High Marginal Value Cleaning

The law of diminishing returns is called a law for a reason. The more of something you do, eventually the payoff decreases. It might increase at first (e.g. if there's network effects or economies of scale), but sooner or later, it turns negative.

But if you're clever, you can use this to your advantage. Take the lazy bachelor's approach to cleaning. Suppose (entirely hypothetically in my case, I assure you), your bathroom is quite dirty. In the case of cleaning, the first efforts at cleaning have huge payoffs. Just wipe the floor with a paper towel and you'll pick up maybe 70% of the filth. And it only takes 5 seconds! This is clearly a huge return on effort. But if you really want to get the floor clean, you'd have to get the mop and bucket, run the water, put in detergent, scrub the floor, and wait for it to dry.

In other words, that last 30% is going to take you 10 minutes, minimum. Honestly, who's got that kind of time?

The answer, of course, is people who are OCD about dirt, clean for a living, or have too much time on their hands.

It will come as no shock to those who know me in real life that I would self-classify as none of those three. Okay, maybe the third one is true (see, for instance, this blog), but I don't have the inclination to spend it cleaning.

If you don't believe me, just ask David Ricardo:

You should listen to your friend David Ricardo, he's a cool dude.

So True!

Phrases that I challenge ANYONE to explain the logic behind

(After the plane has landed):

"You may now use your cell phones but all other electronic devices must remain off."

Gotcha. Now we've reached the seventh circle of anti-scientific hell - my iPod might cause the plane to crash into the hangar, but when they installed a cell phone receiver to make it an iPhone, this somehow fixed the problem.

Ugh.

A Pre-Mortem Post-Mortem

Over at Hacker News, there's a fascinating article discussing the prospects of Raystream, a company that claims to have a new video compression technology. As their 'about' page describes their claims:

Using Raystream, the same one hour 720p video can be compressed up to 90% of its original file size, which makes it easily streamable over connection speeds ranging from 0.4 to 1.0 Mbs per second.

No playback modifications required (codec, browser player, set top box, smart phones, etc.)

Interesting, no?

Enter the description at 'Ihatelawyers3':

OK, at this point, if you know anything about video compression, you start to see a red flag waving in your face. The only way one can encode videos so that they (a) play on mobile phones, and (b) need no playback modifications (codecs, etc) is... if you use an existing codec.
But how can an existing codec compress to 10% of what it... already can do?

So he decided to take their test video and compress it using off the shelf technology. And the results, as described in the hacker news thread:

If you encode their test-video with an off-the-shelf open source H264 codec on normal settings, you end up with a video that is smaller than their sample video. Their "amazing new technology" is just vanilla h264 compression.

 Or put another way:

It means the _normal.mp4 file was encoded in an absurdly high bitrate for no reason except to make their claim of 90% compression.

 Hmmm.

I don't know video compression. The hacker news discussion and the github site seem pretty compelling.

But I do know finance.

Here's Raystream's stock price over the last month:

Yeeeaaaaah. It sure looks like something fishy is going on.

It's an over-the-counter stock, so you can't short it. But let's put it this way - Shylock Money Management is not investing any of its proprietary trading money in RayStream, and would be interested in possible short exposure to the stock.

Spam Comment of the Day

From a spam site commenter calling itself 'Wastewater Training' (no link for the spam site):

"A lot of water is wasted in those taps. But that doesn't end there. There are still a lot of things we should look into if we really want to save water like for instance in the garden. We should use the conventional water container to water the plants rather than using a hose or a sprinkler."

Yeeaaah. I'm not so sure that that was really the original point of the post:

So here's the bottom line. I refuse to feel the slightest bit guilty about taking long showers as long as the water department are blowing taxpayer dollars on ridiculous ads. If you want people to use less water, raise the damn price.

But sure, why not! Those free-market types will be rushing to take your online environmental compliance and safety training class after reading how insightful your remarks were.

Morons.

Market-Clearing is Overrated

In Australia, today they voted in the Senate to pass a tax on carbon dioxide.

Now, there are some reasonable argument for having a world-wide price of carbon, assuming countries could somehow be arm-twisted into doing so.

There are bugger-all reasonable arguments for imposing carbon tax when very few other countries are doing so. All that will happen is that carbon-intensive industries will be exported overseas.

But (as Tim Blair notes) to add to the hilarity, the tax comes in at a specific amount - in this case $23 a tonne. The trouble is that the current carbon price in Europe is about half that. You can see the progress for yourselves.

But that's alright, we've got Climate Change Minister (yes, really, Australia actually has one of those) Greg Combet to point out the answer:

But Climate Change Minister Greg Combet is not convinced the difference demands a change in the local price, saying a few months ago the European cost was “there or thereabouts” of $23 a tonne.

“We’ve just got to take a bit of a longer term view of this,” he told ABC Radio

Hmm. Any particular reason you think that the current price is unrepresentative, but the old price is clearly accurate? Any reason at all? I mean, if you're willing to admit that the market is inefficient today, why is 'a few months ago' the gold standard for the halcyon days of price efficiency?

Don't hold your breath waiting for a good answer to that one. But even this is beside the point - efficient or not, the European price of carbon right now is a lot less than it will be in Australia. (Not to mention that the Chinese price is forecast to be $0 for quite some time now, with an R-Squared of about 100% on that regression). As long as there's going to be a price, it ought to be the market price. Unless you think the relevant market is the US and China, in which case we're back to the earlier Shylock regression.

In Australia, the price will be at $23 a tonne, which some days will be less than Europe, and other days will be more.

In other words, the price will definitely not be a market-clearing price. This gives Australian firms a fluctuating competitive position relative to Europe, and a permanent disadvantage relative to just about everywhere else. Heckuva Job, (Bob) Brownie!

One prediction I can make with some confidence - expect the market for Australian-produced Aluminium to start clearing very rapidly at an equilibrium quantity supplied of zero.

Some Quality Trolling

This is one of the most hilarious heckles on the repulsive Westboro Church cult.



Unfortunately, these clowns are too obtuse to even be embarrassed (kind of goes with the territory). But Brick Stone does a great job of ridiculing them, which I think is far and away the best response to these imbeciles.

Randomised Compassion

The problem with giving to the homeless is twofold.

First, how do you tell which people are truly in bad shape, as opposed to merely being professionally homeless? There are lots of people who are really out of luck. On the other hand, back when I was at university, the same 'bum' worked the same corner for years near school, and didn't look that homeless. I subsequently found out that he actually lived in the same large apartment building that I did.

Second, how do you give money without creating bad incentives? In other words, if you give money to people that beg, you create incentives for more people to beg, as opposed to say apply for a low-wage job. The last thing you want to do is set up a situation where someone makes more money begging than they would at a minimum wage job, or you'll end up with the hard-working being punished on net.

One solution that I like is to to give large-ish amounts of money to people who aren't asking for it.

In other words, find someone who is clearly homeless and away from significant pedestrian traffic, so it's unlikely that they're doing things for the benefit of an audience. For instance, I came across I guy today near a petrol station who was going through the bins looking for aluminium cans.

Now, clearly this guy meets criteria #1. Nobody digs through rubbish bins unless they're clearly down on their luck - it's not an obvious way to win sympathy from people, unlike holding up a sign saying you're a homeless vet.

But even better, giving the guy money isn't going to change his incentives. Because the generosity was essentially random from his point of view, he'll keep doing whatever he was doing before - in this case, working to eke out a small existence recycling cans. If you give money to a guy begging, your generosity is not random - it's a response to him asking you, and thus you're creating incentives for him to beg more.

Now, if the guy is truly homeless, this honestly isn't such a problem - more people get hassled, but he gets a little more money. I can happily call that a wash, or even a gain overall.

The bigger problem is the incentives you create for people who aren't actually homeless - slacker hippy tourists, for instance, who see beggars getting money. Unless you're able to clearly distinguish genuine need from grifters, giving to homeless beggars will create incentives for non-homeless beggars. And those are the people that definitely should be applying for jobs instead. Even worse, being asked for money by obvious moochers tends to make the average person reluctant to give money to anybody, even those actually in need.

In other words, I'd rather give twenty bucks to a guy sleeping on the street than twenty cents to a guy begging.

This is not a problem-free solution, of course. The guy who is truly in real trouble is likely to ask for money, out of desperation if nothing else. And he's the guy you'd really rather not turn down. The problem, as always, is the hippie grifters, mooching off people's sympathy.

In this sense, when I do give to beggars, the question of whether they truly are homeless is dealt with using the strong application of the Ronin principle  - if there is any doubt, there is no doubt.

It's not perfect, but compromises necessarily aren't. Don't blame me, blame the moochers.

Miscellaneous Joy

- A wonderful, rambling essay about crows as a metaphor for the working poor. There's plenty in The Exiled to disagree with (including, herein, gratuitous enjoyment about the Blackwater deaths at Fallujah), but they'll sometimes have these kinds of brilliant pieces that you're unlikely to read elsewhere.

-A great rant about how bad the websites are for Indian trains. Having been in the unfortunate position of having to once book railway tickets in India, I can attest to every word.

-Copyright troll who sued people for reproducing newspaper articles loses, big-time. Popehat has more on the background to this development.

-JWZ had this great post about how ridiculous Google's claimed 'support' for pseudonyms was, offering instead the following alternative policy:

Google's statement is obvious bullshit, and here's why. The way you "support" pseudonyms is as follows:

1. Stop deleting peoples' accounts when you suspect that the name they are using is not     their legal name.

2. There is no step 2.

Sure enough, they didn't take him up on the offer.

Stop it, B!

Something I was put on to recently - Felonious Munk. He has a whole series of interesting rants full of common sense and gratuitous swearing and humour. Check 'em out - the first is his appeal to the government to balance the budget.



The other great one was about the bad state of modern relationships. The good bit starts at about 3:00, and boy is it a corker!



Interestingly enough, the guy who put me on to him was Jay Nordlinger in National Review, which is not the most obvious audience for this stuff. But that's part of what appeals about Nordlinger in particular, who is one of the more interesting (and not rigidly political) conservative writers out there.

Your Proud Feelings vs. Drowned Boat People

Ho hum, another six asylum seekers drowned while on the way to Australia.

I wrote about this at some length last year when another bunch of boat people drowned near Christmas Island.

Here's a summary of the main point from last year. :



I don't know what the updated graph looks like, but if anyone would like to wager over the direction of the line, do let me know.

That's what compassion will get you. Look how self-righteous the Labor Party and the Greens were! No more wicked off-shore detention of asylum-seekers. No more housing people in those cruel, cruel detention centres! How virtuous we feel, now that we've finally gotten rid of those evil and nasty laws that John Howard put in place.

In an inconvenient turn, hundreds of people are estimated to have drowned since Labor scrapped the previous laws, based on the inexorable logic that 'more people attempting the crossing = more people dying in the attempt'. But who cares about such a trifle as that!

The phrase 'tough love' is one of those expressions that lefties hate, as it's one of those cliches that gets thrown around a lot in support of many policies, some of which really are tough love, and others of which are just tough.

But doubt not this: people respond to incentives. When people tried to point out to Julia Gillard that her policy was indirectly leading to hundreds of deaths by drowning, she responded that this was a “vile slur”, and among the most “dangerous”, “irresponsible” and “despicable” she’d heard in politics.

So here's a question. Let's put our 'correlation!=causation' caps on, and say that the straightforward incentives and persuasive time-series evidence is not conclusive. I'll take that. But even then, what the hell is Julia Gillard's alternative explanation for this trend? So you saying you're not killing people, huh? Then what exactly is the contention? Is it that more people aren't actually drowning, or that the increase in people coming and drowning has nothing to do with the fact that they are more likely to be processed in Australia and given asylum? Is it driven by the supply and demand of leaky vessels? Is it driven by these asylum seekers expecting to hop off the boat and get a job in Australia's booming mining industry? What?

In fairness to the Labor Government, since last year they've been trying to get offshore processing going again. Whether this attempt can be construed as a tacit admission that the previous policy was in fact killing lots of people is a different question, and one which I would love a reporter to ask her. But the policy hasn't been passed, mainly because they continue to operate under the ridiculous self-imposed constraint that  they won't use the single most logical place for it, namely Nauru.

Because then they'd have to admit that Howard was right. And nothing is more important that that. Certainly not a couple more drowned asylum seekers.

Andrew Bolt is right in skewering the worst delusional culprit - Bob Brown, leader of the Greens. But then again Bob Brown has never, in his entire political life, given even the vaguest indication that he grasps how incentives work. This imbecile is a walking monument to the Dunning-Kruger effect - the more he screws up policy, the more sure he is of his idiotic beliefs. You'd have more luck trying to get your dog to understand Fermat's Last Theorem.

Ostentatious moral vanity is unpleasant enough to watch at the best of times. Ostentatious moral vanity that is simultaneously leading to hundreds of preventable deaths, on the other hand, is sickening.

Faulty Logic on the Soccer Pitch

Let me explain briefly some logic that may seem superficially appealing, but is in fact catastrophically wrong:

Nobody wants to play goalie on our team. I have good hand-eye co-ordination, but I'm not that accurate at kicking. I'm probably going to be the worst player on the field if I play a normal position, whereas I'm probably at least decent at just catching the ball. I'll give goalie a go.

Yeeeaah. Let's call this 'Shylock logic, circa last Sunday at 11:50am'. At about 12:10pm, after getting scored on multiple times by a team that was clearly better than us, let me enlighten you on just how much you can learn in ten scant minutes about where your thinking went astray.

1. When you're crap at some team endeavour, it is less important to actually be good at something than it is to not be blamed for actively being bad at something in a way that is harming the whole team. Goalie is the worst possible position for this. Every screwup is directly attributable to you and you alone. In addition, there's going to be lots of people that remember your screwups and have it in for you.

2. Being goalie is like writing put options, in that your payoffs have crazy negative skewness. When you stop a ball that you should stop, you get a small amount of praise. But should you miss a ball that you should have been able to stop, you just went broke. You know who should be writing put options? Really highly rated financial institutions with deep pockets and lots of experience. You know who shouldn't? Mum and Pop.

3. You know how you can tell that a team is likely to be crap and full of amateurs? When nobody wants to volunteer to be goalie. You know when is the worst possible time to be goalie? When your defence is crap and full of amateurs. Because that's when you're going to get lots of shots on goal, and when you inevitably let some in, people will still blame you more than the crap defence. Talk about a winner's curse problem.

The only good news of the day was that when I subbed out, the goals kept coming, albiet at a slightly slower rate. I am quite certain I was the only person on our whole team to be significantly pleased by this development.

Alan Joyce, You Magnificent Bastard!

So over the weekend, Qantas Airlines grounded all of its planes, without any warning. This of course stranded thousands of passengers, and did massive damage to the Qantas brand. The Associated Press has a reasonable summary.*

This story all unfolded very fast, and it wasn't quite clear what the hell was going on. After reading around, here is what I've managed to piece together as the underlying explanation:

Firstly, to make any sense of this, you need to know that a lot of Australia's industrial relations disputes are governed by statute. In other words, there are courts to decide what strike actions are acceptable, and what wage and conditions are reasonable in various contracts. Sounds monstrously stupid? That's because it is! Apparently people need the government to intervene in private disputes, because of ... well, who the hell knows? The point though is that when unions get into a stoush, it will end up being settled by a quasi-court body like 'Fair Work Australia'. That's point #1.

Secondly, the Qantas unions (baggage handlers, pilots etc.) have been engaging in rolling strikes for several months now, causing huge damage to the company. It's workers are already paid pretty damn well - baggage handlers make between $70,000 and $85,000 including penalty rates but not overtime, an amount over 20% above the industry rate. For lifting suitcases. And they were demanding even more money, based on the impeccable logic of 'Hmm, the company seems to be turning a profit - why don't we try to expropriate all of that to ourselves, even though we're not actually adding any more value?'.

Thirdly, Alan Joyce, the CEO of Qantas, decided that if he gave into the union's demands, Qantas was going to go broke. This has actually happened in the last decade, with Ansett Australia, one of the previous major airlines, being liquidated in part to ridiculous union demands making it unprofitable.

So here's where it gets interesting. With the unions engaging in industrial action, Alan Joyce took the radical step of a lockout of union employees, grounding the airline in the process.

Now, on face of it this seems odd. Usually, union lockouts are designed where the company hires a bunch of non-unionised strike-breakers and plans to engage in a long-term plan to replace the union workforce. At a minimum, lockouts are meant to harm the workers by depriving them of wages for an extended period, thereby hoping to make them concede.

But that clearly wasn't the case here. Qantas couldn't possibly replace its workforce in a hurry, and if they didn't get flying again soon, the company would be finished. So what the hell was the point?

The point, which I was slow to realise, is that the lockout was actually designed to force the hand of the government and Fair Work Australia. In other words, Alan Joyce was doubling down by making the union's industrial action implicitly not just a problem for Qantas management, but for the entire travelling public, for Australia's reputation as a safe place to do business, and for the whole Australian tourism industry.

He was wagering, in other words, that the grounding of planes would cause such a holy sh*tstorm that the government and Fair Work Australia would do just about anything to get the planes back in the air. And they did - they declared the lockout over, but much more importantly, they declared that future union strike action was illegal. Bingo - game over unions, victory to Qantas.

In addition, the government was complaining that Joyce didn't give them enough notice. As it turns out, this claim looks to be bogus. But on the other hand, Joyce was also in a game of chicken with the government too. The Labor Party is beholden to the unions. If Joyce had tipped them his plans early, they would likely have taken the opportunity to figure out how to make him into the bad guy and try to get him to back down. When he presented them with the lockout as a fait accompli, there was nothing they could do. He'd already committed to shutting down the airline if needs be, and the only Nash Equilibrium was for the courts and government to back down.

It's far too early to tell what the longer-term damage to the Qantas brand will be from all of this. But screw it, even if this is the end of Qantas, what a way to go out! You can either give in to the unions and slowly die of unprofitability, or you can give them a big middle finger, knowing that either you'll win the dispute, or you'll go out like Francisco D'Anconia.

Alan Joyce, in other words, had both a very clever strategic and political insight, and the huge brass balls to pull it off.

The grounding of Australia's major airline over industrial action is something to regret greatly, not least because of the huge disruption to lots of innocent bystander travellers.

But Alan Joyce deserves serious props in my book for staring down the unions instead of giving them the airline. Very nicely played, Mr Joyce. Very nicely played, indeed.


*(My newspaper of choice, The Australian, has decided to put all their content behind a paywall, also known as the 'I really felt we had too many readers anyway' strategy, so you get the AP instead. This also goes to show that companies are more than capable of destroying their brands without any union interference).

The cause of military suicides

A statistic that I had a strong hunch was true as soon as I heard it:

The suicide rates are at all time highs and rising in the Army and Marine Corps. Over 70% of the sucides are because a man’s wife or girlfriend is leaving him while deployed to a war zone. She is almost always taking the kids if there are any and quite often( most of the time) depleting (legally stealing) his bank accounts too. She is often enough cheating on him.

Sure enough, the base statistic holds up:

Vice Chief of Staff of the Army General Peter Chiarelli reviewed investigations on Soldier suicides, which reached a three-decade high in 2008, and reported that in over 70 percent of the cases, “you have one constant, and that was a problem with a relationship.”

Yeah, translate that from the officialspeak and I'm pretty sure that a 'problem with the relationship' when one party is in a combat zone probably looks a lot like the first quote. You can disagree with the agency in the first quote (the woman is 'leaving', and thus is implied to be making the selfish choice), but it probably doesn't change much from the perspective of the man.

But if I had to hazard a guess at the actual agency, let's put it this way - if you're in an all-male combat unit living in a military base overseas, you probably don't have a whole lot of options to pick up women, nor would I imagine that you'd be likely to stop calling your wife at every chance in preference for playing X-Box. It's possible that he slept with a hooker, but the situation of a man in a warzone suddenly deciding he's sick of his wife and wanting to leave... let's just say it sound psychologically less likely than the alternative .

But the problem is not divorce - relationships end for lots of reasons, and given the tendency for military people to marry young, they may have been likely to end that way anyway.

No, the real horror stories are much worse. The first quote comes from some truly repulsive stories of a guy in the Army:

Then of course there was the soldier in my company who had a baby with his wife and she sent him streaming videos via internet of her having sex with other men while his baby son was in the house...

Read on, and be appalled.

The law is necessarily an imperfect instrument for enforcing proper conduct. In other words, laws can never be a substitute for morality. They can circumscribe some of the worst behavior (and much behavior that is completely trivial), but they are a very weak guide for what one ought to do. A society that organises itself around restraining only behaviour that is illegal will quickly turn into rampant misery.

It is illegal to cross at the traffic lights when the walk sign isn't flashing.

It is not illegal to sleep with the wife of a man who is risking getting a bullet in the ass to defend your freedom, nor is it illegal to maliciously screw said wife on camera and send the footage to the husband while he is in a warzone.

If there is any justice in the world, both the man and the woman who did this would be on the receiving end of life-threatening levels of ass-kicking, ideally from the husband himself, but failing that, from friends, family members, or just strangers with an interest in fairness.

Of course, there isn't any justice in the world for this kind of outrage, so both of them will get away with it completely.

Human nature being what it is, people in war zones are sometimes driven mad by the atrocity and horror that they have to witness. But men can be very resilient in dealing with this challenges, knowing that there is a higher purpose to their actions, and having been prepared to face these difficulties.

But to expect them to do all this while their own personal world that they fight and die for is being senselessly lost to them as they're away, and it's their own loved ones who are twisting the knife - that is too much to bear. That is when people lose hope, and wonder what this is all for. And frankly, what would you say to them? Other than the fact that this is all stupendously unjust, and there's nothing that can be done? Plenty of fish in the sea, old chap?

As Eric Bogle sang about war - I never knew there was worse things than dying.

A Prediction I Doubt I'll Live to See

Western society has seen enormous changes in its attitude towards animal cruelty over the last 150 or so years. In a rural setting, if you wanted to eat roast chicken, you had to kill the chicken yourself. The link between ‘Eating Meat’ and ‘Killing Animals’ was uncomplicated, and it doesn’t seem like many people were especially emotional about it. That was just how it was. Gratuitous cruelty towards animals was frowned upon, but as long as you owned the animal in question, there wasn’t much that could be done. Think of Dostoyevsky in ‘Crime and Punishment’ describing the man deliberately flogginghis horse to death for public amusement:

“He’ll crush her,” was shouted round him. “He’ll kill her!”

“It’s my property,” shouted Mikolka and brought the shaft down with a swinging blow. 

There was a sound of a heavy thud. 

“Thrash her, thrash her! Why have you stopped?” shouted voices in the crowd.

These days, animal cruelty will land you in prison. Just ask Michael Vick. And the vast majority of people enjoy eating meat, but don’t want to see how the sausage is made. People deliberately avoid enquiring too much about the process that produces their steak – it’s not that they don’t know what’s involved, they just prefer not to think about it. If you forced the average person to kill a cow to get their T-Bone steak, I’m not sure they’d be up to it.

And this is where my prediction comes in. If nanotechnology becomes sufficiently developed (and it’s a fair bet it will), it seems that given say, 200 years, we might be able to recreate a perfect steak at the molecular level without having to slaughter cows.

And when this happens, it will sever the link between eating meat (which most people don’t want to give up) and killing animals (which most people seem quite glad to give up, at least most of the time). Think about the success of free-range eggs. Can you imagine if you could purchase equally delicious chicken that never involved a hen having to suffer? I’d buy it in a second.

Give it two generations in this environment, and I'd predict that the average person will view the deliberate slaughter of animals for meat as being repugnant and horrific.

My guess is that in the fullness of time, future generations will come to view today’s abattoirs in a similar way to how we view the Circus Maximus. In other words, they will bare be able to control their repulsion at the idea that the average person would willingly go along with such wholesale slaughter for no higher purpose than their own enjoyment.

And if I had the courage of my convictions, I’d admit that I’m not altogether sure that they won’t be right in this belief.

Divorce and Mistakes

It is a sound rule for those with any understanding of probability that the only real mistakes are ex-ante mistakes. Put simply, you should only beat yourself up for decisions that you should have been able to figure out were a mistake based on what you knew at the time. If something turns out to be a bad decision because of things you found out later, there’s no sense beating yourself up over it. 

So if you go to a casino and bet on black (following the Passenger 57 Edict) and it comes up red, betting on black was not in any meaningful sense a ‘mistake’. At the time, red was just as good a bet as black. Now, it may be an ex-ante mistake to play roulette (which has fairly bad odds) rather than craps (which has better odds). It may well have been an ex-ante mistake to go to the casino in the first place. Those are decisions worth beating yourself up over. Landing on red sucks, but it doesn’t indicate a mistake.

To this end, I often wonder what percentage of divorces are the result of an ex-ante mistake. In other words, sometimes it’s clear from the start that a given partnership will not work (although usually not to the participants). Did you date for less than 3 months before he proposed? Did he have a history of cheating on you multiple times in the leadup to the marriage? Has she been divorced 5 times already? These kinds of things probably should be red flags. I wouldn’t say that anyone who marries in these cases is making an ex-ante mistake (there are lots of factors to consider, and these are still small determinants).

And a lot of the time things just don’t work out, even though the couple seemed well-suited to each other and deeply in love. A lifetime is a long time to stay together. And if you (or your spouse) has periodic temptations towards making Seriously Bad Decisions, you find yourself in a place not dissimilar from the IRA’s boast to Margaret Thatcher that ‘you have to be lucky every day, whereas we only have to be lucky once’.

But given all this, I’m still not sure what the true number would be, even if taken subjectively from the point of view of the divorcees. In other words, how many people who get divorced look back on heir marriage and think ‘Gee, it was a mistake to marry this person, and I shouldn’t have been such an idiot’, as opposed to thinking ‘Yeah, it sucks that it didn’t work out, but we had our good times, and I can still see why I made the decisions I did.’ 

I dunno. Even if I knew a large enough sample of divorced people to ask, it seems too likely to cause distress or offence relative to my idle curiosity on the subject

A Social Faux Pas that is Fast Disappearing

Opening someone else’s mail. This used to be a big deal. But think about it – how much important personal business is actually conducted by mail?

The average person’s mail consists of a combination of bills, junk mail, and the occasional package from Amazon. Granted, it’s possible that your credit card bill could reveal embarrassing details about you being in lots of debt or lots of purchases from that foot fetish website, but these seem like relatively uncommon occurrences.

The reality is that the vast majority of truly personal correspondence (love letters, scandalous news from friends, family secrets) is conducted by email, phone or text message. I imagine that most people who aren't trying to disguise evidence of an affair on a credit card statement or phone bill would be quite happy to have their spouse read through their mail.  Reading someone else’s email retains much of the flavor that opening mail once had. But the sacredness of mail is something I guess will only diminish with time.

In other news, apparently the plural of 'faux pas' is 'faux pas', which is confusing as hell to me.

Charles Dickens and Modern Political Sensibilities

In each period, different combinations of political beliefs tend to go together. These days, for instance, a belief in the importance of generous social welfare programs tends to be correlated with a suspicion of private enterprise, a belief that crime is largely a product of circumstance rather than character, an opposition to the death penalty, and a suspicion of religion.

But it's worth remembering that there's no particular reason that all of these should go together. And once upon a time, they didn't.

I just finished reading 'Oliver Twist'. And if you had to try to pigeonhole Dickens' sympathies in the book as 'conservative', 'liberal' or even 'libertarian' by modern standards, you'd struggle.

Dickens is very sympathetic to the plight of the poor. Large chunks of the first part of the book are scathing satire of the brutal conditions in London's workhouses and orphanages, and the smug self-satisfaction of religious authorities who run them, juxtaposed with their indifference to the misery around them.

So by that measure, he'd be pretty liberal in today's terms.

But in terms of the question of the causes of crime, Dickens is quite emphatic that certain people are drawn to it because they're irredeemably greedy and wicked. To be sure, there are some characters that are drawn in by circumstance and lack of opportunity, and for those he writes with obvious sympathy. But the overall picture of crime is a long way from the 'root causes' crowd of today.

In addition, Dickens has a fairly neutral attitude towards the death penalty. In the book it's directly described as applying for being an accessory to murder, but it's implied that people get it for robbery as well. And while this fact isn't cheered, it seems to be just part of the landscape - rob houses, and you're going to hang. It's fair to say that even the most strident law-and-order conservatives of today might shy away a little from this viewpoint.

And while Dickens is quite suspicious of the Church as it operated in terms of poverty relief, he seems quite supportive of Christianity in general:

I have said that they were truly happy; and without strong affection and humanity of heart, and gratitude to that being whose code is Mercy, and whose attribute is Benevolence to all things that breathe, happiness can never be attained.

The reality is that this portfolio of views has no obvious analog today. But that's often how it is. If you don't believe me, have a read about the Whig Party and try to make sense of it. They were the antecedents of the modern Liberal Democrats. Except they were firmly in support of free trade. And really didn't want a Catholic as King. But liked Parliament over the King. And were in favour of abolishing slavery and extending the franchise to women. But they also passed the Poor Law Amendment Act of 1834, which caused so much of the misery for the destitute that Dickens rails against in the first part of the book.

Just think, your political views might seem equally confusing to a child born in 200 years time.

Free Business Plan of the Day

McDonalds is an astonishingly successful franchise. If you need to get a clear example of this in practice, just look at the distribution of customers across restaurants in the average airport.

Every time I go past one, the McDonalds is easily the most packed place there. For some reason, the appeal of cheap and tasty comfort-food hamburgers is especially large for tired travelers whose self-control is depleted. The queues in front of the place are typically at least twice as large as those at the next most crowded place.

Let us make the rather heroic assumption that the profit per customer is similar between McDonalds and other comparable fast food restaurants at the airport. By this measure, being the most packed place is a pretty good proxy for being the most profitable. I can’t back this up with any hard numbers, but I’d be willing to wager a decent amount of money to this effect at 2:1 odds.

But here’s where things start getting weird. My guess is that not only is McDonalds the most profitable store at the airport, but I’d wager that the difference is so big that the second-most profitable restaurant you could open at the airport would be another McDonalds in the same terminal, right next door to the first if needs be. Even though you’ll clearly be competing with (and cannibalizing) the first one.

Now, this obviously doesn’t appear to happen. I’m not sure if the McDonalds franchising arrangement prohibits McDonalds granting another franchise license within a certain distance (it probably does). And I’m not sure the airport would grant another McDonalds tenancy right next door (they may not, based on a nebulous idea of serving different customer needs, although my guess is that they should, if they’re profit-maximising). 

But it’s just possible that nobody has thought of an idea so absurd as opening up a second McDonalds right next door. My guess is that it would make quite a bit of money. If you decide to avail yourself of this awesome free business plan, make sure to let the manager of your store know that you owe a guy called Shylock a free Big Mac Meal. I'll plan to collect when I run into two McDonalds stores at an airport within 15m of each other.

Why does the Post Office always lose money?

This hilarious story from the Consumerist provides a clue:

The Styrofoam cube enclosed in this envelope is being included by the sender to meet a United States Postal Service regulation. This regulation requires a first class letter or flat using the Delivery or Signature Confirmation service to become a parcel and that it "is in a box or, if not in a box, is more than 3/4 of an inch thick at its thickest point." The cube has no other purpose and may be disposed of upon opening this correspondence.

Alec Baldwin: They're just sitting out there, waiting to give you their money! Are you gonna take it? Are you man enough to take it?

United States Post Office Worker: No! Not unless their money is in an envelope at least 3/4 of an inch thick!

Alec Baldwin: *picks up set of steak knives, proceeds to stab Post Office worker in rage*

A late-night email exchange

The Greek: 

[Subject: 'The Glory of Australia'] It's stunning to me that you consider yourselves an independent country. At least our prime minister doesn't have to curtsy to a FOREIGNER.

Shylock:  

If you read even the headline, you'd see that the whole point was that the Prime Minister didn't curtsy to anyone.

But you miss the larger point. Queen Elizabeth the Second is not just the Queen of Great Britain and Northern Ireland, but also the Queen of Australia. This is an official title.

Besides, better to curtsy to the Brits than bend over for the Germans.

Miscellaneous Winners

-What would the world look like as you approached the speed of light? Apparently, it would look like this.

-Gary Brecher continues to provide interesting descriptions of military history that you won't find anywhere else on the web. Here is a piece on Ben Grierson, a Civil War hero (no mean praise from Brecher). Here is his take on the wars between the Mayans and the Spanish in Mexico.

-Futility Closet describes a weird maths problem that I still don't quite understand the answer to. More details here.

LOLs of the day

The police medic:



Comedy gold!

And if you're in the mood for a gratuitously harsh but hilarious heckle by Ace of Spades, this was pretty funny too.

Great Moments in Computer Security and Public Relations

First State Superannuation is a company in Australia that provides superannuation funds (the equivalent of America's 401K-type plans for retirement accounts).

First State Super, it seems are complete imbeciles when it comes to their members' security. Let Techdirt tell the story:

[A]security professional found a big and ridiculously obvious bug in the website of an Australian investment fund, First State Superannuation. Apparently you could see other people's accounts by merely changing the account numbers in the URL. Increase the number by one, and see the next user in line. This is the kind of extraordinarily basic mistake that I thought had been eradicated a decade ago. Apparently not.

That's right, just change the account number in the URL and you get to see someone else's details. Okay, but presumably it's just some random person - who could be bothered?

Patrick Webster found he was able to access electronic superannuation notices of any customer by changing numerical values in URLs used to issue statements to clients.
Webster, a customer of First State Superannuation and consultant at OSI Security, increased the URL number value by one and was granted access to a former colleagues' super statement.

 Hmm, that's awkward. How much detail could he see?

He was shown information such as name, address, date of birth, next of kin and superannuation payments.

Oooh. That's worse.

Apparently their website was designed by someone drunk or still in high school. Or both.

This is strike one.

So Patrick Webster, model citizen, reported this gaping flaw to First State Superannuation. How did they respond? I like to imagine the following conversation took place

Underling: Some IT guy reported that it's simplicity itself to hack our website and our users' details are at risk. In fact, the method was so basic that it doesn't even really qualify as 'hacking' - he just typed in a different URL.

CEO: Holy Smoke! How do I choose between the following important priorities:

1. Fix the website to make sure this doesn't happen again
2. Work out how to explain this breach to our members and the press
3. Send a thank you card to the guy who reported the breach
4. Call the cops on the guy who reported the breach.

 Ha ha! #4 is surely a joke, right?

No. No it isn't.

I would love to know how that phone call went.

CEO: Hello, is this the Police? I need to report a potential crime: our website is completely insecure, and I need the guy who told us this to be arrested immediately!

Operator: No really, who is this?

Kidding! The cops of course turned up at the guy's house.

That's strike two.

Okay, so maybe this was just a rush of blood to the head when they didn't know what was happening. Surely after a few days, they came to their senses?

Bwa ha ha! Of course not. They threatened to sue the guy.

Whilst you have indicated that your actions were motivated by an attempt to show that it is possible for a wrongdoer to obtain unauthorised access to Pillar's systems, you actions may themselves be considered a breach of section 308H of the Crimes Act 1900 (NSW) and section 478.1 of the Criminal Code Act 1995 (Cth). You should be aware that due to the serious nature of your actions, this matter has been reported to the NSW Police.

Further, as a member of the Fund, your online access is subject to the terms and conditions of use which are outlined on the Fund's website. Your unauthorised access also constitutes a breach of those terms and has caused the Trustee to expend member funds in dealing with this matter. Please note the Trustee has the right to seek recovery from you for the costs incurred in accordance with those terms. 

This was their considered response. That's strike three.

Minter Ellison, the lawyers who wrote this embarrassing letter, have covered themselves in shame.

So here is my question:

Why on earth would any right-thinking person leave a red cent of their retirement savings with these ungrateful buffoons? Why would you leave your hard-earned cash in the hands of people that cannot design an even minimally secure website, and think that the appropriate response to people trying to help them fix this is to call the cops and threaten lawsuits?

Personally, I would sooner set my money on fire than give it First State Superannuation.

I would, however, gladly hire OSI Security and Patrick Webster to help diagnose security flaws in my website.

Semi-Conscious Thoughts and Free Parking

I don't know about you, but my brain has a category of thoughts that I describe as 'semi-conscious'. These are the cases where you see something that's slightly anomalous or unusual. The event is weird enough that you vaguely remember it, but not so weird that you immediately stop and wonder why it might be there (unlike, say, seeing  a clown on a unicycle riding down the road).  But it's only later on when you see something else that explains it do you remember that you sort-of noted how the underlying thing was unusual.

Today, for instance, I was looking for parking near a coffee shop, and was slightly distracted. The side of the road I was on looked pretty full, but I noticed that the opposite side of the street had a number of spots. I wheeled around, pulled up outside the coffee shop, and didn't think about it. I came back out 5 minutes later, and had gotten a ticket. I looked around - there was no requirement for paid parking, and I wasn't in a no-parking zone. The ticket revealed the answer, of course - I had been there for the two hours of the week where that particular side of the street had street cleaning.

And suddenly it all makes sense! Having one side of the street be totally full and the other side be mostly empty is unlikely if cars are all parking at random. In my case, if one side of the street were completely deserted, this might raise the thought to conscious questioning ('why is nobody parked here? is there something funny going on?) but semi-empty wasn't enough.

The other category of 'semi-conscious thoughts' I notice are cases where people are acting slightly oddly relative to what you'd expect. In other words, there's some small action they do that seems at odds with your general model of their personality. Girlfriend or husband acting slightly odd? Yeah, you may want to at least think about why that could be, with particular emphasis on models of behaviour that you don't normally contemplate. Maybe they had something crap happen at work that they didn't want to tell you about. Maybe they're cheating on you. Maybe it's a surprise party they're planning for you. In any case, it's probably worth at least thinking about, because the actions that would raise it to the level of conscious thought may be less pleasant than you'd like.

In my experience, these odd anomalies are often very good signs that your model of the world is somewhat wrong. Of course, if you chased every slightly odd-looking thing, you'd probably get a large majority of dead-ends and wasted time. Still, if there's a moral here (and there probably isn't), it would be to pay more attention to vaguely odd things.

Quote of the Day

In reference to the 'Occupy Brisbane' protests, smurray38 had this zinger:

I think even Lenin would be hard pressed to find anything ‘useful’ about these idiots.

Ha ha! Comedy gold!

Via Tim Blair, who has a full length smackdown on how lame the Occupy Sydney protests are.

Save Water, Comrade! The Glorious People's Republic of Australia Demands Your Sacrifice!

Politicians are, for the most part, suspicious of decentralised controls of any sort. Instinctively they tend to reach for technocratic solutions to problems, where a bunch of smart people can come up with clever solutions to problems and then boss around the reluctant citizenry, for their own good of course.

One example that always amused me was the absurd way that Australian governments approached questions of water shortages. If you believe what the government tells you, Australia is permanently short of water.

Part of this shortage is due to deliberate government mismanagement of supply. Namely, they refuse to increase it by adding more dams. As Andrew Bolt has pointed out:

No, the real cause of our shortage has been as I’ve warned since 2001 - that Melbourne has added a million more people since we built our last big dam, the Thomson, and never bothered to find more water for the newcomers’ extra showers, toilets, washing and gardens.

So there's a lot of environmental hysteria that effectively makes it impossible to build another dam, the one technocratic solution that might actually solve the problem.

But let's forget about that, and just take the supply as being fixed. People keep using a lot of water, and the dam levels are getting low. How can we solve the problem?

If you're from an Australian state government, the answer is clear - we need a public advertising campaign hassling people to use less water. "Target Every Drop", we'll call it! Are you taking a 10 minute shower? Shame on you! You should feel guilty for enjoying that water for more than 4 minutes at a time! We'll guilt the plebs into better behaviour!

That's Plan A. To the astonishment of absolutely nobody, this plan seems to work as well as the laughable 'Whip Inflation Now' campaign of the seventies (memorably described by Alan Greenspan as 'unbelievably stupid').

Okay, so what's Plan B?

Forced water restrictions! Firstly you can only water two days a week in the early morning or late evening, and we'll encourage your neighbours to dob you in if you exceed this. Failing that, we'll restrict you to only using a hand-held hose! "Deadweight loss", you say? Never heard of it! It'll be good for the proles to get the exercise of walking back and forth. And if that doesn't work, we'll restrict them to using buckets!

I haven't seen the next step of restricting the public to water their gardens only using teaspoons, but surely it can't be far away.

As this happens, millions of dollars in property damage pile up as lawns and gardens turn brown and die. Never mind! We all must sacrifice!

Wait a second - here comes the pesky Australian Bureau of Statistics to point out that in New South Wales, agriculture comprises 46% of water use, while all households combined only account for 12%. Hmmm, so we could eliminate the households altogether and it might not save that much water?

Here's what's staggering about all this: at absolutely no point does it seem to occur to do the one thing that would really stop the problem of excess water use - raise the bloody price of water! They're growing rice in New South Wales, for crying out loud! Do you think this kind of economic activity makes the slightest bit of sense in a semi-arid climate with a market-clearing price for water? Of course not.

If there's one thing markets are really, really good at, it's solving shortages. If you just raise the price, people will save water all by themselves. You won't need to hector them. You won't need to make them waste hours watering their lawns with a thimble. You won't need to spend millions of dollars on advertising campaigns in order to not reduce water consumption.

And even better, they'll reduce consumption without you having to do anything or spend any money. They'll put in more water efficient plants. They'll take shorter showers. They'll replant their rice fields with wheat or something better suited to the climate. And a thousand other things that the bureaucrats never thought of.

And the ones that don't? Well, that's their way of telling you that they value the water at the market-clearing price. They really, truly are getting a lot of utility out of that 10 minute shower.

So here's the bottom line. I refuse to feel the slightest bit guilty about taking long showers as long as the water department are blowing taxpayer dollars on ridiculous ads. If you want people to use less water, raise the damn price.

Generosity on the Cheap

People worry about all sorts of ridiculous small probabilities. Small probability events tend to loom large in their minds, making them worry about rare disasters (planes crashing, being eaten by sharks) and placing their hopes in things that are extremely unlikely to happen (winning the lottery, cheap online viagra actually working).

But you can use this to your advantage and help out your friends at the same time.

First, find some medium size loss that the friend is unusually worried about. For instance, a few months ago a friend and I were driving around looking for a parking spot. We saw a place that we thought might be connected with the restaurant that we were going to, but we weren't sure.

My friend seemed worried that this might cause him to get a parking ticket. I judged this pretty unlikely - I was maybe 80% sure that the parking lot was for the restaurant, and that even if it weren't, we had at most a 10% chance of getting a ticket over lunch.

So, I made the following offer. "Tell you what", I said, "I'll indemnify you against the cost of the parking ticket, should we actually get one. I'll pay the whole lot."

And people love this kind of offer. If they are a worrier, you've given them peace of mind, and you make yourself look cool as the man who is willing to (in the immortal words of Warren Buffet) "retain [his] risks, and depend on nobody."

And the best part? It costs you next to nothing, at least in expectation. My expected chance of getting caught is 2% - if the ticket is $50, each guarantee only costs me a dollar. But to your friend, the salient comparison is the offer to pay $50 and their peace of mind.

B-b-b-b-bargain.

Behavioural Economics and micro-insurance, man. It's what the cool kids are doing.

Eating Humble Pie

This was the prediction, regarding the leaked nude photos of Scarlett Johansson:

I'm going to go out on a limb here, and make a wild prediction - no 'hacker' will be found.

The prediction, it turns out, was completely wrong.

The benefit of running regressions is similar to the benefit of publicly committing your predictions to writing - you get to find out just how often your intuitions about the world are incorrect.

Moneyball Part 2

Steve Sailer's take. I really liked this anecdote:

When my son was ten, his baseball coach—inspired by Michael Lewis’s bestseller Moneyball: The Art of Winning an Unfair Game—came up with a statistically brilliant team strategy: Don’t swing. Ever.

Because few ten-year-olds can throw more strikes than balls, his team won the pennant by letting the little boy on the mound walk them around the bases until he dissolved into tears and had to be replaced by another doomed lad.

 Ha! That's fantastic.

The next spring, the parents got together and decided not to let that coach return.

Boo-urns.

Better Dead Than Rude

Suppose it's late at night, and you're walking along a street alone. You see up ahead of you a group of three rough-looking male youths walking towards you, wearing hoodies and street clothes. They're about 30m away, and with both of you going at average walking speed of about 5km/h, that will give you around  10.8 seconds until they're right in front of you. You're a young male yourself and decently athletic, but in a fight you'd have a hard time against three of them, especially if they're carrying a knife or a gun.

Your instinct says that these guys look like trouble. But they haven't done anything specific that you can point to. So what do you do?

As far as I can guess, the following two options cover about a hell of a lot of human responses:

a) If you're a polite SWPL type who's been dutifully trained to ignore all your evil and wicked prejudices, you'll just keep walking, and hope that they're not up to anything. If you cross the street, you'll contribute to the isolation alienation these kids must already feel from society. And honestly, how likely is it that anything will really happen?

b) If you're more prudent and you're worried about your safety, or a SWPL type without the courage of your see-no-evil-hear-no-evil convictions, you'll walk across the street to try to avoid them. They'll know that you crossed the street to avoid them, and that you thought they were thugs, but you might have needed to go that way anyway, so you've got some deniability. In any case, you can then see if they cross as well, and decide what to do.

So here's my question:

If you think there's a couple of percent chance that these guys might try to rob you or beat you up, why on earth don't you just turn around and start sprinting away from them as soon as you get that feeling?

Seriously, think about it. Option a) is disastrous. Once they're in front of you, you're screwed - if they pull a knife or a gun, your chances of being able to escape are really low, particularly if they surround you. And once they're at close range, it's a lot easier for them to grab you or threaten you in other ways. If you need to get away, you've got zero head start, so you've got to be a significantly faster sprinter than them. All three of them.

Option b) is a little better, but not much. If they follow you across, a lot of people will just keep walking anyway, or maybe try the truly devious strategy of walking a little faster! Yeah, muggers never thought of that tactic or how they might circumvent it. The best that can be said is that you're now approaching each other at a slightly slower rate. Perplexingly, even the people who cross the street still often won't start sprinting when the other guys cross as well. They're essentially option a) people in disguise.

If you run away as soon as you see danger, you've now got a 30m head start, which will make up for a reasonable deficit in running ability. They're only going to chase after you if they were already intending you harm, at which point you'll be damn glad to have a lead on them. And the reality is that most weapons they could be carrying aren't really effective at 30m. Even if they have a handgun and fire it at you, they're going to be firing at a moving target, in a poorly lit area, probably without any real weapons training, and likely while trying to chase after you. To put these factors in perspective, trained policemen in shooting confrontations have an average accuracy of about 30%. And this is for shots that are fired at a distance of 7 to 10 feet on average! (Randall Collins makes the same point). Bottom line? You'd have to be very unlucky to get hit at 30m with a hundgun fired by a gangbanger as you were running away.

And all this is totally obvious. Which is where the 'better dead than rude' concept (which John Derbyshire uses) comes in. A lot of people are made seriously awkward by the prospect that a bunch of random teenagers at night might laugh them or that some anonymous stranger will be offended that you ran away. But so what? You're never going to see them again. Does their opinion of you or their likely offense really matter for anything?

Apparently, by revealed preference, it does. And this is kind of astounding. Put it this way - you wouldn't have to explain why you should run away to a rabbit or a squirrel. As soon as they think you're a threat, they're outta here. Which makes complete sense.

If you're with other people, obviously this becomes a lot harder. Especially if you're a guy who's with a girl - even if you both run at the same time, if you're a faster runner then you're leaving the girl behind to the hoods. Not a great plan.

But if it's just me on my own? I'm getting the hell out of there as soon as I feel uncomfortable. I can't fight off three guys, but at my peak I could run 400m in 56-odd seconds. With a 30m head start, I like my odds that they're going to find it easier to mug someone else than to catch me. Let the hoods think what they want - better rude than dead.

The Mentality of Psychopaths

I've never met anyone I actually was sure was a psychopath. I've known people that I suspected of it, but perhaps in its milder forms. That is, they seemed unusually calculating and careful in how they presented themselves, and demonstrated a level of of empathy for other people that was stunted, although still perceptible.

I came across this very interesting letter from a reformed psychopath, talking about the mentality of what it's like. The whole thing is fascinating. Some excerpts:

We are neither the cartoon evil serial killers, nor the 'its your boss' CEO's always chasing profit at the expense of everyone else. While we are both of those things, it is a sad caricature of itself.

...

You are right to say that psychopaths hate weakness, they will attempt to conceal anything that might present as a vulnerability.

...

We are good at identifying, very rapidly, extreme traits of those around us which allows us to discern vulnerabilities, frailties, and mental conditions. It also makes psychopaths supreme manipulators, for they can mimick human emotions they do not feel, play on these emotions and extract concessions.

Huh. Read the whole thing.

I think I would actually enjoy a conversation with a reformed psychopath, in part to find out what they perceived as my psychological weaknesses to exploit. As long as, you know, they weren't able to stab me with a kitchen knife at the time.

Date and Time Parochialism

A day is the length of time it takes a planet to rotate once on its axis.

A year is the length of time it takes a planet to orbit a star.

On Earth, we're so used to the fact that a year is a lot longer than a day here, we are apt to sometimes forget that there's no reason why this has to be the case.

On Mercury, a day is 176 Earth days long. Even more strangely, a Mercury day is 2 Mercury years. In other words, a year is longer than a day there. If you'd grown up on Mercury, your default concept of time ordering would be minute, hour, year, day.

Huh.

Via the always interesting Astronomy Picture of the Day.

Update: The Dogg makes the excellent point that the interaction of day and year would mean than sunset and sunrise would be a really weird combination of the day and year effects. As would the path of the sun in the sky, for that matter. I demand that NASA commission a simulation and post it in a youtube clip to satisfy my idle curiosity!

Mixed Strategies

John Nash would be proud.

Today is clearly a double-dose of Yank Sports + Economics.

In other news, penalties for 'excessive celebration' are seriously pissweak. When even curmudgeons like me who don't care at all about American football think the rule is just needlessly squashing the joy in sports, that's a pretty lame achievement.

Moneyball

Let me start with the punchline:

If you've ever run a regression in your life, you should definitely see the movie Moneyball.

This is a sufficient but not necessary condition for liking it - it's a very good movie anyway. The combination of Michael Lewis for the original book and Aaron Sorkin for part of the script is a pretty damn compelling one.

It's the story of the Oakland Athletics, and how the general manager (Billy Beane, played by Brad Pitt) got a great team on a tiny budget by following the advice of Peter Brand (played by Jonah Hill), who uses a data-driven approach to identify undervalued players and better strategies to winning games.

The whole movie is like catnip for econ nerds. The main guy who shakes things up is this fat, awkward young guy who studied economics at Yale. And even better, the obligatory montage for any movie seeking to convey computer programming (closeups of lots of numbers, statistical looking outputs) featured code running in Stata! I was at this point thinking Ha ha, I run those regressions too! I could be that fat econ nerd. No wait - I am that fat econ nerd!

But the phrase 'catnip' above is deliberately chosen, in the sense that non-statistical people are likely to see it differently. The key dynamic is that Brand/Hill has the underlying regression-based strategy for winning games, and Beane/Pitt is the general manager who sees the promise in the idea, and implements the it against the wishes of the establishment. So which of the two is more crucial to the process? Both are are necessary, but which part you emphasise depends on how you view the world.

Here's how IMDB describes the movie:

The story of Oakland A's general manager Billy Beane's successful attempt to put together a baseball club on a budget by employing computer-generated analysis to draft his players.

In other words, to the non-statistical public, the role of Brand/Hill is limited to 'computer-generated analysis' -  this is a story about the general manager with the vision. The statistical guy is the wonk who runs the numbers in the background. Same as in finance: you need the quants to do the analysis, but you need the visionary portfolio manager to know when to implement it.

The stat nerd views it as follows: 'Screw that! If I could only pick one of them, the data guy knows the strategy to run, and without him the vision guy is toast. Ulysses Grant won the Civil War for the North, not Abraham Lincoln'.

The CEO type rejoins: 'Lots of people have visions for how to run baseball, and a large part of being a general manager is knowing who to listen to. If you can't get yourself into a position of authority to actually make the decisions, your strategy is useless. Lincoln had to go through seven generals before he found Grant.'

(In an ironic twist for the nerds, in real life Paul Podesta was the assistant GM, but he didn't want his name used, in part because he objected to being portrayed as a pure stats nerd. So he became 'Peter Brand'.)

And in fairness to Beane/Pitt's character, he does come to understand and embrace the strategy, and we're also shown that he understands the general problem even before coming across Brand/Hill. Specifically, how can teams with small resources and budgets hope to compete with the far better funded Yankees?

The answer is screamingly obvious to econ types - stop trying to buy the assets that everyone agrees are the best, for which you'll almost certainly overpay, and start buying the most underpriced assets that get you the same output. I've written about this before in the context of stocks:

In the language of the common man, you're better off buying a crappy but underpriced company than a solid but overpriced company.

As it turns out, this is as true in baseball as in any other business.

The tragedy for Oakland, of course, is that any strategy that exploits mispricing will be most effective when few other people are doing it. The best chance for this actually getting them a World Series was the first year it was tried. The more people think the strategy is successful, the more it gets copied, and the less of an advantage it brings you. True to form, the Oakland Athletics have still not won a World Series since the strategy was started..

Update: The one scene that the movie didn't show is the one where the strategy initially isn't working, and Brand/Hill is seen furiously re-checking his analyses late at night and muttering to himself, 'Oh $#**, I really hope I didn't make a coding error or run a badly mis-specified regression.' Because I guarantee you that that happened at some point.

Miscellaneous Joy, Fools of the World Edition

-Some Chinese restaurant in Beijing decides to market itself as Obama Fried Chicken, complete with a mockup version of Obama as Colonel Sanders. Somewhat poor taste, but honestly, who gives a damn? Where do you think this was reported? Engish Funny, perhaps? Nope, guess again - the New York Post and the Daily Mail (UK)! As far as I can tell, this whole story seems to be based around nothing more than a photo of an odd sign that somebody took while in Beijing. Lucky there was nothing else more important to report on that day. Eager to put it into geopolitical perspective, the Daily Mail helpfully offered this context:

The Obama Fried Chicken could be a response to the U.S. filing a complaint with the World Trade Organization about Chinese tariffs on American chicken exports.

Yes, I suppose it could be! Care to bet a fiver as to whether that would be what the proprietors of the store would say if we asked them?

As if this weren't bad enough, who do you think the New York Post trotted out for a comment? That's right, the old racist tax-avoiding imbecile himself, the "Reverend" Al Sharpton! Showing absolutely no apparent perspective that he was lecturing a small-time chicken shop in Beijing that probably didn't speak English and certainly didn't give a rat's ass, Sharpton thundered that "It’s insulting, offensive and plays to racial stereotypes.". Al Sharpton, you are a pompous buffoon.

-Showing that drug policy lunacy can be a thoroughly bipartisan affair, the Obama Administration is currently in the process of cracking down on California Medicinal Marijuana dispensaries. Take that, cancer patients! You'll think twice before trying to combat your chemotherapy-induced vomiting and nausea.

And to leaven off the snark, two winners from Reddit recently:

-Graffiti as Artwork

-Abstinence Cartoons

On the Imperfectability of Human Relationships

Are there any serious doubt that Theodore Dalrymple is the most interesting writer alive today? Here is his latest offering in the New English Review, discussing the problems of modern relationships. A sample of some of the wisdom contained within :

The problem with meritocracy, however, even in its purest imaginable form, is that few people are of exceptional merit. The realisation that the fault lies in us, not in our stars, that we are underlings, is a painful one; and in the nature of things, there are more underlings than what I am tempted to call overlings. A meritocracy is therefore fertile ground for mass resentment.
...
At the root of the problem is our belief in the perfectibility of life, that it is possible in principle for all desiderata to be satisfied without remainder, and that anything less than perfection, including in relationships, not only is, but ought to be, rejected by us. We cannot accept that we might at some point have to forego the delirium of passion for the consolation of companionship, that Romeo and Juliet is fine as catharsis but not very realistic as a guide to married life at the age of 56. We cannot have it all.

Read the whole thing.

Sad But Timely

Thinking about Steve Jobs reminded me of this XKCD comic describing how cancer survival rates actually work.

This is why you can be cured of your pancreatic cancer, and still die a few years later.

The picture at the bottom is sobering - give it enough time and all the paths go off to the right, into that night which shall be yours, anon.

Steve Jobs, of course, was well aware of what this all meant:

When I was 17, I read a quote that went something like: "If you live each day as if it was your last, someday you'll most certainly be right." It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: "If today were the last day of my life, would I want to do what I am about to do today?" And whenever the answer has been "No" for too many days in a row, I know I need to change something.

Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

...

No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life's change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.

Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

In Memoriam: Steve Jobs

Apple is reporting that Steve Jobs has died. A sad day indeed.

Much will be written about him in the next few days, no doubt. The world does not often celebrate businessmen. Steve Jobs was one of the exceptions to this, because his products held such immense appeal to so many people that even those with an instinctive anti-business bent had to admit they were cool. But rather than praise his design skill, or his determination to come back from being exiled from Apple or his many other achievements, I'd like to celebrate something more basic.

Steve Jobs created a truly stupendous amount of value for the world. The $345 billion I was talking about yesterday is only the starting point. The consumer surplus to these products must be many times more than that, as evidenced by the devotion of Apple customers to their products.

It is ridiculously hard to create $345 billion worth of value. This is merely another way of saying that it's incredibly hard to become rich.

And he did it without rent-seeking, without big negative externalities, without lobbying for legally privileged positions, or anything else. He did it the old-fashioned way - creating truly excellent products that people voluntarily wanted to buy, and sold them cheap enough that they treasured the surplus they got. In the end, he seemed at times a victim of his own success, as yesterday's announcement indicated - when expectations become high enough, great products still create market disappointment. Which is why market cap can drop by $8.7 billion, and people will still be lining up around the block to buy the new phone. Which they will be, you can depend on it.

Human nature being what it is, however good the product or service you provide is, people will end up taking it for granted and complaining that they wanted more. Which, I blush to add, I have been guilty of. The point is not that such criticisms are unwarranted, but that I was only motivated to write a post complaining about Apple, and never one praising it. People in this category must be feeling pretty small and mean today, when they finally reflect on what an immensely difficult achievement it is to create such products from scratch.

Society tends to heap the most praise on those whose inventions tend to extend life, but human welfare takes on many different forms. Steve Jobs created gobs and gobs of it, and the world is immeasurably better off because he was born into it. And that is tribute indeed.

Steve Jobs, I hereby induct you posthumously into the Shylock Holmes Order of Guys Who Kick Some Serious Ass.

Ave Atque Vale, Mr Jobs.

How Good is the Apple iPhone 4GS?

Apple unveiled the new iPhone 4GS today. Rather than pore through smoothly presented video presentations, let's answer the question with boring financial data!

Zooming in on the return today only:

Return on Apple Stock today: -0.56%
Return on the S&P 500 today:  2.25%
Beta of Apple: 0.87

Abnormal Return of Apple Stock today = -0.56 -2.25*0.87 = -2.52%
(taking the S&P 500 as my lazy man's market proxy)

i.e. It's disappointing. Given Apple's market cap of $345 billion, it's actually about $8.7 billion worth of disappointing.

You'd think that this kind of basic information would be easy to discern, but it took much more hassling around to find out a simple market-adjusted return than you might think.

Instead, the financial press reports useless and insipid descriptions like the following:

Investors were disappointed, too. Apple's stock fell more than 5 percent before getting a late bump.

That 'late bump' was entirely driven by the market movement, and tells you virtually nothing about Apple. Yeesh. No wonder people end up believing ridiculous folk tales like 'the market fell today as investors began to take profits from last week's rise'.