Wednesday, September 30, 2009

Conference Trip: Random Comments

The door of the plane cockpit had a sign saying 'Unauthorized Entry is Prohibited.' That is a pointless tautology; it conveys no information.  It would have been much better to have a sign saying 'Crew Only'

In the security screening leaving Washington, they had one of those new 'Millimeter Wave' scanning machines that basically make a nude picture of someone.  Inside was a woman who looked completely harmless and fairly attractive.

While waiting for a flight, I was sitting across from a woman who had a massive reddish-purple fake leather purse.  This thing was about three-quarters the size of my backpack.  She was talking on her mobile phone, and I heard her say, "I didn't bring my big purse with me."

On the first flight, I made the mistake of ordering cranberry apple juice, foolishly thinking it might be something like the juice my parents get.  Nope.  It was basically just flavored corn syrup.  It was disgusting, with so much fructose that I could practically taste the corn.  On the flight back, I got the Bloody Mary Mix.  It was marginally better, but had way too much salt.  I now know what a Bloody Mary tastes like, and I have no desire to ever order one.

I still like watching the ground beneath me as I fly, especially near takeoffs and landings.  It is such a fun view of the world.

The hotel food was really top-notch, by which I mean it was almost as good as what my mom would cook on a bad day, if she was using bland white flour and rice instead of good whole grains.  I really have become a snob for whole grains.  I ended up taking the bread off the lunch sandwiches and eating the innards (roast beef and veggies) with a fork and knife.  It was really good that way.  Why do people insist on ruining perfectly good food by putting it between two slabs of white 'bread'?

The service was impressive.  When a waiter started to take away a plate that had one last bite of cake on it, I twitched a tiny bit, thinking about stopping him but then deciding not to.  He noticed that, and left the plate alone.

At lunch, one of the professors related a conversation he had with a Frenchman.  The Frenchman was complaining about ignorant Americans.  The professor said that there are plenty of ignorant and crude people in rural France, but that you don't notice them because they never have enough money to travel.  The Frenchman did not dispute this, but instead said, "People that uncultured should not be allowed to become wealthy."  That says a lot about the elite French attitude to life, economics, and government.

My presentation went fairly well, and got plenty of feedback.  One professor noted that I seemed to switch between positive* and normative** statements too often.  But that's how I think.  Whenever you propose something, you have to constantly refer to how it will affect the world.

For example, I later ended up talking with someone who said that it was morally wrong to treat people differently because of where they were born, so all borders should be completely open.  When I said that this was not practical and we should advocate other types of immigration reform that might actually be implemented and improve people's lives, he accused me of 'pandering to xenophobia' and acted like I was immoral.

There is no way to argue or discuss anything with people who refuse to accept the constraints of reality and are convinced of their own moral superiority.  All you can do is ignore everything they say, hope they go away, and make sure they never get into a position of power.

* Stating a fact about the world.
** Making a policy suggestion

Monday, September 28, 2009

Quote

When psychologists say "most people" they usually mean "most of the two dozen sophomores who filled out a questionnaire for beer money."


Sunday, September 27, 2009

Arlington

I just got back from an academic conference in Arlington, Virginia.  It was good and useful, but I'm tired.  I may add more details later.

All of my flights went well, and I always got through the airport lines quickly.  For some reason, I get paranoid about airports and insist on showing up two hours before departure, so I always end up waiting an hour and a half.

I took the metro to Arlington National Cemetery during the afternoon break on Saturday.  As is typical for me, I wandered off the assigned path and into the actual cemetery sections, looking at the names on the tombstones and letting my mind wander.  It started drizzling, so I sat down under a tree in the middle of a section with the identical tombstones laid out in that perfect geometric pattern you only see in American military cemeteries.

After sitting there a while, I walked through the section with massive ostentatious chunks of marble for old generals and admirals.  I find it fitting that nobody really cares about that section anymore.  The main images of Arlington are the sections with identical tombs for everyman soldiers, and the Tomb of the Unknown Soldier.

I watched the changing of the guard, in a light rain.  There was a large crowd there, including a lot of veterans in wheelchairs.  The ceremony and setting made me think random poetic thoughts.  After it was over, I spent some time looking at the new guard and wondering about him.  I knew that he was a human being with human friendships, experiences, hopes, and dreams.  But he had been transformed into an icon, a symbol, a cog in a machine.  The tombstones have the same effect; you have to work hard to think of each one as a real person.

I saw the Pentagon from the airplane, the takeoff took us almost directly over it.  I saw most of the other Washington landmarks from the hotel restaurant and from the cemetery, but I didn't go into the city.

Thursday, September 24, 2009

Future Constitution Brainstorming

Note:  This think is long and complicated, and is still a rough outline in many ways.  Don't read unless you have some time to kill and an interest in politics, intellectual games, and/or the long-term future of humanity.  If you do read it, I certainly welcome as much feedback as possible:

Most countries operate based on constitutions that are decades or centuries old.  Some of these constitutions produce good outcomes for governments and societies, and some do not.  The constitution and institutions of a country have been shown to have a very large effect on individual liberty, social well-being, and economic growth.

We have learned a lot about political economy and game theory in the past few decades.  We have gathered a lot of data about the real-world effects of various political systems and constitutions.

For this reason alone, it is an interesting intellectual exercise to design a new constitution that keeps the positive features of governments that work and discards the features that produce inefficiencies and perverse incentives in government.

But there is another reason to rethink the rules that govern our society.  In recent decades, we have become aware of the implications of new technologies.  In the next century, it is possible that people all over the world will be forced to confront things like human life extension, artificial intelligence, cloning, the granting of sentience to animals, and the creation of new forms of sentient life.  We will have to make decisions about the rights and responsibilities of these new life forms and augmented humans.

I'm certainly not an expert, but I have never seen anyone else doing anything like this, so I'll give it a shot.  My eventual goal is to crate a workable constitution for some future state.  Obviously I'll need help.  I will start off with general principles and outlines, rather than trying to create the actual legal language.

Assume that our new state is a collection of floating cities in international waters that has, for some reason, declared independence from existing nations.  Or that it is colony of some kind in outer space, or the deep sea.  The specifics are not important, but I assume that it co-exists with existing governments without overthrowing them or attacking them in any way.  I also assume that all citizens of the state are willing immigrants who agree to the constitution.

The constitution is designed with four main objectives:

1) The government must provide the maximum value for its citizens, however those citizens choose to define value.
2) The government must have the ability and authority to protect its citizens from internal criminals and hostile external powers.
3) The government must have clear rules for who will be given citizenship in the cases of immigration, reproduction, and the potential creation of new sentient life.
4) The government must be designed remain stable for as long as possible, surviving all forseeable technological and social shocks.

I work under the following observations, assumptions, and philosophical priors:

1) Separation of powers is vital.  Having three independent branches of government: Legislative, Executive, and Judicial, seems to work pretty well.
2) A judicial system should be based on Common Law.  This is a vital check on the power of the other two branches, and reinforces the notion that the government must be bound by the law.
3) A proportional-representation parliamentary system works better than a winner-takes-all district system.

This could be the subject of an entire book, but the basic facts are that Europeans don't have the problems that Americans do with gerrymandered districts and a two-party lock on power.  Our voting system practically guarantees those bad outcomes.

4) Federalism improves the quality of government.

When more decisions are made at the local level, people have more ability to change governments and to move to different places.

5) There should be as few barriers to trade as possible within the nation.  Local ordinances and regulations create barriers to trade.

This conflicts directly with the previous point.  But we have observed lots of corruption and inefficiency with things like state licensing requirements, local cable monopolies, and separate state markets for insurance.  Whenever possible, the whole nation should be a single marketplace, allowing everyone to compete and making monopolies harder to maintain.

So far, the constitution does not deviate much from existing ones, and the actual language is a matter for lawyers.  But now I add some unique things that should help things run better, based on more observations.

6) Complicated laws passed in haste are typically bad.

Here is where a constitution can start to take advantage of new technology.  Whenever a law is proposed, it should be put out for public comment for an amount of time based on its length.  While the comments are not necessarily binding, the time delay should be.

7) Amendments to popular bills are opportunities for corruption.

Any changes to a bill should reset the time for public comment.  It become impossible to slip pork in at the last minute.  If you try, the whole process will get reset.

8) The fact that new laws are constantly being created means that the government inevitably grows in size and complexity, usually with bad results.

The constitution should include a clause saying that all laws automatically expire after a fixed amount of time, maybe ten years.  When the law expires, it can only be renewed after a full period of public debate.  This will mean that, after a decade, most of the legislature's time will be spent working on fixing old laws, instead of constantly introducing new ones.  The size and complexity of government should remain mostly stable, and it becomes harder for bad things to stay in due to inertia.  Unless the lobby fights for them constantly, they will fade away.

9) Legislators have little incentive to balance the budget, and a large incentive to send public money to their supporters.

The pay of the legislature, and to a lesser extent members of the executive branch, should be based on the state of the nation's finances.  The bonus for running a surplus should be fairly large.  Incumbents will also get no-strings-attached campaign funds if the budget situation is good.  This will align the incentives of the legislators with the taxpayers, and it should mean that all other legislators will oppose pork attempts.  Legislators will probably produce a large surplus and end up overpaid with a massive campaign war chest making them hard to get rid of, but that is a small price to pay for fiscal discipline.

10)  Taxes should, whenever possible, be consumption taxes on things that impose costs on society.

When you tax things like pollution, then you either get government money or you stop the bad action.  It is a win-win situation.  It probably isn't possible to fund a modern government solely with these kinds of taxes, but that is the ideal situation, because it means no taxes on income or productive activity.  The constitution should explicitly support this type of taxation.

There are some things, like drugs, smoking, and unhealthy food that impose large long-term costs on the consumer even though they are not really externalities.  These should also be taxed, especially if there is any system of social support for the sick, as there almost certainly would be.

I would personally support a system that taxed advertisements as costs to society, but there may be conflicts with freedom of speech.

Weapons should be taxed equal to the damage they do in crimes where they are used, with no other restrictions on owning any weapons that are not actually weapons of mass destruction.

11) Legal or bureaucratic controls harmful things should be replaced with a combination of taxes and legal protection.

As discussed above, taxing things equal to the damage they do, while keeping them legal, is better than strict rules created by a political process.  It allows more freedom, ensures that all things are taxed equal to the harm they cause, and means that policy decisions are based on real science.  Making vices illegal tends to feed organized crime, while taxes mean the state gets the money.

12) Restrictions on new and untested things should be replaced with an offer of legal protection.

Instead of having, for example, a Food and Drug administration that makes it illegal to sell new drugs until they meet approval, the following system should be supported:

You can sell anything you want.  However, the legal system assumes 'caveat vendor' and you can be sued for anything bad it does.  You may choose to have your product evaluated by a government agency.  If you do, you must pay whatever fees they assign, but you get to put an 'Approved' seal on your product.  And more importantly, if they approve a product and something goes wrong, all lawsuits are directed to the government agency.  Your company bears no legal risk.

Ideally, competition among agencies should keep things working smoothly.  Private companies could also enter into this 'legal coverage' market, if they think their 'Approved' seal can compete with the government's.  Most people would presumably be reluctant to buy anything without a seal of approval from the government or a trusted organization.

***

So far, the things I have presented are pretty tame.  People have probably proposed similar thongs in the past.  But now, I will show how the constitution will have to be written to deal with the results of advanced technology.  Consider the following points:

1) At some point in the future, the cost of creating a sentient life will become arbitrarily close to zero.  (This could be due to sentient computer programs copying themselves, and also artificial wombs that allow humans to painlessly produce children.)
2) All such lives deserve, and should be given, basic human rights.
3) Guaranteeing the rights and security of these lives will have a positive cost.
4) Some of these lifeforms will not be productive enough to pay sufficient taxes to cover the costs of guaranteeing their rights, yet will still be willing and able to reproduce.
5) If such lifeforms are allowed to reproduce unchecked, the government will eventually become bankrupt and/or society will collapse.
6) It is wrong to permanently deny reproductive rights to an innocent life, and government cannot be trusted with the power to make this decision.

Given these six points, I can only think of one stable solution.  The creation of sentient life should be taxed.  The creator should be forced to pay at least enough money to cover all of the costs that the state will bear from an additional citizen.  That way, the person who imposes a cost on the state, and not the innocent progeny, is the one who pays the cost.

This tax must be applied equally and fairly, covering all new forms of technology as well as 'old-fashioned' reproduction.  If this seems wrong to you, consider things from the point of view of an intelligent robot.  Why should it have to pay to reproduce when humans are allowed to do so for free?  Such institutionalized discrimination can only be destructive in the long run.

If the creator is unwilling or unable to pay the tax, then it is perfectly fair for the creator to be stripped of citizenship, and denied the ability to create more lifeforms.  The way that developed nations currently hand out the incredibly valuable resource of citizenship for free is unsustainable in the presence of advanced medical and computer technology.

7) In order for the standard of living of the society to increase, population growth must be less than economic growth.

Given this fact, and the potential ease of population growth, the number of citizenships handed out each year must be controlled.

8) Auctions are the best way of allocating scarce resources.

If you are not an economist, you might not believe this.  But it has been repeatedly shown that any other method of allocating things is inherently vulnerable to corruption, and generates loads of bureaucracy, inefficiency, and/or bad results for society.

So the constitution would have to create a mechanism for the government to put up for auction a number of citizenships based on recent economic growth.  These citizenships can be purchased by people who wish to reproduce, and also by people who want to immigrate into the country.  Note that while newborns of all types are assumed to be innocent, immigration can still be subject to the normal restrictions.  In order to get in, you have to buy a citizenship and also pass a background check to make sure you are not a criminal.

I also argue that it should be possible for people to sell their citizenship to anyone who meets a background check.  The government loses nothing by this, and it increases individual liberty.  The person selling the citizenship becomes a non-citizen, and presumably they did this because they have gained citizenship somewhere else.

This requires a rethinking of the concept of citizenship.  Currently, it is something that an individual possesses, usually from birth, that cannot be alienated from that person.  But with such a constitution, citizenship becomes something that can be bought, sold, and traded, like a share of ownership in a company.

Each citizenship would be eternal; it would be like a perpetuity that grants its bearer all the benefits of association with the state.  If the bearer died, the citizenship would be inherited like any other asset.

Note that a market for citizenships will develop.  The market price will be the net present value of being a citizen of that state for eternity.  This provides a powerful check and feedback mechanism for the government.  If the government passes a stupid law, then the market price of citizenships will fall.  This assumes that the market is sufficiently large and liquid to be efficient, but this will probably the case.  If the government makes a large portion of its revenue from selling citizenships, then legislators will have very powerful incentives to keep the value of a citizenship as high as possible.

Doomsday Machine

The Russians had one all along.

The system looked for seismic shocks and communications breakdowns, and sent a launch signal if certain conditions were met.  It wasn't completely automatic, but it was close.

Kill Dolphins

I am serious:

If you work out the math on this (and you don't have to, because the environmental justice foundation did) , you find that 1 dolphin saved costs 382 mahi-mahi, 188 wahoo, 82 yellowtail and other large fish, 27 sharks, and almost 1,200 small fish.

By trying to help dolphins, groups like Greenpeace caused one of the worst marine ecological disasters of all time.

From a Southern Fried Science post about tuna fishing.  'Dolphin safe' tuna is much worse for the ecosystem.

This is just one of many examples of how people have a stupid attachment to charismatic megafauna, instead of focusing on the envirnomental issues that really matter, like ecosystem stability and habitat loss.

Psychological Puzzle

"Consider an experiment by researchers at Maastricht University in the Netherlands who gave subjects a series of 20 electric shocks. Some subjects knew they would receive an intense shock on every trial. Others knew they would receive 17 mild shocks and 3 intense shocks, but they didn't know on which of the 20 trials the intense shocks would come. The results showed that subjects who thought there was a small chance of receiving an intense shock were more afraid — they sweated more profusely, their hearts beat faster — than subjects who knew for sure that they'd receive an intense shock.
That's because people feel worse when something bad might occur than when something bad will occur. Most of us aren't losing sleep and sucking down Marlboros because the Dow is going to fall another thousand points, but because we don't know whether it will fall or not — and human beings find uncertainty more painful than the things they're uncertain about.
But why?"
From The Situationist

For the record, this typically does not apply to me.  I am fine with uncertainty, and deal with things as they come.  But I have known for some time that this is a rare skill.

Tuesday, September 22, 2009

Random Thought

Knowing a little bit of econonics is more useful than knowing a little bit of physics.

But knowing a lot of physics lets you build really fun and useful things, while knowing a lot of economics just means getting into complicated arguments with other economists.

Acorn Rant

This is a good rant on the recent ACORN bust and on politics in general. (Language alert)

If you already agree with her specific point, please pay attention to the general theme on tribalism.  Defending Richard Nixon because of what he did is just as bad as defending ACORN because of their history.

Value of Beliefs

Here's something related to my earlier Value of Choices post:

Highly trustworthy individuals think others are like them and tend to form beliefs that are too optimistic, causing them to assume too much social risk, to be cheated more often and ultimately perform less well than those who happen to have a trustworthiness level close to the mean of the population.  On the other hand, the low-trustworthiness types form beliefs that are too conservative and thereby avoid being cheated, but give up profitable opportunities too often and, consequently, underperform.  Our [empirical] estimates imply that the cost of either excessive or too little trust is comparable to the income lost by foregoing college. "

So having a realistic attitude about how much you should trust people means just as much to your wallet as going to college.  Parents take note.

Friday, September 18, 2009

Vibram Fivefingers

I got myself a pair of black Vibram Fivefinger KSO's for my birthday.  I like them.  When I put them on, I don't want to take them off.*

Many people comment on how wearing them feels like being barefoot.  I didn't think so, because I am used to doing things barefoot.  Between martial arts training and the occasional barefoot jog around my parents' property, I have a lot of experience in barefoot activity**. 

They felt like sandals at first.  I was surprised at how thick the heel was.  Even though the soles are thinner than any other footwear I have tried, it felt odd.  I guess that was because it fits so much better and closer than a shoe.  But I got used to it really quickly, and after a while they started to feel like a part of my foot, instead of something I was wearing.

So, the best way to describe wearing them is that it feels like your feet have grown really thick, strangely shaped, elephantine calluses all over.  That may not sound like an appealing description, but it feels great.  You have most of the feeling and control of being barefoot, but with a nice thick layer of protection.

I just got back from a run through the woods.  I ran through complete wilderness from my house to a nearby trail, then around the trail, and then I hiked back.  They did great, protecting my feet from all of the rocks and thorns.  The traction was as good as advertised.  At one point I sank knee-deep into a mud pit, but the shoes stayed on tightly and hardly let any mud in.  When I got home, I hosed them off and they look as good as new.

The only bad thing is that leaves and seeds got stuck between my toes when I ran through dense undergrowth, and then they stayed there, held in place by the soles of the shoes.

They are certainly worth the money.  They will serve as my running shoes, my hiking shoes, my casual shoes, and my sandals.  I don't think I'll wear anything else on my feet unless I need to fit a dress code of 'business casual' or higher.

*This is partly because I know it will take a couple minutes to put them on again.

**I have jogged barefoot over a gravel driveway and through the ice of late winter.  Yes, I'm a little crazy.

Wednesday, September 16, 2009

Kids these days

I just had one of my students write in an essay that "computers used to be rather expensive ... limited to one per household."

He would have been about five years old when our household got its first computer.  If he came from a rich family, he might have had one in the house his whole life.  The time before personal computers is prehistory to him...

Fun Illusion

From Cognitive Daily

Stare at the red dot. Just keep staring at it....
It only took about eight seconds for the green ring to disappear when I looked. What happened when you looked?

Changing Morality

Wearing fake glasses makes people more likely to cheat.

There are all kinds of studies that show things like this.  People's moral choices are influenced by the little details of their surroundings.  If they think that society doesn't mind cheating, they are more likely to cheat.

Tuesday, September 15, 2009

The 'Homo Economicus' Straw Man

Mainstream economists assume two things. First, we assume that people
always try to get more of what they want for less personal cost.
Second, we assume that a well-functioning market will result in an
ideal, efficient allocation of resources.

The first statement seems self-evident. The second one takes a bit of
work to prove, but it is fairly easy to see that a system that gives
people more choices, in the form of competing offers, will allow them
to improve their condition and find the best deal. Even if they make
mistakes at first, choosing poorly or getting cheated, they will learn
who and what they are dealing with, and find better deals after a
little experimentation. And more importantly, the market system will
allow them to benefit from other people's experience and not just
their own, as inefficient or corrupt traders are driven out of
business.

However, there seems to be a persistent fallacy that economists assume
that all people are hyper-rational. Many non-economists, and even
some of the 'behavioral economists', accuse standard economic theory
of modeling all people as 'Homo Economicus' instead of real people.
They make the claim that 'Homo Economicus' is super-intelligent,
possesses perfect information, and has the willpower to implement any
decision perfectly.

We don't assume any of this, nor are these assumptions necessary for
any theories about efficient markets. The entire point of a market
system with transparent prices is that it aggregates imperfect
individual knowledge and pushes people to make better decisions.
Suppose a nasty frost wipes out a lot of the orange crop. The price
will then go up, and people will cut back. Those who really want
oranges will pay the extra price, while others will eat something
else. There is no need for anyone to make complicated choices or be
super-intelligent. They just have to adjust their behavior in
response to their desires and the market prices. A central planning
system, however, would require someone or something to have perfect
information and make perfect choices, to make sure that the oranges
get to the people who really need them.

Now, it is true that many economists forget that market efficiency
takes time and feedback to achieve. People need to get information
about how their choices affect their lives, and time to try new things
as a result. When making choices with consequences that take a long
time to realize, they will make mistakes. It is also true that
information is expensive. But as a simplified model of reality, the
assumption of rationality works well and allows us to make useful
predictions. When the markets are working right, they end up
producing the result that a hyper-rational person would generate.

Monday, September 14, 2009

The Hitler Game

Many people have heard of the 'Kevin Bacon Game'  Start with a random actor, and try to connect him or her to Kevin Bacon in as few steps as possible, through movies that two actors were both in.  Playing the game requires extensive knowledge of movie trivia, something I do not have or want.

Last weekend I learned of a similar game.  Go to Wikipedia and click on the 'Random article' link in the upper left.  Wherever you end up, try to get to the 'Hitler' article in as few links as possible.

Here are my first few attempts

A: The King's Own Calgary Regiment (RCAC)
This one is too easy.
First click: Italy 1943-45
Second click: Hitler

B:Carroll College (Montana)
slightly trickier
1st: History
2nd: History of Europe
3rd: Hitler

C: Sala Biellese
This is a random town in Italy.  Also too easy:
1st: Italy
2nd: Hitler

D: Augmented chord
Finally, a challenge...
1st: Tristan Chord
2nd: Richard Wagner
3rd: Hitler
Hah!  And I got that on the first try.

Try the game yourself, if you have a few minutes free.  It is fun and educational.

Sunday, September 13, 2009

Television Review: Torchwood

Torchwood is a BBC show, filmed in Wales, about an organization devoted to dealing with alien threats to humanity.  It is set in the same universe as Dr. Who.  With those ingredients, it should be a good show, like Men in Black or Stargate.  It isn't.  I watched the first season, and have no desire to see any more.

Maybe I'm just too old-fashioned, but I expect my fiction protagonists to be heroic and/or competent.  Sure they can have the occasional personal problem or interpersonal conflict to add spice to the show, but the majority of the time should be spent doing useful and productive things.  I want to see people solving mysteries, fighting bad guys, and generally making the world a better place. 

Torchwood has precious little of this.  I mean that literally, because when it does show up it is great.  There are some scenes, even a couple episodes, that are as good as anything in my favorite shows.  Several of the first few episodes were good enough to make me want to keep watching.   But these are overwhelmed by soap-opera stupidity and an excessive amount of pure incompetence on the part of the team, especially in later episodes.
 
The leader of the organization, Captain Jack, is a decent character, well-written and well-acted.  While he occasionally makes some amazingly stupid command decisions, he is overall a proper heroic character.
 
Everyone else, however, is totally worthless.  They are fools and cowards, with no emotional maturity.  They make the wimpiest liberal on Star Trek look like John Wayne.  They routinely do things that would result in court-martial, or even summary execution, in any well-run military or police organization.  It seems that they cause more mayhem than they prevent.  More than once, I was rooting for something to kill them so they could be replaced by somebody, anybody, else.

And sometimes, the entire plot and premise falls apart.  The writers can't decide if the people in the world know about aliens or not.  The idea that they might not is ridiculous.  This is a continuity where an alien ship once have hovered over London and brainwashed a third of the population, and where alien races have engaged in a shooting war in the middle of British cities.  The Torchwood people sometimes covers things up, but nobody could have covered up the things that have happened.  Yet anyone who believes that aliens exist is treated as crazy by the general population.

In the end, the whole thing reeks of senseless European artsy postmodernism, all image and no substance.  I'd rather have American sci-fi, even if they have to dumb it down to make it sell.  I miss Stargate.  Hopefully the next incarnation will be decent.

Friday, September 11, 2009

Value of Choices

In the United States, the net present value of the difference in after-tax lifetime earnings of college graduates and high school graduates is about $170,000.  This is a lot of money, and many people think that going to college is the single most important thing you can do to improve your life.

But this is wrong, for two reasons.  The first is selection effects.  Many people look at this number and conclude that going to college will give you $170,000.  This is not true.  The fact that college graduates earn more than high school graduates does not necessarily imply that sending someone to college will make that person better off.

To see why this is the case, imagine a weight-lifting contest.  It is certainly true that the winners of the contest are stronger than the losers.  But it not true that the contest makes you stronger.  It is just a way of separating people who are already strong from those who are weak.  Winning the contest gives you a trophy to prove that you are strong, but the trophy does nothing for your strength; it simply shows people that you are strong.

There is a big debate about how much value college actually adds.  At one extreme are people who think that there is no difference between a high school graduate and a college graduate, except that the latter went to college.  These people want to send everyone to college.  At the other extreme are people who think that college is just a sorting mechanism that adds no value.  They see no value in sending more people to college; they see it like giving a trophy to everyone who shows up at a contest.

The truth is, of course, somewhere in the middle.  The kind of people who complete college would have made more money even without college, but their education does have some value-added effect in making them even more productive.  If you are someone who is barely qualified to go to college, slogging through will give you some boost to lifetime earnings, but not nearly as much as $170,000.

But even if the decision to go to college netted you all that money, there are other things that have even more value.  For example, cigarettes cost about $5 a pack, so someone who smokes two packs a day will pay $10 a day.  Assume that this cost will increase at the same rate as inflation, and that people smoke for 50 years.  Starting a smoking habit therefore has a net present value of   negative $180,000.  So even if you get the maximum possible benefit from college, all of that benefit will be wiped out if you develop a smoking habit in college.  And that's just the cost of the cigarettes, without even considering the increased health care costs.

So if you are a parent, making sure your kids don't start smoking is more important to their future well-being than making sure they gets into a good college, or even any college at all.

But everyone knows smoking is a bad.  Are there any other lifestyle changes that might be more important to your bank account than going to college?  There are probably several, but I'll discuss one in particular that many people ignore: cooking.

Cooking your own meals can easily save you $10 a day.  If you eat out for lunch and dinner, you will spend at least $15 a day.  It is fairly easy to feed yourself for $5 a day if you know how to cook*.  If you have special dietary requirements, or a well-developed palate, then the cost savings get even bigger. 

So learning how to cook good food cheaply, and getting in the habit of doing so, will mean more money over your lifetime than going to college.  In this case, it isn't pure profit, because you have to spend time cooking and shopping, but you would also have to spend time driving to a restaurant, ordering, and waiting.**  It also assumes you work somewhere where you have access to a fridge and microwave, so you can eat a hot lunch of equal quality to what you would get at a restaurant.

But that's just for one person.  When you are cooking for multiple people, the value of the skill is multiplied even more.  Assume that you cook for yourself for 60 years, a spouse for 50, and two kids for 20 years each, at a cost savings of $10 per person per day.  Your cooking skills would then have a lifetime value of over half a million dollars, or three times the maximum value of getting a college degree.

Now, the kind of cooking I am talking about has very little to do with high cuisine or what you learn in a culinary school.  It is the dying art of putting good, healthy food on the table day after day, cheaply and efficiently.  Any recipe that is long and complicated or requires too many fresh ingredients is no good because you won't be willing or able to do it on a regular basis.  The food has to be easy to prepare, and use inexpensive ingredients.  It needs to be good enough to keep the family from wanting to eat anything else, while giving them all the proper nutrients without too much salt or fat or empty calories.

This is not an easy skill to learn.  It requires an investment in time and effort, and an experienced person to guide you.  But it is worth it.  So if you know how to cook, make sure you pass that knowledge to your kids.  It may not be the modern or politically correct thing to do, but can mean a huge improvement in their lives.

*I spend about $60 a month on a healthy, mostly vegan, diet, but I know that most people don't have the mindset or skills to enjoy spending that little.

**This time cost of eating out is something I forgot to account for in my previous post, and is another reason why many rich people would choose to spend time cooking their own food.

Thursday, September 10, 2009

Paper Draft Review Session

Earlier this week, I attended a workshop where professors and grad students discuss each others' papers.  The one being discussed was a grad student's work on giving in-state tuition to illegal immigrants.

There was an interesting case of culture shock: A Czech professor could not understand how it is even possible for an illegal to get a high school diploma.  Given the culture and government he was used to, such a thing would be impossible.  He assumed that registering for school would automatically reveal enough information to cause you to be deported.

The paper was full of junk like this:

"Denying illegal aliens instate tuition rates denies most of them access to a higher education and given the increasing undocumented population those laws every year leave around 65,000 undocumented students without the opportunity of getting a higher education."

The professors ripped this apart, rightly so.  This is a pernicious logical fallacy that is, unfortunately, way too common.  A decision not to subsidize something is not the same thing as denying it.  It would be absolutely ridiculous to say that the government is censoring the New York Times because it won't buy me a subscription, but that is the logic this sentence uses.


Today's Awesomeness

Carrier Pigeon beats Broadband.

I love the kind of attitude that tries things like that.

Tuesday, September 8, 2009

Home Cooking

One of the main predictions of economics is that people will specialize as society gets richer, more complicated, and more technologically advanced.  Instead of doing everything ourselves, we will train for a specific job and use our money to buy everything we need.  And this prediction usually comes true.  We no longer make our own clothes or build our own shelter.

But this prediction does not hold true with cooking.  Most people who have thought about the future in the last century thought that, by the 21st century, nobody would cook their own food.  And yet we do.  Yes, there are some people who don't know how to cook and go to restaurants or order food all the time.  But contrary to economic theory, these people tend to be the poorest members of the society, rather than the richest.  Why is it that high-wage people spend so much time doing a menial activity rather than hiring specialists to do the job?

In my experience, many people who learned how to cook good food did so for health reasons.  If you or a family member has gluten intolerance, juvenile-onset diabetes, or some other special food need, then it will be very hard to purchase a good, suitable diet on a middle-class income.  You will have to learn how to provide it yourself.  And once you learn how to do that, you find that you are a much better cook (from your point of view) than the people working at most of the local restaurants.  You have become the efficient producer of your food needs.

But this cannot the the main reason; there are plenty of people with no special needs who cook their own food.  Why is this?

One explanation is that most chain restaurants are horrible, from both a health and quality standpoint.  Their entire strategy is to attract impulse purchases from the ignorant or time-constrained, and this leads to calorie-dense, nutrient-poor dishes that are loaded with salt, fat, and simple carbohydrates.  Once you reach a certain level of education and awareness, you simply cannot tolerate this on a regular basis.  So people cook their own food because they have no other alternative.

But an economist is not satisfied with this explanation.  Why has the market failed to provide restaurants that meet the needs of people who want good, healthy food?  The demand is clearly there, and the people demanding it have money.

The answer is cost.  These restaurants do exist, but they are very expensive.  I would have to pay at least $30 a plate to get food that is as good and healthy as the stuff that I, my mom, my dad, or my friend can cook on a regular basis.  Getting good ingredients, keeping them fresh, and cooking them properly takes attention and skill, and it costs a lot to hire the kind of people who can manage it.*

My conclusion is that the desire for good food rises faster than income.  Your palate expands faster than your wallet.  In economic terms, good food has a very high income elasticity of demand.  A poor person earning $10 an hour is satisfied with an $8 dinner from a chain restaurant.  A richer person earning $30 an hour wants a dinner that would cost $50 a plate if purchased in a restaurant.

Assuming that the same abilities that increase earning power allow one to cook food more efficiently, so that each person takes one hour to prepare dinner, it makes economic sense for the poor people to eat out and the rich people to cook their own food.

*There is also the matter of communication costs.  You know what you like.  You know what brand of sauces you prefer, and exactly how long and in what manner you like your vegetables cooked.  It is costless for you to incorporate this information into your own cooking, but very costly to communicate these requests to a restaurant, or to find a restaurant that meets your preferences.

Monday, September 7, 2009

Random Knowledge Questions

Think about these questions.  You don't have to post answers, but you can if you want.  The questions are meant for Americans, but you can adjust them to fit your country.

How many famous people from China can you name?
How many Civil War generals (four generals from an important conflict in your country's history) can you name?
How many of the Founding Fathers (four people who wrote your country's constitution and/or fought for its independence) can you name?
How many governors of US states (heads of state from small neighboring countries) can you name?
How many living Nobel Prize winning scientists can you name?
How many current heads of state can you name?
How many authors, composers, or artists, outside of your own cultural heritage, can you name?

I know that being able to list random facts is not true knowledge.  But it often serves as a good indication of how much you care about understanding the world you live in.  At least four in each category is very good.

Thursday, September 3, 2009

Wednesday, September 2, 2009

Historical Research

This is interesting:

'Using historical data on prices and quantities for these "new luxuries", we estimate their value to consumers. It turns out to have been very large. By 1850, English consumers were better off by 15-20% as a result of new goods. The Age of Discoveries boosted peoples' well-being – not by changing the quantities or prices of goods that Europeans already knew in 1500, but by expanding the range of goods that consumers could buy.
Comparing these gains to more recent new goods, we find that – from a welfare perspective – sugar, tea, and coffee mattered more back then than did the recent introduction of the internet, computers, satellite television, and mobile phones combined.'

It is easy to take things for granted.  If you have no sense of history, you won't know how good we have things today.

Now move forward and imagine a world where computers are as cheap and plentiful as sugar.  What kind of luxuries will new technology bring?

Quotes

It is time to copy a pile of random quotes and thoughts that have been piling up...

Math is a foreign language.  You will never be fluent in it unless you are immersed in it, everyone around you speaks it, and it is part of the culture.

When you say 'I suck at something' what you really mean is that several of your friends are better than you.

I remember my actions in childhood as I remember actions in a dream: no reason, logic, thought, or sentience.

The big difference between economists and everyone else is that we know exactly why we are not rich.

Irrationality is defined as anything that makes you later say "I wish I had acted differently."

Economists are the richest social scientists.  But they are the only social scientists who usually make less money than the people they study.

The word 'almost' means something very different in mathematics.  'Almost sure convergence' and 'pretty good privacy' are incredibly string statements.

In general, the most productive members of society are those with high intelligence and low wisdom.  These are people who are capable of doing a lot of things, and who think that their life will be better if they spend time chasing money, status, and material possessions.  Fools cannot win the rat race, and the wise don't bother to enter it.