This paper draws distinctions among various concepts related to tipping points, robustness, path dependence, and other properties of system dynamics. For each concept a formal definition is provided that utilizes Markov model representations of systems. We start with the basic features of Markov models and definitions of the foundational concepts of system dynamics. Then various tipping point-related concepts are described, defined, and illustrated with a simplified graphical example in the form of a stylized state transition diagram. The tipping point definitions are then used as a springboard to describe, formally define, and illustrate many distinct concepts collectively referred to as "robustness". The final definitional section explores concepts of path sensitivity and how they can be revealed in Markov models. The definitions provided are presented using probability theory; in addition, each measure has an associated algorithm using matrix operations (excluded from current draft). Finally an extensive future work section indicates many directions this research can branch into and which methodological, conceptual, and practical benefits can be realized through this suite of techniques.

Measures of Tipping Points, Robustness, and Path Dependence

Morningside Analytics discovers and monitors online networks that form around particular ideas and identifies thought leaders with standing in these audiences.

Shifting The Debate: Political Video Barometer

Questions for Kent Moors.

Q: Why should Americans care that Saudi Arabia has fallen on hard times?

If the situation continues for any time it will lead to political instability in Saudi Arabia.

Those who argue for American self–sufficiency, that we can somehow produce the energy we need here in the U.S., don’t understand the nature of the oil market.

In my judgment, we have about 30 years left of a sustainable crude oil based economy.

Saudi Economic Problems, American Foreign Policy and the Future of Oil

From a long list of Nobel laureates in the sciences:

This year's presidential election is among the most significant in our nation's history. The country urgently needs a visionary leader who can ensure the future of our traditional strengths in science and technology and who can harness those strengths to address many of our greatest problems: energy, disease, climate change, security, and economic competitiveness.

We are convinced that Senator Barack Obama is such a leader, and we urge you to join us in supporting him.

An Open Letter to the American People

Paul Krugman:

Whatever the reasons for the continuing weakness of policy, the situation is manifestly not coming under control. Things continue to fall apart.

The Widening Gyre

David Brooks:

My sense is that this financial crisis is going to amount to a coming-out party for behavioral economists and others who are bringing sophisticated psychology to the realm of public policy. At least these folks have plausible explanations for why so many people could have been so gigantically wrong about the risks they were taking.

This meltdown is not just a financial event, but also a cultural one. It’s a big, whopping reminder that the human mind is continually trying to perceive things that aren’t true, and not perceiving them takes enormous effort.

The Behavioral Revolution

Homeowners should not expect to make much headway in the years ahead.

Even though prospects for equity accrual have improved slightly in bubble markets, most homeowners will still leave their homes with large amounts of negative equity if house prices return to trend levels. For example, by the year 2012, homeowners in New York will have $101,964 of negative equity and in Los Angeles the shortfall would be $168,069. In these, and other bubble markets, households would benefit from proposals that attempt to provide affordable rental options as part of policy solutions.

For cities where the costs of owning are much closer to rental costs, it is likely that a small amount of equity will be accrued. In these markets, policies that keep owners in their homes, possibly through some form of government-guaranteed mortgage, are preferable.

Looking Forward to Negative Equity Accruals in Many Markets

A new Harvard/Princeton working paper:

The essence of structured finance activities is the pooling of economic assets (e.g. loans, bonds, mortgages) and subsequent issuance of a prioritized capital structure of claims, known as tranches, against these collateral pools. As a result of the prioritization scheme used in structuring claims, many of the manufactured tranches are far safer than the average asset in the underlying pool. We examine how the process of securitization allowed trillions of dollars of risky assets to be transformed into securities that were widely considered to be safe, and argue that two key features of the structured finance machinery fueled its spectacular growth. At the core of the recent financial market crisis has been the discovery that these securities are actually far riskier than originally advertised.

The Economics of Structured Finance

Sometimes, when a political campaign has run out of ideas and senses that the prize is slipping through its fingers, it rolls up a sleeve and plunges an arm, shoulder deep, right down to the bottom of the barrel. The problem for John McCain, Sarah Palin, and the Republican Party is that the bottom was scraped clean long before it dropped out.

Like, Socialism

The political climate felt none too stable in 1986, something Bernstein had just experienced firsthand during an international tour with two of his beloved orchestras—the Israel Philharmonic and the Vienna Philharmonic. Ronald Reagan was in his second term. Pan Am Flight 73 had been hijacked in Pakistan that September, after which a series of deadly terrorist bombings had taken place in Paris. Terrorist threats plagued the Israel Philharmonic’s tour, and Bernstein was “heavily guarded,” as he put it, yielding a situation where “the more protection one has, the more danger is implied.” Thus he turned his speech into a rumination on the metastatic nature of fear.

Have you seen The Band's Visit?

Something Called Terrorism - By Leonard Bernstein