Including: the economics of love, a definition, a Swiss referendum on executive pay, and some questions that should be asked to all the industry lobbyist naysayers.

Good morning

The headlines:

  1. It’s Valentines Day.

    Link: the Economics of Love.

    It being Valentines Day, there are a host of articles out there exploring love and its economic implication. My favourite piece of random information is the economic definition of love. Which is:

    A person emotionally invests, has their investments accepted and gets a positive, equitable return on their emotional investment.  This causes further investment and as additional returns build up emotional equity is stored.  The stored emotional equity can be drawn upon in times of negative return or low return.  However, unless the accumulated, emotional equity is considerable, severe loss or continued lengthy low returns can lead to a cessation of emotional investment which in turn can lead to a cessation of the love relationship.

    Which should have bored me, but it didn’t. I actually found it quite profound. Although, I would probably add an addendum about some investments being better than others. And the “loss aversion” bias causing people to hold on to bad investments hoping that they’ll turn, and letting go of good ones (by taking them for granted).

    The bloomberg article link above has a warmth and fuzziness that I find disturbing. Mainly because it takes a topic that could be profoundly interesting, coats it in sugar, and attaches one of those heart-shaped balloons.

    It contains some statistics suggesting that people feel loved. Which, if I’m honest, is probably more symptomatic of the way the survey question was asked. Few of us would openly admit to social pariah status when the question is posed: “Did you experience love for most of the day yesterday?”

    “Yes. Obviously. Who’s asking?”

    But Happy V Day either way. And even if you’re a hater (you know who you are) – maintain your cool. V-day hatred is almost as clichéd as the super-sweet Hello-Kitty style of facebook posts. The vitriol is almost as cloying as the cloying.

    I’m just saying.

  2. A Swiss referendum on executive compensation.

    Link: cats, even fat ones, have nine lives – didn’t you know?

    Back in business news, the Swiss are gathering signatures to petition for a referendum on executive compensation. They would like a regulation requiring that executive compensation be set by shareholders. And polls suggest that they might get it.

    The industry lobby groups are obviously making dark and dire predictions on the impact that it will have on industry. And how you’ll end up with bad CEOs because all the good ones will be snapped up. And the organisations will move to other countries.

    I was once convinced. Today, I have doubt. Are we really saying that CEOs will actively uproot an entire organisation in order to earn a bit more money*? I think that the shareholders would have enough time to vote him/her out if he/she did that – because that process won’t happen overnight.

    Also – can we really say that there are so few good CEOs in the world? That no one else could step up and take their shoes? That no one in the lower ranks would step into the job for less money?

    I just think that it’s all statistically unlikely. There are 7 billion people in the world. I’m sure we could find another 500 to replace that list on Forbes. And they would be just as good.

That’s all for now.

Have a good day.