First, let me say the scoring process for Dancing with the Stars (DWTS) is fair. It is honest. It’s just not obvious.

It also is weighted 50pct to judge’s scores and 50pct to popular vote.  Which means the votes of viewers have more impact than the judges scores…. Which is  why Bristol Palin has done so well.  Let me explain.

When I was on the show, my first week I found myself in the bottom two. I was pissed. I had scored triple 7s. Which had me tied with half the other  contestants and ahead of several. Yet there I was sweating bullets.  I survived to dance another week. After wards one of the producers explained to me how the voting works, which in turn completely changed my strategy and approach to the show. Like anything else. It helps to know the rules.

From the DWTS site:

“Each week every couple receives points from the judges and votes from the public. For every couple we work out the share they got of the points given by the judges on the night, and the share they got of the public’s votes on the night and we add these two shares together. The couple with the lowest combined total is eliminated from the show.

For example if couple A, B and C receive 38, 26 and 14 points from the judges, we calculate what share these points represent of the total awarded by the judges on the night. In this case the judges gave 78 points in total, and each couples’ share of 78 points breaks down as follows: 38= 48.72% of78, 26= 33.33% of 78, 14= 17.95% of 78. Let’s suppose that when the public votes are tallied, each couple has the following shares: A= 20%, B=40%, C=40%. To determine who’s eliminated we combine these two shares for the total:

Couple A: 20+48.72%= 68.72%
Couple B: 40+33.33%= 73.33%
Couple C: 40+17.95%= 57.95%
In this case, the bottom two couples would be A and C, and C would be eliminated.”

If you follow the math of the process, and you understand the show we can see that the two key variables have very different limits.  In any given dance, the most the judges can score a dance is a 10. Across the 3 judges (and yes i realize there are some weeks they try different things, but the math still works) a couple on the show can’t score more than 30 total points.

This is particularly important in the early weeks of the show.  Early on the total scores of all the contestants is relatively high, so the percentage of total scores for even the couples getting the highest possible scores with the judges is relatively small.

For example, if 9 couples score 30 and 1 couple gets 0 points, thats right a total goose egg, the couples with 30s would each have 1/9 (30/270) or 11.1pct of the total score. You would then add to that total the percentage of viewer votes that each couple got. So if the couple that got a zero from all 3 judges got 25pct of the vote and none of the other couples got more than 14 pct of the vote, then the couple who got nothing but zeros from the judges would actually have won that week !

As the number of participants decline over the course of the show, the importance of the judges votes increase, but the popular vote is still more important. Again, because there is a limit on the scores from judges, but  no limit on the number of  viewer votes a couple can get.

This was particularly evident for this past week 9 with the elimination of Brandy and Maks.  The scores for all 4 couples were relatively close.  There were a total of 228 points awarded. Jennifer and Derek got a perfect 60 for 26.3 pct of the vote. Kyle had a 58 and 25.4 pct , Brandy had 57 and 25pct while Bristol was at the bottom with a 53 and 23.2 pct of the vote.  On a night where ABC said they got more total votes than any non finals week, in order to get to the finals, all Bristol and Mark had to do was get  about 2pct more votes from the fans to get to the finals, which she obviously did.

We also don’t know the order the couples finished in. Only that Brandy and Maks were eliminated. It may well be that Bristol is so popular that came in first place with plenty of room to spare. Or maybe she barely scraped ahead of Brandy and Maks. Thats the beauty of DWTS voting. The viewers don’t know the actual order or how many votes anyone got. Which in turn motivates more to vote.

So here we are at the finals. I don’t know if they are going to score the 3 finalists against each other, or if they will re calculate the scores so its just the final two against each other.  We have to see what the show does. But again, it doesn’t change the math.

Who ever has the lower judges total scores for the final dances can make it up by gaining more votes from the viewers. The most the judges can give is a 30. There is no limit to the total number of votes that can be cast for either couple.  Given that historically the judges scores for the finals have been relatively close, it will all come down to viewer votes. Again.

Some folks think that gives Bristol the edge. Or maybe it will incent the fans of  Jennifer and Derek or Kyle and Lacey to vote in greater numbers.  All I know is that I will be watching !

And no I wont be voting. I only vote for my former partner Kym

The Wealth Effect on Individuals suggests that the more wealth people know or feel they have, the more likely they are to spend their money. Which in turn is good for the economy.

I’m no economist. Thankfully. I try to pay attention to what is happening with the economy and create observations based on experience and common sense.  Based on that, I think the Fed is making a big mistake in how they are implementing their Quantitative Easing 2 policy.

Here is why: Companies are not spending money.  Corporate cash balances at public companies are at an all time high.

When People feel like they are getting richer, that wealth doesn’t convey power to the vast majority of the population.  They reward themselves for all their hard work and success with increasing their standard of living.

In today’s world, when companies accumulate cash they feel the exact opposite. A growing cash balance conveys a feeling of power to CEOs.  The more cash in the bank, the more power with in their industry that CEOs feel that they have.  It is not an accident that CEOs refer to their cash balances as a “war chest”.  The more cash a company has , the bigger the industry sledgehammer they have with which to make acquisitions, buy back stock and most importantly increase their own personal wealth through a rising stock price.

Not only does a big cash balance convey power to the CEO, but it also acts as a foundation for a stock price.  Analysts are quick to justify Apple’s stock price by pointing to the fact that 17pct of Apple’s market cap is in cash.  Steve Jobs has been quick to point out that there is no reason to spend their “war chest” because of the opportunity value the cash presents for acquisitions in a  very competitive industry.

Jobs doesn’t chase stock price increases. Most CEOs do. The same personal wealth greed that pushed companies to over leverage (only to be deleveraged) is now pushing companies to aggregate as much cash as possible. With cash you can buy back stock at any time, increasing the company’s stock price and your personal wealth.

With cash in the bank, you don’t have to pay to repatriate cash from overseas . You already have the cash you need.

With cash you can lay off people to increase earnings per share, knowing that if you make a mistake, you have the cash to fix it.

With cash you can borrow all the money you need at barely breathing interest rates.

Companies are not holding on to cash because of fear of political and tax uncertainty. Companies are holding on to cash because of the power it offers and the opportunity to increase personal wealth.

All that cash is sitting in the bank earning NOTHING.  Economists would tell you that if you can earn more from deploying cash than by hoarding it, you should deploy it. Not true. In this age of CEOs, power trumps return on cash every time.

If the Fed thinks that creating money to make it easier for companies to borrow money is going to stimulate the economy, they are wrong.

They are simply making it easier for companies to hoard cash.

What should the Fed do ? I’m not sure the fed can provide the solution. I don’t think they have the authority to encourage or penalize companies into using their cash. The way to get companies to spend their cash is to make it hard for them to spend their “warchests” in manners that only serve to increase their personal wealth.  As i wrote several years ago:

How to Tax Wealth = Earned vs Found Money

Aug 26th 2008 4:41PM