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  #111  
Old 08-14-2016, 03:34 PM
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Originally Posted by bdschobel View Post
Having worked for a decade in the public sector (for SSA), I'll tell you that ranges are simply unacceptable in that environment. Politicians -- and their budget staffs -- demand point estimates. We actuaries know very well the uncertainty surrounding our estimates, but politicians just can't deal with it.

Bruce
Disclosures should be ranges, but required contributions may be based on point estimates.
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  #112  
Old 08-14-2016, 03:36 PM
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it's not just that the tax base increases, but the assumption is that the payroll increases at a particular rate

That is part of what happened to the Detroit pension, whch was supposedly so well-funded, (though it seems other things were excluded like the 13th check...apparently. I'm still trying to dig through files I was given). The payroll (and Detroit population) actually contracted, so the costs increased as % of payroll way out of line with what came before.
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  #113  
Old 08-14-2016, 04:02 PM
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Yeah, it's kinda funny how a Nobel Prize can give you unearned confidence. I'll take this opportunity to note that many of your posts are incomprehensible. I may not always be as perfectly informed as you seem to be, but I really really try to make my AO posts intelligible. I do the same with papers (although my priority in papers is precise language, sometimes at the expense of easy apprehension). Maybe my attempted attention to my audience leads to my low AO post count.

Thanks Mary Pat

BTW, Mary Pat, "Mary Pat" is a good handle. What's your real name? You too BDSchobel.
The Nobel Memorial prize for economics was established as a PR campaign for the field of economics. From Wikipedia:
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In his speech at the 1974 Nobel Prize banquet, Friedrich Hayek stated that had he been consulted on the establishment of a Nobel Prize in economics, he would "have decidedly advised against it"[24][28] primarily because, "The Nobel Prize confers on an individual an authority which in economics no man ought to possess.... This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence. But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally."
I'm nobody special, I'm not perfectly informed, and I'm not looking to advance myself on these forums. But I've studied topics that put bounds on competence and I'm trying to do a few things with that knowledge on these forums. (1) I'm trying to ascertain what people do and do not know. (2) I'm experimenting with randomizing my arguments on some topics to identify approaches with better traction. (3) Even where I don't have traction in an argument, I want to try to plant some interest in certain topics to see if I can influence people to develop them independently.

My goal is not necessarily for someone to understand something the first time they see it. That would be a wonderful outcome, but that's not necessary for success. I've seen plenty of examples of someone hearing something and not understanding it until they find themselves in a context where it clicks into place. So when I write a post I think about a number of things. I think about what I want someone to understand. I think about how much I think that I need to explain to them to get them there. I think about different approaches to explaining it. I think about what points might result in misunderstandings. I think about tradeoffs between writing more text to develop a point, versus writing less and having a greater chance that it will be read, albeit with a lower chance of being understood immediately.

This is a challenging problem. I don't expect absolute success and I am just looking for moves that generate a fraction of success.
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  #114  
Old 08-14-2016, 05:01 PM
DiscreteAndDiscreet DiscreteAndDiscreet is offline
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I'm pretty sure physicists do not lack arrogance. Intellectual and otherwise.

From my direct experience.
In physics they have a notion of nested models called renormalization groups where the coarse grained model of the electron is similar to the fine grained model of the electron, except with some parameters loaded to represent the average effect of interactions not modeled at the coarse level. Physics has well defined concepts of what is and isn't being modeled with different approaches and the fundamental limits on what physics can tell you. The established standard of credibility for new physics discoveries is an effect that is a 5 sigma outlier compared to background noise in the experimental apparatus.

That's an example of a discipline that has a very well honed institutional skepticism and deep study into the limitations of methods while making careful use of approximate understanding of their systems of study. Of course, they have the luxury of being a laboratory science where experiments can be constructed rather than needing to rely on a natural rate of observation of the environment.
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  #115  
Old 08-14-2016, 07:35 PM
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I think you just said that actuarial science isn't really a science. If so, I agree to some extent.
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  #116  
Old 08-14-2016, 08:05 PM
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I think you just said that actuarial science isn't really a science. If so, I agree to some extent.
Engineering is a better analogue for the actuarial profession. Engineers use a theory when it helps manage an outcome and engineers ignore a theory when other factors are more relevant to the outcome.

Engineers also tend not to believe that they can manage an outcome unless they already have a mental picture of the mechanisms needed to make it happen.
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  #117  
Old 08-14-2016, 08:16 PM
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Suggested message: you are defending internal due process of the AAA with arguments about precedents (that are unlikely to recur and hardly precedents anyhow) of other volunteers who will abscond with their own volunteer writings.

Wake up! Look outside! The damage you're doing to the profession's image and the reputation of all U.S. actuaries is far more important than your legalistic posturing. Too many lawyers.
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Dear Tom W.

Look outside your window:

http://www.economist.com/news/financ...o-love-actuary

Forget bureaucratic process. You need to attend to the brand we all share.

Try announcing that you never meant to imply legal action against the authors or any publishers.

Exactuary
It seems obvious (except to the respective leaderships) that the SOA & AAA are coming off as unreasonable bullies in this instance. As SOA & AAA are not going to be publishing this, why prevent the authors from publishing it on their own? What would be the harm to the SOA & AAA?
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  #118  
Old 08-15-2016, 11:00 AM
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https://calpensions.com/2016/08/15/d...-pension-debt/
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  #119  
Old 08-15-2016, 11:47 AM
Helen Sass Helen Sass is offline
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I think you just said that actuarial science isn't really a science. If so, I agree to some extent.
And here I was just about to apply string theory.

"If everything lines up exactly right, it will work out just fine"
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  #120  
Old 08-15-2016, 12:05 PM
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With any debate, it’s important to remember that there is no guarantee that one of the sides is correct. They can both be wrong, which I believe is the case in the traditional vs. financial economics pension debate.

My big disagreement with the 20th century financial economics position (my adjective added) is that it is not based on conventional science, when it certainly could have been. Conventional science, as used here, includes the process of making a hypothesis, then gathering empirical data and constructing a statistical model to reject, or fail to reject the hypothesis. The key 20th century financial economics for pensions hypothesis is that the correct value of pension liability can be determined by pretending that pension payments constitute a bond, and then by applying the standard bond valuation arithmetic. In the study that I’m working on, I calculate the market’s consensus of what S&P 500 pension liabilities were worth in 2013 (for non-frozen plans only) was about $400 billion less than the liability the plan sponsors calculate & disclose under ASC 715 – i.e., the reported liabilities were overstated by 30%.

The 20th century financial economics position is that the discount rate used to calculate ASC 715 liabilities is too high – they believe it should be a risk-free rate (not a Moodys AA rate). So, other than the effect of a salary scale assumption (reflected in ASC 715 liabilities), 20th century FE folks believe ASC 715 liabilities are understated – the opposite of what empirical data shows.
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