Multivariate random variable

2013-11-15T00:39:45Z

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[[Image:Luca Giordano 014.jpg|thumb|right|Prudence, by [[Luca Giordano]]]]
'''Prudence''' (''[[Latin|Lat.]] prudentia, [[contraction (grammar)|contracted]] from providentia, seeing ahead'') is the ability to govern and discipline oneself by the use of [[reason]].<ref>[http://www.merriam-webster.com/dictionary/prudence Prudence - Definition and More from the Free Merriam-Webster Dictionary]. Merriam-webster.com (2012-08-31). Retrieved on 2013-07-19.</ref> It is classically considered to be a [[virtue]], and in particular one of the four [[Cardinal virtues]] (which are, with the three [[theological virtues]], part of the [[seven virtues]]).

The word comes from [[Old French]] ''prudence'' (14th century), from [[Latin]] '''''prudentia''''' (foresight, sagacity). It is often associated with [[wisdom]], [[insight]], and [[knowledge]]. In this case, the virtue is the ability to judge between virtuous and vicious actions, not only in a general sense, but with regard to appropriate actions at a given time and place. Although prudence itself does not perform any actions, and is concerned solely with knowledge, all virtues had to be regulated by it. Distinguishing when acts are [[courage]]ous, as opposed to [[Recklessness (psychology)|reckless]] or [[Cowardice|cowardly]], for instance, is an act of prudence, and for this reason it is classified as a cardinal (pivotal) virtue.

Although prudence would be applied to any such judgment, the more difficult tasks, which distinguish a person as prudent, are those in which various goods have to be weighed against each other, as when a person is determining what would be best to give charitable donations, or how to punish a child so as to prevent repeating an offense.

In modern [[English language|English]], the word has become increasingly synonymous with cautiousness. In this sense, prudence names a reluctance to take risks, which remains a virtue with respect to unnecessary risks, but when unreasonably extended (i.e. over-cautiousness), can become the [[vice]] of cowardice.

In the [[Nicomachean Ethics]], [[Aristotle]] gives a lengthy account of the virtue [[phronesis]] (Greek: ϕρονησιϛ), which has traditionally been translated as "prudence", although this has become increasingly problematic as the word has fallen out of common usage. More recently ϕρονησιϛ has been translated by such terms as "[[Phronesis|practical wisdom]]", "practical judgment," or "rational choice."

==Prudence as the "Mother" of all virtues==
[[File:DSCN2047.JPG|thumb|Allegory of Prudence on the [[tomb of Francis II, Duke of Brittany]] The female face depicts Francis' daughter [[Anne of Brittany]].]]
Prudence was considered by the [[Ancient Greece|ancient Greeks]] and later on by [[Christian philosophy|Christian philosophers]], most notably [[Thomas Aquinas]], as the cause, measure and form of all virtues. It is considered to be the ''auriga virtutum'' or the charioteer of the virtues.

It is the cause in the sense that the virtues, which are defined to be the "perfected ability" of man as a spiritual person (spiritual personhood in the classical western understanding means having [[intelligence]] and [[free will]]), achieve their "perfection" only when they are founded upon prudence, that is to say upon the perfected ability to make right decisions. For instance, a person can live [[Temperance (virtue)|temperance]] when he has acquired the habit of deciding correctly the actions to take in response to his instinctual cravings.

Prudence is considered the measure of moral virtues since it provides a model of ethically good actions. "The work of art is true and real by its correspondence with the pattern of its prototype in the mind of the artist. In similar fashion, the free activity of man is good by its correspondence with the pattern of prudence." ([[Josef Pieper]]) For instance, a [[stockbroker]] using his experience and all the data available to him decides that it is beneficial to sell stock A at 2PM tomorrow and buy stock B today. The content of the decision (e.g., the stock, amount, time and means) is the product of an act of prudence, while the actual carrying out of the decision may involve other virtues like fortitude (doing it in spite of fear of failure) and justice (doing his job well out of justice to his company and his family). The actual act's "goodness" is measured against that original decision made through prudence.<ref>Although Aristotle himself would have considered this way of making money contemptible: "[T]hose who ply sordid trades...and those who lend small sums and at high rates...take more than they ought and from wrong sources. What is common to them is evidently sordid love of gain...[A]ll such forms of taking are mean. (Nicomachean Ethics 1121b31)</ref>

In Greek and Scholastic philosophy, "form" is the specific characteristic of a thing that makes it what it is. With this language, prudence confers upon other virtues the form of its inner essence; that is, its specific character as a virtue. For instance, not all acts of telling the truth are considered good, considered as done with the virtue of honesty. What makes telling the truth a virtue is whether it is done with prudence. Telling a competitor the professional secrets of your company is not prudent and therefore not considered good and virtuous.

==Prudence versus cunning and false prudence==
In the Christian understanding, the difference between prudence and cunning lies in the intent with which the decision of the context of an action is made. The Christian understanding of the world includes the existence of [[God]], the [[natural law]] and [[Morality|moral]] implications of human actions. In this context, prudence is different from cunning in that it takes into account the supernatural good. For instance, the decision of persecuted Christians to be [[martyr]]ed rather than deny their faith is considered prudent. Pretending to deny their faith could be considered prudent from the point of view of a non-believer.

Judgments using reasons for evil ends or using evil means are considered to be made through "cunning" and "false prudence" and not through prudence.

On another hand, prudence is based on good will, loving kindness towards each other, leading to "peace," "gloriousness" and "joy" of oneself and/or others; it is without evil reasons and will not cause emotional sorrow to oneself and/or others, will not cause trouble(s) to oneself and/or others.

==Integral Parts of Prudence==
"Integral parts" of virtues, in [[Scholasticism|Scholastic philosophy]], are the elements that must be present for any complete or perfect act of the virtue. The following are the integral parts of prudence:
* [[Memoria]] — Accurate memory; that is, memory that is true to reality
* Intelligentia — Understanding of [[first principle]]s
* Docilitas — The kind of open-mindedness that recognizes the true variety of things and situations to be experienced, and does not cage itself in any presumption of deceptive knowledge; the ability to make use of the experience and authority of others to make prudent decisions
* Shrewdness or quick-wittedness (solertia) — sizing up a situation on one's own quickly
* Discursive reasoning (ratio) — research and compare alternative possibilities
* Foresight ([[providentia]]) — capacity to estimate whether a particular action will lead to the realization of a goal
* Circumspection — ability to take all relevant circumstances into account
* Caution — risk mitigation

==Prudential judgments==
[[File:Titian - Allegorie der Zeit.jpg|thumb|The [[Allegory of Prudence]], a painting by Titian. To Titian, prudence was preparation, foresight and judgement from experience and human history. The three faces in his allegorical painting represent passage of human generations, the young facing the light while the oldest fading into shadow. Above the heads of the three faces is a faint inscription that means, "From the past, the present acts prudently, lest it spoils future action."<ref>David Summers (1987), The Judgment of Sense: Renaissance Naturalism and the Rise of Aesthetics, Cambridge University Press, ISBN 978-0-521-32675-9</ref>]]
In ethics, a "prudential judgment" is one where the circumstances must be weighed to determine the correct action. Generally, it applies to situations where two people could weigh the circumstances differently and ''ethically'' come to different conclusions.

For instance, in [[Just War]] theory, the government of a nation must weigh whether the harms they suffer are more than the harms that would be produced by their going to war against another nation that is harming them; the decision whether to go to war is therefore a prudential judgment.

In another case, a patient who has a terminal illness with no conventional treatment may hear of an experimental treatment. To decide whether to take it would require weighing on one hand, the cost, time, possible lack of benefit, and possible pain, disability, and hastened death, and on the other hand, the possible benefit and the benefit to others of what could be learned from his case.

==Prudence in rhetoric==
[[Phronesis]], or practical wisdom, holds an important place in [[rhetoric|rhetorical theory]] as a central aspect of judgment and practice. [[Aristotle]]’s notion of phronesis fits with his notes on rhetoric because neither, in his estimation, could be reduced to an [[episteme]] or a [[techne]], and both deal with the ability to deliberate about contingent, variable, or indeterminate matters.

[[Cicero]] defined ''prudentia'' as a rhetorical norm in ''[[De Oratore]]'', ''[[De officiis]]'', ''[[De Inventione]]'', and ''[[De re publica]]''. He contrasts the term with ''imprudens'', young men failing to consider the consequences before they act. The ''prudens'', or those who had prudence, knew when to speak and when to stay silent. Cicero maintained that prudence was gained only through experience, and while it was applied in everyday conversation, in public discourse it was subordinated to the broader term for wisdom, ''sapientia''.<ref>{{cite book|last=Hariman|first=Robert|title=Prudence: classical virtue, postmodern practice|publisher=The Pennsylvania State University Press|year=2003|page=37}}</ref>

In the contemporary era, rhetorical scholars have tried to recover a robust meaning for the term. They have maintained consistency with the ancient orators, contending that prudence is an embodied persuasive resource.<ref name=Jasinski>{{cite book|last=Jasinski|first=Jamesyear=2001|title=Sourcebook on Rhetoric|publisher=Sage Publications|page=463}}</ref> Although sets of principles or rules can be constructed in a particular culture, scholars agree that prudence cannot be derived from a set of timeless principles. Instead, through gauging the situation and through reasoned deliberation, a speaker should determine the set of values and morals by which to base his (or her) actions. Furthermore, scholars suggest the capacity to take into account the particularities of the situation as vital to prudential practice. For example, rhetorical scholar Lois Self explains, “both rhetoric and phronesis are normative processes in that they involve rational principles of choice-making; both have general applicability but always require careful analysis of particulars in determining the best response to each specific situation; both ideally take into account the wholeness of human nature; and finally, both have social utility and responsibility in that both treat matter of the public good.”<ref>{{cite book|first=Lois|last=Self|chapter=Rhetoric and Phronesis: The Aristotelian Ideal|title=Philosophy and Rhetoric|publisher=Penn State University Press|year=1979|page=14}}</ref> Robert Hariman, in his examination of [[Malcolm X]], adds that “aesthetic sensibility, imitation of a performative ideal, and improvisation upon conventions of presentation” are also components of practical reasoning.<ref>{{cite book|last=Hariman|first=Robert|title=Theory without Modernity|year=1991|page=28}}</ref>

Small differences emerge between rhetorical scholars regarding definitions of the term and methods of analysis. Hans-Georg Gadamer, asserts that prudence materializes through the application of principles and can be evaluated accordingly.<ref>{{cite journal|last=Gadamer|first=Hans-George|title=Truth and Method|journal=Crossroad|year=1982|page=7}}</ref> In his analysis of [[Andrew Cuomo]]’s speech to the Catholic Church of Notre Dame, James Jasinski contends, somewhat differently, that since prudence is not an episteme or techne, it cannot be calculated by formal matters like consequences but by judging embodied rhetorical performance.<ref name="Jasinski"/> Thus, while Gadamer would judge prudence based on the execution of contingent principles, Jasinski would examine the artistry of [[communication]] in its cultural milieu between accommodation ([[compromise]]) and audacity ([[courage]]).

In his study of [[Machiavelli]], examining the relationship between prudence and moderation, rhetorical scholar Eugene Garver holds that there is a middle ground between “an ethics of principles, in which those principles univocally dictate action” and “an ethics of consequences, in which the successful result is all.”<ref name=Garver>{{cite book|last=Garver|first=Eugene|title=Machiavelli and the History of Prudence|publisher=University of Wisconsin Press|year=1987 |isbn=0-299-11080-X }}</ref> His premise stems from Aristotle’s theory of virtue as an “intermediate,” in which moderation and compromise embody prudence. Yet, because valorizing moderation is not an active response, prudence entails the “transformation of moderation” into a fitting response, making it a flexible situational norm.<ref name=Garver/> Garver also asserts that prudential reasoning differs from “algorithmic” and “[[heuristic]]” reasoning because it is rooted in a political community. Garver says that common problems regarding stability and innovation arise in a political community, calling for the need for prudential reasoning.<ref name=Garver/>

==Prudence in economics==
Economists say that a consumer is 'prudent' if he or she [[Saving|saves]] more when faced with [[risk]]ier future income. This additional saving is called [[precautionary saving]]. Prudence is closely related to [[risk aversion]]. The difference is that saying a consumer is risk averse merely implies that he or she dislikes facing risk, whereas prudence implies that the consumer takes action to offset the effects of the risk (namely, by increasing saving).

If a risk averse consumer has a [[utility function]] <math>u(x)</math> over consumption ''x'', and if <math>u(x)</math> is [[Derivative|differentiable]], then the consumer is not prudent unless the third [[derivative]] of utility is positive, that is, <math>
u^{'''}\left(x\right)>0
</math>.<ref>{{cite journal |first=A. |last=Sandmo |year=1970 |title=The Effect of Uncertainty on Saving Decisions |journal=[[Review of Economic Studies]] |volume=37 |issue=3 |pages=353–360 |jstor=2296725 }}</ref>

The strength of the precautionary saving motive can be measured by '''absolute prudence''', which is defined as
<math>
-\frac{u^{'''}\left(x\right)}{u^{''}\left(x\right)}
</math>. Similarly, '''relative prudence''' is defined as absolute prudence, multiplied by the level of consumption. These measures are closely related to the concepts of absolute and relative [[risk aversion]] developed by [[Kenneth Arrow]] and [[John W. Pratt]].<ref>{{cite journal |first=M. |last=Kimball |year=1990 |title=Precautionary Saving in the Small and in the Large |journal=[[Econometrica]] |volume=58 |issue=1 |pages=53–73 |jstor=2938334 }}</ref>

==Prudence in accounting==
In [[accounting]], prudence was long considered one of the '''fundamental accounting concepts''', determining the time for [[revenue recognition]].<ref>[http://www.hmrc.gov.uk/manuals/bimmanual/bim31030.htm Tax and accountancy: 'fundamental accounting concepts'], [[HMRC]], UK. Retrieved 2011-04-12</ref> The rule of prudence meant that gains should not be anticipated unless their realisation was highly probable. However, recent developments in [[Generally Accepted Accounting Principles]] have led academic critics to accuse the international standard-setting body [[IASB]] of abandoning prudence.<ref>[http://www.accountancyage.com/aa/news/1808094/iasb-abandoned-prudence-professor-warns IASB has abandoned prudence, professor warns], ''[[Accountancy Age]]'', 24 August 2010</ref> In the [[Generally Accepted Accounting Practice (UK)|British reporting standard]] FRS 18, prudence, along with consistency, was relegated to a "desirable" quality of financial information rather than fundamental concept.<ref>[http://www.hmrc.gov.uk/manuals/bimmanual/bim31032.htm Tax and accountancy: development of accountancy concepts and new objectives: FRS18], HMRC. Retrieved 2011-04-12</ref> Prudence was rejected for IFRS because it was seen as introducing bias to accounts, which should be neutral.<ref name=Lords>Rose Orlik, [http://www.accountancyage.com/aa/analysis/2039988/lords-leap-international-standards Lords took a leap on international standards], ''[[Accountancy Age]]'', 4 Apr 2011. Retrieved 2011-04-12</ref>

In a 2011 report on the [[Financial crisis of 2007–08]], the British [[House of Lords]] bemoaned the demotion of prudence as a governing principle of accounting and [[financial audit|audit]]. However, their comments were disputed by some leading practitioners.<ref name=Lords/>

==See also==
*[[Prudence (given name)]]
*[[Phronesis]]

==References==
{{Reflist}}

==External links==
{{Wiktionary|Prudence|prudence}}
*[http://www.newadvent.org/summa/3.htm ''Summa Theologica'' "Second Part of the Second Part"] See Questions 47-56
*[http://www.newadvent.org/cathen/12517b.htm ''Catholic Encyclopedia'' "Prudence"]

{{logic}}
{{Use dmy dates|date=January 2011}}

[[Category:Christian ethics]]
[[Category:Positive psychology]]
[[Category:Critical thinking]]

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