Monday, January 31, 2011

End Game for Mubarak

Most people don't make public, verifiable predictions. Everyone is an expert after the fact, and they're sure that they knew what was happening, but try to pin them down at the time and they're much more hesitant. This is the appeal of prediction markets - if you ain't betting, then you don't actually believe what you're saying.

So here's my prediction -  this is the end game for Mubarak. The army has announced that they're not willing to shoot at protesters. My guess is that Mubarak will be out within the week, probably within the next 48 hours. My estimate of the probability for this is between 0.7 and 0.8. I'm well aware that this is perhaps already late in the game and the prediction might be at the point of not being controversial, but it's my two cents anyway.

Revolutions happen in very quick succession, and the break point is always the same. 100,000 people turn up on the streets. President gives order for army to shoot. At that point, the only question is how much internal discipline the president and top commanders loyal to him have over rank and file troops.

If the army actually shoots, game over for the protesters. See Rangoon, Tienanmen Square. Unarmed protesters against live ammunition is an outcome that's not seriously in doubt. And not many people keep turning up to the streets to get mowed down by machine gun fire - the instinct for self-preservation kicks in, and the dictator stays.

If the army doesn't shoot, that's the end for the president. See the PhilippinesCzechoslovakia. When people begin to suspect that the president doesn't have the power to stop them, they start descending on wherever the president is, and he goes from radio announcements that all is well to hopping on a plane for Switzerland. .

We'll see soon how well calibrated I am.

Update: In case I end up being right and it looks like this was a gimme prediction, here's the top suggested Google news article for 'Mubarak', from 40 minutes ago:"Analyst: No Sign Egyptian President Mubarak Will Step Down". So just remember, this was posted when the outcome was at least partly unclear. If I'm wrong, well so much better for the 'Analyst'!

Self-recommending Wikipedia Entries

"List of Animals with fraudulent diplomas"

Pure gold. (via Hector Lopez, who is on fire at the moment).

Saturday, January 29, 2011

Drink driving - as funny as being punched in the kidney while watching Schindler's List

Cultures change slowly, but they do change. Sometimes, even more rarely, they can be changed from without by a deliberate effort.

One of the cases where this was done was in Australia with drink driving. Traditionally, drink driving was viewed as a bit of a laugh - a kind of blokey, she'll-be-right type affair where everything was kind of funny as long as you made it home okay and avoided the cops.

Some time during the 80s, the government began a concerted public relations campaign to de-legitimise it, much the same way that smoking used to be publicly acceptable everywhere and is now largely shunned. They ran a series of quite effective campaigns with the slogan 'If you drink and drive, you're a bloody idiot'.

The idea was to get  people to view drink-driving for what it is - an activity where in expectation you kill people because you were too cheap to pay for a taxi.

Which, when viewed in that light, is disgusting. Saying that you didn't kill anyone this time is like saying that playing an involuntary game of Russian Roulette with the general public is okay, as long as it landed on an empty chamber. If you actually kill someone while drunk, I'd charge you with murder.If you crash or get picked up, I'd send you to the slammer for at least some period of time, no matter the excuse.

As you can perhaps tell from my attitude, the campaign was largely effective. Australians generally now view drink driving as not something funny, but something that makes you a scumbag.

Which is why it's strange to see people who clearly don't think that way. Witness Ludacris, in his song 'Move, Bitch':
"I'm D.U.I., hardly ever caught sober,
And you're about to get ran the fuck over."


It's bizarre to me that he would think this makes him sound cool. I take it as given that rappers are generally a) dumber than a bag of hammers, and b) about as good role models as the hobo down the street. But I do expect them to have a sense of what makes them sound cool - after all, appearing cool is their main job description. Since Ludacris is fairly successful, I'm guessing he probably has his finger on the pulse of public opinion better than me. If so, so much the worse for public opinion.

I guess you've got to do something to make yourself sound like a big man, especially when you're only 5'7". Little Man Syndrome claims another victim.

Thursday, January 27, 2011

It Takes Brass Balls... be a double agent working against the Nazis in WW2.

It takes even bigger brass balls to be so good at it that you manage to receive both the MBE and Iron Cross.

For services to the Allies in fighting the Nazi menace and generally having enormous cojones, Juan Pujol Garcia is posthumously awarded honorary membership of the Shylock  Holmes order of "Guys who kick ass".

The Good Old Days...

...of The Economist, circa 1843.

Check out how eloquent, well-reasoned and thoroughly grounded in economics their arguments against slavery-based sanctions are:

We firmly believe that free labour, properly exercised, is cheaper than slave labour; but there is no pretence to say that it is so at this moment in our West India colonies; and we undertake to show, in an early number, in connexion with this fact, that the existence of the high protecting duties on our West India produce has done more than anything else to endanger the whole experiment of emancipation.
But, moreover, our West India monopoly,—the existence of the high prohibitory differential duty on sugar, is the greatest, strongest, and least answerable argument at present used by slave-holding countries against emancipation. The following was put strongly to ourselves in Amsterdam a short time since by a large slave owner in Dutch Guiana:—"We should be glad," said he, "to follow your example, and emancipate our slaves, if it were possible; but as long as your differential duties on sugar are maintained, it will be impossible 
But now were it otherwise:—have the professors of these opinions ever considered the huge responsibility which they arrogate to themselves by such a course? Let these men remember that, by seeking to coerce the slave-labour producer in distant countries, they inflict a severe punishment on the millions of hard-working, ill-fedconsumers among their fellow countrymen; but they seem always to overlook the fact, that there is a consumer to consider as well as a producer;—and that this consumer is their own countryman, their own neighbour, whose condition it is their first duty to consult and watch;

Note the lack of polemical assertions on economic matters far in excess of what economics can actually establish ("Stock markets are clearly overvalued, and the Fed should raise interest rates to fix this").

Examine how they deal with the anti-slavery trade restrictionists who share many of their aims, but who they feel are incorrect on some matters:

We must, however, in doing so, make a great distinction between the two classes of persons who are now found to be joined in an alliance against this application of free-trade principles; two classes who have always hitherto been so much opposed to each other, that it would have been very difficult ten years since to have conceived any possible combinations of circumstances that could have brought them to act in concert: we mean the West India interest, who so violently opposed every step of amelioration to the slave from first to last; and that body of truly great philanthropists who have been unceasing in their efforts to abolish slavery wherever and in whatever form it was to be found. To the latter alone we shall address our remarks.
We trust we shall be among the last who will ever be found advocating the continuance of slavery, or opposing any legitimate means for its extinction; but we feel well assured that those who have adopted the opinion quoted above, have little considered either the consequences or the tendencies of the policy they support.

Compare this with the sneering condescension of the modern magazine towards the Tea Party, who ostensibly share many of the aims of the magazine:
For all the talk about practical electioneering, some of [the Tea Partiers] teetered on the edge of the extreme and wacky. Mr Tancredo denounced the “cult of multiculturalism” ... Andrew Breitbart, the founder of a news site (, railed in a speech against the hostile “mainstream media” in hock to the far left. 
Wacky! Extreme!

I'd definitely renew my subscription to the 1843 Economist.

(via Marginal Revolution)

Wednesday, January 26, 2011

Make Child Tax Rebates A Percentage of Income

If I had to nominate a fact in the 'most significant under-appreciated truth about western society', it's that western societies have ridiculously low birth rates by historical standards. The United States has 2.06 births per woman, just under the replacement level of around 2.1. Australia is 1.78. Italy is 1.32. Singapore is 1.1. As Mark Steyn is fond of pointing out, this has huge potential consequences. Social security is a Ponzi scheme that only works in a growing population, so lots of workers support each retiree. It collapses when you have negative population growth, and more retirees than workers.As most first world countries are rapidly finding out. The alternative is mass immigration, which is fine as long as you're willing to accept that your country at the end will probably look completely different in many cultural respects from how it started. If you're a self-loathing leftist who sees nothing but greed and oppression in the history of the west, this is a big plus. If you have half a brain in your head, it is not.

Another alternative is of course eliminating these programs, which I'm fully on board with, but try selling that at the Iowa caucuses and watch the AARP vote stampede towards your opponents.

For one reason or another, most educated people in the first world don't seem to want to have kids. While kids may have negative externalities when you're on an airplane, they probably have positive externalities in the medium term.  Like any good economist, we want to incentivise people to have more kids.

And here's where current policy gets tricky. Most tax credits are in lump sum forms, or tax rebates that phase out at higher incomes. The US gives you $1000 per dependent child. The Australian government gives you a lump sum 'baby bonus' of $5294 when you have a kid.

Here's the problem. It costs hundreds of thousands of dollars to raise a kid. Who is actually going to be incentivised to have a kid by the promise of five grand?

Idiots, that's who. Absolute drooling innumerate fools who can't figure out that this is a drop in the ocean relative to what that kid will cost them. Morons with ridiculous hyperbolic discount rates fuelled by their crack habits. Or (more likely) people who will collect the 5 grand, but weren't planning on paying for the kid anyway as they live on welfare.

Now, you don't have to be a genetic determinist to have misgivings about this scheme. A relatively larger proportion of the children in the country will now be raised in households where the parents thought it was a great idea to have a kid for the princely amount of five grand. If you're confident in the ability of Australia's robust public schools to undo this kind of home-instilled stupidity, then it's no problem. I also suggest you probably haven't had much exposure to Australia's public schools.

If I were designing a scheme, I'd make each child generate a tax credit equal to $2000 or 2% of income, whichever is larger. That way the middle class and the rich are encouraged to have children as well. It also reflects the fact that like it or not, rich parents will spend more on their children, and so you have to offer more dollars to incentivise them to have kids. While 2% may sound like a lot, I doubt people are going to start popping out 10 kids to save 20% on taxes. Although if they did, those kids would be being brought in a family that really hated taxes, which is fine by me too. Either way, the future is looking brighter.

Your Daily Roundup of Schadenfreude

-Western Australian police invade clubhouse of outlaw motorcycle gang using a battering ram. Bikies cry like babies about 'police vandalism'. (via Hector Lopez)

-Staff of Lefty New York magazine 'Harpers' join a union, magazine owner suddenly discovers the virtues of non-unionised labour (via Ace of Spades)

-Rahm Emmanuel booted off ballot in election for Chicago Mayor, based on minor technicality that he doesn't actually live in Chicago as the law requires. Court reverses decision of earlier officials, including super transparent and disinterested "hearing officer, and the full Chicago Board of Elections". (Sadly, the Illinois Supreme Court has stayed the ruling until it considers it)

Tuesday, January 25, 2011

Every Insurance Company Can Save You Money!!!

One of the most entertainingly useless statistics touted by insurance companies is the average amount of money that customers save by switching to their insurance.

The first hint that this information is useless is that every company seems to mention it. Now, they can't all be cheaper than each other, although that's certainly the impression that their ads convey. At a minimum, you might think there's some subset of non-advertising ripoff insurance companies that have only imbeciles as customers, and this is the segment that's being targeted in the ads.

The reality is different. It's obvious that customers who actually switch will save money, because nobody switches to a more expensive insurance company. The relevant statistic is what percentage of customers who actually get a quote from you end up choosing your insurance. Because that tells you whether it's worth spending the 15 minutes typing in information to find out if they're actually cheaper. Of course, they never tell you that, because the number is probably pretty low, and probably wouldn't actually motivate you to visit their website. It's much better to just tout the savings of the guys who switch, hoping that idiots won't realise that it's useless information.

Let's assume that all insurance companies are ex-ante identical, and that when a customer comes along, they form an estimate of the premium required for that customer that is drawn from the customer-specific random variable.- e.g., each insurance company quote for you is drawn from N(Shylock mean, Shylock Std Dev). A customer gets their first quote, then goes to the second company for a second draw from the distribution and chooses company #2 if it's cheaper. They repeat this process until they estimate that the time cost of drawing another quote is greater than the expected saving.

Now, in this model all insurance companies are equally good ex-ante. But there'll be some people who start with company A (who had an abnormally high quote), then get a quote from company B that's lower and switch. This will be offset on average by the same number of people whose first quote from B was at the high end, then got a draw from company A that was cheap and switched.

In other words, every company will be able to tout the same pointless statistic about how much their customers saved, even though it actually tells you nothing about the average cost of insurance from that company.

All it tells you is that insurance companies have different premiums for the same customer. Which, when you think about it, is a very interesting point. But somehow I don't think they're spending all this advertising money to raise interesting questions about microeconomics.

Update: The Greek notifies me that he in fact was able to write down a proper version of the model sketched above which generate the conclusions listed. Now that's intuition you can take to the bank!

Monday, January 24, 2011

High Pitched Voices

One thing I find surprising in modern America is the number of women with high-pitched voices. Now, I may be imagining this, but to my ear the average Australian girl speaks at something closer to the alto rather than soprano end of the scale like here. And this puzzles me, because we're talking about white people drawn from fairly similar Anglo-Saxon and European genetic stock. I don't know of any obvious 'high-pitched' races, and certainly not any that also would explain (by virtue of differing demographic representations) the average female pitch in the two countries.

But here's where it gets weird - we normally think that voice pitch as something you're born with. It wouldn't be high on my list of culturally determined things, and certainly not something that people deliberately change.

And yet that's where the data seems to point me. Either consciously or unconsciously, some fraction of women are deliberately speaking in higher pitched voices. My guess is that part of the appeal is that of appearing more girly and youthful. Women's voices drop too when they hit puberty, but not by nearly as much as men. By talking like an 8 year old, it has the same appeal as getting a Brazilian wax, but visible for the whole world.

Consistent with this, having a high-pitched voice is a fairly strong negative signal on my 3 second judgments of personality. This is not because I find the actual voice intolerable, or because it's a massive moral or character failing. But it's about correlations - a desire to make yourself look artificially girly and innocent is likely to be correlated with you being superficial and annoying (conditional on the voice being artificially high, and not just naturally high).

The signals to respond to the most are those that are the most informative about personality in general, not necessarily those that are the biggest problems in themselves. Can you think of any other signal of superficiality that you can identify within half a second of a person talking, regardless of what they're talking about?

Me neither.

Sunday, January 23, 2011

Thoughts while wandering around California yesterday

"Man, it smells like another person suffering from glaucoma! It's like there's a glaucoma epidemic going around or something".

Friday, January 21, 2011

The coolest thing I've seen all month

A demonstration of evolutionary algorithms in physics to generate a car.

Totally, totally cash.

It produces awful cars at first, but as each generation passes it gets better and better.

Evolution - it can produce a car right before your eyes, and yet people still believe in creationism. It's a crazy world alright.

Even ignoring the science, it's hard not to think that creationists are really missing out - the website 'And then God created a car by magic!' wouldn't be nearly as entertaining to watch.

Thursday, January 20, 2011

Child Abductions vs. "Child Abductions"

When I drive on the freeway, there are electronic signs up that give information, usually about traffic times. But every now and again, you get something like the following:

"Child Abduction Alert!
1999 Grey Chevy Tahoe
Lic ABC-1234"

Now, the natural response of most people is 'Child Abduction? How terrifying! Imagine if my kid got abducted by some stranger when we were at the park'.

Perhaps I'm a cynic, but my natural response is a little different. The first question that springs to my mind is this - if your kid were at the park and got abducted by some stranger pedophile, what are the chances that you'd actually know the number plate of the car that took them?

The answer, at least in my mind, is 'the chances are vanishingly small'. I'd expect abductions to happen precisely when the parents weren't around to see the number plate of the car. And if that's the case, wouldn't the immediate report be 'missing child', not 'child abduction'? How do you know they were actually abducted?

Given all this, it seems overwhelmingly likely that the parents in question must have known who it was that abducted their child. That's how they can give a name to the cops, and look up the person's car details with the DMV.

So who are the parents whose kids are being abducted by people they know? To ask this question is to know the answer. Dollars to donuts, the kids were abducted from their mother's custody by their father, who's now refusing to give them back, and whose whereabouts are now unknown.

Now for sure, this is something the law should get involved in. There's a chance that the dad has gone troppo, and the kids are at risk of some kind of murder suicide. But it's also possible (and to my uneducated guess, much more likely) that the dad is not planning to harm the kids, but is just not planning on giving them back to the mum. And give the way that divorce courts tend to screw over fathers, it is perhaps not surprising that some desperate fathers resort to these kinds of measures. That doesn't make it right, but it does make their motivations here a little more understandable.

Now think back to the red alert sign on the freeway. If it read 'Mother's sole custody of children violated! Family court decision over allocation of visitation rights under threat!' you might feel a little differently.

More infrequently, you get child abduction alerts that don't feature a number plate, just a vague description of the car. That's when I cross my fingers and hope for the safety of the child, because they really have been abducted.

Adieu, or The Difficulty of Final Farewells

One of the things I've noticed when watching people say goodbyes is that they become very awkward when it's likely they will never see the person again. Often they're incredibly reluctant to acknowledge that this will probably be the last time they will talk to the person.

Instead, it's common to cling to the feeblest pretenses that this won't in fact be the last meeting. The modern age has made this easier, particularly things like email and facebook. We'll stay in touch! I'll come and visit you when I'm passing through Japan. Never mind that you don't have any plans to visit Japan, and that once you do, it will probably be in 8 years time. At which point, of course, it would probably feel awkward and forced to call up that person and stay at their house. What would you even say to each other?

The reality is, the world is a huge place, and this is almost certainly the last time you will actually see each other. But nobody wants to admit that.

Part of the problem, I think, is that in English we don't have common expressions for this situation, so people don't know what to say. In their mind they're thinking 'Well, I hope your travels go well, and...'. But how do you finish that sentence? 'Have a nice life' sounds far too flippant. 'Goodbye' and 'It was nice to meet you' aren't definite enough, and lack the gravitas. 'It was nice to have known you' is better, but still not great. So they fill in the gap with 'what's your email address?', even though that's not really what they want to say.

I always liked the French 'adieu'. The literal translation of it is 'Until God' - meaning, I shall see you again in heaven. This is perhaps the nicest spin you can put on a final meeting. It offers the right measure of serious contemplation of the inevitableness of sad departures, but with the bittersweet possibility of that glorious day in the afterlife when we will all be together once more.

The problem with 'adieu', however, is that precisely because of its gravitas, it gets used very sparingly. Part of this is also that it would be awkward and anticlimactic to say goodbye forever and then see the person again. Interestingly enough, the Spanish 'adios' (which has the same meaning) is used much more liberally, which makes it accessible, but undermines the seriousness.

When I spent some time travelling on my own and meeting people, I decided that I didn't want to run with the 'let's chat on facebook!' goodbye, and tried to come up with a more satisfactory farewell.The formulation I settled on is the following:

"Well, I don't know when or if I shall see you again, but it was a true pleasure nonetheless."

which is the best I've been able to come up with.

In Imperial China, it was much harder to pretend that you actually were going to bump into each other in a few months, and so serious men had to give the matter much more thought. So rather than closing with my relatively poor words, I instead leave you the much wiser and better thoughts of the Tang dynasty poet, Du Fu.

To Wei Ba, who has Lived Away from the Court

Like stars that rise when the other has set,
For years we two friends have not met.
How rare it is then that tonight
We once more share the same lamplight.
Our youth has quickly slipped away
And both of us are turning grey.
Old friends have died, and with a start
We hear the sad news, sick at heart.
How could I, twenty years before,
Know that I'd be here at your door?
When last I left, so long ago,
You were unmarried. In a row
Suddenly now your children stand,
Welcome their father's friend, demand
To know his home, his town, his kin -
Till they're chased out to fetch wine in.
Spring chives are cut in the night rain
And steamed rice mixed with yellow grain.
To mark the occasion, we should drink
Ten cups of wine straight off, you think -
But even ten can't make me high,
So moved by your old love am I.
The mountains will divide our lives,
Each to his world, when day arrives.

Wednesday, January 19, 2011

Dog Bites Man Bites Dog

From the Washington Post:
DA: Pa. abortion doc killed 7 babies with scissors
Uh, isn't that what he's paid to do?
A doctor who provided abortions for minorities, immigrants and poor women in a "house of horrors" clinic has been charged with eight counts of murder in the deaths of a patient and seven babies who were born alive and then killed with scissors, prosecutors said Wednesday. 
Oh, the babies were outside the womb at the time. Send in the prosecutors!

Peter Singer just called to say 'So if the scissors go in before the delivery that's a woman's choice, but if the delivery goes before the scissors, that's 20 to life? Is that really the most important distinction to draw here?'

Everyone else replied 'LA LA LA we can't hear you!'

Woe be to the man who inadvertently exposes the hypocrisy that's inevitable when society makes difficult compromises.

Why you should study science

SMBC nails it with their motivation for science study. This:

seems very prescient given this:
JAPANESE researchers will launch a project this year to resurrect the long-extinct mammoth by using cloning technology to bring the ancient pachyderm back to life in about five years time, a report yesterday states.
So it's not a T. Rex, but riding a woolly mammoth to school would be almost as cool.

As a side note, I think that when this happens, biologists will get to give a well-deserved 'up-yours' to all the physicists who sneered for so long about biology not being a real science:

"Oh, look at you! I'm up here on my mammoth, and you're down there on the ground. Why don't you just ride around on string theory? What's that you say? All your precious strings are really tightly rolled up somewhere in the 10th dimension? Sucks to be you!"

Tuesday, January 18, 2011

Two winners

So I meant to post this about a month ago, but forgot. While fishing around for the link for the Johnny Cash post, I found it again, and with the passing of time the two articles are even better.

A classic rant about magic wristbands (via TJIC )


The new show 'Bridalplasty' (via Popehat)

How to Diss an Ex-Lover as a Rock Star

The current corner solution in my listening playlist is the song 'Gives You Hell' by the All American Rejects:

It's a classic of the 'You know how you didn't want to date me in high school? Well I'm a rock star now, bitch!' genre.

It's apparently quite a popular theme, with the other notable example being Cee-Lo Green's song 'Fuck You' . This reinforces my conclusion that a lot of famous rock stars were actually losers in high school. Not all of them, of course, but certainly the ones singing about all the girls that barred them. You know who doesn't have a song like that? Jon Bon Jovi. You know why? Because he was probably knee-deep in pussy, both in high school and ever since, and has barely given the question a moment's thought.

Cee Lo Green - Exhibit A

Tyson Ritter - Exhibit B

Jon Bon Jovi - One of these things is not like the other.

But as Roissy pointed out, it's very difficult to make this kind of point as a rock star without looking kind of pathetic. To wit, you're implicitly saying two things:
1. I was lame back in high school and girls didn't like me, and
2. I'm still so hung up on this fact that I need to compensate by flaunting my rock star status and talking up how much better I am than that guy who she was being boned by at the time.

Which brings me back to the All-American Rejects. The chorus is catchy
When you see my face,
hope it gives you hell,
hope it gives you hell.

When you walk my way,
hope it gives you hell,
hope it gives you hell.
But it's the bridge that's really well done. They make a very good attempt to deal with point 2.
Truth be told, I miss you.
And truth be told, I'm lying.
Very nice. They implicitly acknowledge the possibility that writing this song means he's still obsessing about the girl in question. Trying to deny this outright would not look credible, and would seem too desperate to appear over her. So he opens with what seems like an admission of this fact. Psychologically, it's him baiting the girl. He knows that if she is regretting her decision to ignore the guy, she will likely cling to the fact that she's still desirable in his eyes.

But knowing this is what she wants to think, he follows his admission with a clever quip (and some very nice word play) that implies the previous line was a joke. He might find her still attractive in some way. But he's not really bothered by the whole thing. In other words, the song is his idle and humourous reflection on high school, not a burning grudge he has to get off his chest. And that is the only way you can successfully deliver this kind of song.

Nice work, All American Rejects.

Monday, January 17, 2011

Audicare - the defection from single price insurance models

Models of adverse selection in insurance suggest that you have to charge people according to their expected cost, and that fixed price insurance is never going to work. If you charge both the sick and the healthy the same for health insurance, the healthy will drop out of the market. This will leave only the sick, whose rates will get even higher, driving out even more healthy people. 

One insurance where this DOESN'T happen is for emergency car repairs.The standard model for insurance for towing expenses is that of the AAA (or in Australia, the RAC or equivalents) - everyone pays a fixed amount for the right to get towing services if your car breaks down, battery service etc. Once I made the mistake of buying a 13 year old Honda Civic from a Pakistani used car salesman. Free tip for life kids - don't do that. The car had a funny wobble when you got to about 55 miles per hour. I took it into the shop and it turned out that the tyres weren't all the same size. Not only were they different sizes at the front and back (!), but they were also different sizes on the left and right (!!!!). Long story short, I had no end of problems with the car - radiator blew, axle broke etc. So you can imagine that I got some superb value out of my AAA membership for those two years. Then I got a job, and bought an Audi. 

My guess is that most people are largely paying for the peace of mind of having a number that you can call when things go sour with your car, so that you don't need to stress about what you're meant to be doing. The cost isn't that high, so they don't think about it much. But one way or another, the people with good cars are getting a poor deal from this, and freeloaders like I was get great deals. This creates incentives for people to select out those with good cars.

Enter Audicare. Audi, like many luxury car companies, provides complimentary emergency repair service on their cars. This isn't free of course, you just pay for it with the cost of your car. But it's something that's good for them to do, because they can provide it much more cheaply than AAA. They can do this, because they're pricing the expected cost of emergency towing to a fleet of new Audis (~= not very much) rather than a fleet of half new Audis and half 13 year old Honda Civics bought from Pakistani used car salesman (~= significantly more). Bottom line, I haven't bothered renewing my AAA. 

The real surprise is that fixed cost insurance manages to persist in the face of competition selecting only the high quality cars. My guess is that if it cost a couple of grand a year, rather than fifty bucks, the scheme would collapse. Still, I'm glad it hasn't - I would have been in the poo without it, and I'm sure lots of other people with crummy cars are very grateful for the wealth transfer that arrives exactly when you've got that sinking feeling watching smoke rise out of your bonnet.

Sunday, January 16, 2011

Efficient Algorithms in Estimating Personalities

Fair-minded people attempt to reserve judgment about others until they've given the other person a good chance. You don't want to write a person off too hastily, since it might spoil you from being friends with them, and also makes it less likely that you'll see the good parts of their personality.

Perhaps because I've studied too much statistics, I don't quite think this way.  The mark of a good algorithm is that it reaches the best possible conclusion with the smallest possible amount of data. For certain you don't want to form conclusions that aren't justified by the evidence available. But if the person is actually a dickhead (or if they're a nice guy), then you want to reach that conclusion in the shortest available period of time.

For better or worse, I form aggressively fast estimates of other people's personalities. I would say that the impression I form within the first 15 seconds ends up being internally correct about 85% of the time after more data is added. By that, I don't mean to say that if I think a person is a tool within 5 seconds, then they're actually a tool by some cosmically objective measure (thought they might well be). I just mean that if I hang out with them for another week, 85% of the time I'll still think they're a tool at the end. This may still be judging too quickly (with the initial judgment colouring my subsequent perceptions). But on the other hand, there are a non-trivial number of reversals - cases where I write someone off  and then subsequently change my mind. So it's not a final decision.

The fact is, you already know a huge amount about a person within a few seconds if you pay attention. Suppose I'm sitting in a cafe and I see a girl across the cafe talking to loudly to her friend about a guy she knows. What will I be thinking?

Firstly, she's complaining about a guy. This is a weakly bad sign for several reasons. One, if the first randomly chosen words coming out of her mouth are a complaint, it raises my estimate she's likely to be a princess and/or high maintenance. At a minimum, it suggests someone slightly pessimistic about life, and disinclined towards seeing the happy side of things.

Second, the impression of princess behaviour is reinforced by the fact that I can hear her conversation two tables away. This implies a subtle lack of consideration for the other cafe patrons. It also implies a lack of shame about airing one's relationship dirty laundry to her friend (which is understandable) and other nearby strangers (which seems a little more self-involved).

But it's not all bad traits. The girl seems fairly well put together - she's fairly pretty and dresses nicely in a conventional fashion. Takes care in her appearance, hair nicely done. Early 20's. White. We're sitting in a trendy suburb, which suggests a middle class upbringing. Probably graduated college a couple of years ago and working some regular white collar job. Slim - probably goes to the gym a couple of times a week. The fact that she's sitting in a cafe with her friend indicates a general level of sociability, as well as hinting at acceptable SWPL tastes.

If I've gotten the above correct, I start thinking about more speculative propositions (i.e. still true on average, but more likely to be wrong). I'd wager that her parents are probably still married and she came from a fairly stable home. The indications of princess behaviour raise my estimate that she was doted on too much by parents - only child perhaps. Not unlikely that she has either a cat or a small dog.

Back to the conversation she's still going on about the guy. It sounds like he's some guy she's dating, and he's blown her off from some date. Suggests a susceptibility to dating assholes, which is not uncommon for princesses. She won't break up with him though - her complaints hide a sense that she likes his aloofness. Doesn't seem self-aware enough to realise this.

Overall, if I were single I'd be mentally estimating that she seems like more trouble that she's worth as a dating prospect in any medium term sense. I'm not writing her off completely - I'd want to talk to her a bit more and find out if she's just having a bad day and is actually quite sweet. You'd probably have a better estimate after a first date. But as a betting man, that's not how I'd wager. I don't like princesses, or complainers.

The point of this story, dear reader, is that I'm thinking all of these thoughts within the first couple of seconds of overhearing her conversation. Sometimes (such as hearing the above complaint about a boyfriend), it's within the first half a second.

The reality is that behaviours are highly correlated. You might feel that you're completely inscrutable and that I don't know you personally. But if I'm paying attention, I don't need to - I can take what I observe, and add in the information from years of observing about how personality traits tend to go together. It's the same way that you only need to enter 5 movie choices before Netflix can suggest movies to you - it knows the correlations of your choices, and that's enough.

Given enough data about the world, nobody is a mystery. It's all just correlations.

Saturday, January 15, 2011

Advances in Spam Technology

Is it just me, or has there recently been a big increase in the number of bogus friend attempts on facebook from completely fictitious names? While I'm sure it would be fascinating to begin a dialogue with 'Meow Kuyus', 'Gracie Alexander' or 'Christina Chee', I suspect that the main activity would be a server somewhere in the Ukraine harvesting my facebook information. If you're reading this Meow, I hope you'll understand.

Friday, January 14, 2011

Advice to ex-pats arriving in America on how to not be annoying

Yesterday I received my Green Card, that famous piece of plastic for which so many billions of the world's poor yearn. Since I've already been working on these fair shores for a while now, I'm anticipating the enjoyment of some smaller benefits, namely:
a) Getting the fast locals-only line at US customs
b) Not having to deal with visas again, and
c) The prospect that after 18 months and 10 odd hours wasted at the DMV, the State of California may finally consent to grant me a driver's license.

But it did cause me to reflect on something else about being an ex-pat, which is this: few things are more boorish and unappreciated than people who move to a new country and proceed to bitch to everyone around them about things they don't like in the new place. On the whole, Americans are too polite to say what would be my obvious response - if you don't like it, then @#$% off. Since the tendency too complain about what is missing is strong, it's worth restricting this impulse to things that really bug you (in my case, political correctness and the low quality of the tea available), and let the other things slide.

A second, albiet milder, form of irritating behavior is to make generalisations about the locals, especially in the presence of such locals. Sentences of the form 'Americans are always X' tend to come off as presumptuous and condescending for most values of X, even when not intended as such. If you have to make them, save them for your foreigner friends, and even then use them sparingly.

A third way to irritate people, and perhaps the most subtle, is simply excessive comparisons about what is different in your home country. These are the least offensive of all, but they typically aren't nearly as interesting to the audience as they are to the speaker. It's a trap that I think nearly every newcomer falls into. When you first arrive you find yourself noting all sorts of things - the cheese is orange instead of yellow, the light switches move in the opposite direction to turn on, the sign for pedestrians to walk is white instead of green, etc. And you end up commenting on them because they're striking. But to someone who is used to orange cheese and up being the 'on' position for lights, it's not actually a fascinating point to bring up.

These things are all difficult to do. If you read this post again, you'll see that I've breached at least two of my own pieces of advice, and arguably all three. I never said the advice was easy to follow.

Thursday, January 13, 2011

Prices are set by scarcity, not fairness

It is a ubiquitous fact about the world that wages and prices differ sharply from what people consider fair. Witness the perpetual outrage about how much CEOs are paid. Most of it, of course, derives from people who aren't shareholders of the companies in question, and whose stake in the matter is merely that of envy. The sophisticated frame the matter as one of corporate governance - wages are so high that it must be because the CEOs have undermined the proper function of the company board, and set their own outrageous wages. I enjoy pointing out to them that CEO wages of companies that are taken private (e.g. bought out by private equity, or by management) tend to be as high or even higher, despite these agency problems not being present. Typically they agree that this is a puzzle, but not enough to reverse their conviction about CEOs being paid "too much", however measured.

I was talking to EFS about the relative wages of the movers he recently hired when moving house. EFS is a professor at a prestigious school and he said that if he had to do the same job as the movers, even for his current pay, he wouldn't be able to do it. It seemed surprising that they do such a hard job, yet are paid relatively little.

As I pointed out, if you want to make a first-order guess at relative prices, figure out what is the scarce resource. Moving lots of boxes is tough work, but there's lots of people willing and able to do it. Ergo, wages are low. Being a university professor is cushy work, however most people are unable to come up with enough compelling ideas to publish successfully. Ergo, wages are high.

The real question is why people would think that fairness should have anything to do with prices. What, exactly, about the universe gives you the impression that it cares much about the human perception of fairness? This is doubly so if explicit efforts haven't been made to make the world fair - prices are set by the spontaneous order that emerges from billions of related transactions, and as Hayek pointed out, this system is far too complex for people to understand all the drivers of a particular price. Certainly it is possible to shape at least some economic events to human perceptions of fairness - just pass a law capping CEO pay. Markets won't clear properly, of course, but that's never stopped politicians before.

But if this hasn't been done, why would wages be expected to reflect fairness, other than through the conceit that the world should spontaneously operate exactly as we wish?

Wednesday, January 12, 2011

Michael Caine Impersonations

In the category of 'old but awesome':

Let me finish!

Accents are a minor hobby of mine, and the idea of duelling impersonations is a classic one.

Tuesday, January 11, 2011

A Mother@#$%ing [Stock] P.I.M.P.

In many studies in asset pricing, it is common practice to not include stocks with prices less than $5 - they're too small and unreliable in terms of what information is included in the price. And for good reason too, as told in the story of the 50 cent stock.

In another version of the famous story of Entremed story, Curtis '50 Cent' Jackson buys $750,000 in shares in a crappy stock, H & H Imports (HNHI in the over-the-counter markets). How crappy? Let MSN tell the story:
H&H is an extremely sketchy investment and even got the dreaded "going concern" notice last March as its auditor shared doubts about the company's future. The company reported less than $300,000 in revenue last quarter but lost $1.3 million, the Post reports.
So it might not exist as a company next year. What's the big deal?
There are some funny loans at the company as well, the Observer notes. H&H lent $141,000 to what it describes as "an entity in which our chairman's brother is an officer and owner." 
Now that's governance you can take to the bank! As long as it's a bank owned by your cousin's husband.

Okay, so you've lost a ton of money in a stock because you're a dumbass. How can you double down on stupid? Simple - start giving out dubious financial advice to people to buy the stock! Everyone knows the SEC has a great sense of humour about that kind of thing.

So in a move straight out of the Rene Rivkin playbook, 50 cent decides to start spruiking the stock to his twitter followers.
"You can double your money right now,"
"Just get what you can afford."
"They are no joke get in now."
Because people who invest in OTC markets are largely imbeciles, the share price rose 240% by the close of the next day's trading. Originally this was reported as a stroke of financial genius - 50 Cent had just increased the value of his holding by $8.7M!

Eventually, 50 cent (or more likely his lawyer) figured out that randomly posting tweets about stocks he owns and recommending their purchase (especially without disclosing his clear conflict of interest) was probably in breach of several securities laws, not to mention exposing him to a range of civil suits from morons that actually followed his advice. Some of the tweets were deleted, and he posted a series of hilarious follow-ups:
"I own HNHI stock thoughts on it are my opinion. Talk to financial advisor about it."
"HNHI is the right investment for me it may or may not be right for u! Do ur homework."
Apparently the financial genius is having second thoughts about the whole thing.

Shylock's prediction - given how ferociously the SEC pursued Martha Stewart for making about a buck eighty five on a dubious insider trading charge, I'll be surprised if we've heard the last of this incident.

Red hot tip kids - buy index funds, not shitty OTC stocks. If you're tempted to make an active trade based on something 50 cent says, it ought to be to short any publicly listed stock that he's pushing. And if you have a brain meltdown and decide to follow the financial advice of people whose business experience consists of making rap albums, save yourself the bother and just set fire to the money now.

Thoughts on the culture of Fiji

The Fijians that I spoke to seemed universally lovely people and very friendly.They always greet you with a loud 'Bula', which apparently translates as both 'hello' and 'alive'. It's certainly said in a way different from the western 'hello', being yelled and gesticulated. At first I thought that this was a sort of tourist shtick (and I'm sure to some extent it was) but it seemed to persist outside situations where the person had anything to gain out of you, and outside the main resort areas. I came to the conclusion that they were actually just really nice people. The only other comparable place I've been in this regard is India. The main difference is that Fijians seem far less inclined to try to rip you off, at least in taxi interactions (which, given the large information asymmetries inherent and unlikeliness of repeat interactions, seem to be a reasonable proxy).

On the other hand, there is a certain rawness to the Fijian culture. I don't know exactly what word I'm after here - something like 'primitive', but without the condescending connotations that has. 'Primeval' perhaps, but that's not quite right either. I was on a whitewater rafting trip inland, and there was a village there. We were going down the river, and heard a commotion ahead including some loud animal noises. As we got closer, I realised that the noise was coming from a group of small children, perhaps around age 5 or 6, holding large sticks and laughing while attempting to beat a stray dog to death. I yelled out at them angrily as we approached, and they stopped, unsure of how to respond to the adult authority figure yelling in a foreign language. This gave the wounded dog enough time to jump in the river and escape. 1km downstream, we came across other children from the same village, happily swimming up to our rafts and playing around with us when we got out of the water. The juxtaposition was quite jarring. Particularly so since I'm sure that if we'd come across the children in the former group on a different day, they would have been just as adorable, out in the water greeting us too.

Wikipedia tells me that warlord who united Fiji, Seru Epenisa Cakobau, renounced cannibalism in 1854 on his conversion to Christianity.

Monday, January 10, 2011

And another thing...

I'm now back in the US of A, and back to full-time work and part-time work procrastinating, so expect blogging to be back to pre-holiday levels. W00t!

Food Porn

The essential quality of pornography is not sex. The fact that is usually involves this is ultimately incidental.

No, porn involves more basic elements. It's ultimately a voyeuristic enjoyment of watching someone else carrying out a desirable activity that one fantasizes about. This then serves as a substitute for the (unavailable) option of doing it for one's self.

Seen from this perspective, plenty of porn doesn't involve sex at all. The most common one to me is cooking shows.


Cooking a great meal and enjoying both the tasty food and the satisfaction that you made it yourself is something deeply appealing to many people. It's also hard and time consuming. But it's easy to watch someone else do it and fantasise that you might do it yourself tomorrow.

The fiction of cooking shows is that they're teaching you how to cook. This is of course transparently false. How many people who watch cooking shows ever try out the recipes they see demonstrated? Even when they do, what's the relative proportion of time spent watching cooking versus doing cooking?

In food, as in sex, porn is usually a substitute for the real thing, not a complement. The people I know who are good cooks spend a lot of time cooking and trying out recipes, and basically no time watching cooking shows. The people who watch a lot of cooking shows seem to cook very little (The Hammer is one who comes to mind!).Of course, people need the fig leaf that it's about cooking skill - saying out loud 'I like watching other people make and eat food' seems absurd. 'I like learning how to cook' is however entirely respectable.

The principle goes much further. Many years ago, ADQL insightfully described the original Kill Bill as being 'blood porn', which got me thinking along these lines. (UFC and professional boxing are the same). It's all voyeurism and vicarious enjoyment - the only difference is the choice of sense pleasure.

Saturday, January 8, 2011

The Musical Undertaker

You know what the worst phone call is that you can receive from your manager if you're in the music business?

"We think you should do a duet with Santana".

Nah man, it'll really kick-start your career again!

It's the surest possible sign that your career peaked a couple of years ago, and the best you can hope for from here on out is playing 6 nights a week at an off-strip hotel in Vegas and drinking yourself to an early grave, with a possible appearance on 'Where Are They Now?'.

Check out these depressing odds for duets he did with artists that I've at least heard of:

Name Known For Duet Year Done Anything Worthwhile Since?
Rob Thomas Push, 3am (1996) 1999 Released lots of shitty songs, 'Lonely No More' peaked at 5 on US charts but was still awful
Everlast What It's Like (1998) 1999 No singles made Billboard charts, career death in slow motion
Eric Clapton Layla (1971), Tears in Heaven (1992), lots of other good stuff 1999 No, but he's still cool
Lauryn Hill The Miseducation of Lauryn Hill (1998) 1999 Crashed and burned on second album, now hides from publicity
Wyclef Jean Killing Me Softly (with the Fugees, 1996) 1999 Ran For President of Haiti and got universally mocked, filed for bankruptcy
Dave Matthews Crash, 7x Platinum (1996) 1999 Yep, he's still got it. 2002's Busted Stuff was a great album
Michael Jackson Billie Jean (1983), Bad (1987), Liberian Girl (1987), Black or White (1991), kicking ass 2001 Released some crap songs and then died, thereby making lots of people who'd called him a pedophile for the past decade pretend they'd liked him all along
Seal Crazy (1992), Kiss From a Rose (1995) 2002 May as well not have
Chad Kroeger (of Nickelback) How You Remind Me (2001) 2002 Album "All the Right Reasons" had commercial success. Got pelted with rocks during a heavy metal concert in Portugal in 2009, caused millions of LOLs as a result
Michelle Branch All You Wanted (2002) 2005 Played 'All You Wanted' at concert, said 'Now here's something from my latest album..', whole crowd left (N.B. I have no specific evidence that this happened, but honestly, would you be willing to bet against me on this one?)
Steve Tyler (Aerosmith) Walk This Way (1975), Don't want to miss a thing (1998) 2005 Continued to be despised by the other members of Aerosmith
Kirk Hammet (Metallica) One (1989), Enter Sandman (1991), Nothing Else Matters (1992) 2005 Kept bitching that people were illegally downloaded his music, found that the strategy of suing your fans is not commercially viable

The second worst phone call is 'We'd like you to do a duet with Tom Jones'. I leave you to compile that list yourself.

Friday, January 7, 2011

Questions which, if legitimately asked, are very difficult to recover from

'Excuse me, what gender are you?'

If there's a snappy comeback to that one, I don't know what it is.

Thursday, January 6, 2011

Rule of Law 1, Dirty Hippies 0

Via Hector Lopez comes the feel good story of the year:

THE cleaners arrived first - to hose away the filth beneath Clovelly beach's shanty town-on-wheels.

They were quickly followed yesterday by police and council rangers determined to evict a group of illegal campers who had set up their base at Clovelly beach.

In an operation stretching from Clovelly to Malabar, the inhabitants of 45 vans and stationwagons - about 100 backpackers - awoke at 6.30am to the rapping knuckles of council rangers and police to receive their marching orders.

Bwaa ha ha ha!!!

The only sad bit of the article is that it's not clear that any of the squatting backpacker pikies were actually served with the threatened $1100 fines.

There's so much I want to quote, but you should really just read the whole article.

In related news, when people ask me whether it bugs me that Perth is so isolated and far away from everything, I answer no.