imagine what would happen to a credit-rating agency if it was proven that it had knowingly assigned an undeserved an AAA rating?

What if a credit rating agency had knowingly assigned an undeserved AAA rating? European central bankers assigned an even worse 0% risk weight to Greece, which doomed Greece to excessive public debt… and they have yet not been held accountable for it in the slightest.

PS. And in the case of Greece EU violated a fundamental principle of a Union... solidarity.

PS. Even though none of these sovereigns can print euros on its own will, EU authorities assigned to all Eurozone sovereigns’ debts, a 0% risk weight.

@PerKurowski

Tim Harford, as an Undercover Statistician, why do you agree with the Basel Committee?

Sir, I refer to Tim Harford’s “Everything you need to know about statistics — on a postcard” February 10.

After reading it, I have one question for the Undercover Economist/Statistician, namely:

Why do you agree with the regulators’ statistics who, with their risk weighted capital requirements, opine that what is perceived as risky is more dangerous to the bank system than what is perceived as safe? Is that not crazy?

PS. ​Here is a​n aide-mémoire on the major mistakes with the risk based capital requirements

@PerKurowski

What if we in writing had to authorize phone companies to listen to our calls, in order to have access to phones?

Brooke Masters writes: “when I link our Amazon Echo speaker to my son’s Spotify account, I have no idea whether I am violating one of the thousands of terms and conditions he agreed to with his account. Furthermore, does that act give Amazon the right to send him advertisements based on the songs we play?” “Take ownership of the sharing economy” December 29.

She is absolutely right. The rights we seem to have to give up in order to gain access to social media and alike, though defined in small letters in thousands of unreadable pages, is one of the most undefined issues of our time.

Some questions:

Should the marginal cost for social media owners to access, and waste, so much of our limited attention span, be zero?

Should we be able to copyright our own preferences so that we at least can have something to negotiate with?

How much can we allow being distracted during working hours before our employer has the right to deduct our salaries paid?

How will such working hours distractions be accounted for in employment statistics?

How is all this free or very cheap consumption paid by used attention spans be accounted for, for instance in GNP figures?

Should social media owners be allowed to impose their own rules or should that not be subject to some kind of a special arbitration panel?

How our global differences be managed? Does a government that interferes with its citizens’ rights of access to social media have access to other web sites of other nations?

@PerKurowski

What does going from a 10% to a 50% level of distraction signify for full-time employees’ real salaries?

Sir, Sarah O’Connor writes “Males in well-paid full-time employment, earning 2.5 times the median wage, are now working slightly longer hours on average than two decades ago, according to the Resolution Foundation, a think-tank.” “Robots will drive us to rethink the way we distribute work” November 29.

In Bank of England’s “bankunderground" blog we recently read: “With the rise of smartphones in particular, the amount of stimuli competing for our attention throughout the day has exploded... we are more distracted than ever as a result of the battle for our attention. One study, for example, finds that we are distracted nearly 50% of the time.”

So if 50% of the time is now spend being distracted, and since those not employed full time are not equally remunerated for distractions, that of “earning 2.5 times the median wage”, could de facto be a serious understatement.

Sir, just think about what going from for instance a 10% to a 50% distraction signifies to full time employees’ real salaries. Fabulous increases!

PS. And what is its impact on productivity in terms that less effective working time is being put into production?

PS. Or what would the real employment rate be if we deduct the hours engaged in distractions? A statistical nightmare? Will we ever be able to compare apples with apples again?

PS. And how should all these working hours consumed with distractions be considered in GDP figures?

PS. Robots will not only drive us to rethink the way we distribute work. It also forces us to think about how to create decent and worthy unemployments.

@PerKurowski

Eliminating bank failures by means of risk-weighted capital requirements, just sounded too good to be questioned.

Tim Harford discussing statistics writes: “We often pay attention to the wrong thing, scrutinising the numbers with a forensic eye without asking about what those numbers really describe. Sometimes there is no intent to deceive; there doesn’t need to be… We deceive ourselves… If we don’t understand the definition there is little point in looking at the numbers. We have fooled ourselves before we have begun.” “Where the truth lies with statistics” May 13.

Indeed and one of the reasons we fool ourselves is that what those statistics are supposed to offer us, sound so attractive that we ignore to look to closely at them.

Basel I and II offered: “In order to make your banks safe we are going to require these to hold capital based on the risks they take”. Who would say no to such an offer? It sounded so attractive that all were willing to overlook that the formulas and calculations provided had nothing to do with the failure of banks, but all to do with the failure of the clients of the banks, which of course is pas la meme chose.

The Basel II offer also included: “And if you order now, we also throw in, for free, those few experts that can expertly decide for all of us what’s risky or not, namely the credit rating agencies”

Basel III now offers: “And if you order now, we also throw in, for free, some liquidity weighted assets requirements holdings that will guarantee banks have the money available to repay when asked”

In short, because regulators offered the moon, the world was gladly disposed to accept anything, even if it would be something like going back to a geocentrically view of the world.

As long as bank regulators, even in the face of failures, are capable with such straight faces insist in that they can make our banks safe, it seems we can’t refrain from believing them. Sir, we are indeed a sorry bunch.

PS. Here are some questions that seemingly are not to be made less we must abandon our hopes that regulators know what they are doing.

@PerKurowski

Global supply chains should and will change, as robots and automation substitute more and more for cheap labor.

Sir, Shawn Donnan, referring to a recent report by the World Bank writes that a “report by World Bank economists yesterday highlights the fragile state of one historically important engine of global growth — trade” “Policy uncertainty threatens trade growth, says World Bank” February 22.

And he follows up with “One of the big consequences of the explosion in trade agreements in recent decades has been the emergence of global supply chains. Such chains are widely seen by economists to have made businesses more efficient and to have helped boost productivity”

Indeed, but certainly more than policy uncertainty, what could currently affect global supply chains, is that these were based on cheap labor, and more and more cheap labor is being substituted by even cheaper and cheaper robots and automation.

What amazes me is that it is almost impossible to find any statistics; from for instance the World Bank, IMF and OECD, on how many jobs have effectively been taken over by robots and automation, for instance the last year. That to me sure represents a big lacking of data required for projecting tomorrow. 

@PerKurowski

The bank regulatory absurdity, and the journalistic irresponsibility of FT ignoring it are both of epic proportions.

Sir, Angus Deaton writes: “the role of politics needs to be understood, and built in to any careful interpretation of the data. We must always work from multiple sources, and look deep into the cogs and wheels.”, “Statistical objectivity is a cloak spun from political yarn” November 3.

Indeed and among those most responsible for “looking deep into the cogs and wheels” must be the press, the journalists. But too often they don’t.

For instance, during the last decade I have sent the Financial Times over 2.000 letters that on my Tea with FT blog have the label of “subprime banking regulations”.

In these letters I have argued that the credit-risk weighted capital requirements for banks, introduce a regulatory credit-risk aversion that dangerously distorts the allocation of bank credit to the real economy. And because the risk weights are based on the intrinsic riskiness of the assets, and not on the risk for the banks of those assets, it does not help the banking system to become any safer, in fact, just the opposite.

For instance Basel II had a basic 8 percent capital requirement. That, when risk weighted 20% for what was rated AAA to AA, resulted in a 1.6 percent capital requirement, an authorized 62.5 to 1 leverage. And, when risk weighted 150 % for what had a credit rating of below BB-, it resulted in a 12 percent capital requirement, an authorized leverage of 8.3 to 1.

Sir, explain to me, what kind of analysis can justify that loans to those rated below BB-, always awarded in much smaller amounts and with much higher risk premiums, are 7.5 times riskier than huge exposures, with very low risk premiums, to what is AAA to AA rated? 

When have ever those rated below BB- represented more dangers than those rated AAA and who could have a too good credit rating?

Minds capable of such regulatory nonsense should clearly not be allowed to regulate our banks… or promoted to other important posts. Bankers might quite often be dumb, but in general they are not suicidal.

Sir, the Basel Committee’s regulatory absurdity is of epical proportions. And FT’s journalistic irresponsibility ignoring that absurdity is equally of epical proportions.

On April 24, I thought you had finally understood what all was about, when you published your “Banking cannot prosper within a culture of fear”, but seemingly I was wrong.

PS: The capital requirement for banks when holding AAA to AA rated sovereign debt was set at zero percent in Basel I and II. If a bank held only these safe assets, with current negative interests, this would break the bank in just a few days.

@PerKurowski ©

Britain’s Royal Statistical Society, for our sake, please give also bank regulators a course in statistics.

Sir, Anjana Ahuja reports that “Britain’s Royal Statistical Society has launched the #ParliamentCounts campaign, offering all MPs a free training course in statistics”, “Our collective innumeracy adds up to a big problem”, April 20.

What a marvelous initiative. I just hope they could follow it up with a similar course for our bank regulators. I say this because the regulators, while trying to make our banks safer by setting their risk-weighted equity requirements for banks, have been looking at the completely wrong series of statistics. Instead of looking at why banks failed, they have been looking at the risks of bank assets, how bank clients fail, and all of us who have some basic knowledge about statistics know very well that c'est pas la même chose.

That lack of elemental statistical knowledge caused bank regulators to set higher bank equity requirements against assets perceived as “risky” when in fact, what is truly dangerous for banks, have always been assets erroneously perceived as absolutely safe.

PS. April 21 I send the Members of the Royal Statistical Society a letter requesting an urgent Statistical Literacy Initiative