Monday, December 23, 2013

B.S. in English

Gerald Howard tells us about the value of his English degree with stories from his experience working as an editor:
We were theoretically required at that time to have our [profit and loss statements] yield a return of at least 8 percent, and I had become adept in ways to make or exceed that number. You could shave on the cover art. You could shave on marketing and advertising. You could basically lie about projected sales and hope no one called you on it. The techniques I had developed in college to make my ham-handed chem lab experiments yield the proper results found a practical new use.
Basically, you could lie.

But Gerald didn't lie . . . that much. His profit and loss statement only estimated a 7% rate of return so the CFO didn't want to approve it. How did he convince him?
 I made some weak noises about literary excellence, backlist sales, commitment to authors.
Basically, he made up some bullshit. (See "The Rule of 2.")

Lying and bullshitting are valuable skills, especially on Wall Street, where many Ivy League humanities majors look for a job. But Gerald doesn't think you should major in English just for the skill set.
The point is truth and beauty . . . [they are] why you should major in English.
That is not a typo. He writes it twice: "truth."

Monday, November 18, 2013

Don't be a Martin in FL

A lot of people have the Trayvon Martin story all wrong.

The focus has been on race. Travyon was black. George Zimmerman was not. That is why Travyon was killed.

But white people get killed by assholes in FL too. In fact, the most famous "stand your ground" case, one where the law actually applied, featured a black man who killed a white man in front of the white man's pre-school age daughter.

Now the sports world is abuzz about the racist treatment of Jonathan Martin at the hands of his fellow offensive lineman Richie Incognito. But does anyone doubt that white rookies get hazed in the NFL too, inside FL and outside?

The real common denominator in these cases is not race, it's the last name Martin.

If you're last name is Martin get the fuck out of FL ASAP for your safety and wellbeing.

Black people get murdered and harassed in every state, leaving FL is no escape. But Martin's seem to be singled out in the sunshine state.

Friday, November 15, 2013

Medicine isn't a Science

We've all heard a lot about how economics isn't a science like physics, medicine, and chemistry.

Economists didn't predict the financial crisis. Didn't you hear?

That got me thinking.

Susumu Tonegawa who won the Nobel prize in Medicine in 1987, is a professor at MIT. His son also went to MIT.

I say "went" not because he graduated but because he committed suicide during his freshmen year, right in his dorm room.

If medicine were a science, Tonewaga would have been able to predict his son's death. But he couldn't. You draw the conclusion.

But it isn't just Tonegawa who gets this stuff wrong. My wife is reading How Doctors Think so I read through a few chapters and it seems like every doctor has misdiagnosed a patient. In fact, even the good ones he singled out recount many misdiagnoses, sometimes even fatal ones.

You almost get impression from reading the book that doctors don't really understand the human body well enough to predict when people will get sick or prevent people from dying. But medicine is a science so I guess that is a wrong impression.

Sunday, November 10, 2013

2016: Christie vs Crist

Here's my prediction for the 2016 presidential election.

Charlie Crist (D-FL) goes to war with Chris Christie (R-NJ) as both parties double down on "electability" after only allowing independents to vote in their primaries.

The suicide rate for journalists goes through the roof as they struggle to get the names straight.

The average voter refers to them as "the fat one" and "you mean that closest homo?"

The election ultimately comes down to Charlie's home state, FL, where half the voters are senior citizens who can't distinguish the names on the ballot.

Luckily for Charlie he's the governor of FL and has pulled a "Jeb," rigging the election in his favor.

Chris Christie petitions the Supreme Court to overturn the result and they think they did, but an 80-year old Scalia is charged with writing the opinion. The senile old man, entering his 25th year of suffering from Alzheimer's, writes "Charlie Crist" when he meant "Chris Christie" ensuring Charlie becomes the first gay president of the U.S.

Sunday, November 3, 2013

I think I'm starting to understand Medicine

I've always been puzzled at how much "health research" money goes into developing drugs and understanding the biochemistry of the body. Shouldn't we spend more money thinking about how to get people to actually take up our current medical knowledge to use--getting people to exercise more, actually take their pills, eat healthier, and practice mindfulness and other good psychological practices.

This letter to the editor to the NYTimes helped me understand why we don't:

Re “Yes, Economics Is a Science” (Op-Ed, Oct. 21): ...
It is good to hear that economics is entering a phase when rigorous analysis and empirical testing will become the norm. . . . Scholars of physics, chemistry and medicine can study the movement of atomic particles or lab mice without any concern that the particles and the mice are interested in the results. . . .
New York, Oct. 21, 2013
The writer is a lawyer.

Medical research isn't about understanding how to make people healthy, it is about understanding mice!

Friday, November 1, 2013

Abortion Rights back in the spotlight

The Supreme Court ruled today that people have a right to abortions, invalidating centuries of precedent that people have to pay for services like surgery and tax preparation.

In the case, Fluke vs Holder, argued pro se by Georgetown law graduate and “slut” Sandra Fluke, the plaintiff argued that she has “abortion rights” as established in Row v. Wade. Since she had to drive a long distance and pay more than she wanted to get the abortion, her rights were being unconstitutionally trampled on by the market.

In a reversal of precedent the court agreed with Ms. Fluke, rejected the Obama administration’s argument that people had to pay for goods and service like food, tablet computers and prime real estate and abortion did not have a special place in U.S. law.

Well, it does now.

Next week the court will hear Cook vs. Fanboys Limited, a case where Apple fanboys claim they have a right to upgrade their tablets for free, at Apple’s expense, due to their “medically documented obsession with Apple products,” a DSM-VI certified psychological disorder. Pundits predict the court will be confused about what it is exactly that a “tablet” does.

Saturday, October 12, 2013

NYTranslated: Does music make you successful?

Is Music the Key to Success?
by Joanne Lipman, translated by Steve White

Condoleeza Rice, the chief advisor to George W. Bush, the least successful president in recent memory, was a trained concert pianist. Alan Greenspan, the man who inflated the housing bubble as Chairman of the Federal Reserve, also played music as a child. Other people you have never heard of, the fat numbers gay at MSNBC, and the least deserving Best Director winner of all time also play or played music.

I know correlation is not causation, but in this case we'll just assume it is: music training makes people successful. I know because I asked a bunch of successful people who played music if music made them successful. They said maybe it had something to do with it now that I mention it.

You might ask why I asked people I knew were successful and who play music. Doesn't that beg the question on the correlation. Yes, but I was scared that if I asked successful people who didn't play music (most of them) that they might not attribute their success to music. I was even more afraid to talk to average people who played music (i.e. the vast majority) because it might force me to change my mind.

So, yes, I can't offer evidence for why music makes you smart, but I can offer a half-baked theory filled with buzzwords. Music is about collaboration, except when you play solo like most of the people I talked to. It focuses your mind, like mindfulness training except not as well. And it to play you have to listen and listening is good. I'll stop because you are probably convinced at this point.

Mr. Greenspan told me that the probability that so many high achievers played music in school is unlikely to be coincidence. Sociologists I consulted pointed out that everyone on my list was white or from an affluent household, and in most cases both, but I'm pretty sure that has nothing to do with their success.

So let me clarify. Music won't turn you into a star in your field. That probably requires hard work . . . in your field. But music education should be subsidized heavily so rich white kids can attribute their success to their violin and ignore the underlying social inequalities it represents.

Tuesday, October 8, 2013

Is a home run just a home run?

In sabermetrics, the statistical analysis of baseball, there is a lot of work done to estimate the value of players to team. How valuable is a player who hits .330 with an OBP of .387 with 12 HR? Is he more valuable than someone hitting .347 but with just a .365 OBP and 2 HR?

To make life simple sabermetricians generally try to answer questions like this by focusing on the player and his hits, walks, etc. and ignore what team he plays for and where he bats in the lineup. Stats like RBIs and runs depend on what other players do--unless you hit a home run someone needs to bat you in, and likewise you need someone on base to generate RBIs.

Traditionally this criticism is brushed aside as unimportant. The goal of asking "who is more valuable?" is to find our who is better and that question doesn't hinge on how good the other players are, does it?

But a home run isn't just a home run. The more people who are on base, the more runs you score when you hit a home run. Whether you play for a good offensive team or a bad one could have a big impact on how many runs a home run tends to be worth.

In fact, it DOES have a big impact on how valuable a player is by up to 40%. Replacing a replacement level hitter with Mike Trout would turn the Marlins' terrible offense (515 runs) into a merely bad one (584 runs predicted) for a gain of 69 runs. Doing the same trick for the Red Sox's potent offense could push a strong offense (853 runs) into the stratosphere (949 runs) for a gain of 96 runs.

96 runs is not "approximately" the same as 69 runs. It's important to take context into account when thinking about value.

Saturday, September 28, 2013

Why edX is a failure

When MIT announced MITx I went on the record saying it will be a major flop.

No one had any idea what it was supposed to accomplish but across a wide range of goals it seemed doomed to failure.

Is it an educational gym, providing resources to help you build mental muscle?
Is it a personal trainer, providing you advice on how to train?
Is it a means to signal how smart you are?
Or a networking tool, the main function of a residential college?

It looks like the leadership is mostly hoping to be some combination of gym and signaling device, weighted toward gym. You can get certificates for passing classes, but most of the resources are going into developing tools. Look at the job postings:

Devops Engineer (2x)
Front-end Developer (2x)
Director of Services
Program Manager (2x)
Test Engineer
Software Engineer
Principal Software Engineer

It looks like 70% of their employees are programmers and the other 30% are administrators. Where are the educators? Evidently they aren't that important.

After a year and a half, MITx is well on its way to flopping.

Thursday, September 26, 2013

Jindal: We need Low-isiana Standards

Gov. Bobby Jindal of Louisiana announced his opposition to Common Core, an initiative led by 45 state governments to develop common, high standards for our nation's primary and secondary schools.

Jindal decried the "federalization" of education and pushed the state's board of education to avoid damaging the state's reputation as the second dumbest in the nation.

He urged teachers and students in the state to help "put the Low back into Low-isiana. We need Low standards, not D.C. standards." He suggested that Mississippi can pass his state in high school graduation rate if the tests asked students to write in complete sentences or do basic geometry while other states kept in place their comically low bars for high school graduation.

In comments with reporters after the press conference Jindal lamented that "we're just a bunch of dumb hicks in this state . . . let's face it, my dad grew up in India and more people understand his English than mine."

Wednesday, September 25, 2013

Why are poor people dumb?

Sendhil Mullanathain and Eldar Shafir have a new book out, Scarcity: Why Having Too Little Means Much More.

The book discusses a few experiments in psychology and introduces a few pieces of jargon to help readers remember the main points:

Focus Dividend - when you don't have a lot of time, or money, etc. you economize on its use, and your mind is better able to focus on the task at hand

Tunneling - the focus you get when time, or money, etc. is short has a negative side-effect: tunneling. You can only see things that relate to your goal. If you are own a diet, for instance, you can't stop counting calories, or thinking about sweets...

Bandwidth (Tax) - bandwidth is a loose word for "computational horsepower." Doing things uses up bandwidth and scarcity--of money or time, etc.--eats up bandwidth since, for instance, dieters are using some of their bandwidth repressing urges to eat sweets

That all happens in the first two chapters. The rest of the book has a lot of applications--to poverty and other things no one will remember--but the discussion of poverty has captured most of the attention of the press, including NYTimes essayist Tina Rosenberg.

She asks whether people are poor because of bad choices or whether they make bad choices because they are poor. It's probably a lot of both, but the scarcity paradigm nudges us to acknowledge that is might be more of poverty causing bad habits than we used to think.

The strange thing about the book is that it makes no mention of meditation or mindfulness. Psychologists know how to treat deficits of attention and lack of focus. Meditation, even as little as 15 minutes a day, trains people to bring their focus back to the present. You would think it would help people avoid tunneling while still reaping some benefits of the focus dividend but the book's recommendations are about text messages, simpler forms, and default enrollment . . . which doesn't sound that different from a traditional liberal focus on changing "the system" instead of changing people's behavior.

Second, we know most of what people do is based on habits, not conscious decisions. The bandwidth tax, they have shown, lowers fluid intelligence and executive control, but how does it influence habits? Is there an interaction: rich people don't get a bandwidth tax because they know what to do by habit (draw on a credit line?) while the poor have to think about which lender, which friends to borrow from, if its worth it to fix the car this week or wait until next week? Isn't going to a payday lender also mostly a problem of habit, not a byproduct of bad decision-making when you are tunneling? (As Tina notes, most loans go to people who visit semi-monthly.) This is surprisingly under explored in the book except in passing, calling the tendency of people given abundance to waste it and end up right back in a  scarcity trap the "psychology of abundance," i.e. habits.

Saturday, September 14, 2013

Sad news from Florida

Sad cyber bullying story from Florida. Fortunately someone will be punished, although the death penalty is "unconstitutional" for teens it seems like the appropriate punishment.

Thursday, September 5, 2013

Do higher minimum wages help to pay the bills?

James Surowiecki calls for a higher minimum wage, but do higher wages really help to pay the bills?

Not as much as you would think.

Part of it is because of taxes. We all know taxes get deducted from our paychecks, so when you get a raise of $2 an hour in Massachusetts you'll pay $0.11 cents an hour in higher state taxes, and $0.30 an hour more in federal taxes (most likely), and then of course contribute $31 cents toward social security and Medicare. So you only get to take home $1.28 of that $2/hour wage. If you spend the money on anything with a sales tax that is really just $1.20 since you'll have to use the other 8 cents to pay the tax.

So a $2 raise for a full-time worker (40 hours) isn't going to free up $80 in their budget, it is going to free up more like $48.

But that's not all. The real difference in take home pay is going to be far less than $1.20 in many cases because our government does a lot to help the poor--and stops doing it when people stop being poor. The $2 raise could cost you eligibility for Medicaid or reduce you subsidy for buying health insurance on the new exchange, reduce your allotment of food stamps, and shrink your Earned Income Tax Credit (EITC).

You'll lose $0.60 worth of food stamps for every hour you work and owe $0.32 more in federal income tax as your EITC is phased out. You'll have to pay around $0.52 cents more for your health insurance since you are more able to afford it. And you might also lose eligibility for affordable housing,  Pell Grants and other scholarships for your kids to attend college or free lunch if your kids are younger.

When you add it all up it is possible (and even likely if you have children) that a $2/hour raise wouldn't net you more than $10 a week in the bank. Most of the "income" would all disappear in tax deductions, higher taxes, higher expenses for health care, housing, and food.

That is not to say a higher minimum wage wouldn't help anyone out. Some people apply for few benefits and so have little to lose and people without children generally don't get much help from the government, even if they are poor.

Thursday, August 29, 2013

Tim Scott hates entitlements

Tim Scott (R-SC) hates entitles. He opposes expanding Medicaid because "[w]e simply cannot continue to dig a hole" and argues that "increasing our entitlements [means] jeopardizing the future."

I guess that is a sensible mentality for a black conservative. He wants people to get up off their ass and work hard to make their lives better. It's hard to argue with that.

But it's also hard to get out of the entitlement mentality.

Senator Scott's press secretary put out a press release bemoaning the fact that "Senator Scott was not invited to speak at [the 50th anniversary celebration of MLK's "I have a Dream" speech]." Appearnetly, as CNN puts it, "the only black senator and is one of only eight African-Americans to ever serve in the U.S. Senate" is entitled to speak about the legacy of Dr. King.

Friday, July 19, 2013

Breaking: Tebow killed Odin Lloyd

In a shocking twist to the Aaron Hernandez murder investigation, it appears Tim Tebow is taking responsibility for the murder of Odin Lloyd.

In a press conference Tebow said he did "terrible, terrible things"to Lloyd. He claims to have erupted in rage after finding out that Lloyd had "disgraced himself and God by taking a life" by forcing his girlfriend to have an abortion. Tebow announced that he would "take full responsibility for [his] actions, and the consequences" adding that he "just want[s] to help the team win."

The shocking development clears the way for the Patriots to resign Hernandez at a discount as the Bristol County DA is unlikely to win any case against Hernandez.

ESPN's Skip Bayless bemoaned the "selfless act" saying Tebow "took a bullet for Aaron Hernandez, he is not guilty" and insisted Tebow could do more to help the team by dethroning Tom Brady as the Patriots starting QB. The rest of the world agreed that the Patriot's acquisition of Tebow has paid off handsomely.

Monday, May 13, 2013

How Doctors and Austerity Kill

David Stuckler and Sanjay Basu have an interesting op-ed in the New York Times.

They note that during economic catastrophes public health tends to worsen. More people start taking anti-depressants and more people commit suicide. People visit the doctor less and delay preventative care. When infectious disease control is cut, epidemics sometimes break out.

They argue that austerity is to blame since depressions tend to lead to decrease tax revenue and budget cuts, or austerity.

The obvious retort is that maybe the depressions themselves are to blame for high unemployment, suicides, and general misery. Maybe the lack of money and hopelessness are what gets people down, not cuts to TB control funding. But the authors . . . don't really address that issue. They assert that health declines more in countries that adopt austerity but they don't present any evidence for their claim, citing statistics from countries like the U.S. that adopted stimulus programs.

I used to think hospitals killed people. When people are at a hospital they are much more likely to die than when they are at work. But I've come to think that people go to a hospital when they are sick and likely to die. David and Sanjay probably disagree.

Thursday, April 11, 2013

Does MIT educate people or sort them?

When my wife got sick she e-mailed her TA to ask for notes from the lecture she was about to miss.

The TA's response: "I can't because it would provide an unfair advantage over the other students."

It's hard to understand what he means if you enter a class thinking the point is to learn the material. Isn't the TA's job to provide the students with material, , like notes and practice problems, to help the them learn? If he has them, shouldn't he give them out so students can be better prepared for the tests?

But when you understand that the class isn't about learning then everything falls into place. The tests aren't supposed to measure how much of the material you understand, they are supposed to measure how smart you are. Giving out good notes or practice problems might help students learn the material, but it would make the assessments test how much you practiced those practice problems and how much times you reviewed the notes, which weakens the value of the exam as a sorting device.

NRA recommends mandating firearms at football games

In response to a recent epidemic of fights between drunk fans at NFL football games, the NRA has proposed mandating that all ticket-holders over the age of 18 bring a firearm to the game. Spokesman Wayne LaPierre noted that "the only thing that stops a violent drunk fan is another drunk fan with a gun."

Economists at the CATO Institute quickly filed a press release in support of the plan. They note that "to stop violence on the field the league threatens fines and 15-yard penalties--to stop violence off the field it should also use incentives." The theory, known as the deterrence approach to crime, is based on the work of Gary Becker, a Nobel prize winning economist. Freakonomist Steven Levitt, an expert on the theory, noted that "it makes sense but sometimes drunk people do stupid, irrational shit."

NFL Commissioner Roger Goodell stated that he would "consider the policy on it's merits" without dismissing it out of hand. "It is counterintuitive--giving thousands of drunk, angry men weapons, packing them like sardines, and hoping that violence decreases, but it just might work."

A spokesman for the NAACP complained that the policy could price many African-American fans out of seats at the stadium: "Tickets often cost over $100, and now you will have to invest $100 or more on a handgun just to get in the door!" Together with 50 other minority-rights group the NAACP has proposed building the price of a handgun rental into the price of the tickets in order to ensure that "when a massacre goes down the victims are as diverse as the country that allowed it to happen."

Medical School: Cost Analysis

Getting an M.D. is expensive. The median student graduates with over $100,000k in debt and many student have so "little" debt because their parents paid for part of the cost. The median black student, who tends to have lower income parents, graduates with $184k in debt.

So its not surprising reporters are spreading the word with cost analyses of medical school. Bloomberg has the best such story that I have come across.

As a reminder, cost analysis is an alternative to cost-benefit analysis that ignores the benefits of a choice. The approach helps to simplify analysis, at the cost of leading to conclusion that are complete bullshit in almost all cases.

Saturday, April 6, 2013

Do only rich people have $3 million IRAs?

Obama's new tax plan is supposed to target IRAs worth over $3 million in order to hit the rich where it hurts. I like soaking the rich as much as the next guy but $3 million sounds a bit low, like it hit a substantial share of the middle class as collateral damage?

California is known for its generous pensions so it seems like a good place to start looking for pensions worth $3 million. Retired California teachers average $51,000 in pension income and probably around $20,000 in social security income. That pension is equivalent to about a $2 million IRA. If two teachers were married, each pulling in $51,000 pensions and $25,000 in social security income that would be the same as having a $3.6 million IRA. California is a high income state, and the pensions are generous there even relative to the cost of living, but these are pensions for teachers, not exactly the best paid profession in the middle class. If a family of teachers has over $3 million in their IRA (or pension equivalent) then I think its safe to say a large safe of the country should/could have $3 million IRAs.

So $3 million does not seem like an unreasonable amount to put away in your IRA. Many upper middle class people who save 15% of their income for retirement will end up with something like that amount when they retire. The damage to the middle class would be compounded if the $3 million cap is not indexed to inflation, as seems likely.

Thursday, April 4, 2013

Should taxpayers pay for book at Catholic schools?

Valerie Strauss makes a case against funding Catholic hospitals and schools. I think the argument is that

(1) it is impossible to separate the religious aspect of Catholic schools from the educational aspect, the state-approved non-religious textbooks have the flavor of both

(2) more importantly, non-Catholic schools have a weak union that accepts lower pay. By channeling funds to Catholic schools we will, in the long run, undermine the leverage teacher's unions have to extort higher wages and benefits

What I like about the analysis is that while it's not a traditional cost analysis it does successfully avoid any mention of the students. In general, when you're considering spending more money on schools, there are going to be (some) benefits for students. In the case of textbooks those benefits are small but if you acknowledge them you open the door to the idea that the other side has good points too.

To make a compelling case against the "corporatization" of education it's important to ignore how it is helping students. If your audience starts to think about poor Haitian kids going home unable to do homework because they can't afford $100 math textbooks it may feel terrible about sticking it to the kids. And as soon as people focus on the kids you've lost the argument.

Monday, April 1, 2013

The right to do what you want with your body

For many people it is obvious that when you want to have a procedure to remove a fetus from your body in order to destroy a life, you can because you control you body.

But if you want to have surgery to remove a kidney from your body in order to save a life, you can't because you aren't allowed to decide what to do with your body.

I guess it has something to do with the fact that the kidney is "part of you" and belongs inside you whereas the fetus is another person that does not. But if you're going to acknowledge that the fetus isn't part of you, then aren't you acknowledging that it isn't part of your body?

Is the purpose of Medicaid to save lives?

DailyKos has a story reporting that expanding Medicaid would save 12,000 lives. It is a good benefit analysis. It's not clear over what timeframe 12,000 lives would be saved. Over the next year? Ten years? (It is probably ten years.) It completely ignores the cost of the program, but my estimate is about $10,000 in taxes per family.

Are you willing to pay $10,000 to save those people's lives? How many people will die because they have to cut back on medical care, gym memberships, more expensive but healthier foods, and are more stressed because of lower incomes after paying an extra $1,000/year in taxes?

The point is that the purpose of Medicaid isn't to save lives. If all we cared about was saving lives we wouldn't ban kidney donations and we would ban cigarettes, heavily tax soda, mandate more exercise for kids in school, all of which are policies being advocated that most people oppose. We care about how our food tastes and personal liberty and spending our money on things aside from health care (or taxes that pay for health care).

Calculations: 0.0001 deaths averted per enrollee from Finklestein et al. on the Oregon experiment => 12 million people enrolled at a cost of about $5,000 in taxes per person plus $600 in excess burden = $780 billion over 10 years. $780 billion / 313 million * 4 people per family = $9968 per family.

"Gay marriage will lead to fraud"

Sue Everhart makes a compelling case that gay marriage could result in a wave of immigration and insurance fraud.

Anyone could just "marry" a friend and the friend would become eligible for a temporary permanent resident card and health insurance benefits. (That is not a typo: the permanent resident card expires in two years but is renewable.)

In fact it sounds like such a good idea, you have to wonder why people aren't already doing it. If fact, you could commit  immigration and insurance fraud without even getting married! We should probably just eliminate insurance and immigration to eliminate the potential for fraud.

Sunday, March 31, 2013

Revealed preference and empty words

I saw this list of the 12 worst Supermarkets earlier today.

I was pretty sure Shaws, the local monopoly in Cambridge, MA, would be number one but it fell all the way to #3 because the stores are clean. Ranked just above it, at #2, was Wal-Mart.

Yes, Wal-Mart, the largest grocer in America, which faces stiff competition from a variety of regional chains and yet tends to dominate wherever it goes . . . is the kind of place no one wants to shop at.

So what should we trust, what people do when they go and shop there, or what they say when they say it is one of the worst supermarkets?

Probably the former. The survey (apparently) gives equal wait to prices, cleanliness, food quality, and service. That means Shaws can make up for 30 and 40% markups by having a clean store with clear aisles. But would you be willing to pay 30% more for the right to shop in a cleaner store? I'm not.

Wal-Mart customers complain about long lines, bad meat, and poor service, but are "highly satisfied" with the prices. Evidently if I can shave $50 off you grocery bill you're wiling to wait 10 extra minutes in line. That make's sense. $50 for 10 minutes works out to $300/hour for your time.

Friday, March 29, 2013

Cost Analysis: Flex Time Edition

Slate has a great cost-analysis of flex time for workers with young children.

As regular readers know, I write about cost analysis because it fixes a major problem with cost-benefit analysis: it requires you to think about why a plan is good and why it is bad and make tradeoffs and tough choices. Cost analysis is black and white: we obsess over why an idea is bad so we can trash it without any regret about benefits we are sacrificing.

The basic idea in the Slate article is that, without flex time, women can either be career women or stay-at-home moms without much of a career.* Flex time gives women a third option with more work-life balance, but by opening the door for work-life balance some women choose to get out of the rat race and as a result (on average) women earn less, work fewer hours, and will ultimately have fewer top positions in their field.

The only problem I have with the article is this sentence:
This kind of work-life balance may make for happier womenconsider the Netherlands, where women are quite happy . . .
By acknowledging that flex time makes women happier you're acknowledging the tough tradeoff between happiness and money/prestige that women face. No one wants to hear about how you can't have a work 60 hours a week earning money and spend 8 hours a day with your family and get 8 hours of sleep.

* - This is an exaggeration. Obviously there are many ways to do some of each, so flex time really just expands women's options.

Thursday, March 28, 2013

Fans say time keeper should not decide the game

The NBA league office confirmed that time should have expired when Kobe Bryant made a game winning shot against the Minnesota Timberwolves on Saturday night.

The league office statement explained that "the time keeper did not want to let the clock decide the game." An anonymous source clarified that "[w]ith just 0.8 seconds remaining Kobe may not have had time to set up a decent shot if we started the clock when he received the inbounds pass" so the time keeper decided that "it was not up to [him] to decide the game, so he let Kobe spot up before starting the clock."

Lakers' Coach Mike D'Antoni commented that "They should start the clock, I think, in theory, but also in theory they want players to decide the game. So, I can understand it" before adding that "[t]his is Kobe Bryant was are talking about, the normal rules don't really apply, right?"

Timberwolves coach Rick Adelman, best known for losing game 6 of the 2002 Western Conference finals to Kobe's Lakers due to 22 inexplicable free throws awarded to the Lakers in the 4th quarter, was fuming after the game. "If you are going to not start the clock in order to give Kobe a shot, why not wait until we get another shot as well?" The league office fined Adelman $5,000,000 for making "a really retarded comment."

When asked about whether the shot came in time at shootaround the next morning Kobe was incredulous. "If time is still on the clock, I got it off in time. Like Fish." referring to the game-winning shot Derek Fish took 0.6 seconds to make when the clock only had 0.4 seconds left.

Tuesday, March 26, 2013

Why Medicare bills are like College Tuition

Imagine you're married and have two teenagers. Somehow you ended up with $25,000 in credit card debt and payments are you don't know how it happened. Since you kids are in their teens you know that in a few years they will go off to college and tuition bills will start arriving in the mail. You don't want to get deeper in debt in the future so you've dedicated most of your financial planning to dealing with those tuition bills.

Does that make any sense?

Sort of. That is how most policy wonks think about the federal budget. The U.S. is deep in debt and Medicare costs are increasing rapidly. If costs continue to grow as the baby boomers retire the country will be forced to run massive deficits (or raise taxes) to pay those big bills off on the horizon.

But the question everyone is interest in today is how the U.S. got so deep in debt and what we can do to get out of debt. To understand why we have a large debt today you have to focus on what we spend money on in the past, not what we will spend money on in the future.

The fixation on future costs has led many to minimize discretionary spending. Their projections assume discretionary spending will decline as a percentage of GDP into irrelevance while Medicare costs will explode. So the talking point for the anti-sequester bloc is that "discretionary spending isn't a real problem so we don't need the sequester."

1) It is like saying "I don't need the medicine, the doctor said I would heal."
Projections of declining discretionary spending are based on the premise that Republican leadership will remain obsessed with cutting discretionary spending to the bone. Telling them to stop worrying about the problem because it is going to get fixed is like saying you don't need to take the medicine (the sequester) because the doctor said you would feel better next week (... if you take the medicine).

2) We have a huge debt because of discretionary spending.
This point cannot be emphasized enough. If discretionary spending was so obviously going to recede into irrelevance why hasn't it happened yet. In theory when the Cold War ended there was going to be a major "peace dividend" as military spending decreased. Why did it go? Military spending remains close to 5% of GDP when costs for the wars are factored in and are two biggest factor in explaining why the U.S. fiscal position deteriorated over the past decade.

The Health Care Cost Crisis

Policy wonks around the country agree that the U.S. has a serious health care cost crisis.

As Peter Orzag notes, Medicare currently takes up about 3.8% of GDP and that proportion could rise to 6.8% by later this century. But Medicaid costs are also increasingly rapidly as are private sector so total health care expenditures currently take up 17% of GDP and could rise to 30% of GDP by 2040.

But first, you might be wondering why I'm only talking about the problems with spending money on health care. It is because the fact that fewer people are dying because of all of this money invested in health care is something we can safely ignore. When every other industries grow, like the cell phone industry or the automobile industry, we celebrate all the "job creation" and value the higher quality of new products. In fact, that is why we those industries grow: people like their products so much they spend more and more money on them. But health care is different for reasons I can't explain.

The chart below should the historical pattern from 1945 to 1995 as more of our resources were dedicate to healing the sick.

As you can easily extrapolate why out of sample, health care could easily take up 0.3% of GDP by 2040. Wait . . . that can't be right. Oh, sorry, this is a graph of movie ticket sales as a percentage of GDP. And since it ignores DVD, VHS, and streaming video sales and rentals, obviously it understates the percentage of GDP we are dedicating to movies and entertainment.

I think I just diagnosed America's movie cost crisis.

Monday, March 18, 2013

Is the NYTimes the web's most unscrupulous business?

There are a lot of scumbags running scams on the Internet but it's usually easy to sort out Nigerian princes from legitimate businesses.

The exception is

The Times is running an outdated business model, investing heavily is coverage that is occasionally excellent (David Leonhardt on economic policy) but mostly mediocre. Few people are willing to pay for it with so much free competition.

So if the Times can recruit new customers what are they gonna do?

Hold their current base hostage, of course.

That isn't a misprint. 

You can sign up online but you can't cancel. You have to call their customer service line, which is only available about half the time, tell them your name, e-mail, and address and refuse two hard sells (99 cent for 4 weeks, 50% off for 12 weeks).

NYTimes: Working hard to conform to stereotypes and conspiracy theories since (at least) 2013.

Saturday, March 16, 2013

Why You Don't Have Any Wealth

The NYTimes has a story about how my generation has less wealth than my parents with the subtext that this is a serious problem.

The "problem" is that my generation is investing more in education so we have more student debt and we take longer to get into the workforce.

We make more money, especially when you take into account the life-saving health care we of get as a fringe benefit,* but it takes longer before we start earning. The result is that in our 20s we received far fewer paychecks than our parents did and as a result we've earned less in wages.

No one really doubts that by the time we reach our 40s and 50s everything will have flipped. We will catch up with our parents, pass them, and soar to new high, and probably accumulate more wealth along the way, but while we're young we have more debt (from higher investment) and less savings (from lower income).

Another less misleading way to think about it is that we DO have a lot of wealth but it isn't in real estate, stocks, or bonds, it is in what economists call human capital (i.e. education and experience). Our "lack of wealth" is misleading because it doesn't count our primary asset.

If that sounds abstract a simple example shows what I mean. Would you rather be a newly minted M.D. earning $150,000 a year with $100,000 in debt our a department manager at Wal-Mart earning $35,000 a year with $30,000 in equity in his house? The department manager has $130,000 more wealth but if you take into account human capital the doctor has over $1,000,000 more wealth.

* - An example: when I was born there was an experimental procedure to eliminate a congenital heart defect I was born with. By the time I was 8 my mom felt it was safe enough to try and now I no longer have a 1 in 200 chance of sudden death. If I were born in the 60s that wouldn't be true.

Wednesday, March 13, 2013

Acemoglu didn't watch KONY 2012

Daron Acemoglu and James Robinson note that
The finding that about 10 percent of foreign aid goes to intended recipients [. . . is] from Uganda, which was not a war zone but a peaceful country at the time of the 2004 study we cite. 
I guess they didn't see Kony 2012.

Monday, March 11, 2013

Jonathan Rees, Luddite, hates MOOCs

My dad repairs computers for a living. For a long time he worked at a hospital and the main thing that would break down were the printers. They would jam, run out of toner, run out of paper, or just go on the fritz inexplicably all the time. But that made work for my dad so, great, right? Of course, it is possible to make printers that can do some self-diagnostics and to make more reliable printers over time. Now fewer printers break at the hospital. When they do it is easier to figure out what is wrong. In some cases it is so easy you don't need a specialist to do any work, many people can replace the paper when the printer flashes the new "replace paper" button.

It probably wouldn't shock anyone to know that my dad isn't a huge fan of printer self-diagnostics or robust craftsmanship in printers. So I don't think anyone would take him seriously if he wrote an op-ed about how terrible these new printers were and why no one should use them. It would be pretty predictable if his main argument was that, while the self-diagnostics are pretty accurate, they miss subtle problems that only an experience human can diagnose, i.e. you can't eliminate his job.

Enter Jonathan Rees: he's a history professor that took a Massive Open Online Course (MOOC). MOOCs can enroll thousands of students at a time and have major cost advantages over traditional brick and mortar schools since buying bandwidth and webspace are cheaper than building classrooms and the per-student instructor cost is 1/100th as big when there are 100x as many students per professor.

Rees sees MOOCs are a threat to traditional education--you know, the kind that he's employed doing--and he's here to tell you about why this new technology isn't as great as it seems. For some reason he thinks you'll trust him since he's an expert and ignore the massive conflict of interest. And for some reason he doesn't mention the possibility of running an experiment to test his hypothesis, as if he doesn't want to know if it's true.

But maybe that isn't surprising. Maybe the reason he doesn't seem to care if MOOCs work is because he doesn't care--he just wants to preserve his profession (and his job).

That's fine. All I ask for is that they place a conflict of interest note before each article so everyone has fair warning before they waste their time on the article.

Wednesday, March 6, 2013

If you were going to be raped . . .

Sometimes people ask this question when trying to get to know people:

"If your house was on fire and you could take one thing with you, what would it be?"

The thing is, some people have come home and found their house on fire. It's a terrible experience. Most people don't respond rationally. I was 15 and I was scared, I just called 9-1-1, grabbed a book and ran out. My mom was 54 and was had a total panic attack.

I still feel like I could have gotten a hose and put out what was a pretty small fire (spreading on the carpet) when I found it. It haunted me for years. And whenever people ask their question, like the Harvard University Housing questionnaire or a pre-freshmen program I did at MIT, it just brings up a lot of bad memories.

I hate to make light of more serious crimes, but I'd compare it to asking people something like:

"If you were about to be raped and you could choose vaginal or anal penetration, which would you choose?"
"If you were pregnant and had to abort one of your twins to save the other, would you abort the boy or the girl?"
"If you sadist broke into you home and gave you the option of having him chop off an arm or a leg hand, which would you choose?"

Saturday, March 2, 2013

The Tebows of Harvard, Part 2

It is easy to offend Asian people so I take some pride in it. Even my wife hates "the Tebows of Harvard" blog post. The point of the post, as you may recall, is that it turns out that sometimes a skill that does you a lot of good on one task does not help that much on a seemingly closely related task. Tim Tebow was a great college football player. You would think that would help him be a great NFL football player. But no, he sucked, because his skill set was not very useful in the NFL the way it was in college.

How does that relate to Asian people?

Asians do very well on the SAT in general and on the math section in particular. That probably has a lot to do with parenting and almost certainly nothing to do with genetics. Asian parents are stricter than other parents about doing homework, studying, and preparing for college. Strict parenting is especially helpful in helping kids learn math.* It shows: 41.3% of the kids who score >= 700 on the SAT math section are Asian and 50.1% of the kids who score >= 750 are Asian. Most likely an even larger percentage of the kids with perfect scores are Asian.

Some people have used these numbers to infer that Asians should make up a similarly large proportion of the students at top colleges. But Harvard is at most 31.4% Asian, Princeton is just 28%. Yale just 27.7%. MIT weighs in at 30% but that does not include mixed race students and Stanford leads with 32%, probably because of its location.**

Because all of those numbers are inflated, the true proportions of Asians at these top college is on average probably in the 18-25% range, about half of what we would expect if admissions were based only on having high SAT math scores.

But admissions is supposed to be abut more than SAT math scores, right? At the very least we should also consider SAT reading. Not that surprisingly Asian make up a disproportionate share of top scorers on the SAT reading section too. 20.8% of the students scoring >= 700 are Asian as are 23.1% of the student scoring >= 750.

If SAT reading scores were the only factor in admissions then Asians would be pretty fairly represented. They make up 20% of the top scorers and something like 20% of the students at top colleges. The situation is somewhat in between for the writing section which is formulaic like the math section but based on language skills like reading, 31.8% of those scoring >= 700 and 28.9% of those scoring >= 750 being Asian.

So what percentage of the top schools should be Asian: 40-50% like if things would be if just the math test matters, or around 20% like if the reading just mattered? Should it be a combination of the three, as if the top scorers in each section were admitted? And why is there so much variation?

What if colleges used non-academic criteria? With the percentage of Asians qualifying variating widely on academic measures they could shoot all over the place by other measures. If we included teacher evaluations, GPAs, character traits like grit, zest, or compassion maybe the percentage of Asians with top scores would be 50%. Probably it would be more like 11.5%, their share of the population.

That last point, of course, was the point I wanted to make in Part I. Being great on the SAT math doesn't mean you'll do great on the reading or writing sections much less have good character, a good GPA, or good evaluations according to your teachers or interviewers. It is pretty plausible that the reason so "few" Asians get admitted to Harvard is not discrimination but rather just a lack of the traits Harvard should be looking for. In fact, with so little evidence to show for exceptionalism in Asians aside from the SAT math test, it seems more natural to ask why so many Harvard students are Asian, not why so few are.

* - A lot of inner-city charter schools that work with low-income students have had a ton of success in closing the achievement gap on math standardized tests but somewhat less success in closing the achievement gap for reading. Their methods mostly emphasize discipline as they substitute doing the parents job in the parents place by having much longer school days, longer school years, mandatory Saturday tutoring, time to do homework during the long school day, shorter summer breaks, and strict punishments for misbehavior.

* - All of these numbers are inflated for effect where we count all "unknown race" and "two or more races" as Asian. Also they are only for American students, so these are percentages of the American part of the student body.

Is medical insurance just medical insurance?

I ate dinner yesterday. You probably did too.

But we didn't eat the same thing. I had a buffalo chicken sandwich. You might have had PB&J. Or maybe you had steak or lobster. Even if you also had buffalo chicken you didn't necessary eat the same size sandwich, or one with the same quality and mix of ingredients.

We don't expect everyone's dinner to cost the same amount. People eat different things. If you eat more, you pay more.

We tend to think that is fair, even though men eat more than women, on average, so they also pay more for their dinner. Fatter people eat more than skinner people and old people eat less than growing teenagers, with corresponding larger bills, but we don't have a problem with that either.

Yet we do have a problem when people buy very different health insurance products and don't pay the same price. We insist that, to be fair, everyone pays the same or almost the same premiums.

Someone who smokes, for instance, is much more likely to get lung insurance this year than someone who does not smoke. People with diets high in salt are more likely to have high blood pressure and heart attacks. People who exercise are less likely to get depressed (and less likely to get almost any other disease).

Health insurances pays out more when you get sick, so it is worth more to people who are more likely to get sick. It also costs more to provide that insurance. In other words, when Bill and Bob buy health insurance they aren't buying the same thing any more than they are when they buy "dinner." If Bill is a higher risk than Bob he's buying more insurance the same way he might if he was hungrier and bought more food.

It doesn't make sense to insist that Bill and Bob should pay the same price out of fairness any more than it would to insist they both pay the same price for dinner at McDonalds. If Bill orders off the dollar menu and Bob buy a large Extra Value Meal they will pay different prices for the same thing, "dinner," and that is fine because "dinner" isn't just dinner. If Bill pays higher premiums that is fine too, because "medical insurance" isn't just medical insurance.

Thursday, February 28, 2013

Health care as a Car

Health care is a lot like a car. Here is what I mean.

There are two ways Americans think about cars. For most Americans, people over 25 who work every day and don't live in a city, you just have to have a car. You need it to drive to work, to drive your kids to the park, to pick up the groceries. Yeah, cars are expensive, insurance adds to that cost, and most of all (even though its not the biggest cost) gas is expensive.

But you have to have a car so you bitch and moan . . . and then pay for the gas.

Most people think of health insurance like they think of their car and gas. It is expensive, it keeps getting more expensive, they whine about how expensive it is . . . but they have to have it so they pay for it.

But cars look very different when you are 14. When you're 14 you can't drive, but you know in 2 years you can get a license. You're eligible to work. You're too dumb to figure out that you'll make a lot more money in the future if you spend your time learning to program or do something useful, but you're smart enough to know you can get a job at McDonalds and slave away for two years saving up so that, when you turn 16, you can buy some wheels.

From the eyes of a 14 year old, a car isn't a hassle to bitch about, a car is just fucking awesome. It's so fucking awesome that you are willing to sacrifice your time and effort mopping floors and cooking burgers so one day you can take your girlfriend to a movie and then nail her in the backseat.

This is, I think, how people should look at Medicare and maybe health insurance in general. Medicare is fucking awesome. Medical care keeps getting better and better. When today's old people were young doctors couldn't treat depression or do much about high blood pressure, heart attacks, or cancer. Today they still can't do that much about heart disease or most forms of cancer, but they can do enough to keep you alive for several years longer than you would probably otherwise live. And when today's workers are old--when I'm old--they probably will be able to treat my skin cancer (I'm a red head) and save my life. That is awesome. In fact, it's a lot more awesome than banging your girlfriend in the backseat in a deserted parking lot.

Like a 14 year old slaving away at the drive-thru window hoping to save up enough for his first car, I should be happy to make some sacrifices today so I can reap the rewards in 45 years when doctors pump me full of chemicals and my tumors shrink like Jared's waistline. In other words, I should just accept the fact that to get what I want (life-saving medical care), it's going to cost me, probably with a Medicaid tax of more like 5% than 2.9% of my income, including the employer's contribution.

Thursday, February 21, 2013

Should Technology make Health Care Cheaper?

There is a big cover story for Time this week on health care prices. I only got through the first page before I stumbled onto this question:
And what is so different about the medical ecosystem that causes technology advances to drive bills up instead of down?
People often talk about technology reducing costs but . . . I just don't see it in any industry except computers.

CPUs, hard drives, memory chips, and the like have gotten both better and cheaper over time, but everything else gets better but more expensive. (All of this discussion is adjusting for inflation.)

Cars get better gas milage than they did in the 1970s and you are a hell of a lot less likely to die driving thanks to better construction, airbags, seatbelts and the like. And they break down less often to boot. But car prices have increased dramatically over time due to the addition of those features and other technological innovations like cameras to guide backing up, power windows, power locks, etc.

Movie studios have increasingly relied on computer technology to help bring stories to life. Digital imagery has allowed movie studios to blow audiences away since Jurassic Park came out in 1993. But Jurassic Park cost $63 million to make, more than double the inflation-adjusted cost of Star Wars at $25 million. Digital imagery helps movies come to life, but the cost of developing the software, hiring animators, and buying the technology to render scenes has raised the cost of making movies (and ticket prices) the same way safety features have raised the price of cars.

There has been enormous advances in TelCom over the past few decades. Butter's Law says that network capacity doubles roughly every year and wireless networks have become increasingly reliable. In the 1990s no one had a cellphone and you connected to the Internet using dial-up, but now you can get a high-speed Internet connection over your cellphone. Of course, the price of FiOS and a data plan from Verizon is at least 5x what you paid for Compuserve in 1999, even adjusting for inflation.

Health care similarly uses diagnostics technologies  to detect diseases earlier, new pills to cute formerly untreatable disease such as HIV, and new surgical procedures to save people's lives. But the cost of developing, building, and testing these technologies is enormous so they have, just like digital imagery for movies, safety features in cars, and fast, reliable wireless for the Internet, raised the cost of the product.

So everywhere you look except for semiconductors new technology has made things better and more expensive, not cheaper. Yet whenever I hear people talk about technology and health care they act like the increasing speed and decline prices for computers is the rule and health care is the exception.

Wednesday, February 13, 2013

Is Rubio a closet liberal?

I've never seen Poland Spring in Florida. The local branded water where I grew up was called Zephyrhills.

But I do see Poland Spring in Massachusetts.

Where did this guy film his response?

And why doesn't he buy store brand?

The only answer I can come up with is "Elizabeth Warren's house" and "because he's too good to shop at Wal-Mart."

Wednesday, February 6, 2013

Good example

I hate to link to a good example of how not to write (and, by extension, think) but this blog is too good to pass up.

Lots of examples:

Mood affiliation: "Tough echoes the arguments of the corporate education reform movement. . . . He gives the elite and powerful the ultimate excuse to do nothing about structural problems of poverty."
(The author thinks we should instead give teachers an excuse to do nothing because the only way to  help poor/minority students is solving "structural problems.")

Vague buzzwords: "KIPP’s curriculum is not based in social justice, in teaching students about oppression, racism, or class structures."
(All of these words sound like they mean something, class and structures have clear meaning but what is a class structure? Racism has meaning in everyday language, but here it is either jargon or gibberish.)

Blame Game: "At KIPP, if you do not exhibit the correct “character” it is YOUR fault, and YOUR fault alone."
The blame game can be fun, David Jones has a fun article that reinvents the history of Amerindian-European interaction because he thinks traditional history doesn't blame white people enough. But the blog is a commentary on a man who wants to fix problems not find someone to blame for them.

Stupidity: "There is no conversation about WHY the children (often rightfully so) are feeling the way they are.  There is no talk about historical oppression or institutional racism. . . . Why not create curriculum that is so engaging and relevant that children discover a joy in learning?"
This one is far and away the most important. The author wants to tell kids to blame history, white oppressors, institutions, etc. for their problems. Yet at the same time she wants kids to enjoy learning and be happy. She is ignorant of all the research on happiness and depression. People who are taught to have an external locus of control feel powerless, not empowered, and people who complain all day are miserable, not happy. KIPP teaches children that they can succeed if they work hard to empower them. It teaches them to give thanks, not whine, because that gratitude is a key to happiness.

Monday, February 4, 2013

You cannot be SERIOUS!!!

Someone at Slate wrote a blog on the political implications of Hillary Clinton's choice of font in her resignation letter.
Clinton made other questionable choices in her resignation letter as well: the old-fashioned indents, what appear to be two spaces after each period. What does this say about the presumptive front runner for the Democratic presidential nomination in 2016?
OK, probably nothing. . . . Nevertheless, branding has become a key part of any presidential campaign . . .

I still can't tell if this is serious.

Sunday, February 3, 2013

BREAKING: Harbaugh bribed refs

In a breaking story, Jack Harbaugh bribed referee Jerome Bogger. A large wire transfer was made from his savings account into Bogger's checking account last night as confirmed by Bank of America.

In a statement issued to the media Jack said "[he] just wanted both of [his] sons to feel like they won. Letting the game end on a blown call lets both boys believe they were the real winner."

When asked who won the game Jack reflected that "we will never know what would have happened."

Wednesday, January 30, 2013

Joe Flacco's record (as a choke artist)

Joe Flacco has won a record 6 road playoff games, showing that he "wins when it counts."

But there is a catch. Joe Flacco is also tied for fewest Super Bowl wins in NFL history.

In fact, here is a list of the biggest games for each of Flacco's past four seasons.

Comp %
L (14-23)
L (3-20)
L (24-31)
L (20-23)