X is for XBRL

I didn’t know anything at all about XBRL last week, but it’s making my Excel Ninja fingers twitch. For every blogger handling the “A to Z Challenge,” this is the one that really gives us nightmares–X. (They’re out there…Xena, Xolotl…) I briefly considered “X-axis,” but that’s not really accounting-related, or “eXpense,” but that’s not really an “X.” I came across this newfangled thing: XBRL. Y’all, it’s the bees knees!

XBRL: Waddizzit?

You know how financial reporting produces paper? Lots of paper? Lots and lots? The computer revolution gave companies the ability to do all their financial data collection and reporting online. Spreadsheets–primarily Excel, but also initially Lotus 1-2-3 and recently Google Sheets–revolutionized the way companies can keep track of and analyze everything.

Financial statements, thanks to GAAP (see Letters E, and G) are also fairly standardized. Assets are on the what? (See Letter “D”–left!) Even the account names on the balance sheet and income statement are pretty standardized–Current Assets, Fixed Assets, Accounts Payable, and so on. It makes it easy for accountants to find and read other people’s statements.

Yet the devil is in the details.

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D is for Double-Entry

Cosmic balance sheet, drawn by Ledger Light.

We are bipedal creatures. We are symmetrical by nature. Two eyes, two hands, back and front, left and right. Our fundamental concepts reflect this: good and evil, dark and light, the Jedi and the Sith. It should be no surprise that multiple cultures–the Chinese, Indian, and Renaissance Italians–created counting systems built around two entries.

One of my favorite authors wrote a series where the people on another planet organize everything around threes instead. Two is infelicitous; you need three to balance. The eighth birthday is unlucky, the ninth harmonious. Scientists have to build models factoring in three. Dinner parties are a nightmare. It is possible to conceive thinking systems not built around two.

Or, imagine, if sentient creatures had five limbs like starfish. Instead of left and right, you’d build your counting around pentagons.

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Going Once…Going Twice…

“Paul, it’s Bob Wilson. You’ve won the Nobel Prize.”

A security camera in front of Paul Milgrom’s home in Stanford, California, recorded Wilson and his wife Mary sidling up to Milgrom’s front door in the predawn darkness and repeatedly knocking and ringing the doorbell to wake him up. After a short pause to take in the momentous news, Paul Milgrom responded, “Wow, yeah. Okay.”

Story by Melissa de Witte at stanford.edu.
Robert Wilson and Paul Milgrom, photo by Andrew Brodhead.

The Nobel Prizes for 2020 were announced earlier this month. I thought I should take it on myself to understand what it was that earned these folks the Biggest Blue Ribbon for Brains in the world. I know just enough economics to get myself into trouble, so this could be fun. Economics (and science for that matter) are like languages that I speak badly (hablando de español…) I can almost read economic theory with a little wikipedia and dictionary.com at hand, but writing about it might generate some misinformation. Nevertheless, let’s dive in and alleviate your curiosity. I know you saw the awards but did you understand what they were for. I’m especially proud since northern Californians took four out of the eleven Nobel awards, two from my alma mater and two from its rival but still my peeps, woot woot!

Not All Auctions Involve Cattle or Eyebrows

My favorite award this year has to be the Prize for Economics, which usually annoys me in its advancement of “free markets,” which aren’t. This year, however, the theories were comprehensible and practical. Understanding the math is something else entirely, but never fear—we won’t go there. Two fellows from Stanford (take off that red shirt!) won for their development of Auction Theory.

When I think of auction, I always visualize a Texan with a big hat and microphone who sounds something like Leroy Van Dyke, in his famous song from the 1950s:

Either that or auctions make me think of a scene in a spy movie or comedy, where fancy people are seated in a room, and the British butler begins auctioning the mysterious painting or golden egg or Wonka ticket, which might hold a clue to the whereabouts of the Austerioserlian terrorists. Numbers are randomly repeated as he points at audience members who do nothing more than move an eyebrow or lift a pinky. Or, if it’s a comedy, the lady inappropriately dressed keeps accidentally bidding when she sneezes. To me, that’s an auction. It turns out that those are not the only types of auctions.

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