The LA fires have devastated Southern California. According to US Weather Service, the financial loss due to the still ongoing fires is already estimated at $135-$150 billion. Whatever the final total ends up being, the… The LA Fires Are Not a Black Swan Event

According to bestplaces.net, Seattle, Washington averages 38 inches of rain per year, while Nashville gets 49.3 inches of rain per year on average. Thus, on average, Nashville is 29.7% rainier than Seattle. But is Nashville… Is Nashville Rainier Than Seattle? The Problem with Averages

In developing Modern Portfolio Theory, economist Harry Markowitz posited a relationship between risk and reward that exhibited a positive correlation between risk and return, like the one shown in the figure below: The blue curve… The Myth of the Efficient Frontier in Investing

When risk analysis is used as the basis for funding a project, the level of funding is typically at or below the 80th percentile, depending on the industry, and often at significantly lower levels. For… Why Aren’t Projects Funded to High Percentiles?

I was recently asked by a client why cost uncertainty is lognormal. While the normal distribution is familiar to every statistics student, the lognormal is often less encountered in an academic setting. The normal distribution… Why Cost Uncertainty Is Lognormal

The James Webb Space Telescope (JWST), launched on Christmas Day last year, has started producing some spectacular images: However, the successor to Hubble spent 25 years in development and cost over $11 billion. Initial development… James Webb Space Telescope – But What About the Cost (And Schedule)?

I recently saw yet another article about quantitative risk analysis that made me cringe because of its mistaken claims. It was, in the words of the famous physicist Wolfgang Pauli, “not even wrong.” As a… Five Myths About Quantitative Risk Analysis

As of June 14, more than 600,000 people have died from COVID-19. However, the total impact is not reflected in just the COVID-19 deaths. In a recent article in Bloomberg, economist Alison Schrager points out… Big Risk Vs. Small Risks, Or What Economists Still Don’t Get About Extreme Hazards

The Iron Bowl is the annual (American) football game between the University of Alabama and Auburn University. When I was in college, one of my neighbors told me that she had two tickets to this… The Neoclassical Supply Curve, the Iron Bowl, and Reality

In my last post, I noted the apparent contradiction between supply curves and learning curves. Both display a relationship between cost/price and quantity, but one displays a positive correlation between the two while the other… Learning Curves and Rate Curves – Which One Represents Supply?