Negative Knowledge

To my mind, one of the most useful functions of the internet is vastly simplifying the search for negative knowledge. How do you verify that something doesn't exist? Obviously in the full philosophical sense, this is quite difficult to do (outside of mathematics). This is related to the problem of induction. David Hume captured this with the example of black swans - the fact that all the swans found so far are white is not proof that all swans are white (an example made more poignant by the fact that black swans do indeed exist, but Hume didn't know this at the time). The question 'Are all swans white' is essentially the question 'Are there any black swans?'. Because we can't prove the first proposition, we can't definitively prove that there aren't any black swans.

Consider the example of the great song 'You Found Me', by The Fray.

The opening lines are:

I found God,

On the corner of First and Amistad

The question occurred to me 'I wonder if that's a real place, and if so, where it is?'

Now, go back 30 years and this would be a very hard problem to solve. How do I search all the cities of the world (or just the US) for '1st and Amistad'. Even worse, what if there is no '1st and Amistad'? How do I ever verify that I've checked everywhere and that it actually doesn't exist?

Today, I just type in '1st and Amistad', and google maps directs me to an intersection in Quernado, Texas (which is the only suggested location). I'm also directed to Yahoo Answers, where some mentions that lead singer Isaac Slade actually made up the name, not knowing about the place in Texas.

It works, because I'm harnessing the power of the thousands of other people who've wondered the same question, thankfully some of them much more dedicated and knowledgeable than me. If all of them have searched and found nothing and written as much on the internet, it's not proof that the thing doesn't actually exist, but it makes for a reasonably good assumption.

I wonder if somewhere Zombie David Hume is reprising his argument about the problem of induction, while some Zombie modern teenager killed in a car crash is responding 'No, you just google "Are all Swans White", and it tells you the answer".'

Interesting times we live in.

Adventures in Big Government

1. Courtesy of the Greek, comes pictures of the latest rioting in Greece.

I had previously described these people as being on strike against double-entry accounting, but the Greek had an even better description - the 'Time Machine Enthusiasts'. They don't know what policy they want exactly, they just know that they want things to go back to the way they were in 2007. How that's meant to happen, who knows? If the government can't deliver, they must be crooked or evil.

Yeeaaah. Great plan. The Government may well be crooked and evil, but the straightest, most benevolent government isn't going to be able to put the Greek Fiscal Humpty Dumpty back together to 2007 days.


2. Still on the topic of Big Government, Mark Steyn eviscerates Michael Bloomberg's tendency to be enthusiastic for nanny-state policies, but less so for ordinary tasks of local government like clearing the streets of snow:

That’s the very model of a can-do technocrat in the age of Big Government: He can regulate the salt out of your cheeseburger but he can’t regulate it on to Seventh Avenue.

Oooh, the burn!

3. Meanwhile in California, regulation shuts down startup businesses and benefits incumbents! Well, sometimes. Sometimes it benefits nobody. Pundits astounded! News at 11!

X-Men and Foreign Policy

There is little doubt in my mind that the X-Men series of movies is far and away the best of the comic book movie adaptions.

Not because mutants are awesome, although they are.

No, the reason is that the X-Men is the only series where everybody, heroes and villains, has a believable motivation. And this is because it is ultimately a study in foreign policy.

Think about it. In nearly every comic movie, the plotline relies on some sort of villain who just loves evil for the sake of evil. Sometimes, this can be done in a very compelling way, like the Joker in the new Batman movies. More often it's not, like the Green Goblin in the Spiderman movie. But either way, the characters are never quite plausible, because the bad guys usually relish their nasty actions without any covering narrative. In real life, however, nobody is the villain in their own tale.

X-Men works very well, however, because the groups closely resemble the different attitudes of foreign policy groups, and end up capturing competing and incompatible views that are still internally reasonable.

The audience is positioned to sympathise with Professor X, who is the foreign policy dove. He is pro-mutant, but sympathetic to humans. He believes that humans and mutants can get along, and is always working to defuse conflict between the two groups. The recent movie explores this idea well - Charles Xavier is the liberal son of privilege, the deserving aristocrat working towards the betterment of human/mutant relations. He believes that people can get along because he himself is such a genial and reasonable character - if the world were filled with more people like Charles Xavier, they would all get along! By the end of the movie, he recognises the need for mutants to stay mostly hidden, but always maintains an optimism that by setting a better example, mutants and humans can coexist.

Magneto, on the other hand, is the foreign policy hawk. He, too, is pro-mutant, but believes that mutants and humans will inevitably be in existential conflict - humans will never accept mutants, and battle between them can only be delayed (to the advantage of humans) but not avoided. In the movie, Magneto is a Polish Jew captured by the Nazis during the Holocaust. This is his introduction to the dark side of human nature, and the willingness of humans to be xenophobic and cruel, or to simply go along with leaders who think this way.

But where the movies actually get interesting is the interplay with the third group, namely the humans. In the movies, humans are usually portrayed quite negatively. There are some who are willing to co-exist with mutants, but a deep undercurrent of suspicion and mistrust characterises the general attitude towards mutants. And even when the humans are co-operating, there is always a group with a tendency to view the wholesale killing of all mutants as the most expedient solution to make the whole problem go away.

And this is the real genius of the series. The audience is drawn to sympathise with the dove viewpoint and mutants in general (and interestingly, not with the humans in the movie). And so while watching it, you want the doves to be right. You keep thinking 'But I like the mutants! Why can't everybody get along? If only the humans understood the doves better! If only the hawks could be made into doves'.

But the ways the humans are portrayed, there is lots of evidence that perhaps the hawks are right - the average person won't ever really accept mutants, and will eventually want to kill them all, or round them up and keep them in prisons. In other words, the Holocaust. This problem, of course, gets exacerbated by the hawks, who attack the humans, thereby increasing the dislike of mutants, and making it harder for an uninformed human to make a 'good mutants / bad mutants' distinction.

And this is why you get the most interesting interplay of all, between Professor X and Magneto. They both want to help mutants, but have irreconcilable views on how this should be done. As a result, they find themselves drawn into conflict with each other, but reluctantly so, and always with an eye towards their mutual need to protect themselves from human anger.  And ultimately, Professor X and Magneto are genuinely old friends who understand each other's position.

The fact that this is done so successfully is far more impressive writing feat than Marvel is normally given credit for. But doubt not that this interplay is deliberate and very cleverly thought out.

I recommend the new X-Men movie highly.

It Sure Can!

Ha!

(Couldn't find the original source to link to - sorry HumourTouch)

Metaphor of the Day

From Peter Gabriel's excellent song, Biko.

The subject matter is the death of anti-apartheid activist Steve Biko, beaten to death by South African police.

"You can blow out a candle,
But you can't blow out a fire.
Once the flame begins to catch,
The wind will blow it higher."

A wonderful metaphor. And he was right, of course.

Sadly the removal of apartheid didn't turn out to herald a panacea for South Africa. But it's probably asking a bit much of a single metaphor to capture that too, so good work Peter Gabriel.

Starbucks is in the Sanctimony Business

I remember when I used to enjoy Starbucks coffee cups. They had a series called 'The Way I See It', which would feature interesting quotes from various people. There was a lot of modish lefty claptrap, to be sure, but it was usually of the mild and inoffensive kind. And I would actually enjoy seeing what they had.

This was in part designed to appeal to snobbish sensibilities - look at us, identifying with educated thinkers of acceptable elite opinion! But they disguised this well, and it was generally a nice touch.

But sooner or later, they ran into the H.L. Mencken (or P.T. Barnum, depending on which website you believe) dictum that nobody ever went broke underestimating the taste of the American public. The message of sanctimony was a bit too subtle. How to jazz it up? The answer, of course, was this monstrosity:

Got that? YOU SHOULD FEEL GOOD ABOUT YOURSELF BECAUSE YOU BOUGHT THIS COFFEE, YOU ENLIGHTENED BEING!

That's right, apparently buying your $4 coffee makes you a regular Mother Theresa for the word's poor. Never mind the acres of newsprint devoted to exposing what a sham "fair trade" coffee is. (If it was purchased consensually and not taken at the point of a gun, that's fair trade enough in my opinion).

No, what is hilarious is how blatant they are in trying to make you feel puffed up and proud for your role in helping the poor. They've reached the reductio ad absurdum of anti-poverty campaigners - no need to change your behaviour, just feel good about the things you were doing anyway! Could they make it any more explicit that this campaign has absolutely nothing to do with third world coffee farmers and everything to do with how you feel about how special you are for helping out third world coffee farmers? Don't be surprised when marketers see through this sham and react to the incentives that customers are providing - helping poor people is expensive but making people feel self-righteous is cheap! Let's increase the amount of self-righteousness per unit of help to poor people!

I can't decide what is more depressing - the fact that Starbucks thinks their customers are this hollow and conceited, or that they're probably right.

Casinos - A Moneymaking Machine!

One of the things I find interesting about casinos is how they expose people's odd ideas about what makes a good stock purchase.

In popular conception, the casino is the ultimate licence to print money. You can't fail! The house always wins! Suckers come in, spend money on gambling, suckers walk out, profit!

Because of this, so the reasoning goes, you should always want to own the casino. The best approximation is to own the casino's stock.

For some reason, people don't think this way about, say, the box factory. The reasoning, however, is just as (in)applicable. Wood pulp comes in, boxes get made, suckers come in, spend money on boxes, suckers walk out, profit!

The reality is that casinos are a business, just like any other. Sure, once you get people playing, the odds are in favour of the house. But if there's free entry into the casino market, there's going to be a lot of casinos cropping up to compete for gamblers. And to get them to come to you, you have to spend money - on subsidised hotel rooms and buffets, on lavish decoration, on complimentary drinks etc. All of these things cost money. And as long as you're making abnormal profits, new casinos are likely to keep entering until you're only making normal profits.

To give you a sense of this, let's compare some real casinos and box factorys. Let's start with the most basic measures of profitability. We'll compare a typical Casino (Las Vegas Sands corporation (LVS) with a typical box factory (International Paper (IP).

According to Yahoo, the box factory had a return on assets of 5.34%, and a return on equity of 16.38%. The Casino, by contrast, had a return of assets of 4.78%, and a return on equity of 13.55%.

Not exactly a slam dunk for the casino, is it?

But there's a bigger misconception here - most people don't make a distinction between a good company and a good stock. In the language of the common man, you're better off buying a crappy but underpriced company than a solid but overpriced company. Stock prices only react to news. If everyone already knows that Google is going to be an awesome company in the future, you'll have to pay extra for that fact now. And when it in fact becomes awesome, your stock price won't go up, because people had already taken that into account. The stock price will only go up if Google turns out to be an even better company than people thought.

In finance, one way to think about this idea is comparisons of price and asset value. Price-to-Book Value of Equity measures the ratio of the share price to the accounting value of equity. Price-to-Earnings measures the ratio of the share price to the previous year's earnings. Both of these capture a rough sense of how "cheap" or "expensive" the company is.* (I hope finance students will forgive my hand-waving here)

By this measure, our box factory has a price-to-book ratio of 1.73, and a price-to-earnings ratio of 10.94. The casino has a price-to-book ratio of 4.20, and a price-to-earnings ratio of 49.48. By both measures , the box factory is cheap and the casino is expensive.

According to no less an authority than Fama and French (1992) , this predicts that the box factory will also have higher stock returns in the future.

And this is in part due to the basic point at the start. Precisely because everyone thinks that casinos are a money-making machine, they bid up the stock price, making them a lousy purchase and forecasting low stock returns. And because the box factory isn't exciting to people, it has a lower price, making it a better purchase and forecasting high stock returns.

The moral of the story is that you should be wary of pop-culture perceptions of what makes a good stock purchase. And if you need a rule of thumb, boring is better.

*Fama and French claim that book-to-market could also be a measure of risk, and it might be. In my anecdotal experience, if there's someone other than Fama or French who deep-down truly believes this, I'm yet to meet them.

Nuclear Waste - As Long As We Don't Think About It, It Will Go Away

Popular opinion seems to be incredibly averse to the idea of nuclear waste dumps being located, well, anywhere.  Anywhere near them, at a minimum, but to a large extent anywhere at all. This idea seems to be rooted in the notion that as long as you don't approve a permanent place for nuclear waste, then the waste itself will just disappear. The reality, of course, is that it just keeps building up at temporary locations, which are much less suitable than most of the proposed permanent locations.

Take the story of Yucca Mountain, the proposed long-term storage facility in Nevada. Let's let wikipedia tell the story:

Although the location has been highly contested by environmentalists and non-local residents such as in Las Vegas over 100 miles away, it was approved in 2002 by the United States Congress. However, under pressure from the Obama Administration funding for development of Yucca Mountain waste site was terminated effective with the 2011 federal budget passed by Congress on April 14, 2011. ... This leaves United States civilians without any long term storage site for high level radioactive waste, currently stored on-site at various nuclear facilities around the country...

What's the worst thing that could possibly happen to nuclear waste? Let's assume that, defying all likely physics, the nuclear waste somehow manages to transform itself into a supercritical mass of weapons grade material, causing a nuclear explosion wherever it's being stored. That, we can all agree, would be pretty damn bad.

So let me submit a modest proposal.

The US has currently performed 1054 nuclear tests between 1945 and 1992. A good number of these took place at the Nevada test site, 65 miles from Las Vegas. So why not just store the waste there? Is there anything that could conceivably happen to the waste that would be worse than the 928 nuclear explosions that have already occurred there!  Do you notice people fleeing Las Vegas because a whole lot of nukes were exploded 65 miles away? I sure don't. As long as people aren't thinking about the nukes, they seem content to go on their merry way.

There was a proposal to store nuclear waste in Australia, which is blessed with huge areas of worthless, geologically stable desert. Cue the environmentalists shrieking about the possible impact on the priceless dirt out there, and the possibility of contaminating the water supply in a place that gets virtually no rain anyway. If I were an Australian politician, I would offer to store nuclear waste from around the world, and commit to paying out the proceeds as a cheque to each household. That way you could make an ad that explicitly captured the tradeoff:

"What do you care about more? This $500 cheque? Or the fact that radioactive materials might be stored on a worthless patch of desert where the Brits already tested a bunch of nuclear bombs?"

Put that way, the debate might suddenly become a lot more reasonable.

Trendy Job Titles

You learn a lot about trends in popular perceptions of the economy (the corporte zeitgeist, if you will) by looking at what job titles people choose to give themselves.

In the late 90's and early 2000's the buzzword was 'consulting'. Everyone was a consultant of some form. Usually, it was left unspecified (until the impolite pushed the point) as to
A) what was the subject matter being consulted on
B) what the person's relevant qualifications or experience were, if any, and
C) whether they actually had any clients, or had received any meaningful remuneration in their chosen profession.

In fact, it is precisely these vague aspects that make the term so appealing - the unemployed programmers get to lump themselves in with McKinsey, and hope nobody spots the difference. They're just waiting for a company to hire them to tell them and hear all about the mistakes the company is making.

Somewhere along the line, consulting became passé. The new hot job title, it seems, is 'working at a startup'. This has the same benefits as before. What is conjured up is 'founding the next facebook' or 'CFO of groupon'. The reality might be anywhere from working at a company making napkins, to being unemployed and toying with the idea of writing an iPhone app to track navel lint (or whatever), even though you have no programming experience.

You observed something similar for a while going on with the phrase 'I work at a non-profit'. For better or worse, I don't meet enough people who would be in a position to be claiming this, so can't tell you if it still has the same cachet (at least relative to "I work for a Catholic charity" or "I volunteer for the Sea Shepherds").

My guess is that the time that people stop saying that they work at startups will roughly coincide with the time that technology startups start trading at reasonable price-to-earnings ratios, and I might think about buying shares in them.

I killed Tupac!

So apparently some guy has confessed to killing Tupac. The rap world being what it is, this will no doubt lead to notoriety, record deals and groupies.

My guess though is that once convicted felons realise this is the consequence of confessing to Tupac's killing, you're going to get a scene like this.

Lie down with dogs, wake up with fleas

I have little enthusiasm for watching professional sport. Partly this is a result of the fact that none of my sports of choice (cricket, Australian Rules Football) have any following in this country, but even back in Oz I was at best a casual observer. Partly, this is also a snobbery about the kinds of people who get excited about sporting teams - let's just say that I wouldn't expect to converse with them about their favourite opera, poet, foreign politician, or economist. There are exceptions, of course - Steve Sailer writes lots of interesting stuff about sports. But the prior stays mostly where it is. And every now and then, you remember why.

As far as I understand it, in the NHL finals recently Vancouver just lost the Stanley Cup to Boston. It was game 7 in the series, and Canadians are famously hockey-mad.

So how do you respond to this disappointment? A few sad ales? Complaining to your friends about the refereeing? Ranting on the internet?

No. Apparently, if you're Canucks fans, you decide to riot and trash your own city.

I note in passing that disappointment at Eugene Fama being passed over for the Nobel Prize in Economics has yet to produce this response in Hyde Park.

Make sure to check out the pictures at the link above. Look at these lecherous, middle class dipshits, grinning and posing next to burning police cars and trashed stores in their own home town. What a laugh! Some guy's car is being tipped over!

This juxtaposition on reddit summed it up well. These pampered, spoiled brats go bananas over ... what? One sporting team losing to another? That's your big complaint in life?

It reminds me of this wonderful essay by Jason Lee Steorts on the Batman movie.

Let me end on a personal note. I hate vandals. My friends ask what makes me a conservative, and sometimes I wonder myself, but there is an answer, and it’s that I hate vandals. The problem with vandals is not that they are wrong about a conceptual matter. The problem is that they smash beautiful things. They couldn’t care less about your rules or your God or your conception of the good. You have to stop them with tools that work.

Just so. In this case, thankfully, the prudent response is also the satisfying one - send in the riot police early and hard to bust heads. The key dynamic in riots seems to be that there's a hardcore group of initial instigators who start breaking stuff, and a whole lot of average joes sitting around waiting to see what happens. The instigators on their own can't actually wreck a city, as there's not enough of them. The really dangerous point is when the average joes see that the police aren't stopping anything. At that point, they start thinking, wouldn't it be fun to smash a window and swipe some stuff? And there's a whole lot of them wondering this at the same time, waiting to see what happens. Average people start joining in, and the trickle becomes a flood.

The good news is that average joes are the most amenable to being deterred by riot police making arrests and busting heads. And even if they are temporarily too high on destruction to be deterred, as least you can get the cathartic pleasure of seeing vandals and thugs getting their asses kicked.

In terms of the tools that work, this is a good start. This is even better.

Stopping By Woods on a Snowy Evening

Apropos nothing, the great Robert Frost.

Stopping By Woods on a Snowy Evening

Whose woods these are I think I know.
His house is in the village though;
He will not see me stopping here
To watch his woods fill up with snow.

My little horse must think it queer
To stop without a farmhouse near
Between the woods and frozen lake
The darkest evening of the year.

He gives his harness bells a shake
To ask if there is some mistake.
The only other sound's the sweep
Of easy wind and downy flake.

The woods are lovely, dark and deep.
But I have promises to keep,
And miles to go before I sleep,
And miles to go before I sleep.


I love this poem a lot. It manages to say much, even though most of the poem is merely describing the scene. The point, only made explicit at the end, seems to me to be partly about the short time we have on earth and the relation of man to nature. Nature is ambiguous in the poem - beautiful, but somewhat lonely and foreboding. The poem notes that the duties of the world we live in stop us from usually really noticing this, and instead we rush on on the long road that ends in sleep, with the repetition suggesting the second meaning of the long sleep we all face eventually.

Serious poetry fans eschew Frost, because he is too common and accessible, and thus affords few opportunities for snobbery and condescension. And while it would be easy to mock this motivation as being stupid (and it is), I think it is also unnecessary, since there is no danger of appearing too common by liking any sort of poetry these days (as opposed to, say, Lady Gaga). Frost, like Kipling, is popular because he is great - both of them are on the efficient frontier of 'profound' and 'accessible' - there are greater poets, and more accessible poets, but there are no poets who are both greater and more accessible.

It's a trap!

SMBC nails the the question of how people keep falling for Trojan Horses. Gold!

Insta-Protest

Here's a free tip for how to turn any common or garden illegal action into a righteous protest against oppression.

Suppose you're jaywalking - the light says red, but you're going anyway. Normally, this just makes you a bit impatient. But to turn this action into a philosophical blow against oppression, just state loudly while doing it:

"Government doesn't tell me what to do."

And presto! You have an obligation to resist the tyranny of the traffic signal. The sheep of this world obey merely because the government said so, but a free born citizen knows that Governments are instituted among Men, deriving their just powers from the consent of the governed, and right now, you're not giving that consent. As a patriot, Thomas Jefferson (or Sir Isaac Isaacs if you're Australian) will be applauding your actions somewhere far off.

If you need to pad out this philosophical battle cry, I suggest the elaboration, "The government makes suggestions on how I should act. Sometimes I follow them, sometimes I don't."

Notwithstanding the hyperbolic nature of this post, I do actually do this when I jaywalk. It just seems that much more righteous.

It's my RIGHT to get something for nothing!

Via Jerome Cardinal comes this great Charlie Brooker piece, talking about how the internet makes everyone get a huge sense of entitlement about how everything should be free:

I once read an absolutely scathing one-star review in which the author bitterly complained that a game had only kept them entertained for four hours.

FOUR HOURS? FOR 59P? AND YOU'RE ANGRY ENOUGH TO WRITE AN ESSAY ABOUT IT? ON YOUR EXPENSIVE IPHONE? HAVE YOU LOST YOUR MIND?

Ha!

I actually paid for the premium version of Pandora, because the product itself was good, and I was getting infuriated hearing the same ads for Farmer John's Bacon Wrapped Hot Dogs 5 times an hour. Which, when you think about it, is a great subtle strategy to make people pay money.

Clowns to the left of me, Jokers to the right

Sometimes you see a debate where both sides are picking positions that just seem crazy. Like recently in New Zealand. This story is full of so much fail all round. It describes new penalties that New Zealand has enacted for copyright enfringement:

This past April, to the dismay of many, New Zealand enacted The Copyright (Infringing File Sharing) Bill to combat online infringement. The legislation allows for penalties of up to NZ$15,000 ($12,000) to be paid to the copyright owner, repeat infringers can have their Internet account suspended for up to six months.

Got that? Download something off BitTorrent, and they cut off your internet for 6 months. They could have just called it the "Punishing Small-Time Nobodies at Excessive Levels in a Vain Attempt to Undo the Impact of the Internet on Record Company Profits Act of 2011".

So how does New Zealand Justice Minister Simon Power defend this turd of a piece of legislation?:

“The legislation that we passed a number of weeks ago now was thoroughly consulted over a two-year period,” he said. “I’m confident that it’s been through just about every test and every forum it could have been to get where it is today.”....he thought the agreement between ISPs and copyright holders was “satisfactory.” 

Translation: It may suck, but we sure read a lot of stuff and tried hard to focus group it through all the various lobby groups. Except consumers. Whoops.

So, you're faced with an unpopular, draconian Bill stuffed fat with measures to protect special interest business groups. How would you go about building a consensus for repeal? Why, with ridiculous hyperbole and leftist agitprop, of course!:

However, last week Frank La Rue, the UN’s Special Rapporteur on freedom of opinion and expression, submitted a report concluding that disconnecting Internet users, “regardless of the justification provided,” is a violation of the International Covenant on Civil and Political Rights because it limits the type of media individuals are allowed to use to express themselves.

So now internet access is a human right, eh? I wonder how many generations of my ancestors toiled and perished, not knowing that they were having their rights violated by not being able to post to a blog.

This is the worst kind of modish, 'everything that might be desirable is now a right' view of the world. Doesn't the UN Special Rapporteur on freedom of opinion and expression have better things to do than criticise New Zealand? Like, you know, perhaps talk about how Syria is closed off to the world while its government shoots hundreds of unarmed protesters.

Isn't it enough to point out that this is an egregiously bad draw, ramping up punishment levels to vainly compensate for the fact that enforcement  practically impossible? Isn't it enough to make that point that seldomly enforced laws with extreme penalties result in hugely inequitable variation in outcomes between people committing the same crime, with most getting away free and a tiny number losing everything? Isn't it enough to question what actual social harm this whole damn exercise is even meant to remedy?

If there's one thing designed to unite people in favour of a domestic policy, it's having UN busybodies declaring it against international law. Sheesh, with friends like these...

As Kissinger reputedly said about the Iran/Iraq war - it's a shame they can't both lose.

Mental Accounting and Countries

Mental accounting is the idea that people think about outcomes in terms of particular categories, or mental accounts. You think of the profits on your risky share portfolio as being one set of money, and the profits on your kid's college fund invested in safe bonds as another set of money, and evaluate them differently. In reality, it's all your money, and it's all transferable. You ought to be optimising over the whole portfolio, but people usually don't.

Another area this shows up is in terms of travelling to countries. There is a certain class of traveller who I refer to as a 'list-checker'. They view it as their mission to go to as many countries as possible. But crucially, they tend to only go to each one once, and each one is somewhat interchangeable. Typically, these people are amongst the worst bores for telling travel stories, constantly interjecting 'I've been there' whenever a country comes up. This interruption is rarely associated with an actually interesting anecdote related to the current discussion, but instead is merely there to remind you how cultured and worldly they are. Their aim is not necessarily 'seeing more stuff', but more 'getting to tell people they've been to dozens of countries'.

If you want to see how this makes no sense at all, consider a map of South America.


(image credit)

According to wikipedia numbers, Brazil has about 48% of the total land area of South America, and about 52% of the people in South America. So regardless of whether you're after a representative sample of seeing different geography in South America or meeting different people in South America, you ought to spend half your South American vacations in Brazil, and the other half in the rest of the countries combined.

The list-checker doesn't work this way, of course. They'll spend a week in Brazil doing 4 days in Rio and 3 in Sao Paulo, and declare victory. "I've already been to Brazil!", they'll declare. "Let's check out what's in Suriname."

The answer is of course, "f*** all", and they'd be much better off seeing more of Brazil. That's assuming that they're actually after more interesting experiences. On the other hand, if you take their preferences seriously and think that there really is nothing more important than checking off that list, then they should stick to what they're doing. Tick off that country!

Here's the way to tell if you're a list-checker or not. If the northern half of Brazil decided to split off into a separate country called 'Holmesia', would you feel a subtle urge to go there that you don't currently feel?

If you would, you are mega lame. (Unless you're so enamoured of yer 'umble narrator that you're drawn by the name alone - in that case, think of it as 'Amazonia', and do the exercise again.)

Don't be that guy. Nobody likes a list-checker.

Transmission Errors... Please Stand By

Sorry for the lack of updates, I've been travelling back to the old country. In related nostalgia, is there a better coffee than a flat white? So delicious.

I'll try to keep up the flow of hilarity, and let you know when to expect the full strength version of my half-assed blogging that you know and tolerate, rather than the half-strength quarter-assed version of the moment.

The Coase Theorem and Hotel Bathrooms

It is possible to un-wrinkle a suit-jacket by hanging it in the bathroom, turning on the shower, and leaving the steam to remove the creases.

I can safely report that this process has the side effect of turning the bathroom into a soggy mess, with sodden toilet paper rolls and water dripping from the ceiling.

The extra time spent for the maid to clean the bathroom is likely less than the cost of dry cleaning a jacket free of charge.

Somewhere, Ronald Coase is shaking his head.

Weight

Once, my weight followed a mean-reverting process, something like an AR (1).

Then it followed a random walk.

Now it seems to follow a ratchet.

Boo-urns.

The Taxonomy of Tea

You can learn a lot about how people view things by examining the taxonomy they use to describe them. The reason for this is that people will start out with the first distinctions being the ones they perceive as most important.

Violating my own rule, it is easy to get a snapshot of what is wrong with the quality of tea in America by examining the taxonomy used to describe it. Implicitly, the taxonomy can be thought of as the question that comes next when you say 'Can I order a tea?'. It's the formulation of "What sort of tea - X, Y or Z'? The choice of X, Y and Z says much about what is viewed as the important variation in teas, and that in turn tells you the level of perception.

Before we get to America, let's start with how the taxonomy appears to a tea connoisseur.

This indicates a familiarity with the main types of tea, and if this is the first question, you can be sure that many more detailed questions will follow. This is the mark of someone who knows what they're talking about.

Let's look at how the taxonomy appears to the reasonable middle class tea drinker in most commonwealth countries.

The assumption here is black teas, but that's okay, since they're the main teas that are drunk in western countries. Moving down the refinement scale, you'll get

In this case, the implicit subset is 'Black' and probably 'English Breakfast' (or more realistically 'Black' and 'What's the Difference Anyway'). So this is at the okay but not great level - these are still reasonable teas, and the milk/no milk (or sugar/no sugar) distinction gets to questions of taste. I'll pay it, but just.

So what's the first level of the American taxonomy? What do you get asked when you order tea?

Yeesh. In other words, Iced teas are about 50% of the relevant variation. If you have to add 'Hot', you've already got a problem. The probability that you'll be getting a teabag is close to 98% at this point, and the likelihood that you'll be offered milk without asking is probably less than 50%.

It's like if you went to an electronics store and asked for a TV and were asked 'A Colour TV?', you've probably be worried about whether you'd walked back into the 1970s. Same thing with 'hot' tea. Is there any other civilised kind?

A friend of mine who lived in the South told me of a circle of tea hell that is even one level lower

In this case, the assumption that the tea will be iced is so obvious as to go unstated. Ye Gods.

Thank goodness for internet tea purchases, that's all I can say.

Getting back to my rude foreigners rule, tea notwithstanding, America is a great country. This may sound like the 'some of my best friends are black/Jews/gay' defense, but it's true.

Hipsters

In Praise of Monolingualism

One of the standard markers of being sophisticated is learning a second language. This is regarded as an unadulterated "good thing", and the multilingual sophisticates look down on the mouth-breathing, Walmart-shopping, non-passport-owning plebs that never bothered to learn a language other than English. Don't they know what they're missing? The chance to speak to people in other countries! The chance to learn about the assumptions of one's own language at a deeper level! The chance to read great books in their original language!

Now, gentle reader, I must confess to once being drawn towards such logic. Several times I slogged away through my teach-yourself-Spanish mp3s, usually in the lead-up towards a trip to some Spanish speaking country, and out of a sense that it would be cool.

What I would inevitably find once I got to said country is that knowing a little bit of a language is basically no better than not knowing anything. In particular, the range of questions you can ask and understand the response for is almost the same as those you can get with pointing and gestures.You can ask what stuff costs, as long as you know numbers. You can ask for directions (e.g. to the bathroom), but anything that's not immediately visible will be an answer too complicated to understand. You can maybe read a menu, but even that can be done (and I did once) just by pointing and making animal noises. The simple reality is that a wad of money that you're trying to spend, and possibly a phrasebook, is about as useful as a year or two of learning a language.

The main reason to learn a second language is when your first language isn't English. English has become what Esperato fanboys always claimed to want - a common lingua franca language that everyone could speak and understand. Strangely, the Esperanto folks aren't celebrating this fact.

The reality is that learning a language is one of those things that always seems great, as long as you don't consider the opportunity cost. If you force kids to learn a language at school, that's time they're not spending on maths, history or science. However the argument is always phrased as 'learning a language is important!', not 'learning a language is more important than spending the time on science', even though that's the relevant comparison. Sounds a bit less convincing the second way, doesn't it?

In my case, the opportunity cost was the fact that I didn't get to listen to music while driving to work, and had to concentrate hard the whole drive. What a trivial cost! Who wouldn't give that up?

Well, in the end, me. After noting this discrepancy between my stated and revealed preference, eventually I just became comfortable with what revealed preference was telling me - I didn't actually want to learn Spanish, and I did actually enjoy listening to my music. The only change was that I stopped feeling remotely bad about the fact that I don't speak anything other than English.

In the mean time, the google translate app, which now speaks sentences in dozens of different languages and can be carried around in your phone, has done little to modify my earlier views.

Off-Colour Metaphor of the Day

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Thought of the Day

"Air travel used to be a luxury. Now it's isomorphic to entering a prison and then boarding a bus."

-The Greek (who will one day start his own blog, which I look forward to reading)

Something Important Has Been Lost...

Let us compare how people expressed their baser instincts, contrasting the 11th-13th centuries and the 20th-21st centuries, via Carl Orff's opera 'Carmina Burana' (in translations from the original Latin)

Hedonism, 11th-13th Century - Estuans interius (Burning Inside)

I travel the broad path
as is the way of youth,
I give myself to vice,
unmindful of virtue,
I am eager for the pleasures of the flesh
more than for salvation,
my soul is dead,
so I shall look after the flesh.

Hedonism, 20th Century - Me So Horny, by 2 Live Crew

Ahh! So horny!
Me so horny!
So horny!
Me love you long time!

Alcoholism, 11th-13th Century - In taberna quando sumus (When we are in the tavern)

When we are in the tavern
we do not think how we will go to dust,
but we hurry to gamble,
which always makes us sweat.
What happens in the tavern,
where money is host,
you may well ask,
and hear what I say.
Some gamble, some drink,
some behave loosely.
But of those who gamble,
some are stripped bare,
some win their clothes here,
some are dressed in sacks.
Here no-one fears death,
but they throw the dice in the name of Bacchus.

Alcoholism, 21st Century - Shots, byLMFAO and Lil Jon

Shots! Shots! Shots! Shots! Shots! Shots! Shots!Shots! Shots! Shots! 

Sometimes it's hard not to think that Mike Judge was right.

Need advice on your poor decisions? Screw up spectacularly enough and the world will provide!

So I'm late to the party in having anything to say about the Schwarzenegger love-child affair. And I don't have much to say on it directly.

But it did make me think that it must be strange to be the subject of a sex scandal, and seeing every detail of your personal choices ridiculed, analysed and oogled at by the great and the good, the unwashed and the elites.

Most people immediately think of the horror of it all. And that's obviously true. On balance, I doubt anyone would want to go through it.

But to someone who's a thick-skinned narcissist (as most celebrities probably are) AND intellectually curious enough to wonder about what things they deceive themselves about (as most celebrities probably aren't), it would be most interesting to have all of the world's commentariat telling you what they thought of your personal decisions.

If I had Steve Sailer, Roissy in DC, Popehat and Ace of Spades, poring over all the choices I make in my life, it may not be pleasant, but I'd sure learn a lot.

Don't you know who I am?!

There is a very high likelihood that if you ever have cause to ask 'Don't you know who I am?', you are, in fact, nobody.

In this case, you're an accused rapist. Beyond that, you're some French socialist, and the guy that runs the IMF in part because of an absurd arrangement that an American gets to run the World Bank and a European gets to run the IMF.

Don't believe me?

Quick, who's the head of the World Bank?

Yeah, I'd forgotten too. It's Robert Zoellick

But this gives us a useful proxy for roughly how important Dominique Strauss-Kahn was before he allegedly raped a maid.

Google reports about 72 million hits for 'IMF'. By comparison, it reports about 65.7 million hits for 'World Bank'. Separating out the effect of the two leaders "IMF -Dominique -Strauss-Kahn " returns 58.7 million hits, and ""World Bank" -Robert -Zoellick" returns 64.6 million. So they run roughly equally important organisations.

So how about the relative newsworthiness of the two heads of the organisations?

"Dominique Strauss-Kahn" records 18.9 million results.

'Robert Zoellick' records 1.55 million results.

Let's make the somewhat heroic assumption that Robert Zoellick and Dominique Strauss-Kahn were equally important people before this latest scandal broke.

In other words, according to Google hits, allegedly molesting a maid was around 11 times more important than everything Dominique Strauss-Kahn had done up to that point.

The irony, of course, is that at the time Dominique Strauss-Kahn was asking the question 'Don't you know who I am?', he was about to become vastly more important, but not in the way he'd like. He's certainly put the IMF on the map to a lot of rubbernecks who hadn't heard of it before!

By contrast, 'Justin Bieber' has 296 million hits. He also  probably doesn't have to ask people whether they know who he is.

That's depressing in its own way, but at least should serve as a useful antidote to pompous clowns like Strauss-Kahn.

You can-NOT be SERIOUS!!!

Greg Mankiw links to this very interesting paper by William Davis, Bob Figgins, David Hedengren, and Daniel Klein in Econ Journal Watch. It's a poll taken of economists, asking who their favourite economists are. Presumably 'me' (in the general form, not 'Me, Bob Smith') was not an available option, otherwise I suspect that this would be the dominant winner in nearly every living case.

The first question I have is on Page 7 of the pdf - Favourite Pre-20th Century Economists.

#5 is Karl Marx.

Karl @#$%ing Marx!!! Ahead of Walras! Ahead of Pareto! Ahead of Cournot!

Good God, which 'economists' were they interviewing? East Podunk State School of Sociology?

I suppose the likely explanation (consistent with evidence elsewhere) is this isn't a measure of 'who do you think were the best economists', merely your favourite ones. This would also explain other trends that would be strange in terms of actual contribution to economics - putting Galbraith (who mainly wrote popular works) ahead of giants like Irving Fisher, von Mises, Hicks, Stigler, Veblen, and Tobin.

In the spirit of bipartisanship, this isn't just a diss on left-leaning economists. Thomas Sowell was a surprising inclusion in the living economists age 60 or over. Now, I yield to nobody in my love of Sowell's brilliantly lucid and enjoyable explanations of basic economic principles, but like Galbraith he is mainly known for popular writing. I'd struggle to rate him ahead of Martin Feldstein or Robert Fogel.

I guess this is partly the mind projection fallacy at work.

But even so! Karl @#$%ing Marx? How do you even rate him as a serious economist, let alone your favourite one?

It's a sick world alright.

The main saving grace was that Gary Becker was the favourite living economist age 60 or older. A well-deserved honour!

A Sunset on Mars

This might be one of my favourite NASA photos of all time - a photo of sunset on Mars, taken from one of the rovers.

The sky is red, the sunset makes it blue, and the sun is a fraction of the size it is on earth. And the ground just looks like regular desert, minus any signs of life.

It's an amazing universe alright.

Oooh, the burn!

Via Zero Hedge, comes Ice Cap Management's assessment of the fiscal situation in Greece. It includes these two pearlers:

To put the situation into perspective, the yield on a Greek 2 year bond is about 25%. It may actually be cheaper for Greece to fund their deficit using their VISA and Master Cards instead.

Zing!

Reasons why the EUR will escape crisis:   [This page intentionally left blank]

Double Zing!

Zero Hedge also makes a plausible case for what will happen when (not if) Greece defaults. Some highlights:

• Every bank in Greece will instantly go insolvent.

• The Greek government will nationalise every bank in Greece.

• The Greek government will forbid withdrawals from Greek banks.

• To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law.

• Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting)

• The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting 0n 50 per cent or more of all Greek euro-denominated debts.

Read on for more.

Sadly I can't see much to argue with in this analysis. The ultimate problem is the same as elsewhere in Europe - the current round of 'austerity measures' isn't even enough to close the budget deficit, merely to reduce the rate of issuing new debt. And even this has caused near riotous levels of dissent. Short of miraculous 10% per year economic growth and/or a magic infinite German Chequebook (which is, as far as I can tell, is the current ECB plan), the money just isn't there, and sooner or later this is going to become apparent.

This slow-motion train-wreck has been coming for some time. The only reason it's been slow-motion is the desire of all concerned to just keep rolling over the debt and buying time until the inevitable has to happen (ideally on some other politician's watch). I think the author of the second post is right - the sensible thing at this stage is to start figuring out what happens next. People differ on specifics, but the first commenter at Zero Hedge gets the big picture right:

So it's bullish for stocks...

Yeeaaahhh.. About that...

By the way, at the risk of congratulating myself, I did enjoy the title of that earlier post "Greece - Circling the Drain, Fiddling with the Second Derivative of 'Screwed' with respect to 'Time'".

Mr Brown

My latest Pandora find is the thoroughly excellent 'Mr Brown', by Styles of Beyond.

This falls into the category both of the current musical corner solution, and also the metaphor of the day - in this case, a metaphor for getting shot between the eyes:

'[To] catch a 40-calibre case of glaucoma'

Classic!

This song also exemplifies the fact that the chord progression of 'Tonic, Sub-Dominant, Dominant, Sub-Dominant, Repeat' (e.g. C, F, G, F) is excellent and among the best four-chord riffs. It works really well in this song, it works well here, it works well here, it works well here, it pretty much works well everywhere.

More from the Good Doctor

Two great Theodore Dalrymple asides.

#1, in reference to Dr John Shebbeare (born in 1709):

Fanny Burney mentioned him in her diary, and says that his conversation was extraordinarily coarse and consisted mainly of the abuse of women and Scotsmen, whom he claimed to be “the two greatest evils upon earth.”

Ha! To identify these as the greatest evils sounds a little, shall we say... intemperate.

#2, on the tendency of intellectuals to ascribe motivations for bad actions to material circumstances, instead of temptations towards evil:

In my own country, for example, the motives for criminality have been so mystified for so long by proselytising academics that efforts at repression have been, if not abandoned entirely, so weakened as to have turned one of the best ordered western societies into one of the worst within the space of a few decades, while at the same time reducing many of its civic freedoms. The motives of criminologists are far harder (on the whole) to discern and understand than those of thieves.

 Ah, so true.

Loud Talkers

One of the most insidious forms of anti-social behaviour is talking loudly in public. It's inconsiderate, because it inflicts your conversation on everyone around you, even though almost certainly don't want to hear it. The problem is compounded by the fact that the people oblivious to this social courtesy are also more likely to be engaging in banal, obtuse conversation at loud volume, rather than say discussing the merits of Wittgenstein vs. Nietzsche, or the latest offering from the Lyric Opera.

In this regard, people seem to generally fall into one of two categories:

a) People that instinctively moderate the volume of their voice so as not to be easily audible to others nearby who aren't part of the conversation.

b) People that just talk at a loud fixed volume, regardless of the the level of background noise, how many other people are around, and how many people are likely to hear them.

This behaviour is inconsiderate in the true sense of the word - failing to consider whether your actions will impact other people. It's a class of antisocial behavior that's different from, say, farting loudly or urinating on the sidewalk. In those cases, the people who do it broadly know that it won't be appreciated, but just don't care. The loud talker is, as often as not, completely oblivious to how many people they're pissing off.

Loud talking persists because most people are unlikely to actually request the person keep their voice down. To do so is to provide a public good - you personally look like a dick as well when you complain, and the beneficiaries are those who get quiet but don't have to hassle the person. This doesn't happen much, because the people who prefer quiet are less likely to be brash enough to request others to shut up.

Every now and again, though, the quiet folk will get tipped over the edge, and ask the person to keep their voice down.What happens next determines whether the person is an oblivious loud-talker, or an obnoxious loud talker.

The oblivious loud talker will probably say, 'Uh, sure' or something like that. They'll think the complainer is weird, but probably just go along.

The obnoxious loud talker will react like Lakeysha Beard:

"Lakeysha Beard of Tigard was charged with disorderly conduct after police said she got into a “verbal altercation” with train passengers on Sunday. Passengers complained she refused to put down her cell phone and conductors had to stop the train in Salem, where police got involved."

Okay, so maybe the people complaining were way out of line.

"Salem police reported she had been on the phone non-stop since the train pulled out of Oakland, Calif. 16 hours earlier....

Holy hell! 16 straight hours of drivel! And it gets better:

"Amtrak does have a policy that riders can’t use cell phones in designated “quiet cars,” like the one in which Beard was riding."

Good God, this horrendous boorish woman sat down in a designated quiet car, talked on her mobile phone for 16 hours straight, and then got in a "verbal altercation" with passengers who asked her to stop, which was bad enough to result in the police being called.

And was she chastened by the experience? Has she seen the error of her ways?

"[She] said she felt “disrespected” by the entire incident."

Lakeysha Beard of Tigard, you are a repulsive, obnoxious human being.

Every now and again, I reflect on my policy of never, ever riding public transport unless absolutely necessary. Stories like this remind me of the wisdom of this rule.

Valet Parking

Every now and again, you stop and think that we live in a very remarkable society.

One of the things that brought this feeling was giving my car to a valet the other night. Just consider for a second how his institution works. Guy A pulls up and gives his $80,000 Mercedes, keys and all, to Guy B. Guy B is likely making about $10 per hour and may very well have a net worth significantly less than the car he is entrusted with, and yet Guy A lets him drive it away to park it. Guy A probably walks away without even checking what happens when he leaves and without asking where it will be parked. At the end of the meal, Guy B brings the car back intact, possessions all inside.

To make things stranger, this happens for run-of-the-mill restaurants, amongst people who've never met before and may never meet again. It's not just at some high-end country club with repeated interactions.

How many countries in the world do you think this kind of norm could reasonably work in? How many periods in history did people exhibit this much trust towards complete strangers? My guess is that the rate of theft wouldn't need to get very high at all before this institution would collapse completely.

And yet there it is.

Luigi Zingales, who's done a lot of work on this area, would argue that trust is linked to economic development. There's all sorts of value-increasing transactions that can only take place among strangers when there's strong norms of co-operation and low rates of screwing people over.

In other words, we shouldn't be surprised that institutions like valet parking only exist in highly developed nations.

Strange times.

(from a conversation with The Greek).

Worm Paternalism - A Metaphor

I was walking the other day along a footpath. It had been a damp day but sunny day, and there were some worms on the concrete. Most were dead, having either been squashed or dried out.

I saw one of them that was wiggling along, and decided I should try to rescue it.

Now, gentle reader, I tend to take a generally libertarian approach to people's actions. But there could hardly be a better instance of the worth of paternalism. Even the hardest of hardcore rational choice believers would not claim that every action of earthworms is likely to be utility maximising, particularly wriggling along a footpath after the rain. I mean, technically the moth might really really love circling around the light globe until it dies and the fly might enjoy getting electrocuted by the insect zapper. Of course, if you believe that, the Ghost of Karl Popper will hurl a copy of 'All Life is Problem Solving' at you and ask what, exactly, might falsify your theory. Plus, the evidence is all around you - look at all the other dead worms, killed for want of someone to move them back on to the grass!

So I decided to move one of worms.

Since I was worried about squashing it if I picked it up with my fingers (and, let's face it, it's a bit gross), I picked up a leaf and a piece of grass, and tried to maneuver the worm onto it.

This worm was quite lively, however. Despite my best intentions, it seemed deeply reluctant (for reasons that would not be at all puzzling to an evolutionary biologist) to go along with the plan. It kept wriggling away. I tried to move the grass underneath it to lift it up, but it would just poke the bottom of the worm (and looked not especially pleasant to be on the receiving end of).

Eventually, I managed to finally get it on the grass blade, and lifted it up to move it to the nearby grass. But even then, it wriggled off the grass, and fell about 20cm back down to the concrete. It kept wriggling away, and I let it go, feeling sad nonetheless.

As I walked away, I started to question the assumptions about the footpath being an obvious deathtrap. In particular, I didn't have any idea how many dead worms per square metre there might be on the grass, because the grass obscures them. If worms were dying at about the same rate on the grass and on the footpath, I'd still conclude that the footpath was a deathtrap, just because the evidence is more visible. This didn't make me completely change my underlying view (since worms can tunnel through dirt but not concrete, and feet are more likely to squash them on concrete), but it did make me revise it downwards.

I would still move snails off footpaths, as they can be picked up easily. I may even still try to move worms.

And yet...

Despite the best of intentions, I had merely managed to beat the worm up. Despite my apparently far superior understanding of the problem relative to the worm, it was no guarantee of any sort of good outcome.

The subject of this metaphor is 'Why the Government Should Meddle in People's Lives Much Less Than It Does'.

A.E. Housman on War

From 'More Poems'

XXXVI

"Here dead lie we because we did not choose

To live and shame the land from which we sprung.

Life, to be sure, is nothing much to lose;

But young men think it is, and we were young."

An Instant Bookmark

My guess is that you will fall into one of two categories. You will find this to bring you an unexpected joy, like meeting an old friend in a foreign country where you didn't expect to find them.

Or, if you never read Calvin and Hobbes, you'll have absolutely no idea what I'm talking about.

To a lot of people, myself included, Calvin and Hobbes occupied a strangely deep attachment. Lots of the great comic strip writers I know and enjoy (Scott Adams immediately comes to mind) list it as one of their big influences. I think Adams described it as the best comic ever, and I'd agree.

I think the strength of the nostalgia associated with this comic (and the emotions that the current redoing provoked) is twofold. Firstly, it's a comic about childhood, but with the protagonist being a strange combination of childhood petulance and aims with adult jokes and insights. As a result, it captures an idealized image of childhood from the perspective of an adult - knowing what you know and enjoying what you do, but still partaking in the innocence of it.

But there's a second sense of it. For a lot of twenty-somethings or thirty-somethings, Calvin and Hobbes is also of their childhood. The time when the comics were still written was long ago, and Bill Watterson has shown a Seinfeld-esque level of timing, leaving on a high note and resisting all calls for an encore. Calvin and Hobbes is thus like a 1950's chevy - they just aren't making them any more.

I think this explained the strange outpouring of emotion this comic got on Reddit. There were some people who complained that it was ruining their image of the comic, but many more that seemed overjoyed at the prospect, however fleeting, of a new Calvin and Hobbes comic. It let them, just briefly, be reminded of that glorious time when you could open up the morning paper and find a new Calvin and Hobbes strip waiting for you.

Those were great times.

I had not heard of 'Pants are Overrated' before this, but they've earned my readership loyalty for quite some time to come.

Kaplan Test Prep - Lucky They're Not Teaching You Causal Inference

Kaplan is a service that runs a test preparation service - you sometimes see their flyers on public transport (on the very small number of dire occasions I've been forced to ride the bus or train), and other places. They help people prepare for standardised tests like the LSAT, MCAT, GMAT, and all those other scary acronyms ending in a capital T.

 I have no idea whether they do a good job or not. But I do know that their "High Score Guarantee" on their website is stupid, and designed to fool only stupid people. Which, as it happens, are probably the people who need help on these tests.

"Higher score guaranteed or your money back
We have the most comprehensive guarantee in the industry. Get a
higher LSAT score guaranteed or your money back."

So what's the problem with this? Well, it's an old one familiar to economists - identification. To work out whether Kaplan is actually doing anything, we'd like Kaplan courses to be randomly assigned to students. And they're not. So what else could be going on?

The most obvious problem is that I'd expect everyone to do better on average on their second attempt, regardless of whether they took a test prep course. Why? Because the fact that you took it a second time probably means that the first time you took the test you had been drunk the night before, assumed it would be easy, and screwed it up. And that's why you're doing it again. Had you gotten an unusually high score the first time you took it, it's very unlikely you'd take it again. Reversion to the mean alone will get you there, let alone the fact that on the second time people are probably doing the study that they didn't do the first time.

So a better comparison would be:

"Honest Kaplan Score Guarantee - We guarantee that the improvement in your test score will be higher than the average improvement for all second-time test takers"

This is better, but it still isn't perfect. Specifically,  people who want to pay money for a test prep service are likely more intrinsically motivated to study than the average second-time test taker. So what would be the ideal guarantee?:

"Holmes Testing Service Guarantee - We guarantee that if we take a  sample of 200 second time test takers and randomly assign half of them a Holmes Test Prep Course, the group with the test prep will have a larger average score increase, or you get your money back. We guarantee this because we did the experiment, and it works." 

You're looking at that thinking, "Wait, what the hell? How is this guaranteeing me anything? How could I get my money back?"

Well, it depends what you're after.

If you're after useful information that the course you're about to take will actually help you, the Holmes Guarantee is far more useful than any of the others.

If you're the type who buys the extended warranty on your dishwasher, likes the idea of something for nothing, and doesn't understand causal inference, go with the Kaplan guarantee. Your score will definitely go up!

Kaplan has decided that the market for the latter is far larger than the market for the former. (Assuming they themselves understand inference, which is far from clear). Depressingly, they're almost certainly correct in their assessment. Which is why I'm not in the test preparation business.

Predictable Preference Reversals in Procrastination Choices

In the category of 'stupid mistakes I make that I will admit to', let me add this one.

Procrastination is a classic sign of hyperbolic discounting. It's what happens when you know that something is in your interests to do, but you don't want to pay the small upfront costs just yet. You'll do it soon, really. As a result, it creates in predictable preference reversals. After you're done procrastinating, you'll wish you hadn't. Moreover, even as you're doing it, you know that you'll later regret it. But you do it anyway.

My mistake is not that I procrastinate and wish I didn't (although that happens too). It's more that hyperbolic discounting also causes me to procrastinate with things that aren't optimally enjoyable. So how does this mistake work in this context?

Procrastination typically tends to take the form of lots of small chunks of time. You tell yourself that you'll only waste five minutes, and then you'll work. Five minutes passes, then you want to spend another five, and so on. You may end up wasting a lot of time, but the decision has to be made incrementally because it's only the really immediate effect that has the high discount rate. In other words, in 5 minutes time, you really are willing to work. The problem is that '5 minutes time' keeps turning into 'now', when you aren't willing to work.

Someone who is hyperbolically discounting will only do so in tasks that individually require a small amount of time. Like checking one more blog. Or playing one more game of solitaire. They generally won't set aside in advance a large chunk of time to waste, such as by watching a TV show, or worse, a whole movie.

But here's where the preference reversals come in. In total, I will often waste 2 hours of time over the course of a day. If I could commit in advance to wasting this time and then getting on with work, I would rather spend it watching at least one TV show, or maybe a whole movie.

But I won't want to commit to that, because standing in the present, the first 5 minutes seem like acceptable procrastination, but the remaining 85 seem like an unconscionable waste of time when I should be working. They'll only seem like acceptable procrastination when they turn into 'now'.

An alternative title for this post is "Why, 6 months later, I still haven't watched 'The Hangover' that SMH lent me, even though I honestly believe it's a good movie"