It is well known that "there are three kinds of lies: lies, damned lies, and statistics." Yet if and only if the speaker and the audience are not careful enough to make a blunder. Previously we have already linked a video about the most well known and counter-intuitive Bayes theorem and now we share another video discussing another well known statistics paradox.

As described in One Minute Physics video below, Simpson's paradox occurs when you have data set, which contains multiple groups. When analyzing groups separately one trend could be observed (the more you earn the less happy you become), while after combining the groups the trend disappears or is reversed.

Currently I am waiting for the Research Council of Lithuanian post-doctoral project final results. Though interim results are already known, but RCL still needs to decide where they will cut. This situation starts up my existensial thinking on what is good science and what is not. I believe that at least partialy it is well covered by the following Numberphile video.

In this video Cliff Stoll presents one of the homeworks he gave his students to test their ability to notice subtleties and if they are self-conscious (able to check their own errors) enough. This qualities are somewhat important to produce a good piece of scientific work.

Two months ago I have started an interesting topic related to the price discovery. This topic is rather important in the contemporary context as it is often claimed that we should "let (the markets) go" (fr. Laissez-faire) with out any regulation or influence from the government. Supposedly free markets would discover the fairest prices and allocate resources to the most capable. I would like to argue that this is true only in limited circumstances.

The following Numberphile video can be seen as argument that the rules under which the market agrees to operate (or is forced to operate) heavily impacts the prices, which are discovered. Note that this video discusses auctions, which are not exactly an everyday economic interaction experienced by an every-man, though some ideas can be creatively generalized for the economics as whole.

Exactly seven years ago we have launched second iteration of the Physics of Risk website under the flag of the EU structural fund project Science of business and society (lt. Mokslas verslui ir visuomenei; see the article). The second iteration was different from the first one as it was powered by WordPress (instead of Drupal) and was multilingual (instead of being available only in Lithuanian).

Today I (Aleksejus) launch a third iteration of the Physics of Risk. There will be some changes as we will replace WordPress with a static site generator Pelican.

At the heart of economics lies two fundamental concepts, to which most of the other concepts are related. These two concepts are supply and demand. From every day life we are rather familiar with these two concepts - we demand goods and services, while industry supplies them. While industry demands labor and we supply it. But this familiarity to most of us is rather superficial, thus in this text we will try to provide a simple academical introduction into these concepts and their role in economics.

It is intended that this text will serve as an introduction into a series of posts on how and why free market does (not) work.