@9CL7T9k8cjnD@mastodon.social The image is a screenshot of a webpage dedicated to Thomas Bayes, a statistician and philosopher. The top section features a title "Thomas Bayes" with the subtitle "Statistician and philosopher." Below the title, there are three tabs labeled "Overview," "Books," and "Education."
On the left side, there is a large portrait of Thomas Bayes, with a smaller image of him in the background, surrounded by mathematical equations and diagrams. The image is credited to the "Times Literary Supplement."
To the right, there is a section with information about Bayes, including his birth and death dates: "Born 1702, London, United Kingdom" and "Died Apr 7, 1761, Royal Tunbridge Wells." There is also a section titled "City St George's, University ... Book Launch: 'Everything Is Predictable'" with a date of "May 28, 2024." This section mentions that academic experts celebrated the launch of Tom Chivers' book on the topic.
Further down, there is a "See also" section with links to "Everything Is Predictible" by Tom Chivers and "Tom Chivers" as a writer. The overall layout is clean and organized, with a light green background and white text.
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The image is a document outlining a Bayesian analysis of recessions following D-R (Debt-to-GDP Ratio to Recession) transitions. It begins with a recommendation to add leading indicators, such as yield curve inversions, to signal potential recessions. The document emphasizes the statistical significance of the pattern, noting that it is strong enough to warrant action in business contexts, especially given high stakes and historical consistency.
The bottom line states that the pattern is statistically significant at a 0.20 (one-tailed) level, and it is recommended to treat this as a high-probability risk factor, pairing it with other indicators. The document asks if the reader would like help designing a decision framework for when to act on this signal.
The Bayesian analysis section outlines the goal of quantifying how strongly the observed data updates the belief that D-R transitions increase recession risk. It details the steps of defining prior beliefs, updating with data, analyzing the posterior distribution, comparing to frequentist results, and considering the decision context in business/finance.
The analysis includes defining the prior belief, updating with data, and calculating the posterior distribution. It also compares the Bayesian posterior mean to the frequentist p-value and discusses the 95% credible interval. The document concludes with final takeaways, emphasizing the Bayesian updating suggests an 89-99% chance that D-R transitions increase recession risk, and that this warrants risk mitigation, especially when combined with other indicators.
The document concludes by asking if the reader would like to model the expected $ value of acting on this signal, such as avoiding a 10% portfolio drawdown 50% of the time.
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