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QUIS? QUID? Introducing myself and my site This site consists in a personal review of issues related to economics, business and development. I am Augusto Rufasto, economist. I hope you'll have a good time browsing in my website. To contact me for a job or just to make me a free question, kindly send me a message using this contact form. This page available also in Spanish (disponible en español). Thanks. AR  FEATURE The Power of Man (series of notes) It is said that Albert Einstein used only 10% of his brain to create his theories. I’ve been thinking about it, and somehow tend to conclude that the world is a better place to live than we can possibly imagine. Just for starters, I think that anyone who can use his brains at least at the 10% level Einstein did, will, undoubtedly, capable to acquire wisdom. And wisdom is likely to be currently a very scarce asset, throughout the whole world, or we would not be depending on fossil fuel and would not be witnesses of such bane as famine and wars.  MATH Bayes' Theorem Bayes’ Theorem is a great analytical tool designed to solve what we can label as “inverted probability problems” regarding the attributes of any stochastic event. The standard problem is somehow like: “if I choose a box labelled ‘j’ which is full of red and white balls in a specific proportion, which is the likelihood of getting a red ball in the first draw? The inverse problem, on the other hand, is the following: if you have m different boxes each one with its own red/white ball proportion and you just drew a red ball, which is the likelihood that the ball was drawn from a specific box ‘j’?” Let’s now see the formulation of the problem: There are m boxes with red and white balls Red ball ratio in a box i is referred to as p(red/i) The total amount of balls (no matter the color) inside box i as a proportion of the total amount of balls in all m boxes is wi Consider a specific box j Now the question to be posed is: if you drew a red ball from an unknown box, what is the likelihood that this red ball was drawn from box j? And the answer to this question is: On Capital Budgeting Techniques We permanently perform financial operations. But we will be perfectly prepared to undesrtand the impact of these operations if we show the origin and trajectory of the value of our assets and investments. Capital budgeting is the theoretical body best fit to study the main financial matters. Capital budgeting's best known indicators are NPV (net present value) and IRR (internal rate of revenue), although some other tools for measuring risk (built upon statistcs science) are also necessary. I have prepared some written material on capital budgeting, including theory and applications using Microsoft Excel tools. If interested, send me an email: rufasto2000@gmail.com, or call to my personal mobile number +511 97213492.  THE THINK TANK Who is Anthony Downs? Dr. Anthony Downs is a remarkable american social scientist. His thinking has been quite influential in academic spheres, as well as in the government and the corporate world. He worked as consultant for the White House, and also for some of the largest american corporations. In 1977 he became Senior fellow for the Brookings Institution. Downs' two most remarkable books are An Economic Theory for Democracy (1957) and Inside Burocracy. In Theory of Democracy he builds a model for analyzing the distribution of political acceptance, and to do this he uses the Hotelling geographic model for the definition of a duopoly. The conclusion is that politicians will be lured by the middle position regarding the ideological scope. Downs view on politics was the first step to build a strong approach, which was completed with the formal works of Davis, Hinich and Ordeshook. Dr. Downs is a defying and brilliant thinker. Let's recall that he says that "Many people claim we are now in the "information age;" so old-fashioned activities like agriculture and manufacturing do not matter much anymore. Nonsense. The information age wouldn't survive for a minute without an immense amount of manufactured equipment, and eating is still a nice idea. True, those sectors are not growing as rapidly as the information sector, but innovations in the older sectors still present great economic opportunities." Downs has also studied the problem of traffic congestion, because of what he wrote Stuck on Traffic (1992) and Still Stucked on Traffic (2004), in which he recommends road pricing as tha solution. Currently, Dr. Downs is concerned with housing issues. Anthony Downs' official website

Augusto Rufasto, 2006.