The Georgia Institute of Technology plans to offer a $7,000 online master’s degree to 10,000 new students over the next three years without hiring much more than a handful of new instructors.

Georgia Tech will work with AT&T and Udacity, the 15-month-old Silicon Valley-based company, to offer a new online master’s degree in computer science to students across the world at a sixth of the price of its current degree. The deal, announced Tuesday, is portrayed as a revolutionary attempt by a respected university, an education technology startup and a major corporate employer to drive down costs and expand higher education capacity.

Very exciting.

Udacity will receive 40 percent of the revenue from the new degree program, according to Georgia Tech, which will receive the rest. AT&T is subsidizing the effort financially to ensure that it will break even in its first year and is lending its name to the project

There will several kinds of students:

1. 6,000 students who meet the minimum standards will be admitted.
2. 2,000 students will take the courses but not be interested in the degree. Not clear whether these meet any standards.
3. 2,000 studnets who do not meet the minimum standards (GRE) who “do well in two core classes”. How do they take those core classes if they aren’t admitted? Well, they’re drawn from…
4. the unlimited number of students who can take the MOOC-version of the course with no instructor support and no real degree at the end.

Students will be assisted by instructors from Georgia Tech and Udacity employees who handle more run-of-the-mill questions:

Galil and Thrun both said that Udacity-paid staffers could answer most of the questions students in the courses come up with.

“In many cases, the questions are simple. In many cases these questions can be found in FAQs, even though students don’t find them in FAQs,” Galil said.

Thrun said there’s no reason to make a professor answer the same question 200 times for 200 students. He said his staff will free up Georgia Tech instructors to do more difficult work.

Oh, and everyone is getting paid. Welcome to the future!

…it seems that strong families tend to be good for people individually, but bad for the world as a whole. Family clans tend to bring personal benefits, but social harms, such as less sorting, specialization, agglomeration, innovation, trust, fairness, and rule of law.

That’s Robin Hanson.

In his post there are many quotes with interesting perspectives on this idea. I focused on this one:

Risk taking …in family firms … is positively associated with proactiveness and innovation. .. Even if family firms do take risks while engaged in entrepreneurial activities, they take risk to a lesser extent than nonfamily firms. … Risk taking in family firms is negatively related to performance. (more)

Interesting.

The essence of agency costs is that somebody else pays when something goes wrong. This encourages risky behavior.

Is risk really so great? Just hire some managers to bet the farm more often and everyone wins? What is “risk”, anyway? After a bit of digging I was able to find this definition of risk taking:

Thus, firms with an entrepreneurial orientation are often typified by risk-taking behavior, such as incurring heavy debt or making large resource commitments, in the interest of obtaining high returns by seizing opportunities in the marketplace…

Presently, however, there is a well accepted and widely used scale based on Miller’s (1983) approach to EO, which measures risk taking at the firm level by asking managers about the firm’s proclivity to engage in risky projects and managers’ preferences for bold versus cautious acts to achieve firm objectives.

Ok, so it’s survey data (ie watch out for bias!). Large, agent-run companies, remember, have their own risk-killing system which shrugs off survey results: bureaucracy. One can imagine a situation in which agents raise their status by boldly proclaiming a desire for risk with no hope of having to actually act.

These papers should say “professed desire for risk taking is associated with inferior results” for family-run companies. It’s my own view that real corporate strategy involves making lots and lots of small, decent bets.

Never swing for the fences. Never bet the firm. Big risks are unconscionably stupid business.

Changes are afoot inside the world‟s major central banks… After more than a decade of inflation targeting, monetary authorities are, it seems, increasingly minded to go for growth, as the problem is no longer rising prices, but unemployment.

The long-term consequences of this shift – which my colleague Jim Leaviss has termed “central bank regime change‟ – remain uncertain… With its incoming governor recognised as having one of the most informed understandings of the new regime, the Bank of England looks set to play an increasingly important role in the global monetary policy revolution. UK shares could stand to benefit.

I agree. When the central bankers get their act together, which they are doing, nominal incomes will rise, whipping up a tailwind for the recovery.

Now consider the price of of gold which, according to my view, should drop when the markets get comfortable with the bankers’ strategy. It has.

Humans are good at throwing things. In fact, we’re great at it; no other animal can throw stuff like we can.

Hm. How important is throwing? I wonder if Aliens, should they exist, throw? More here.

-=-=-

edit: the Randall Monroe post links us to this abstract (among others), which opens with this:

It has been proposed that the hominid lineage began when a group of chimpanzee-like apes began to throw rocks and swing clubs at adversaries, and that this behaviour yielded reproductive advantages for millions of years, driving natural selection for improved throwing and clubbing prowess.

But simple, beautiful mathematical explanations can make us greedy. While we wish for all explanations of the world around us to be elegant, science often involves “the slaying of a beautiful hypothesis by an ugly fact,”

…“there is growing empirical evidence that people use a common source for evaluations of both beauty and truth.” The source he refers to is processing fluency, the state of being able to easily parse and understand a situation. Essentially, the more easily we can get a handle on a situation (because it’s mathematically simple, we’ve seen it many times before, it’s symmetrical, etc.), the more likely it is to seem right.

That’s from this article by Sam Arbesman. I’ll bang my actuarial drum again here: we are trained to use a series of very elegant models of random processes which often involve some clever math but in reality the models only become convincing once you have enough historical data to… well, throw the model away.

There is nothing elegant about social/economic interaction. Go crude and go ugly.

If the author can’t explain what they’re doing in terms you can understand, then you shouldn’t be convinced.

It’s the biggest problem I have with what I do for a living. I often don’t understand what I’m measuring, be it weather phenomena or auto accidents. They systems that produce Hurricanes and car crashes are too complex for anyone to understand.

Yet we fit statistical parameters to them and cross our fingers.

consider what happened to the European insurance industry in 2002. European insurers are allowed to invest much more in equities than their U.S. counterparts can. (Berkshire Hathaway (BRK.A:NYSE) is an interesting exception here.) As the bull market of the 1990s came to an end, European insurers found themselves flush with surplus from years of excellent stock-market returns, and adequate, if declining, underwriting performance. The fat years had led to sloppiness in underwriting from 1997 to 2001.

During the bull market, many of the European insurers let their bets ride and did not significantly rebalance away from equities. Running asset policies that were, in hindsight, very aggressive, they came into a period from 2000 to 2002 that would qualify as the perfect storm: large underwriting losses, losses in the equity and corporate bond markets and rating agencies on the warpath, downgrading newly weak companies at a time when higher ratings would have helped cash flow. In mid-2002, their regulators delivered the coup de grace, ordering the European insurers to sell their now-depressed stocks and bonds into a falling market. Sell they did, buying safer bonds with the proceeds. Their forced selling put in the bottom of the stock and corporate bond markets in September and October of 2002. Investors with sufficient financial slack, like Warren Buffett, were able to wave in assets at bargain prices.

From this awesome piece by David Merkel.

When discussing that turn, everyone points to the claims costs ticking up and 9/11. But it takes more than that to turn a market.

Wait for the regulations to come out that say a minimum of 5 police officers and k-9 unit for every mile of race distance, or something similar.

Somebody pays for that. The cost of marathons just became prohibitive.

If we all came to see our political opponents not as nonsensical fools but as basically reasonable speakers of another language, we would not elect the demagogues we do now, or watch the same clowns on cable news.

From this review of Arnold Kling’s new book, which (sigh) I hope to read.

The biggest problem with maintaining such ancient computer systems is that the original technicians who knew how to configure and maintain them have long since retired or passed away, so no one is left with the knowledge required to fix them if they break.

That’s from this amusing article on ancient computer systems still in use today (how about the company in Texas using punchcards!).

In Asimov’s Foundation series we’re introduced to the idea of technology beyond the understanding of anyone that uses it. Its use spawns a religion around the ‘magic’ it performs.  God forbid it breaks!

I’m also reminded of Kevin Kelly’s book on technology:

I told him it would take me a half hour to find a tool, an invention that is no longer being made anywhere by anybody.

Go ahead, he said. Try.

If you listen to our Morning Edition debate, I tried carbon paper (still being made), steam powered car engine parts (still being made), Paleolithic hammers (still being made), 6 pages of agricultural tools from an 1895 Montgomery Ward & Co. Catalogue (every one of them still being made), and to my utter astonishment, I couldn’t find a provable example of an technology that has disappeared completely.