I have to give a presentation on the "Seven Sins of Bad Thinking" and I mostly just talking about one on this blog: ignoring either costs or benefits. I'm going to add a second to the list today and it starts with a story.
Say you have 10 employees and you're adding an 11th. You have a couple different products that you produce and you need to put the 11th employee on one of those product teams. One of your VPs say to put them on product A because you'll get the biggest increase in production (in units) if you put the new guy on team A--and it's all about productivity. Another VP says to put the new guy on product B because product B brings in the biggest profit per unit--that's where the big money is. What do you do?
You say they both are only telling half the story. Your goal is to maximize profit and to do that you need to think about both how many units you make and how much you profit from each. The value of the employee is (marginal units)*(profit per unit) and you can't just think about one aspect or the other.
That might seem obvious but how often do we focus solely on what is possible or solely on what is certain when we should probably be thinking about what is more likely?
(There was an example to go with this from a discussion I had with a friend. But when I wrote it down it was a mess so I'll just post the short version.)
Showing posts with label logic. Show all posts
Showing posts with label logic. Show all posts
Monday, September 20, 2010
Thursday, September 9, 2010
Dangers of Obscuring the Point
Sometimes people make arguments in what I call "shotgun" fashion. Instead of listing the key benefits of some policy or project they list all possible benefits in the hope that they'll appeal to a host of different interest and make the project sound like it makes a big difference--by killing two--or five--birds with one stone. I did this when I had to make a presentation about a project I did teaching West Africans to build cheap peanut shellers and I regret it.
I'll use a different example though because it's more illustrative. Take this pitch: "this new energy project lowers costs for individuals, creates jobs, and cuts down on deforestation. Oh, and kids benefit from the fact that the fuel is cleaning burning too!"
When I hear presentations like that is that it makes me wonder if any of those benefits are large. Are they listing many benefits because none of them alone is impressive? And doesn't having a long list obscure the original point of the project?
In the case of the energy project, limiting deforestation probably isn't important in the long run. The impact will be minimal and the environmental consequences are (to my knowledge) paltry compared to the consequences of poverty. The "lower cost" could be (probably is) as little as $10 a year for people, not exactly a kick out of poverty. And it might "create" jobs, but how many? And how many people are displaced in the competing industry? In some ways this is just another argument for trying to be quantitative when talking about benefits and for remembering to be honest about costs.
What I think is particularly interesting in this case is, though, that the added side-benefit, the one that was thrown in at the end, may well be the most important. Indoor air pollution kills millions of kids each year. If they don't die from air pollution they might live to be, say, 50. That's 45 years-of-life added, which we value at $25,000 a piece in the U.S. (roughly). So saving one kid from reducing air pollution is worth (something like) the savings from lowering costs for 11,250 people.
The example that motivated this post was Cash for Clunkers. The program was a total disaster, but many people liked it because of it's laundry list of beneficiaries. It would be progressive (help people driving older cars), environmentally friendly (get dirty cars off the roads), provide a needed stimulus and help the ail car industry. But in reality none of those objectives were achieved efficiently. If we were honest about which were important from the start we could have just designed specific policies for each--at less cost.
I'll use a different example though because it's more illustrative. Take this pitch: "this new energy project lowers costs for individuals, creates jobs, and cuts down on deforestation. Oh, and kids benefit from the fact that the fuel is cleaning burning too!"
When I hear presentations like that is that it makes me wonder if any of those benefits are large. Are they listing many benefits because none of them alone is impressive? And doesn't having a long list obscure the original point of the project?
In the case of the energy project, limiting deforestation probably isn't important in the long run. The impact will be minimal and the environmental consequences are (to my knowledge) paltry compared to the consequences of poverty. The "lower cost" could be (probably is) as little as $10 a year for people, not exactly a kick out of poverty. And it might "create" jobs, but how many? And how many people are displaced in the competing industry? In some ways this is just another argument for trying to be quantitative when talking about benefits and for remembering to be honest about costs.
What I think is particularly interesting in this case is, though, that the added side-benefit, the one that was thrown in at the end, may well be the most important. Indoor air pollution kills millions of kids each year. If they don't die from air pollution they might live to be, say, 50. That's 45 years-of-life added, which we value at $25,000 a piece in the U.S. (roughly). So saving one kid from reducing air pollution is worth (something like) the savings from lowering costs for 11,250 people.
The example that motivated this post was Cash for Clunkers. The program was a total disaster, but many people liked it because of it's laundry list of beneficiaries. It would be progressive (help people driving older cars), environmentally friendly (get dirty cars off the roads), provide a needed stimulus and help the ail car industry. But in reality none of those objectives were achieved efficiently. If we were honest about which were important from the start we could have just designed specific policies for each--at less cost.
Wednesday, August 4, 2010
Descriptive and Normative
I will never understand why the difference between descriptive statements and normative statements is so hard for people to understand.
David Berri once wrote a post on The Wages of Wins blog about who was widely considered an "MVP-candidate" but wasn't actually playing well. He was obviously making the normative statement "if you're not playing well, you don't deserve the MVP award. These guys aren't playing well [... you infer the rest]." But commenters objected, writing that Dave shouldn't title "Who is not the MVP" if he wasn't making a descriptive point about who is not the actual MVP. Yet we know that is a disingenuous point because if you take the title "Who is not the MVP" literally when the MVP won't be award for 5 months, then you expect the post to include every name in the NBA.
Still, you might be willing to cut the commentator some slack since writers often try to pass off normative statements for facts. Nicholas Krisftof wrote the worst op-ed he's ever written a few days ago. It's an opinion column celebrating wider availability for an abortificant that is very safe to use. It's obvious he's pro-choice and celebrating this fact because of the way he places facts in the article and the language he uses: "Up to 70,000 women die from complications of abortions . . . last year the World Health Organization expanded it's uses as an 'essential medicine.'" But it's painful to read because, while this is an opinion column, Kristof is trying to hide his opinion and manipulate the reader by telling the story of a pill (with selectively chosen facts) as if it were a news story.
One of the most painful areas where people mix up normative and positive statements is when they talk about the arts. A third of the time when people say "that was a great movie" they mean that lots of people like or that on average people like it (descriptive), another third of the time they mean "I like it" (normative) and another third it's hard to know what they mean but it's something along the lines of either "this movie is widely praised by the elite" (descriptive) or "I think this movie will be widely praised by the elite for its structural properties" (normative). When I tried to write all of that I started to understand, just a little, why people can be so confused about whether people are saying something about what is or what should be. Look at this story where the author makes a statement of fact "Inception is ranked #3 on IMDb" but presents it in a warped way "Inception is the third greatest movie of all time." It certainly is not the third greatest movie of all time by any reasonable metric, so does he really just mean he liked it a lot? Or does he think IMDb is a representative poll? (This would make a nice post on why people need to learn statistics in high school.)
The most painful area, though, where people confuse the normative/positive distinction, is ethics. People often use "legal" as a proxy for moral, as in "well it ain't illegal" which is meant to imply it's acceptable and you shouldn't complain. To this day, despite being reminded a hundred times, my dad still thinks that say "the Supreme Court ruled [insert ruling, say that abortion is legal]" is a good argument for why I should think killing an infant is acceptable. Philosophers often confuse what is "natural" with what is right. This comes up often in relation to utilitarianism, where philosophers argue that because utilitarianism places too much of a burden on people to do the right things all the time that it's the wrong moral philosophy. If ethics had a low point of complete intellectual abdication in the past 50 years, it might be that debate. Yet, somehow, a related debate is starting to drag things down even further. As scientists have understand more about people's moral intuitions and it's become clear that, like how all languages are related and share a similar structure, all the rules different societies develop to regulate behavior share similar structure. Someone this has evolved into "morality is a product of evolution" becoming a catch-phrase that is meant to be taken as a normative statement--whatever your brain tells you to do is acceptable because your brain evolved to know right from wrong. Or something. It doesn't make any sense to me, but I've heard people I'd consider pretty smart and reasonable try to make that point.
All of that was cringe-inducing to write.
David Berri once wrote a post on The Wages of Wins blog about who was widely considered an "MVP-candidate" but wasn't actually playing well. He was obviously making the normative statement "if you're not playing well, you don't deserve the MVP award. These guys aren't playing well [... you infer the rest]." But commenters objected, writing that Dave shouldn't title "Who is not the MVP" if he wasn't making a descriptive point about who is not the actual MVP. Yet we know that is a disingenuous point because if you take the title "Who is not the MVP" literally when the MVP won't be award for 5 months, then you expect the post to include every name in the NBA.
Still, you might be willing to cut the commentator some slack since writers often try to pass off normative statements for facts. Nicholas Krisftof wrote the worst op-ed he's ever written a few days ago. It's an opinion column celebrating wider availability for an abortificant that is very safe to use. It's obvious he's pro-choice and celebrating this fact because of the way he places facts in the article and the language he uses: "Up to 70,000 women die from complications of abortions . . . last year the World Health Organization expanded it's uses as an 'essential medicine.'" But it's painful to read because, while this is an opinion column, Kristof is trying to hide his opinion and manipulate the reader by telling the story of a pill (with selectively chosen facts) as if it were a news story.
One of the most painful areas where people mix up normative and positive statements is when they talk about the arts. A third of the time when people say "that was a great movie" they mean that lots of people like or that on average people like it (descriptive), another third of the time they mean "I like it" (normative) and another third it's hard to know what they mean but it's something along the lines of either "this movie is widely praised by the elite" (descriptive) or "I think this movie will be widely praised by the elite for its structural properties" (normative). When I tried to write all of that I started to understand, just a little, why people can be so confused about whether people are saying something about what is or what should be. Look at this story where the author makes a statement of fact "Inception is ranked #3 on IMDb" but presents it in a warped way "Inception is the third greatest movie of all time." It certainly is not the third greatest movie of all time by any reasonable metric, so does he really just mean he liked it a lot? Or does he think IMDb is a representative poll? (This would make a nice post on why people need to learn statistics in high school.)
The most painful area, though, where people confuse the normative/positive distinction, is ethics. People often use "legal" as a proxy for moral, as in "well it ain't illegal" which is meant to imply it's acceptable and you shouldn't complain. To this day, despite being reminded a hundred times, my dad still thinks that say "the Supreme Court ruled [insert ruling, say that abortion is legal]" is a good argument for why I should think killing an infant is acceptable. Philosophers often confuse what is "natural" with what is right. This comes up often in relation to utilitarianism, where philosophers argue that because utilitarianism places too much of a burden on people to do the right things all the time that it's the wrong moral philosophy. If ethics had a low point of complete intellectual abdication in the past 50 years, it might be that debate. Yet, somehow, a related debate is starting to drag things down even further. As scientists have understand more about people's moral intuitions and it's become clear that, like how all languages are related and share a similar structure, all the rules different societies develop to regulate behavior share similar structure. Someone this has evolved into "morality is a product of evolution" becoming a catch-phrase that is meant to be taken as a normative statement--whatever your brain tells you to do is acceptable because your brain evolved to know right from wrong. Or something. It doesn't make any sense to me, but I've heard people I'd consider pretty smart and reasonable try to make that point.
All of that was cringe-inducing to write.
Sunday, August 1, 2010
More on why journalists need to study math
Usually when I write about why journalists need to make more math it's to correct a misleading statement about a statistic. This time, in a new twist, it's to correct Jeff Jacoby's subtle error in reasoning.
If you didn't read the Op-Ed, he's criticizing the National Popular Vote Compact, which will ensure the winner of the popular vote wins the presidential election when enough states ratify it. It's hard to understand Jacoby's argument because his point is (to translate) "you Democrats are so dumb, like I once was, then I became a conservative" with an imitation of Buckly-Hitchens flair.
But what I think he's saying is this: "Suppose the Democrat wins the popular vote, then MA will give it's electoral votes to them. But they almost certainly would have won the state. Now suppose the Republican wins the popular vote. There's a good chance that the Democrat won MA, so the outcome is to flip MA's 12 electoral votes in the Republican column." This is how the compact "nullifi[es] of [voter's] vote[s]."
That almost sounds like it makes sense. The compact, most likely, will make MA voters have less say in the election because it increases the chances that Republicans will win. Except that it doesn't.
What Jacoby forgot is that, while it's true that under the compact MA's electoral votes will never swing to a Democrat, it's possible votes in MA could swing Texas into the "D" column. In 2000, for instance, Gore's 787k margin of victory in MA also gave him a 545k margin of victory in the popular vote. If the compact were operative in Texas that would have flipped Texas' 34 electoral votes from Bush to Gore and Gore would have been president--thanks, of course, to MA Democrats. But under the compact, Jacoby assures us, MA Democrats would have nothing to gain.
(That only applies to a state's vote as a whole. The issue for a single voter is the probability that without their vote, under the compact, the popular vote is a tie or, under current law, neither candidate has 270 electoral votes without their state and the election in their state is a tie. For MA it's obvious the tiny, tiny probability of the former is many, many orders of magnitude larger.)
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