Re: not enough real programmers? (was Re: Byte Magazine: 18 Vintage issues, 1985-1986)

[Eric Smith <eric-no-spam-for-me@brouhaha.com>]

> Example from Business 101: Choices such as patching up leaking pipes
>  explosion/employee hazard) instead of a new package size, or
> advertising theme. They said 'no right or wrong answer', but the
> correlation between the choices and resulting marks was an amazing
> coincidence, don't you think.

Victoria Welch <vikki@oz.net> writes:
> What scares me is that I think I can imagine what the correlation was.
>  
> Is this for real? 
> 
> I personally think the correct answer is more than obvious :-(!
> 
> Just the fact (? is this *really* true?) that the choices are what they
> are with "no right or wrong answer" rather shocks me.  Contrary to what
> management school teaches, it is the *employees* that produce the
> saleable goods that actually bring in the money.  Perhaps the US
> workforce has reached the level where killing them off doesn't affect
> the bottom line significantly.
> 
> If this is really true and not a joke or put on, perhaps working
> conditions in third world countrys wouldn't be that much worse.
> 
> Pardon me, but I am stunned.

Stunned?  It is very easy to understand the reasoning.  (Not that I
condone it.)

If we spend the money on marketing, we expect $X additional return on
investment.  There's a P% chance that an explosion will kill our employees,
and cost us $Z.  So the expected outcome is (1-P/100)*X - (P/100)*Z.

If we spend the money on repairs, we expect no additional return on
investment, but we also reduce the risk of killing the employees to nearly
zero.  So the expected outcome is $0.

So if (1-P/100)*X is greater than (P/100)*Z, the choice is obviously to
spend the money on marketing.

Where this usually falls apart, though, is that the probability P is
deliberately estimated low, to make it more attractive to spend the money
on marketing.  Or, the probability P is considered to be a constant, so
the same decision is made every month, while in reality the dangerous
condition is in fact getting worse.