tag:blogger.com,1999:blog-17206839.post6260383804784092676..comments2023-09-09T09:26:22.175-04:00Comments on Andrew Samwick's Blog: CBO and Certainty EquivalentsAndrewhttp://www.blogger.com/profile/13514024573333057559noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-17206839.post-40736306722990043782005-01-06T22:03:00.000-05:002005-01-06T22:03:00.000-05:00Note that even though the dashed blue line is comp...Note that even though the dashed blue line is computed assuming that the entire private accounts portfolios are invested in Treasury bonds, the 80% confidence intervals reported do *not* make that assumption. They assume substantial investments in equities. That's why the "expected" return is at the 25 percentile of the distribution...<br><br>Do you have any insight into why they did it this way? I mean, I understand the desire to use certainty-equivalent rather than expected values to evaluate programs, but I don't like the implicit degree of risk aversion assumed when you use the Treasury bond return as the certainty-equivalent value.bradnoreply@blogger.com