Wednesday, May 26, 2010

An anthropologist on Wall Street

FT's Gillian Tett reviews Liquidated: An Ethnography of Wall Street, by anthropologist Karen Ho (see also this Time interview). Ho did three years of "field research" as an employee of Bankers Trust during the mid to late 90s, taking time off from graduate school at Princeton. Tett, trained in anthropology herself, did an excellent job covering the credit crisis. She writes insightfully below.

For an anthropologist's take on high energy physics, see here. The ideas of Bourdieu are just as relevant; see, for instance, the power to consecrate :-)

Financial Times: When I first started covering finance for the FT, I used to get embarrassed when asked about my academic past. Before I became a journalist, I did a PhD in social anthropology, a branch of social science that endeavours to understand the cultural dynamics of societies based on grass-roots analysis.

Back in the pre-credit crisis days, bankers tended to consider degrees in anthropology to be rather “hippy”. As one banker told me; the only qualifications that really commanded status were those linked to economics, maths, physics and other “hard” sciences – or, at a pinch, an MBA.

Not anymore. As the financial disasters of the past two years have unfolded, it has become painfully clear that bankers placed far too much faith on their quasi-scientific models. It has also been evident that a grasp of cultural dynamics is critical in understanding how modern finance works – or doesn’t. Consequently, the idea of using the social sciences to understand money is becoming fashionable in some quarters.

Given all that, Karen Ho has picked an excellent time to publish her fascinating new study – or “ethnography” – of Wall Street banks. Ho is currently a professor of social anthropology at the University of Minnesota. A decade ago, however, she was an employee of Bankers Trust, formerly a powerful Wall Street banking giant, and carried out research among a number of banks.

As field-sites go, Wall Street is not classic anthropological territory: ethnographers typically work in remote, third-world societies. Ho admits that studying banking tribes was hard: “The very notion of pitching a tent at the Rockefellers’ yard, in the lobby of JP Morgan or on the floor of the New York Stock Exchange is not only implausible but also might be limiting and ill-suited to a study of the ‘power elite’,” she writes.

Ho nevertheless embarked on her study in classic anthropological manner: by blending into the background, listening intently, in a non-judgmental way – and then trying to join up the dots to get a “holistic” picture of how the culture works. That patient ethnographic analysis has produced a fascinating portrait that will be refreshingly novel to most bankers.

Ho’s central argument borrows heavily from the work of Pierre Bourdieu, a sociologist/anthropologist who was part of a school of Gallic thought that emerged in Paris in the 1970s. Bourdieu conducted his fieldwork in classic anthropological style in a north African tribal group, where he developed the concept of the “habitus” – the idea that a society develops a cognitive map to order its world that is usually based on its physical experience, albeit in ways the participants are only dimly aware of.

In the case of Wall Street, Ho argues that the “habitus” is shaped by bankers’ educational experience and employment history. Modern financiers live in a world where jobs are insecure, and where bankers are paid by trading things or cutting deals. They tend to project their experience on to the economy by aspiring to make everything “liquid”, or tradable, including jobs and people. These projections are typically couched in the rhetoric of “shareholder values” or abstract concepts of “free-market capitalism” – presented as absolute “truths”.

Ho argues, however, that many of these “truths” are riddled with contradictions that bankers ignore because they are seduced by their own rhetoric. “Massive corporate restructurings are not caused so much by abstract financial models as by the local, cultural habitus of investment bankers, the mission-driven narratives of shareholder value and the institutional culture of Wall Street,” she writes.

Mainstream readers may find this language off-puttingly academic; it is written primarily for a university crowd. Yet Ho peppers her account with revealing eyewitness stories. She describes how investment banks operate an unspoken caste system that divides the elite “front office”, from the lowlier “middle” and “back” offices. She analyses the quasi “kinship” networks based on university alumni . Most fascinating of all is her account of how Wall Street becomes deluded by its own rhetoric about “market efficiency”.

Some bankers may still dub this “hippy”. But if only a few more had been willing to analyse their sector’s cultural foibles, the financial world might not be quite in the mess it is today. I, for one, would vote that Ho’s account becomes mandatory reading on any MBA (or investment banking course); if nothing else, it might be more entertaining than the other texts that bankers swallow so uncritically.

Monday, May 24, 2010

Psychometric thresholds for physics and mathematics

This is a follow up to our earlier paper on GPA-SAT correlations. Click below for the pdf.
Non-linear Psychometric Thresholds for Physics and Mathematics

Stephen D.H. Hsu, James Schombert

We analyze 5 years of student records at the University of Oregon to estimate the probability of success (as deﬁned by superior undergraduate record; sufficient for admission to graduate school) in Physics and Mathematics as a function of SAT-M score. We ﬁnd evidence of a non-linear threshold: below SAT-M score of roughly 600, the probability of success is very low. Interestingly, no similar threshold exists in other majors, such as Sociology, History, English or Biology, whether on SAT combined, SAT-R or SAT-M. Our ﬁndings have signiﬁcant implications for the demographic makeup of graduate populations in mathematically intensive subjects, given the current distribution of SAT-M scores.
There is clearly something different about the physics and math GPA vs SAT distributions compared to all of the other majors we looked at (see figure 1 in the paper). In the other majors (history, sociology, etc.) it appears that hard work can compensate for low SAT score. But that is not the case in math and physics.

One interesting question is whether the apparent cognitive threshold is a linear or non-linear effect. Our data suggests that the probability of doing well in any particular quarter of introductory physics may be linear with SAT-M, but the probability of having a high cumulative GPA in physics or math is very non-linear in SAT-M. See figure below: the red line is the upper bound at 95% confidence level on the probability of getting an A in a particular quarter of introductory physics, and the blue line is an upper bound on the probability of earning a cumulative GPA of at least 3.5 or so. The central values of these probabilities are much lower than the 95% confidence upper bounds: to have a 50% chance of GPA > 3.5 requires SAT-M in the top few percent of the population, judging just by the distribution of individuals in our sample. The confidence intervals are larger in the tails because the number of individuals is small.

Fig. 4.— Probability charts for SAT Math versus grades in Physics classes. For each SAT bin, the number of A-type grades (n) is listed along with the total number of grades per bin (N). The red line displays the 95% probability P(95%) and the blue symbols display an upper bound on the probability that a student will achieve 8 or more A’s out of 16 courses (typically necessary for an upper division GPA of 3.5.) Click image for better version.

Sunday, May 23, 2010

Pride forever

For a decade beginning in 1997 Pride FC was the leading MMA organization in the world. They had the strongest fighters, largest budget and best production values. The Japanese promotion ran into financial difficulties and went under in 2007, but serious fans will always remember the Pride decade with great fondness.

Students of the sport of MMA will note that subtle rule differences between Pride and the UFC had significant impact. UFC rules slightly favor wrestlers -- for example, knees and kicks to the head of a kneeling opponent are illegal, reducing the risk for a wrestler shooting a lower body takedown.

Thursday, May 20, 2010

Temps perdu

1986 -- pounding pitchers with some Sigma Chi's at Kip's. Berkeley frats rented extra rooms in the summer, and some of the coed boarders were with us.

"Gettin' pretty heated!"


"Drunk, buzzed."

"Yeah, we're heated."

"So are they ..." Nods across the table. "Which one do you like?"

"The small one would be more fun, but the big one wants it."

"You know, they can hear us."

Dark energy, with Signatures

New paper! This was selected for Honorable Mention in the 2010 Gravity Research Foundation Essay awards.

Dark Energy, with Signatures

Sourish Dutta, Stephen D. H. Hsu, Robert J. Scherrer

We propose a class of simple dark energy models which predict a late-time dark radiation component and a distinctive time-dependent equation of state $w(z)$ for redshift $z < 3$. The dark energy field can be coupled strongly enough to Standard Model particles to be detected in colliders, and the model requires only modest additional particle content and little or no fine-tuning other than a new energy scale of order milli-electron volts.

Friday, May 14, 2010

Sex, Drugs and CDOs

This book is a novelization of the events surrounding the credit crisis, as viewed by a junior banker on the rise. In addition to simple introductions to securitization, CDOs, CDS, SIVs, etc. (including figures that might have been drawn on Cristal-stained cocktail napkins) there is plenty of insight into the psychology of bankers and the sometimes tawdry client-banker relationship on the sell side. Amazon: US edition , UK edition (more reviews).

Readers unfamiliar with Wall Street and The City may find the various banker shenanigans depicted surprising. Yes, client meetings really do happen at strip clubs and in the presence of call girls. But the more substantive point that readers should note is just how intense the demand was for CDO products. There are many scenes in the book in which the protagonist's main problem is dealing with incensed clients whose orders for CDO allocations have not been filled due to excess demand. As we heap blame on CDO issuers we might think a bit about the buyers of the securities and why they were so stupid.

The author, Tetsuya Ishikawa, was educated at Eton and Oxford and worked at several major banks including Goldman, where he was peripherally involved in the Abacus deal. For more, including video interviews, see his blog.

Wednesday, May 12, 2010

What everyday things tell us about the universe

Science writer Marcus Chown's new book is full of marvelous introductions to fundamental physics, motivated through everyday observations. I recommend it to non-scientists and also to scientists looking for new perspectives on physics and how to explain it to ordinary people.

See also this review by Chad Orzel. In the interest of disclosure, I should note that Chown covered some of my research in this New Scientist article, an expanded version of which appears as a chapter in the book.

The title is based on a discussion of absorption of light by atoms: how does an atom absorb light with wavelength 500 times larger than the atom itself?

An atom, according to our theory of matter, is a tiny, localised thing like a microscopic billiard ball. Light, on the other hand, is a spread-out thing like a ripple on a pond. Take visible light. A convenient measure of its size is its wavelength - the distance it travels during a complete up-and-down oscillation, or double the separation of successive wave crests. The wavelength of visible light is about 5000 times bigger than atom. Imagine you have a matchbox. You open it and out drives a 40-tonne truck. Or say a 40-tonne truck is driving towards you, you open your matchbox and the truck disappears inside. Ridiculous? But this is precisely the paradox that exists at the interface where light meets matter.

I particularly like Chown's way of introducing quantum randomness by considering photons and a pane of glass:

If light behaves as a stream of particles – and this is the point of this discussion – it has serious implications for understanding why you can see the reflection of your face in a window. Why? Well, what is perfectly straightforward to explain if light is a wave – remember the wave from the speedboat hitting the partially submerged wood and being partially reflected – is fiendishly difficult to explain if light is instead a stream of bullet-like particles. Photons, after all, are identical. However, if they are identical, surely they should be affected identically by a pane of glass? Either they should all be transmitted or they should all be reflected. So how can 95 per cent can go through and 5 per cent bounce back?

This is a classic case of a physical paradox - a situation in which one theory, the particle theory of light, predicts one thing, whereas our common sense experience tells us something contradictory. Our experience is clearly trustworthy - we can indeed see the scene outside a window and simultaneously the faint reflection of our face. Consequently, something must be awry with our idea of photons.

There is only one logical possibility. Each photon must have a 95 per cent chance of being transmitted and a 5 per cent chance of being reflected. It may seem an innocuous fact. However, it is actually a bombshell dropped into the heart of physics. For, if we can know only the chance, or "probability", of a photon going through a window or coming back, then we have tacitly given up all hope of knowing for sure what an individual photon will actually do. As realised by Einstein - ironically, the first person to propose the existence of the photon - this was a catastrophe for physics. It was utterly incompatible with everything that had gone before. Physics was a recipe for predicting the future with total confidence. If, at midnight, the Moon is over here in the sky, using Newton's law of gravity we can predict that at the same time tomorrow night it will be over there - with 100 per cent certainty. But take a photon impinging on a window pane. We can never predict with certainty what it will do. Whether it is transmitted or reflected is totally utterly random, determined solely by the vagaries of chance.


In the day-to-day world every event is triggered by a prior event. A cause always precedes an effect. The dice comes up the number it does because of the effect of all the forces acting on it. You trip and stumble while out walking because a paving stone is loose and catches the heel of your shoe. But what a photon does on encountering a window pane is triggered by no prior event. It is an effect without a cause. Though the probability of a dice coming up “six” can be determined in principle, the probability of a photon going through a window can be determined from no prior event, no hidden machinery whirring beneath the skin of reality. It is nature's bedrock, its bottom line. There is nothing deeper. For some mysterious reason, the Universe is simply constructed this way [4].

The kind of unpredictability that characterises photons at a window pane in fact characterises their behaviour in all conceivable circumstances. And, actually, typical of the behaviour of not just photons but all denizens of the microscopic world of atoms and their constituents - the ultimate building blocks of reality. An atom of radium can disintegrate, or "decay", its central "nucleus", exploding violently like an tiny grenade. But there is no absolutely no possibility of predicting exactly when an individual radium nucleus will self-destruct, only the probability that it will happen within a particular interval of time.

The unpredictability of the microscopic world is not like anything human beings have ever come across before. It is something entirely new under the sun. This is why Einstein got the Nobel Prize for deducing the particle-like nature of light from the photoelectric effect and not for the theory of relativity. He – and the Nobel committee – realised it was a truly revolutionary discovery.

The recognition that the microscopic world is ultimately controlled by irreducible, random chance is probably the single most shocking discovery in the history of science. Ironically, it so appalled Einstein that he famously declared: "God does not play dice with the universe." (The great quantum pioneer Niels Bohr retorted: “Stop telling God what to do with his dice.”). He steadfastly refused to believe that things at a fundamental level in the Universe happened for no reason at all. The bitter irony, not lost on Einstein, was that he was the one who, by postulating the existence of the photon, had inadvertently set loose the genie of randomness in the heart of physics [5].

Chown, whose education in physics led him to graduate school at Caltech, has also written an acclaimed children's book :-)

Why did you decide to write for children after being a successful popular science writer?

MC: When I was at school my favourite subjects were English and Physics. But it was impossible to do both. So I ended up pursuing Physics, ending up at the California Institute of Technology in Pasadena doing radio astronomy. It was there that I thought: “No, this is not for me.” and decided to try and get back into writing. I worked as an editor on “New Scientist”, then left to go freelance when I started writing popular science books. But the books were the route of least daring since they were only a short step from science journalism. But I always wanted to get back to the kind of things I liked at school and write things that were more imaginative and more me. I have many unfinished stories, novel ideas etc. But, for some reason, I thought I would write a children’s story. And that was the thing I pursued through the inevitable rejections by publishers. I actually discovered, when I started, that it was a lot of fun, not the chore that some factual writing can be. Now I want to do more!

Tuesday, May 11, 2010

Frank Frazetta dead at 82

NYTimes obituary. Frazetta's art graced the covers of all the Conan pulps I read as a kid. See here for more.

I always preferred Frazetta to his competitor Boris Vallejo because Frazetta's subtle textures left more to the imagination -- his covers hinted at dark mysteries yet undiscovered.

"Egyptian Queen"


Sunday, May 09, 2010

Climate change priors and posteriors

I recommend this nice discussion of climate change on Andrew Gelman's blog. Physicist Phil, the guest-author of the post, gives his prior and posterior probability distribution for temperature sensitivity as a function of CO2 density. I guess I'm somewhere between Skeptic and Phil Prior.

As an aside, I think it is worth distinguishing between a situation where one has a high confidence level about a probability distribution (e.g., at an honest casino game like roulette or blackjack) versus in the real world, where even the pdf itself isn't known with any confidence (Knightian uncertainty). Personally, I am in the latter situation with climate science.

Here is an excerpt from a skeptic's comment on the post:

... So where are we on global climate change? We have some basic physics that predicts some warming caused by CO2, but a lot of positive and negative feedbacks that could amplify and attenuate temperature increases. We have computer models we can't trust for a variety of reasons. We have temperature station data that might have been corrupted by arbitrary "adjustments" to produce a warming trend. We have the north polar ice area decreasing, while the south polar ice area is constant or increasing. Next year an earth satellite will launch that should give us good measurements of polar ice thickness using radar. Let's hope that data doesn't get corrupted. We have some alternate theories to explain temperature increases such as cosmic ray flux. All this adds up to a confused and uncertain picture. The science is hardly "settled."

Finally the public is not buying AGW. Anyone with common sense can see that the big funding governments have poured into climate science has corrupted it. Until this whole thing gets an independent review from trustworthy people, it will not enjoy general acceptance. You can look for that at the ballot box next year.

For a dose of (justified?) certitude, see this angry letter, signed by numerous National Academy of Science members, that appeared in Science last week. See here for a systematic study of the record of expert predictions about complex systems. Scientists are only slightly less susceptible than others to group think.

Saturday, May 08, 2010

Assortative mating and the far tail of intelligence

A Fermi estimate of the increase in the tail population due to elitism, mobility and assortative mating. My conclusion is that there has been a significant increase in the number of kids in the far tail relative to, say, just one or two generations ago. I think my assumptions below are fairly realistic. (Note to non-scientists: this is only an order of magnitude calculation!)

My original estimate was off -- see erratum 2 below and this updated post

US birth cohort roughly 4 million.

Roughly few hundred kids at +4 SD ability (taking into account an excess over the normal distribution prediction; past assortative mating is probably one of the main causes of this excess ;-). What are these kids like? See here or here.

Number of +3 SD graduates per year from elite universities (average at these universities is above +2 SD): 10,000
(Note: a significant chunk of the roughly 40k +3 SD population!)

Plausible additional number of +3 SD / +3 SD marriages due to elitism and assortative mating, relative to one or two generations ago: + 1000 per annum

Number of additional +4 SD children produced, assuming, e.g., heritability of .8 (so, +4 SD kids are +1.6 SD from parental midpoint adjusted for regression): + 100 per annum

This ignores any environmental advantage to a child from having two +3 SD parents; but that effect might be small.

This enhancement of the tail population doesn't imply anything about the average intelligence of the overall population -- it is due to a concentration of good genes in a small sub-population that has been filtered by psychometric exams like the SAT, GRE and LSAT. I suspect that immigration (e.g., foreign graduate students at top programs, engineers coming to Silicon Valley, etc.) produces an effect of similar or even larger size.

Erratum 1: I kept screwing up the most important part of the calculation: what the mean IQ of children of +3/+3 SD parents would be. (See comments below from Carson Chow and Henry Harpending.)

Rather than continuing to try to do it in my head I looked up the result in Gillespie's Population Genetics (p.113) and the result is that the correlation between offspring and midparent is h^2 = heritability.

If the parental midpoint is +3 SD, then the children are distributed around an average of +3 h^2.

I had originally assumed h^2 = .8 which leads to +3 (.8) = +2.4, which requires a +1.6 fluctuation to produce a +4 kid. The odds of that are about 1/20.

If heritability is much lower, like .5, then it requires a +2.5 fluctuation to get a +4 SD kid and the effect of assortative mating is small.

Note, I have also been assuming that the residual variance among the +3/+3 kids is the full 15 point SD of the general population distribution. Probably the variance should be lower, but this requires us to go beyond the simplest models of additive genetic variance. ...

Erratum 2: After a bit more research, I would guess that the additive portion of genetic variance is no more than .5 or so. The high values of heritability typically quoted (e.g., .8) are broad sense heritabilities which include both additive and non-additive variance. The non-additive part results from dominance, gene interactions, etc. and does not allow a simple prediction of offspring qualities from the parental midpoint. So the result given above for h^2 = .5 is probably the largest effect we can expect from assortative mating, and it is not as large as I originally thought. A second point is that the residual variance once parental midpoint is fixed (i.e., exhibited by siblings) is probably smaller than 15 points. If narrow sense (additive) heritability is .5 then the remaining variability would have SD of about 11 points. This further reduces the chances of getting a +4 SD kid.

For parental midpoint n (in SD units), the probability of a child who exceeds this midpoint is

1 - erf( n sqrt ( 1 - h^2) )

where h^2 is the narrow sense or additive heritability. To see this, note that the mean among the offspring would be n h^2 , so the required upward fluctuation is n ( 1 - h^2 ) , but relative to the remaining variance, which has SD = sqrt ( 1- h^2 ). The probability of a child surpassing superior parents gets smaller the more exceptional the parents, however the probability is much higher than for a random child selected from the general population: 1 - erf(n). This would also be the result for any choice of parents if narrow sense heritability is zero. On the other hand if h^2 = 1 then all children would equal their parental midpoint: 1 - erf(0) = 1.

Note, throughout this discussion I have assumed no environmental boost from being raised by exceptional parents.

Thursday, May 06, 2010

Humans interbred with Neanderthals

The papers from Paabo's group are available at the Science web site:

Special Feature

News focus

A Draft Sequence of the Neandertal Genome

Targeted Investigation of the Neandertal Genome by Array-Based Sequence Capture.

They describe the results of a shotgun sequencing of several Neanderthal genomes, which provide strong evidence for introgression of Neanderthal DNA into the human lineage from interbreeding. From the overview:

... Substantial controversy surrounds the question of whether Neandertals interbred with modern humans. To address this question, Green et al. tested whether Neandertals are more closely related to some present-day humans than to others.* Because modern humans are believed to have originated in Africa, if Neandertals diverged from modern humans before present-day populations began to differentiate, one would expect Neandertal sequences to match sequences from non-Africans and Africans to the same extent. Unexpectedly, the researchers found that Neandertals share more genetic variants with present-day non-Africans than with Africans. These results can be explained if gene flow occurred from Neandertals into the ancestors of non-Africans.

The observation that the Neandertal genome appears as closely related to the genome of a Chinese and a Papua New Guinean individual as to the genome of a French individual is particularly surprising as there is, to date, no fossil evidence that Neandertals existed in East Asia or Papua New Guinea. Green et al. thus suggest that gene flow between Neandertals and modern humans occurred prior to the divergence of European and Asian populations. Based on comparative genomic data, as well as a mathematical model of gene flow, the authors further estimate that between 1 and 4% of the genomes of people in Eurasia may be derived from Neandertals.

... Using this comparative approach, Green et al. came up with a list of 20 candidate regions that may have been affected by positive selection in ancestral modern humans. Five of these regions contain no protein-coding genes and may thus include structural or regulatory elements. Among the remaining 15 regions, the team identified genes involved in metabolism and cognitive and cranial development, which suggests that aspects of these processes may have been functionally important for the evolution of modern humans. [This is evidence for human evolution due to selection in the time since humans diverged from Neandertals about 300ky ago.]

The presence of Neanderthal DNA in some but not all modern human populations implies divergent evolution between groups. Needless to say, this is one of the biggest scientific results in human evolutionary history in some time.


... The team measured the genetic proximity of Neandertals to pairs of modern humans from different continents, first using single-nucleotide polymorphisms (SNPs), or sites in the genome where a single nucleotide differs between individuals. When they compared a Neandertal with a European and an Asian, they found that the Neandertal always shared the same amount of derived (or more recently evolved) SNPs with each of them. But when they compared a Neandertal with an African and a European, or with an African and an Asian, the Neandertal always shared more SNPs with the European or Asian than with the African. "We've shown that Neandertals are significantly more closely related to non-Africans than Africans on average," says Reich.

Even though they looked at just two Africans for this part of the study, those two have a particularly ancient, diverse heritage, so they are a good proxy for much of the genetic diversity in Africa. But sequencing additional Africans would be a good idea, says Reich.

For now, it seems Neandertals interbred with the ancestors of Europeans and Asians, but not with the ancestors of Africans. At first, "we were baffled that this affinity with Neandertals was not only in Europe and West Asia [where it was most expected], but also in Papua New Guinea" where Neandertals never set foot, says Pääbo.

See earlier post for more background.

Also see John Hawks for in-depth analysis, including the following. In earlier work (see also here), Hawks, Wang, Cochran, Harpending and Moyzis argued that the rate of human evolution has sped up in the last 10ky or so. If their estimates are correct, the amount of change in the last 10ky may be greater than what occurred over most of the 300ky since modern humans diverged from Neanderthals.

... Green and colleagues did a similar exercise, except they went looking for "selective sweeps" in the ancestors of today's' humans. These are regions of the genome that have an unusually low amount of incomplete lineage sorting with Neandertals, and therefore represent shallow genealogies for all living people. They identify 212 regions that seem to be new selected genes present in humans and not in Neandertals. This number is probably fairly close to the real number of selected changes in the ancestry of modern humans, because it includes non-coding changes that might have been selected.

Again, that's really a small number. We have roughly 200,000-300,000 years for these to have occurred on the human lineage -- after the inferred population divergence with Neandertals, but early enough that one of these selected genes could reach fixation in the expanding and dispersing human population. That makes roughly one selected substitution per 1000 years.





Our recent evolution, after the dispersal of human populations across the world, was much faster than the evolution of Late Pleistocene populations. In adaptive terms, it is really true -- we're more different from early "modern" humans today, than they were from Neandertals. Possibly many times more different.

Monday, May 03, 2010

Neanderthal-human introgression?

Rumors abound concerning results from the sequencing of Neanderthal DNA by Svante Paabo's group at MPI. More here and here from Nature. Will Paabo's group announce candidate alleles that may have introgressed into the human gene pool from Neanderthals? FOXP2?

Because Neanderthals lived mainly in Europe and Asia, a signal for introgression would be matching regions of DNA in Neanderthals and Eurasians that are not found in sub-Saharan Africans. While one commonly thinks of Neanderthals as primitive, they almost certainly had useful adaptations not already present in the small gene pool of modern humans, newly arrived from Africa. (Neanderthals had been in Europe and Asia for roughly 300k years before modern humans.) Adaptive or selectively neutral Neanderthal genes are more likely to have introgressed into humans than non-adaptive ones (see below).





For a plausible argument for introgression of genes from Neanderthals to humans, see The 10,000 Year Explosion, by G. Cochran and H. Harpending:

... Logically, if admixture occurred at all, it had to happen somewhere in Neanderthal-occupied territory, which means Europe and western Asia. As modern humans expanded their territory, they must have encountered Neanderthal bands again and again. The two kinds of humans coexisted for a few thousand years before the Neanderthals disappeared, at least in some regions. This looks to be the case for the Châtelperronian culture of France and northern Spain, and there are traces of a similar culture in Italy. If there was trade, or if there was enough contact to transmit toolmaking techniques, there was sexual contact as well—depend on it. If in the future we look at very large genetic datasets from huge numbers of individuals, we might ﬁnd a few traces of neutral Neanderthal genes.14

... Imagine that humans occasionally mated with Neanderthals, and that at least some of their offspring were incorporated into human populations. That process would have introduced new gene variants, new alleles, into the human population. Many, probably most, of those alleles would have done almost exactly the same thing as their equivalents in modern out-of-Africa humans; they would have been neither better nor worse than those equivalents—in other words, they would have been selectively neutral. Those neutral alleles from Neanderthals would have been rare, and they would probably have disappeared, the typical fate of rare neutral alleles.

... J. B. S. Haldane, the great British geneticist (1892–1964), found a systematic way of adding up all these probabilities, and his method yields a surprisingly simple answer. If the allele confers an advantage s, its chance of going all the way is 2s. In a stable population, a single copy of an allele with a 10 percent ﬁtness advantage has a 20 percent chance of eventually becoming universal. The fate of one copy of a favorable allele is very much like that of a gambler who starts out with one chip and a roulette system—a way of beating the odds—that really works. ...

Saturday, May 01, 2010

Buffet on Goldman

Great minds think alike ;-)

NYTimes: ... Mr. Buffett said that he feels little sympathy for the firms the S.E.C. says were hurt by Goldman’s purported lack of adequate disclosure. Of one firm, ABN Amro, Mr. Buffett said: “It’s hard for me to get terribly sympathetic when a bank makes a dumb credit bet.”

What Mr. Buffett thinks about Goldman is something the investment community has been buzzing over for days. Berkshire has invested $5 billion in Goldman preferred shares, and Mr. Buffett is notoriously skeptical of Wall Street mores. One of the low points of Mr. Buffett’s investing career is stepping in at Salomon Brothers when the firm was embroiled in a trading scandal: he had to temporarily assume Salomon’s chairmanship and apologize to Congress.

In the case of Goldman, however, Mr. Buffett and his chief lieutenant, Charles Munger, made it clear they’re on the firm’s side. Goldman and Berkshire have a long history, with Mr. Buffett relying on Goldman as his longtime investment bank. (He’s famously said that Byron D. Trott, a longtime Goldman banker who left to start his own shop, is one of the few Wall Street bankers he trusts.)

According to DealBook’s Andrew Ross Sorkin, who’s one of three panelists asking questions at the meeting, Mr. Buffett essentially took Goldman’s defense that everyone involved in the now-infamous Abacus deal was a sophisticated investor fully capable of evaluating the risks in the subprime mortgage investment. Instead of needing to be told that a hedge fund manager who suggested which bonds should form the underpinnings of the Abacus collateralized debt obligation was also short the bonds, the investors should have relied on their own due diligence, Mr. Buffett said.

“If I have to care who is on the other side of the trade, I shouldn’t be insuring bonds,” he said.

Mr. Buffett added an implicit rebuke of a line of questioning raised by several senators during this week’s Goldman hearings. An investment bank could very well be short the securities Berkshire is buying, and a buyer like Berkshire should be perfectly aware of that in any case.

Mr. Munger added that were he on the S.E.C., he would not have voted to press charges.

That isn’t to say that Mr. Buffett and Mr. Munger think Goldman is blameless here. Mr. Munger suggested that there’s a difference between breaking the law and behaving unethically — and that simply following the former shouldn’t be the basis of a business’ conduct.

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