Are TSA checkpoints worth the expense?

Kriston Capps reports: "Using the same formula* as the researchers (and some similar assumptions), I estimated the same costs for airport pre-boarding security. TSA checkpoints have an annual cost per life saved of $667,000,000—two-thirds of one billion dollars."

Why does the government require screenings if the cost per life saved is so high?

Can you think of other policies the government could impose that would save lives at a lower cost? Why doesn't the government impose those policies?

Why Good Leaders Make Bad Decisions

Our brains trick us (HBR, Feb. 2009)

It’s Time to Streamline the Hiring Process

The piece discusses the importance of information flows, decision rights, and incentives in the hiring process. 

Atta Tarki, Tyler Cowen, Alexandra Ham, HBR, July 2022

"Here are few measures you can take to nudge your organization in the right direction.

1. Reduce the number of interviewers in your process. If you have more than four or five interviewers, chances are that the costs associated with the additional complexity in your process have exceeded the benefits they produce.
2. Be explicit about whose decision it is. Steer your organizational culture away from a consensus-oriented approach. Instead, for each role make it explicit whose decision it is, who else might have veto power, and that other interviewers should not be offended if a candidate is hired despite not getting their approval. And then keep repeating this message until most of your colleagues adapt to this new approach.
3. Ask interviewers to use numerical ratings when evaluating candidates. We’ve experienced that doing so helps hiring committees focus on the holistic view rather than on one-off negative comments. Having interviewers submit their ratings before getting input from their colleagues will have the further benefit of reducing the chance of groupthink in your evaluations.
4. Remove the “Dr. Deaths” from your hiring committee. Track which interviewers turn down the most candidates, and if they are not better at picking good hires, communicate with them that they will be removed from the hiring committee if they don’t correct their behavior.
5. Change your culture to reward those who spot great hires, not penalizing those who end up with an occasional poor performer. You can further do this by emphasizing the difference between good decisions and good outcomes. Sometimes a fully logical bet will result in a poor outcome. If needs be, call out those spreading negativism.

"Changing your company’s consensus-oriented hiring culture will not be easy. But the steps listed above can help you gain an edge in your industry by hiring highly productive employees that are overlooked by your competitors."

Elon Musk Offers to Buy Rest of Twitter at a Valuation of More Than $43 Billion

Use the Rational Actor Paradigm to predict whether the board will recommend to accept or to reject the offer. Also, when would something be in the best interest of the shareholders but not in the best interest of the company?

"Twitter confirmed it had received Mr. Musk’s offer and said its board would carefully review the proposal to determine the course of action that it believes is in the best interest of the company and its shareholders" (WSJ, April 2022).

"“I am not playing the back-and-forth game,” Mr. Musk said. “I have moved straight to the end.”

Mr. Musk said he would pay $54.20 a share in cash, representing what he said was a 54% premium over the day before he began investing in Twitter and a 38% premium over the day before his investment was publicly announced.

“It’s a high price, and your shareholders will love it,” Mr. Musk said. “Twitter has extraordinary potential. I will unlock it.”"

"On Wednesday, Twitter shares closed at $45.85. In premarket trading Thursday, the stock rose nearly 9% to $49.90. During the past year, Twitter’s shares have traded between $31.30 and $73.34."

Two addenda

1. After the offer the Board installed a poison pill to make more difficult any acquisition without the Board's approval. Poison Pills can benefit shareholder by creating a bidding war and giving the Board more bargaining power with suitors. They can harm shareholders if they squelch deals that transfer assets from moving to higher valued uses.
2. This opinion (WSJ, April 2022) praises the Board's decisions to install the poison pill and then to agree to terms with Musk. 

Why Colleges Don’t Care About Free Speech

John Hasnas argues that administrators are responding to incentives and recommends some changes in the organizational design (WSJ, Feb. 2022).

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