Board game recommendations (and reasons to use them)

I’ve played plenty of board games in my life. I’m not (only) talking about Monopoly.

I went to Cambridge (to visit, very sadly, not to study) in 2003. I found an awesome board game store and tried to buy Diplomacy.  The incredibly wise assistant basically forced me to buy Settlers of Catan before he would allow me to buy Diplomacy.

About Settlers of Catan

I have played hundreds of hours of Settlers, and recently gave Diplomacy away never having played it. I still believe it’s an awesome game.  (Strategy, relationships, IQ and EQ, competition and a little backstabbing. What’s not to like?) However, it  requires having enough people, the right sort of people. enough time (a weekend apparently is ideal) and ideally a couple people who have played before because it is complicated.

Now, Settlers has plenty of scope for tension as it is.  I kicked my best friend out of my flat once after a kingmaking incident. I’ve had arguments with significant others over games. And this is Settlers, not Diplomacy.

Do I recommend Settlers? Continue reading “Board game recommendations (and reasons to use them)”

Modelling one side of a two-sided problem

Ah models, my old friends. You’re always wrong, but sometimes helpful. Often dangerous too.

A recent article in The Actuary magazine addressed whether “de-risking in members’ best interests?”  I say “recent” even though it’s from August because I am a little behind on my The Actuary reading.

In the article, the authors demonstrate that by modelling the impact of covenant risk, optimal investment portfolios for Defined Benefit (DB) pensions actually have more risky assets than if this covenant risk is ignored.

The covenant they refer to is the obligation of the sponsor to make good deficits within the pension fund. Covenant risk then is the risk that the sponsor is unable (typically through its own insolvency) to make good on this promise.

On the surface it should seem counterintuitive that by modelling an additional risk to pensioners, the answer is to invest in riskier assets, thus increasing risk.

The explanation proffered by the authors is that the higher expected returns from riskier assets allow the fund to potentially build up surplus, thus reducing the risks of covenant failure.

I can follow that logic, particularly in the case where the dependence between DB fund insolvency and sponsor default is week. It doesn’t mean it’s a useful result. Continue reading “Modelling one side of a two-sided problem”

Claims analysis, inflation and discounting (part 2)

This is part 2 of a 3 part series. Part 1 is here.

Non-life claims reserves are regularly not discounted, for bad reasons and good. This part of the series looks at the related issue of inflation in claims reserving. (You’ll have to wait for part 3 for me to talk about the analysis that prompted this lengthy series.)

In many markets, inflation is low and stable. Until a decade ago, talk of inflation wouldn’t have raised much in the way of deflation either. That’s still sufficiently unusual to put to one side.

Low, stable inflation means that past claims development patterns are mostly about, in approximate descending order of importance (naturally depending on class and peril) Continue reading “Claims analysis, inflation and discounting (part 2)”

CT Water: News come 4 October?

Not much of value in this shoddily wording reporting on CT’s water shortage, except that we will hear an official update on the water disaster plan on 4 October.

This is a topic of direct personal and business relevance, but also of a technical forecasting and measurement perspective. Very little I’ve seen so far gives my confidence in the forecasting, which is either because of poor forecasting or from very limited communication.

I don’t know which bothers me more.

31, 151 and what comes next

This is my first new post in over two years. There are many reasons for that, and I may get into that in a future post.  As to why I’m restarting – a conversation with an old friend last night combined with a lunch discussion with an actuarial student a couple of weeks ago has inspired me to attempt to, temporarily at least, restart my blog.

I’m going further than just restarting, I’m committing to a new blog post each day for October. Now the reasons for having stopped blogging haven’t suddenly changed, so it’s likely that some of these posts will be short. (And similarly, some of them long.) Since the decision was made last night, I also haven’t though through anything like a full plan for the month.  I invite you along to see how it goes.

I’m probably not alone in being slightly more jaded, slightly less optimistic than I was two years ago. A summary of the two years might make its way into another post, more to help me collect my thoughts than anything else.

Cape Town is experiencing an intense, multi-year drought and there is a real possibility of the city running out of water before next winter. I will definitely be blogging more about the vacuum of credible communication and forecasting on this front in a later post. For now, a single-purpose website http://www.howmanydaysofwaterdoescapetownhaveleft.co.za/  is currently proclaims (they update weekly, I think, based on updated weekly reports of dam levels) that we have 151 days of water left and will run out of useable water on 1 March 2018.

For now, the claims of cholera in Puerto Rico have not been proven, but it does feel like it’s only a matter of time. Anyone fretting over drinking water in Cape Town should probably bump diseases such as cholera up their list.

The official position of the City of Cape Town is still “we won’t run out of water”, but there are reasons to doubt this and be concerned. I’m keen to work out objectively what the level of risk is. To that end, it would have been useful to be able to dissect the http://www.howmanydaysofwaterdoescapetownhaveleft.co.za/  methodology to understand how credible their forecast is. This is the entire disclosure of their methodology:

Using our recent consumption as a model for future usage, we’re predicting that dam levels will reach 10% on the 1st of March, 2018.

I’m not losing sleep over their forecast. So for now, sleep.

When is revenue lost?

In respect for Nelson Mandela’s death and funeral, many retailers closed yesterday for the day. This Business Day article claims a R300m loss for the retail industry as a result.

Except, no. Some fraction of those sales might be permanently lost, but the income hasn’t been spent and the cash still sits in shoppers’ pockets. The R300m is mostly just delayed.

There will be some impact where closed shops sacrifice sales to open shops.

There might even be some small amount of decreased consumption and therefore increased saving. The article headline wasn’t, “Retailers sacrifice means an increase of R300m in personal savings.”

This is part of an ongoing trend (probably for hundreds of years) for journalists, even respected financial journalists working at a respect newspaper, to seek the most impressive headline. It also reflects our very human tendency to ignore second order effects. Which is a pity because that’s where the really interesting analysis lies.

Does being richer make you feel better than being cooler?

Economists (and actuaries) like to measure things.

The easier to measure and the more reliable the measure, the more we like to measure it. This is not unlike the drunk looking for his keys under the street lamp because that’s where the light is even if it isn’t where he dropped the keys.

Sometimes the most important things to measure are very difficult to measure reliably. Happiness is one of these things.  Economists have been trying to measure this for decades with interesting, counter-intuitive and sometimes contradictory results.

Recent research suggests that maybe money does make people happier after all.

Three Years of Mumbling

I can’t believe how the same blog post is basically exactly relevant, word for word, 3 years later.

Eskom produces electricity for the country and makes a profit or a loss doing so. This profit or loss goes back into treasury, which, inefficiencies aside, belongs collectively to the citizens of South Africa.

If prices are too low and Eskom makes a loss, this shortfall must be made up through higher taxes or lower government spending. If Eskom is not given additional capital, it will have to stop buying coal and stop investing in new infrastructure.

Read more about Mumbling in the Dark in 2009