Tuesday, April 30, 2013

Portion sizes

It has been a busy month but I want to go back to one of Mark's posts.  Mark states:

There are certainly things here that would seem strange here (make sure to get two pats of butter every day), but much of advice -- not overeating, watching salt, sugar and fat, satisfying cravings in moderation -- still seems fairly sound.
Even today, dietary guidelines suggest getting some fat in your diet.  So how much butter is in a pat of butter? 

20 calories in 1 small pat of salted/unsalted butter (0.1 oz or 3g)
For a 2000 calories diet, that is 2% of your daily energy intake.  Now if you consider what was easy to preserve and likely to be widely available in 1950, this makes sense.  Today we'd probably substitute nuts for the butter.  But it would be challenging to find a nutritionist who had trouble with a garnish that was about 4-6 grams of fat/day. 

What is more remarkable, to me, is how much things like meat serving sizes fit with modern dietary approaches.  But I would be surprised if this advice was not very effective at weight control even today. 

Reasons we value a college degree (aside from the obvious)

One of the things I find concerning about the MOOC debate is how simplistic many of the views are, both of college classes in particular and of college education in general. (Here is another one of my concerns.)

Over at Stumbling and Mumbling, Chris Dillow does a good job helping with the latter, discussing the less obvious ways that degrees can pay dividends (not sure about the last one though).
Nevertheless,we should ask: what function would universities serve in an economy where demand for higher cognitive skills is declining? There are many possibilities:

- A signaling device. A degree tells prospective employers that its holder is intelligent, hard-working and moderately conventional - all attractive qualities.

- Network effects. University teaches you to associate with the sort of people who might have good jobs in future, and might give you the contacts to get such jobs later.

- A lottery ticket.A degree doesn't guarantee getting a good job. But without one, you have no chance.

- Flexibility. A graduate can stack shelves, and might be more attractive as a shelf-stacker than a non-graduate. Beaudry and colleagues decribe how the falling demand for graduates has caused graduates to displace non-graduates in less skilled jobs.

- Maturation & hidden unemployment. 21-year-olds are more employable than 18-year-olds, simply because they are three years less foolish. In this sense, university lets people pass time without showing up in the unemployment data.

- Consumption benefits. University is a less unpleasant way of spending three years than work. And it can provide a stock of consumption capital which improves the quality of our future leisure. By far the most important thing I learnt at Oxford was a love of Hank Williams and Leonard Cohen.
I suspect that signaling is the main reason why increasingly many jobs require college degrees though they don't seem to involve any skills we would normally associate with college. HR departments spend a great deal of their time and energy narrowing applicant pools down to a manageable size. Degree requirements are a simple and easy to implement filter.

Monday, April 29, 2013

A break from the Felix-bashing

I realize I've been hard on him lately, but it's worth taking a moment to remember that Felix Salmon is one of the best financial journalists out there, especially on the philanthropy beat:
While the Cooper Union ethos never left the students or the faculty, however, it did seem to desert a significant chunk of the Board of Trustees and the administration. Starting as long ago as the early 1970s, the board started selling off the land bequeathed by Cooper, not to invest the proceeds in higher-yielding assets, but rather just to cover accumulated deficits. Cooper hated debt and deficits, but that hatred was not shared by later administrators, who would allow debts to accumulate — bad enough — until the only solution was to sell off the college’s patrimony, thereby reducing the resources available for future generations of students. If you visit Astor Place today, the intersection once dominated by the handsome Cooper Union building, the main thing you notice are two gleaming new glass-curtain-walled luxury buildings, one residential and one commercial, both constructed on land bought from Cooper Union.

Then, when you turn the corner and look at what hulks across the street from the main Cooper Union building, you can see where a huge amount of the money went: into a gratuitously glamorous and expensive New Academic Building, built at vast expense, with the aid of a $175 million mortgage which Cooper Union has no ability to repay.
I started to quote more, but as startling and depressing as the details are, you really need to read the whole thing to get the full impact. It's an extraordinary story with particular significance to those following the tuition debates. While it would be a mistake to assume Cooper Union is completely representative, it is an enormously instructive example that seems to give us one more reason to question the cost disease theory.

A word of warning, I would not advise reading past the phrase "vision process" on a full stomach.

Free TV blogging -- collateral damage

For those of you who tuned in late to the TV debate, so far we've talked about how well over-the-air television compares to cable (for some people), how new and apparently successful businesses are springing up around OTA, and how the number of viewers getting their television through antennas appears to have been growing substantially since the introduction of digital. What we haven't covered so far is the potential social impact of killing broadcast television.

It is almost axiomatic that, if you have a resource that is used in one way by people at the top of the economic ladder and in another way by people on the bottom and you "let the market decide" what to do with the resource, it will go with the people who have the money. I'm sure many if not most of the readers here could explain it better than I can (econ is not my field), but the problem comes from the fact we're talking about absolute rather than relative money. People at the bottom may be willing to spend a larger portion off their income on the resource but it's a larger portion of a much smaller total.

This becomes particularly troubling when we're talking about a publicly held resource. When we consider selling off a piece of public property, we can't just assume that whoever is willing to pay the most will put it to the best use. By that standard, there would be no roads, parks or libraries in poor neighborhoods. Things used by the wealthy will always come out ahead.

Instead we need to think about who uses the resource now and how their lives will change if that resource is sold off. What groups rely heavily on broadcast television? What groups would have the most difficulty finding alternatives?

People in the bottom one or two deciles are going to be in trouble. Even the lowest tier of cable would represent a significant monthly expense.

People with limited residential security will be even worse off.

People with limited income security will face a difficult choice: sign up for exorbitant no-contract plans or commit to a financial obligation they may not be able to fulfill.

People with poor credit histories will have to come up with large deposits every time they move.

I have no idea what the unbanked would go about getting cable.

Keep in mind, all of these groups will have comparable or greater difficulty getting access to high speed internet service.

Sunday, April 28, 2013

Weekend blogging -- if you were getting your fitness advice from a 1950 comic book...

The following ran in an issue of Harvey's Black Cat* in 1950. I doubt it was based on cutting edge science but it's probably a good read on the conventional wisdom of the time. 

What's interesting is how much and how little things change. There are certainly things here that would seem strange here (make sure to get two pats of butter every day), but much of advice -- not overeating, watching salt, sugar and fat, satisfying cravings in moderation -- still seems fairly sound.

One of my big concerns with health issues is that the media (and sometimes the researchers) create an exaggerated sense of volatility, the impression that, when it comes to a healthy lifestyle, doctors are constantly changing their mind on everything. Under these circumstances, it's easy to see why so many people fall prey to fad diets or simply give up.  

Joseph could give a more nuanced version of this point, but I'm sure that public heath would be better if we stopped presenting a distorted view of health research to the public.

Saturday, April 27, 2013

Weekend blogging -- TV themes by the otherwise famous

When I get around to a post discussing the different branding strategies of the various terrestrial superstations, one of the practices I'll be singling out is METV's policy of playing opening and closing credits uninterrupted. It costs little but goes a long way to build brand both by showing respect for the product and addressing a long standing complaint of hard core fans.

This got me thinking about TV themes, specifically those by musicians known for other things.For example, Flatt and Scruggs were bluegrass legends long before the the Beverly Hillbillies.

Here are some other TV themes known for things other than TV themes like collaborating with Dizzy Gillespie or scoring 500+ movies.

I'll post credits in the comments later.

And bonus points if you can recognize the time signature...

Dangerous synergies

Taking a break from the free-TV blogging rant to go back to the decline-of-journalism rant...

Jonathan Chait has a great post up at New York:
The gigantic ethics violation that was once called the White House Correspondents’ Association Dinner, and is now known as White House Correspondents’ Association Dinner Weekend, is fast upon us. The event originally served as a relatively harmless scaled-up version of the routine source-greasing that is traditionally performed at bars and restaurants. It has become a powerful metaphor for the incestuous relationship between the news media and the power elite.

The WHCD has evolved into a profitable leverage opportunity for media companies. They use the cachet of their brand name, and the access it gives them to the event, to lure celebrities and sell that access to corporations. The biggest media personalities are needed to lure in both the celebrity flesh and the corporate johns, but the rest of the reporters are completely superfluous to the exercise.
Needless to say, the whole thing is lousy (in very close to the original sense) with conflicts of interest, but with the exception of Chait and a few other malcontents, no one seems all that bothered. (True, Tom Brokaw complained, but he seemed to be troubled by the tackiness of the low grade of celebrities, not by the flagrant influence peddling.)

A major aspect of our other ongoing thread (OK, just a little free TV blogging) is the way deep pocketed interests like Verizon and ATT can so control narratives that even our best journalists end up buying a factually questionable stories. When you get into the details (like the Atlantic's elaborate party and its list of corporate underwriters), you start to understand how this can happen.

But what really bothers me about journalism isn't the tolerance of conflicts of interest.

It isn't the devaluing of accuracy.

It isn't the increasing tendency toward group think.

It isn't the practice of uncritically passing on press releases as news stories.

It isn't the inability or unwillingness of press watchdogs to honestly address serious problems.

All of these things are bad, but it's when you combine them that you start looking at catastrophic failure.

Friday, April 26, 2013

I need to be very careful when I base an argument on NBC's competence

I argued earlier that the OTA television audience had to be healthier than Felix Salmon implied for NBC to go ahead with COZI. I was assuming that the company was capable of a basic feasibility study, not that they were good at actually running a channel. That requires programming skills such as putting complimentary shows together.

I'm not making this up:

1:00 p.m. Jan 28 Munster Go Home

 3:00 p.m. Jan 28 Agnes of God

 5:00 p.m. Jan 28 Highway to Heaven

Apparently the ghost of Zucker still roams the halls.

Update: Just to be certain that those unfamiliar with the material get the full disparity here, Munster is a light farce about lovable monsters, Highway is a feel-good Eighties show about an angel who helps people, and Agnes is a drama about a nun and probable rape victim who killed her newborn baby.

Free TV blogging -- betting against Felix Salmon

[Update: Andrew Gelman joins the conversation and, as usual, brings with him a fantastic comment section. Felix Salmon sites this Nielsen study to support his case. Rajiv Sethi (who was possibly the first major blogger on this beat) joins in. I'm still the only one talking about terrestrial superstations, but the night's still young so you never know.]

If you've been reading the last few posts, you know that Felix Salmon has weighed in on the free TV debate and that I find myself in the very unusual position of disputing pretty much everything he says (it is far more common for me to be completely in agreement). I'll be addressing the cost of Salmon's policy recommendations (born disproportionately by minorities and the poor) and questioning the economic implications later. Right now I want to focus on some disputed facts and assumptions.

In the post Salmon is dismissive of the claim that there are fifty million over-the-air television viewers:
The 50 million number, by the way, should not be considered particularly reliable: it’s Aereo’s guess as to the number of people who ever watch free-to-air TV, even if they mainly watch cable or satellite. (Maybe they have a hut somewhere with an old rabbit-ear TV in it.)
And he strongly suggests the number is not only smaller but shrinking. By comparison, here's a story from the broadcasting news site TV News Check from June of last year (if anyone has more recent numbers please let me know):
According to new research by GfK Media, the number of Americans now relying solely on over-the-air (OTA) television reception increased to almost 54 million, up from 46 million just a year ago. The recently completed survey also found that the demographics of broadcast-only households skew towards younger adults, minorities and lower-income families.
OTA can be tricky to measure -- unlike cable, there's no way of telling who has an old set of rabbit ears -- but we can look at other indicators and see which set of assumptions they are consistent with. Specifically consider the recent decisions of NBC and Fox to launch dedicated OTA channels this year

Let's assume Salmon's right and put ourselves in the position of a Fox or NBC executive who has to decide whether or not to create a new broadcast network. We can be reasonably confident that the executives have access to reliable data (particularly the Fox executive if the deal with Weigel included a look at some numbers from ThisTV and METV).

You find, given our premise, that the total over-the-air audience is, say, forty million, the technology is obsolete and entire medium will probably be gone in a few years. At this point, it's hard to imagine you'd proceed with an expensive, time-consuming project that is likely to be an embarrassing failure but the situation actually gets worse.

You are looking at launching an advertiser-driven, English-language station but the OTA market is disproportionately poor and immigrant (I get programming in over a half dozen languages); the maxim relevant audience for your station now drops to maybe thirty million and there's more bad news. You're going to have to share that thirty million with a crowded field of competitors. A major market will have dozens of OTA channels including multiple PBS channels, This, ME, Antenna, Bounce, RTV, three ION channels and various independents.

Given Salmon's assumptions about the size and trajectory of this market, there is simply no way NBC or Fox would have gone ahead with these channels. They couldn't possibly recoup their start-up costs before OTA is phased out. Put bluntly, both NBC and Fox are betting against Salmon's position.

Obviously this is not conclusive, but it's a strong piece of evidence and it's consistent with what we've seen elsewhere. It's also consistent with GfK's numbers.

There's more to come on this. There are many aspects to this story and I'll try to get to as many as I can but I've been looking at this for a long time from a lot of different angles and from every angle it looks to me like OTA is a promising technology supporting an innovative and growing industry, serving important economic and social roles.

The technology is doing fine in the marketplace. It's lobbyists who are likely to kill it.

Thursday, April 25, 2013

The Me Generation -- re-updated

Blogger apparently really dislikes PDFs so I removed the embed but you can find the original here (you might want to check out some of the other press releases as well).

Here's the subject line:
Me-TV adds seven new affiliates
Classic TV network now clears 89% of the U.S.
At the risk of putting too fine a point on a dead horse, this is consistent with a growing market and a sound business model.

(and at the risk of saying you-know-what, I told you to keep an eye on Weigel)

Normally this sort of thing never works

Matt Yglesias talks about a plan to try and move defined benefit pension funds away from organizations that are trying to defund or remove access to defined benefit pensions.  Generally, you would have thought that the people making money off of these funds would have worked things out for themselves earlier on in the process.  That being said, immediate losses that exceed any possible tax benefit might well work if the problem is that these pension managers are excessively focused on the short term.

At the very least it is odd for teacher to be indirectly funding Students First. 

Felix Salmon vs. Chet Kanojia

It's too late for me to think through and research all of the possible issues with these numbers so I'm going to pass these on without further comment for now.

From Salmon's "Aereo and the death of broadcast TV"

Here's the passage Salmon quotes from from Forbes on Kanojia:
“The real question is a consumer question: Can you rightfully disenfranchise 50 million consumers?” he asked. “Is that what the preferred policy is?”

In the event that the networks did go through with it, he speculated that other programmers would be quick to replace them in the role of public broadcasters. “That spectrum is incredibly valuable. Somebody’s going to take advantage of that,” he said.
Here's Salmon's dismissive response:
The 50 million number, by the way, should not be considered particularly reliable: it’s Aereo’s guess as to the number of people who ever watch free-to-air TV, even if they mainly watch cable or satellite. (Maybe they have a hut somewhere with an old rabbit-ear TV in it.)
Here's a comment to Salmon's blog:
“The 50 million number .. is the number of people who ever watch free-to-air TV, even if they mainly watch cable or satellite. ” No! That is the number of people who rely exclusively on over-the-air TV without any cable or satellite. http://www.tvnewscheck.com/article/60230 /us-otaonly-tv-viewing-hits-178-of-hhs Also, far from being on the decline, this is actually one of the fastest growing segments of the market. I think it may have something to do with the digital switch and the accompanying radical improvement in visual quality of OTA TV. Exclusive OTA viewer estimates go from 42M in 2010, to 46M in 2011, to 54M in 2012. The reports of the death of bunny ears have been greatly exaggerated. But yes, it is true that OTA-only viewers rank low on the amount of political clout. They are disproportionally young adults and minorities.
And here's what you get when you follow the link:
According to new research by GfK Media, the number of Americans now relying solely on over-the-air (OTA) television reception increased to almost 54 million, up from 46 million just a year ago. The recently completed survey also found that the demographics of broadcast-only households skew towards younger adults, minorities and lower-income families.

The 2012 Ownership Survey and Trend Report, part of The Home Technology Monitor research series, found that 17.8% of all U.S. households with TVs use over-the-air signals to watch TV programming; this compares with 15.0% of homes reported as broadcast-only last year. Overall, GfK Media estimates that more than 20.7 million households representing 53.8 million consumers receive television exclusively through broadcast signals.
I will be posting some arguments that some of the activity we've seen (see the terrestrial superstations post) support Kanojia over Salmon but those come from a completely different direction. I'll take another look at these numbers in the morning.

Terrestrial Superstations

Normally, I have to work hard to find something to criticize in a Felix Salmon post. With this one, I'm having to work hard to lay the groundwork so I can spell out all of the problems.

When US television went digital, the new platform didn't just allow you to get HD video over a set of rabbit ears, it also allowed TV stations to broadcast multiple subchannels. This has created all sorts of interesting changes in the television landscape (for example, your PBS station is now probably putting out four times the programming). One area of particular relevance to this discussion is the appearance of general interest stations created specifically for the new technology.

The idea of using digital subchannels to launch a TBS style superstation seems to have originated with Weigel Broadcasting, a well-respected regional player noted at the time for being Chicago's last independent television broadcaster. (Both Weigel and Chicago figure prominently in this story.)

Weigel's ThisTV (a partnership with MGM) was up and broadcasting the day American television went digital. Here's what I said about the concept a couple of years ago.
ThisTV has caught on to the fact that the most interesting films are often on the far ends of the spectrum and has responded with a wonderful mixture of art house and grind house. Among the former, you can see films like Persona, the Music Lovers and Paths of Glory. Among the latter you'll find American International quickies and action pictures with titles like Pray for Death. You can even find films that fit into both categories like Corman's Poe films or Milius' Dillinger.
Of course, the other great insight was that movies on the far end of the spectrum tend to be cheaper.

I've written a great deal about Weigel and I have a lot more on the to-do pile. The company is one of my favorite examples of a well-run business but for the purposes of this story, the pertinent factors are: Weigel is an innovative with a good track record; it moves as decisively as any company I've ever seen; it is the most important player in the digital television landscape (as you'll see later).

Skip forward a couple of years and the follow-the-data approach starts to get interesting. The company with the most complete information (Weigel, obviously) announces another, more ambitious superstation called METV, a classic TV channel built around old but prestigious shows like Mary Tyler Moore, Columbo and the Twilight Zone (making very limited use of block programming to allow airing of fifty different programs a week) and promoted a surprising elaborate campaign. In-character station ads featured Betty White as Sue Ann Niven, Ed Asner as Lou Grant, Carl Reiner as Alan Brady and Bob Newhart as Bob Hartley.

The company that arguably had the second best information and experience was Weigel's long-time competitor, the Tribune Company's WGN. Tribune had data from its stations (including KTLA which carried ThisTV in the Los Angeles market), experience with one of the first and most successful cable superstations and finally the inevitable back channel communication you would expect from Chicago's famed television community. It is not a coincidence that Tribune launched its terrestrial superstation, AntennaTV about the same time METV went on the air.

After LA and New York, the two most important television towns are Chicago and Atlanta so it's not surprising that the next terrestrial superstation came from Atlanta. A few months after the launch of AntennaTV, Andrew Young and Martin Luther King III founded BounceTV as an over-the-air alternative to BET.

This is a good place to stop and note something interesting about all of these terrestrial superstations. Neither ThisTV, METV, BounceTV nor AntennaTV have regularly scheduled infomercials. This is a business model built on program driven advertising and we are going on five years of data that seems to say that it works.

2013 continues the trend of more investment on terrestrial television by bigger players. A few months ago NBCUniversal unveiled COZITV. COZI is the only terrestrial superstation with infomercials but, like Bounce, it also has original programming [link added].

And now there's this:
Movies! is an upcoming American digital multicast television network, that will feature an emphasis in its programming on feature films. The network will be a joint venture between Chicago-based Weigel Broadcasting and the Fox Entertainment Group subsidiary of News Corporation, and will be available in the United States through the digital subchannels of broadcast television stations, as well as on select cable systems. Movies! will broadcast 24 hours a day in 480i widescreen standard definition.
I have limited this post to commercial, general interest, English language stations created specifically for digital broadcasting. That's a small sliver of what's available over the air but it does, pretty much conclusively, show that the model is viable and that, unlike so many recent tech and media fads, the more data comes in, the more interested serious players get.

Wednesday, April 24, 2013

Unemployment and causation

Megan McArdle:
On Monday, I wrote about long-term unemployment, and why it's a large enough problem that the federal government should be trying to do something about it. I got pushback along two lines: 1. Extended unemployment benefits probably caused the unemployment, by giving people an incentive to stay home instead of finding a job.  2. Regulations and taxes are making it too hard to hire people. I am sympathetic to the basics of each argument. (. . .)

However, I don't see these as viable explanaitons for the current employment situation. Regulations and taxes did not suddenly spike in the fourth quarter of 2008, but unemployment did. And while Obamacare certainly imposes taxes and uncertainty on businesses, I don't think that it, by itself, can have driven the natural rate of unemployment up by 3-5 percentage points. (. . .) 

But six months is the current length of standard unemployment benefits. And if standard unemployment benefits cause very high long-term unemployment rates, how come they only started doing so in 2009? To sum up, unemployment benefits do cause some moral hazard, and taxes and regulation probably do somewhat depress the natural rate of employment in our country. But neither are an adequate explanation for the truly devastating conditions in the current labor market. Which means that--as much as I would love it to be true--we can't fix them by slashing taxes, regulation, and government spending.

This is a very insightful post from a pundit who is definitely not sympathetic to the role of government intervention in the economy.  But Megan very nicely hits at the core problem with a government induced recession story -- what changed in 2008 that was not true in the decade before?

Now you can argue about a financial collapse followed by central banks being uncertain about the best strategy to deal with interest rates that are nearing the zero lower bound that they can typically have.  It's possible that this narrative could explain some of these issues but it isn't an explanation that attaches blame to typical conservative bugbears.

So I think it is good to push back on these narratives.  They may have some role in particular circumstances, but are clearly insufficient on their own.  In fact, the unemployment insurance piece has the possibility of being counter-productive -- denying income to the very needy and reducing what they spend thus leading to even more economic contraction.  When the number of unemployed workers per job opening falls to the 2006/2007 level, that might be a good time to look at the long term wisdom of the program. 

So kudos to Megan for a very good post. 

Tuesday, April 23, 2013

Add Fox to the list of companies that think Felix Salmon is wrong about terrestrial television


Much more on this soon, but soon after reading this uncharacteristically misinformed post by Felix Salmon on the dismal prospects of broadcast television I came across this link on Weigel Broadcasting's Wikipedia page:
Movies! is an upcoming American digital multicast television network, that will feature an emphasis in its programming on feature films. The network will be a joint venture between Chicago-based Weigel Broadcasting and the Fox Entertainment Group subsidiary of News Corporation, and will be available in the United States through the digital subchannels of broadcast television stations, as well as on select cable systems. Movies! will broadcast 24 hours a day in 480i widescreen standard definition.
So we have Fox, NBCUniversal, Tribune, BounceTV, PBS and others betting (in some cases betting big) that digital broadcasting is growing, not dying.

I have tremendous respect for Salmon but he's out of his area of expertise here and he's been sucked up into a narrative that has an army of flacks and lobbyists behind it but which does not have the evidence to back it up.

More on that later, in the meantime, check out this post by Rajiv Sethi for another take on the question.

[I originally wrote BET when I should have written BounceTV, the terrestrial superstation founded by Andrew Young and Martin Luther King III]

Monday, April 22, 2013

Free TV blogging -- results may vary

[Update: you really should check out the comments at the end of this post.]

It's always a bit of a shock when you're reminded that people do occasionally read your blog and even more of a shock when someone actually follows your suggestions. That was the case recently when, in response to a post on free TV, Andrew Gelman tried plugging an antenna into his set and couldn't get much of anything.

As a proponent of free TV and a reasonably honest  blogger, this forces me to confront an uncomfortable fact: some people need cable or satellite to watch live TV.

There are some caveats (you might improve your results with an amplified antenna; you can almost certainly do better with an external one) but there's no way to get around the fact that people who live in certain areas are going to get crappy results from terrestrial television.

NYC may be one of those areas. Most of my experience with over the air television has been in LA, a city of short buildings and tall mountains, obviously not the best proxy for the big apple. I believe NYC was one of the leaders in cable back in the Seventies and Eighties. I had assumed that the reason was density and infrastructure, but it could also have been due to the difficulty TV signals had making it through that famous New York City skyline.

But, even though it may not pay off, I still recommend testing out a set of rabbit ears if you haven't already, partially because you might find that what you can get for free is better than what you're paying thirty a month for, but mainly because over-the-air television may pay its biggest dividends for the people who don't use it.

In a healthy, competitive market, suppliers are under constant pressure to provide the best possible product at the the cheapest price, innovators find fertile ground and forces tend to align to keep people honest. In television, the market is anything but healthy. Content production is dominated by a small number of producers and channeled through a tiny handful of providers. Competition is severely limited.

As long as awareness of terrestrial television remains low, a Time Warner can overcharge for low quality product and force customers to buy bundles of mostly unwanted channels, safe in the knowledge that most people won't go to the trouble of switching as long as the TV packages provided by Dish, Direct and the local phone company also suck.

Free TV throws a huge monkey wrench in that business model. If a significant portion of of cable customers know that they can get fifty to a hundred digital channels for free, "We suck less than ATT" no longer works as a marketing slogan.

What if you're one of those people who can't get those fifty to a hundred channels? That might be the best part, because your cable company doesn't know who's in what group and even they did, it would be difficult, both in terms of implementation and PR, to set up a pricing system that selectively gouged people who got bad reception. The result is that no customer gets screwed.

And after all, that's how efficient markets are supposed to work.

Note to journalists -- you don't have to believe everything they tell you (business model edition)

File this one with the flack-to-hack series, that part of the decline in journalism that can be attributed to increased willingness to print whatever the PR person hands you.

You've probably heard about this:
While the world has no shortage of pie-in-the-sky renderings for floating cities, a new proposal by Silicon Valley start-up Blueseed is perhaps the first to invoke entrepreneurial spirit and the American Dream in its soapbox pitch. Looking for a way to give foreign-born tech entrepreneurs access to the enterprising atmosphere of Silicon Valley, the founders of Blueseed are hoping to revamp an old cruise ship to create a community, of sorts, 12 nautical miles off California's coast in international waters, so international techies could live within commuting distance without a work visa. With a simple business tourism visa, denizens of the vessel could take a 30-minute boat ride to the mainland once or twice a week. Of course, creating an inhabitable community on water—one that people would live on six months or a year at a time—requires some interior design finagling, including incorporating lots of light and open space.

The big issues here have to do with labor, immigration and industrial policy, but this also provides a small but useful example of gee-whiz, ddulite journalism. I will give the writer, Amy Schellenbaum, credit for using the phrase 'pie-in-the-sky' in her opening sentence but other than the occasional qualifier, that's pretty much the last trace of incredulity you'll find.

For example:
Blueseed still needs $18M (of the $27M required, total) before any building can take place, but if this actually gets rolling, Mart imagines he'll charge organizations anywhere between $1,200 a month to house their employees in a shared cabin to $3,000 a month per person. Just what everyone wants to do: shack up with their coworkers!
I looked at a few cruise ships on Wikipedia and where cost was given, they were all in the hundreds of millions (and sometimes much higher). Even done on the cheap with an old ship, between buying the damned thing and doing the kind of major refit described here, we've got to be talking nine figures.

Now, I have to admit, my experience with start-ups is very limited, so it's very likely that I'm missing some important aspect of funding in this casse. Perhaps this proposal is more credible than it looks, but as presented here, these numbers seem awfully screwy, and it's worrisome that the reporter either doesn't feel the need to explain the screwiness or, worse yet, doesn't even notice it.

Quote of the day

From Norman Geisler’s book on Thomas Aquinas via John D. Cook:
No, I do not agree with everything he [Aquinas] ever wrote. On the other hand, neither do I agree with everything I ever wrote.

Sunday, April 21, 2013

More on statistics in research

One last good point out of the whole excel error in the 2010 Reinhart and Rogoff paper:
This raises another issue. Programming is getting easier and easier, but it’s hard to do well. Economics these days depends heavily on programming. It seems to problematic to me that we rely on economists to also be programmers; surely there are people who are good economists but mediocre programmers (especially since the best programmers don’t become economists). If you crawl through a random sample of econometric papers and try to reproduce their results, I’m sure you will find bucketloads of errors, whether the analysis was done in R, Stata, SAS, or Excel. But people only find them when the stakes are high, as with the Reinhart and Rogoff paper, which has been cited all around the globe (not necessarily with their approval) as an argument for austerity.
It is the most generally applicable advice, in that it might well have prevented many of the other errors.  But it is not a one directional attribution of responsibility.  A careful analyst should have done sensitivity analysis for things like outliers and found the critical sensitivity of the results to the inclusion of New Zealand.  Or compared the different weighting schemes.  If you are going to try and understand a small dataset you need to be very thorough at looking at all of the ways that the data itself could be summarized. 

So statisticians also have a burden of care, here, even if one was not directly involved in this analysis to counsel researchers on how to approach these difficult data problems.  In the same sense, it would not be a bad structural change for researchers to consult more with methodologists, who can look at the problem outside of the lens of strong priors and might be more quick to question a surprisingly good result. 

Saturday, April 20, 2013

Weekend blogging -- Gained in translation

Specifically, where does translation stop and adaptation start?

This is never a trivial question. When you read Tartuffe in college, the story was by Molière but there's a good chance the words were by someone like Richard Wilbur. If you reacted to something other than the plot -- a turn of phrase, a subtle shading of character -- it is not immediately clear who should get the credit.

Of course, a Wilbur starts from a position of respect of the original work and tries to capture what it's like to experience a work in its original form. What happen's when a translator simply says "to hell with it"?

From Wikipedia:
Die Zwei, the German version of The Persuaders, became a cult hit in Germany. This was largely because the dubbing was substantively altered creating a completely different program.[11] In France Amicalement vôtre (Yours, Friendly) also became a popular show because it was based on the redubbed German version instead of the English original. 
The German dubbing was "a unique mixture of street slang and ironic tongue-in-cheek remarks" and that it "even mentioned Lord Sinclair becoming 007 on one or two occasions".[18] Dialogue frequently broke the fourth wall with lines like "Junge, lass doch die Sprüche, die setzen ja die nächste Folge ab!" (Quit the big talk, lad, or they'll cancel the series) or "Du musst jetzt etwas schneller werden, sonst bist Du nicht synchron" (Talk faster, you aren't in sync any more).
Research from the University of Hamburg notes the only common elements between Die Zwei and The Persuaders! is they use the same imagery. Other than the "the linguistic changes entailed by the process of translation result in radically different characterizations of the protagonists of the series. The language use in the translations is characterized by a greater degree of sexual explicitness and verbal violence as well as an unveiled pro-American attitude, which is not found in the source texts".[19] 
In 2006 a news story by CBS News on the German dubbing industry mentioned The Persuaders! The report discovered that many German dubbing artists believed that "staying exactly true to the original is not always the highest aim". Rainer Brandt, co-ordinator of the German dubbing of The Persuaders and Tony Curtis' dubbing voice, said "This spirit was invoked by the person who oversaw the adaption and also performed Tony Curtis' role: When a company says they want something to be commercially successful, to make people laugh, I give it a woof. I make them laugh like they would in a Bavarian beer garden." [20] 
Other researchers suggest international versions of The Persuaders! were given different translations simply because the original English series would not have made sense to local audiences. For instance the nuanced differences between the accents and manners of Tony Curtis, the American self-made millionaire Danny Wild from the Brooklyn slums, and Roger Moore, the most polished British Lord Sinclair, would be hard to convey to foreign viewers. Argentinian academic Sergio Viaggio commented "how could it have been preserved in Spanish? By turning Curtis into a low class Caracan and Moore into an aristocratic Madrileño? Here not even the approach that works with My Fair Lady would be of any avail; different sociolects of the same vernacular will not do—much less in subtitling, where all differences in accent are irreparably lost".[21]

Friday, April 19, 2013

War and research

Though it's too early to tell whether the geopolitical lessons are going to take, we did learn some things from the war in Iraq.

From the New Republic:
Neither Boston Medical Center nor Boston Emergency Medical Services have responded to queries about how tourniquets were used after the marathon bombings, so we can't yet confirm their effectiveness. It wouldn't be the first time, though, that killing abroad has saved lives at home: Wartime medical advances have long translated into civilian life (trauma centers full of specialists sprouted up in cities, for examples, after they’d worked to great effect in Vietnam). America's latest conflicts have also improved techniques to repair tissues and nerves that have prevented amputations in operating rooms around the country.

That kind of research funding tends to dry up when the soldiers come home. But hundreds of thousands of people die from traumatic injuries every year, and Jenkins says that huge gaps still remain in our knowledge of how to treat them. The National Trauma Institute has been campaigning for more money to research trauma, which doesn't loom as large in the public consciousness as many diseases do.
This goes beyond tourniquets. As NPR reported a few years ago, techniques from the war have revolutionized emergency medicine:
The medevac choppers land and then taxi over to the gate just outside the emergency room, where gurneys are waiting. Nightfall has brought a bone-chilling wind, and a gang of nurses and orderlies rushes four patients into the warmth of the ER.

It's more than warm inside. In fact it's 100 degrees. It's the first clue that this hospital — the Joint Theater Hospital at Afghanistan's Bagram Air Field — is a little different. Through years of war, combat surgeons have learned that hypothermia is a big risk in patients with significant blood loss. Nine years of conflict in Iraq and Afghanistan have brought some grim benefits: a new wealth of knowledge about treating war wounds.

"At the beginning of this conflict, we were taking the best trauma medicine from the civilian sector, and we brought it to Iraq and Afghanistan," says U.S. Air Force Col. Chris Benjamin, the hospital commander. He says now his doctors tell him it's the other way around.

"Here we are seven, eight years later, taking what we've learned in these conflicts to teach them the advances that we've made with this data collection here in theater," he says.
It seems strange to discuss war in terms of research and data collection, but despite what you constantly hear, most big problems are solved by throwing large sums of money at them and one of the most effective ways of convincing a government to start throwing money is to get it into a war. I'm not saying that the means justify the ends or that we couldn't find a way to get better results without the horrific costs.

What I am saying is that, in the world we've got, for researchers, like Keynesians, the steps we think society should take (like spending significant amounts of money on trauma research) often only came as a byproduct of war.

Thursday, April 18, 2013

Trying to wean myself off "hibernate"

I assume I'm not the only blogger with this bad habit: I'll come across something that's either worth sharing or worthy of comment or a good jumping-off point for a discussion, but I won't have the time (or perhaps the will) to write out the post right then so I leave the tab up and hibernate the computer rather than shutting it down.

Here are the tabs I currently have open. Hopefully, some will eventually grow into posts of there own. If not, maybe you'll find something of interest in the list.

Dana Goldstein has an article at the Smithsonian on the influence of American industry on education. 

ThisTV is showing The Sweet Smell of Success and I can't help thinking that it's time for a sequel.

I've been thinking about the problem of pivoting something as complex and amorphous as a political party, or maybe thinking about the problem of how to think about the problem, either way this and this (both from TPM) highlight the difficulty.

It is generally both foolish and dangerous for a reformer to say nothing could be worse than what we have now (worse is almost always a possibility), but when the speaker is a college president in the state with arguably the best university system in the country with probably the best university system in the world, it indicates just how detached from reality the debate has become. (via More or less bunk.)

On a related note, I've been meaning to discuss the Hawthorne effect in educational research but now I have no idea what to call it.

I've never been a big Fitzgerald fan (more of a Count No 'Count man, myself), but if I were, this would worry the hell out of me (in 3D):

Maybe I can sucker Joseph into writing a few posts on the wrong kind of government assistance for business.

This Felix Salmon piece on Ripple nicely compliments all of the Bitcoin coverage.

On a related note, though it's not really an insult to say a rich person has more money than sense, some rich people apparently have less sense than you have money.

Finally, it seems that a stock based on a gourmet snack fad may not hold its value.

Two views of Excel

Part of the Reinhart-Rogoff fall-out (see here for Joseph's take) has been a discussion of the role of Excel and similar programs in analytic work. Andrew Gelman has a post up on the subject that includes this quote from an unnamed statistics professor:
It’s somewhat surprising to see Very Serious Researchers (apologies to Paul Krugman) using Excel. Some years ago, I was consulting on a trademark infringement case and was trying (unsuccessfully) to replicate another expert’s regression analysis. It wasn’t until I had the brainstorm to use Excel that I was able to reproduce his results – it may be better now, but at the time, Excel could propagate round-off error and catastrophically cancel like no other software!
Followed by this assessment by Gelman himself:
Microsoft has lots of top researchers so it’s hard for me to understand how Excel can remain so crappy. I mean, sure, I understand in some general way that they have a large user base, it’s hard to maintain backward compatibility, there’s feature creep, and, besides all that, lots of people have different preferences in data analysis than I do. But still, it’s such a joke. Word has problems too, but I can see how these problems arise from its desirable features. The disaster that is Excel seems like more of a mystery.
In contrast, here's James Kwak discussing Excel (prompted by news that an embarrassingly simple spreadsheet error contributed to the London Whale fiasco and, yes, the similarities have been noted):
Microsoft Excel is one of the greatest, most powerful, most important software applications of all time.** [** But, like many other Microsoft products, it was not particularly innovative: it was a rip-off of Lotus 1-2-3, which was a major improvement on VisiCalc.] Many in the industry will no doubt object. But it provides enormous capacity to do quantitative analysis, letting you do anything from statistical analyses of databases with hundreds of thousands of records to complex estimation tools with user-friendly front ends. And unlike traditional statistical programs, it provides an intuitive interface that lets you see what happens to the data as you manipulate them.

As a consequence, Excel is everywhere you look in the business world—especially in areas where people are adding up numbers a lot, like marketing, business development, sales, and, yes, finance. For all the talk about end-to-end financial suites like SAP, Oracle, and Peoplesoft, at the end of the day people do financial analysis by extracting data from those back-end systems and shoving it around in Excel spreadsheets. I have seen internal accountants calculate revenue from deals in Excel. I have a probably untestable hypothesis that, were you to come up with some measure of units of software output, Excel would be the most-used program in the business world.

But while Excel the program is reasonably robust, the spreadsheets that people create with Excel are incredibly fragile. There is no way to trace where your data come from, there’s no audit trail (so you can overtype numbers and not know it), and there’s no easy way to test spreadsheets, for starters. The biggest problem is that anyone can create Excel spreadsheets—badly. Because it’s so easy to use, the creation of even important spreadsheets is not restricted to people who understand programming and do it in a methodical, well-documented way.*** [*** PowerPoint has an oft-noted, parallel problem: It’s so easy to use that people with no sense of narrative, visual design, or proportion are out there creating presentations and inflicting them on all of us. ]
To the extent there's a conflict here, I'm with Kwak on this one. For all their problems, I'm still a big fan of Excel and similar programs (such as the OpenOffice version I have on my laptop). They are indispensable in business for just the reasons Kwak lists.

Furthermore, I'd like to see them have a similar role in secondary and even primary education. I've long found spreadsheets to be a great tool for introducing basic concepts about math, computing and data visualization. You can see some sample lessons over at You Do the Math (one on functions and iteration, another on geometry and Monte Carlo techniques).

Wednesday, April 17, 2013

Swords and Wizardry Appreciation Day: Wow

I was amazed by the number and quality of Google+ responses to the Swords and Wizardry Appreciation Day.  It is pretty amazing the actual depth that this segment of the OSR actually has. 

One thing that really stood out is how easy it is to houserule S&W.  It is not just that they have the rules available in editable text format but that the rules themselves are very robust to tinkering.  This was one feature of more modern RPGs that I found difficult -- if you changed the assumptions of the game designers then the system showed problems.

The classic example is magic items in a D&D 3.X/Pathfinder world.  It is well known that the system presumes a certain level of magical gear for the players.  It also assumes that it is easy to make magical items.  Without these features, characters may well not operate as expected (the Monk 1/Druid X is much more formidable, for example). 

But with S&W, the alteration of a single rule rarely has repercussions across the system.  Sure, you can break it if you try to.  But the game plays well with many tweaks -- some of which are actually discussed in the rulebook (ideas like giving +1 to hit to two weapon fighters, or no memorized  wizard spells above level 6 but rituals instead).   This allows for a lot of freedom for groups to tinker and try to find the optimal balance. 

Swords and Wizardry Appreciation day

I was always surprised to be a Swords and Wizardry fan.  In a lot of ways I was a bigger fan of the original basic and expert (B/X) D&D books released after the first run of Dungeons and Dragons (and contemporaneous with Advanced Dungeons and Dragons). 

But the adventures sucked me in: both Grimmsgate and MCMLXII caught the sense of wonder of the early adventures and the lack of systematic approaches to everything that came latter.  Modern descendants of the original D&D (both the Wizards of the Coast and Paizo versions, both high quality products) lacked the sense of wonder that can from not fully understanding the world.  When everyone knows what an Ogre is and can do then there are few surprises left. 

The latest addition, in terms of rules, is Swords and Wizardry complete, which manages to have all of the key elements of the rules in 131 pages or so.  Sure some of the elements are not described in great detail (especially the spells) but that is a virtue.  I do think it was a mistake to include the spells above levels 5 or 6 . . . but the designer even admits to this in a sidebar.

Overall it was a refreshing vision of the game in an earlier era and one that I quite liked.  It was well timed to come out with the re-release of TSR D&D (both as premium reprints and as PDF files).  I have quibbles (no elf Druid despite an illustration to the contrary) but I think the vision and the production quality make up for these issues.  It is true that the system will work best for those who already understand D&D, but that really was how the hobby came to be (with the rule books often being somewhat inscrutable). 

Overall, I have really enjoyed this game system and I hope that Frog God Games continues to do high quality products like these ones (especially the modules). 

Tonight only -- free teleseminar on getting rich by writing for television

OK, not really, but a friend sent me this and I thought I'd pass it on because:

1. It sounded interesting;

2. It ties in (albeit weakly) with some recent discussions of distance learning;

3. Ken Levine (MASH, Cheers, Frasier) is one of the best bloggers on the subject of television and the business of writing.

Sorry about the late notice.
Tonight at 9 PM Eastern/ 6 PM Pacific I’ll be holding another FREE teleseminar. The topic is writing partners and my partner, David Isaacs will be joining me. We’ll answer all your questions. If you’re interested in participating and not already on the alert list here’s where you go to sign up. You must sign up by noon PDT. Did I mention it's FREE?

From unsupported hypothesis to conventional wisdom

I don't want to pick on Andrew Delblanco, who turned in an unusually well-balanced piece on MOOCs in a recent issue of the New Republic, but this passage bothered me quite a bit:
But the most persuasive account of the relentless rise in cost was made nearly 50 years ago by the economist William Baumol and his student William Bowen, who later became president of Princeton. A few months ago, Bowen delivered two lectures in which he revisited his theory of the “cost disease.” “In labor-intensive industries,” he explained, “such as the performing arts and education, there is less opportunity than in other sectors to increase productivity by, for example, substituting capital for labor.” Technological advances have allowed the auto industry, for instance, to produce more cars while using fewer workers. Professors, meanwhile, still do things more or less as they have for centuries: talking to, questioning, and evaluating students (ideally in relatively small groups). As the Ohio University economist Richard Vedder likes to joke, “With the possible exception of prostitution . . . teaching is the only profession that has had no productivity advance in the 2,400 years since Socrates.”
(for more along similar lines)

I'm not an economist, I haven't gone through Baumol and Bowen's research, and my college teaching experience is more than a decade out of date, so I'm certainly missing some salient points here, but if the hypothesis is true, I'd expect to see the following:

1. There should be a shortage of teachers

2. The percentage increase in wages for teaching should be greater than the percentage increase in overall tuition.

3. The share of tuition going to instructional costs should increase substantially relative to costs such as administration.

Rather than seeing all of these, it's not immediately obvious that we're seeing any. College teaching jobs are not easy to get, non-instructional costs seem to be more than holding their own and if you look at people who are paid solely to teach, their wages are increasing more slowly than tuition.

We have to be careful about treating informal observations as data, but with that caveat in mind, there are lots of reasons to question and not much evidence to support the hypothesis that a lack of technology-driven productivity gains by instructors are causing the sharp growth in tuition. Nonetheless, the idea has gone from interesting but unlikely theory to generally accepted fact.

Here's where I blame it all on Steven Levitt.

OK, not really, but this is an example of a journalistic fad that owes a lot to Freakonomics: propping up an argument with a semi-relevant economic allusion. This isn't the same as analyzing a problem using economic concepts (for example, trying to explain health care inflation as a principal agent problem). Instead, what we have here is the idea that explaining the concept is the same as arguing that it applies.

It is, of course, possible that cost disease really is driving the growth of tuition. This is an enormously complicated problem and complicated problems often look very different when examined in detail. Viewed from a distance, though, the idea that a lack of instructional productivity gains are driving the growth simply doesn't jibe with what we're seeing.

Tuesday, April 16, 2013

Lesson for Epidemiology

I am amazed that Mark was not all over this statistical modeling issue.  Matthew Yglesias posts the response from the authors here

A couple of quick thoughts.  First, no matter what you think of the authors of the original paper, I am inclined to applaud them for sharing both the source data and the statistical code used to analyze it.  It opened to them a comprehensive methodological critique but that could not have happened if they had not shared the source data and code.  The next result, from a scientific point of view, is a huge win (and I think this outweighs any actual errors, presuming that they were not intentional). 

Second, the whole issue of association versus causality is one that we should think more about.  It can be easy to slip in the fallacy of equivocation: asserting associational thinking when a study is attacked but interpreting it in a very causal manner in a policy discussion.  We have this problem all of the time.  We state associations like "people who eat red meat have a higher rate of disease" but then turn that into a recommendation of "eat less red meat". 

Now clearly one has to make an actual decision at some point and, in a lot of cases, the guidance can cause no harm.  But there are complex cases where this could matter a lot.  Consider the inverse association between smoking and Parkinson's disease.  Imagine (based on no data -- just a though experiment) that we extended this association to show slower progression in patients who continued to smoke.  That might make one think that cigarette smoking might be recommended to Parkinson's disease patients.  But if we are wrong (and the association is confounded or acting as a marker for some other trait) we will increase the rates of lung cancer and serious heart disease for no therapeutic benefit. 

Sometimes a randomized trial is an option.  But when it is not (as many exposures, like height or air quality, are hard to randomize) then there is a very delicate decision-making process.  It is very instructive and important to watch how other fields of study deal with these types of issues. 

Edit: It seems everyone has been looking at this question.  Some additional very good takes (over and above the Mark Thoma, Matt Yglesias and Mike Konczal linked above) include:

Andrew Gelman
Noah Smith
Paul Krugman
Tyler Cowen
Jonathan Chait

I continue to hope Mark Palko can be convinced to weigh in as well. 

Simply amazing tale of corporate governence

This was just amazing:

At Iris International, a medical diagnostics company based in Chatsworth, Calif., shareholders rejected all nine directors in May 2011. In keeping with the company’s policy, they submitted their resignations. And then they voted not to accept them. The nine stayed on the board. (The company was acquired in late 2012 by the Danaher Corporation.)
Assuming that this is a factually correct version of events and does not omit a key detail of some kind (always a risk when a story seems this outrageous), this is a remarkable separation of the owners of the company from their own board of directors.  In theory, could any board-member be replaced under these circumstances?  

A defense of the envelope method

Emily Oster has a provocative piece in Slate arguing against the envelope method of budgeting.  The crux of the argument appears to be:

The principle in question here is that “money is fungible.” In reality, all dollars are the same. There is no such thing as a gas dollar, a grocery dollar, a “fun” dollar. The Ramseys of the world argue you should just apportion them into the envelopes depending on what you think you might spend. But doing it this way is not actually the best way to dole out your money; you are not optimizing. Your money is just not working as hard as it should.
The system works great, as long as nothing ever changes. But the minute that some price changes, you’re in trouble. Here’s an extreme example. Imagine you drive to work, and your “gas money” envelope contains enough money to get you to work for the month, and maybe a little cushion. But then gas gets more expensive. You may first react by switching to a worse grade—say, from premium to regular (research shows many people do this). But if gas prices go up even more you simply will run out of money in the gas envelope. And then you won’t be able to get to work. Strictly following the envelope system here would be much, much worse than “cheating”: It’s certainly bad for your household budget if you miss work.

This presumes that the envelope system is static and the allocation of money in the envelopes never changes as prices change.  In other words that you do your budget once and never alter it.  It is clear that the strong form of this argument is actually a straw man -- would anybody let themselves be evicted because their rent went up but they could not bear to alter the values on the envelopes?  In general, this system will fail int he face of massive price and income volatility, but then nothing works well when you cannot plan for future income and expenses.

In my experience, the actual reason for the envelope system is one of two cases:

1. It reduces the complexity of managing a detailed household budget
2. You are really so poor that you have no ability to reallocate money

In my youth, I knew a lot of poor people (less so now, which is not necessarily a change for the better) and, in fact, was very poor for a time.  When your budget is tight enough it may really be the case that you cannot overspend on gas for the car without being unable to pay rent and/or eat and/or pay the electric bill.  People at this level of poverty do not necessarily have credit cards..

One of the features of being middle class is having flexibility.  Consider the plane ticket example that Dr. Oster presents: that makes total sense if you could (in theory) allow a credit card to increase.  But if the cost of the item would bring your bank account below zero and you don't have credit (or it has ruinous terms, like a payday loan or a 30% credit card) then you simply can't spend the money at all.

In practice this lack of flexibility can be very tough.  There are a lot of items that, bought in bulk, are cheap.  But bulk items are hard to transport on the bus (especially if it is crowded) and cost more (and you often cannot borrow against the future).  There are a surprising number of costs to being very poor (as opposed to being very frugal).

So, yes, it is possible for the envelope system to be too inflexible and that is not ideal.  But it is very, very useful when you have $110 after rent and utilities to make the rest of the month work.

Monday, April 15, 2013

Risk Aversion

What is the average interest rate these days?  According to one source it is puny:
Throughout the entire industry, however, the national average bank interest rate for savings accounts is only .21 percent

So why might be it rational to overpay your taxes by a small amount?  Consider this comment from Megan McArdle:
A tax refund is not free money you get from the government. It’s free money you gave to the government—by overpaying your taxes all year. You think the interest rate on your savings account is paltry? At least it's not zero, which is the amount Uncle Sam pays you for your yearlong interest free loan. (If you underpay the government, on the other hand, they charge you not only interest, but also penalties.)

On one hand her advice is completely sensible.  It makes a lot of sense to reduce a very large tax refund.  On the other hand, you need to save a lot of money for the 0.21% interest in that savings account to outweigh the interest and penalties.  Since even interest is 3% (15 times the savings rate), I think it makes sense to aim for a small refund rather than to make errors on both sides of the distribution (since underpaying is much more expensive than the lost revenue from overpaying).  This logic may not hold if interest rates and/or inflation pick up in the future. 

Did Dickens meet Dostoevsky? -- Opinions differ

Ross MacDonald books often start with a family that seems perfect except for one element out of place (like an angry, disturbed child) but when the hero starts to tug on that one thread the entire illusion falls apart.

University of California Berkeley Prof. Eric Naiman has come close to the scholarly equivalent of a Ross MacDonald novel in his recent essay in the Times literary supplement (via LGM). He finds one thread out of place, in this case an unlikely meeting between two famous novelists.By tugging on that thread Naiman uncovers a hoax of truly incredible scale and complexity. (Literally incredible at first. I Googled a half dozen of Naiman's facts before I decided he wasn't the one playing games.)

You really need to read the whole thing for yourself but one section near the beginning was particularly relevant to some of our recent discussions.

Late in 2011, Michiko Kakutani opened her New York Times review of Claire Tomalin’s biography of Charles Dickens with “a remarkable account” she had found in its pages. In London for a few days in 1862, Fyodor Dostoevsky had dropped in on Dickens’s editorial offices and found the writer in an expansive mood. In a letter written by Dostoevsky to an old friend sixteen years later, the writer of so many great confession scenes depicted Dickens baring his creative soul:

“All the good simple people in his novels, Little Nell, even the holy simpletons like Barnaby Rudge, are what he wanted to have been, and his villains were what he was (or rather, what he found in himself), his cruelty, his attacks of causeless enmity toward those who were helpless and looked to him for comfort, his shrinking from those whom he ought to love, being used up in what he wrote. There were two people in him, he told me: one who feels as he ought to feel and one who feels the opposite. From the one who feels the opposite I make my evil characters, from the one who feels as a man ought to feel I try to live my life. ‘Only two people?’ I asked.”

I have been teaching courses on Dostoevsky for over two decades, but I had never come across any mention of this encounter. Although Dostoevsky is known to have visited London for a week in 1862, neither his published letters nor any of the numerous biographies contain any hint of such a meeting. Dostoevsky would have been a virtual unknown to Dickens. It isn’t clear why Dickens would have opened up to his Russian colleague in this manner, and even if he had wanted to, in what language would the two men have conversed? (It could only have been French, which should lead one to wonder about the eloquence of a remembered remark filtered through two foreign tongues.) Moreover, Dostoevsky was a prickly, often rude interlocutor. He and Turgenev hated each other. He never even met Tolstoy. Would he have sought Dickens out? Would he then have been silent about the encounter for so many years, when it would have provided such wonderful fodder for his polemical journalism?

Several American professors of Russian literature wrote to the New York Times in protest, and eventually a half-hearted online retraction was made, informing readers that the authenticity of the encounter had been called into question, but in the meantime a second review of Tomalin’s biography had appeared in the Times, citing the same passage. Now it was the novelist David Gates gushing that he would trade a pile of Dickens biographies for footage of that tête-à-tête. While agreeing with Tomalin’s characterization of this quotation as “Dickens’s most profound statement about his inner life”, he found its content less astonishing than she: “it’s only amazing because it’s the image-conscious Dickens himself coming out and saying what anybody familiar with his work and his life has always intuited”.

Shortly thereafter, the Times website appended to the online version of Gates’s review the same cautionary note that had already been attached to Kakutani’s. But on January 15, 2012, the paper’s “Sunday Observer” section published yet a third article on Dickens that quoted from Dostoevsky’s letter. (The same online disclaimer was soon appended to this piece as well.) The newspaper’s collective unconscious was unable to give the story up. It demands retelling, and by now Dickens and Dostoevsky can be found meeting all over the web. Their conversation appeals to our fancy while, as Gates realized, comforting us with a reaffirmation of what we already know. Moreover, this reassuring familiarity applies not only to Dickens, but also to Dostoevsky. The man who asks “Only two?” is a writer who already knows what Mikhail Bakhtin would eventually write about him, who is presciently aware of his late-twentieth-century canonization as the inventor of literary polyphony.
I wondered if Naiman was being overly harsh when he called the retraction 'half-hearted.' He wasn't:
Correction: October 29, 2011 
The Books of The Times review on Tuesday, about “Becoming Dickens: The Invention of a Novelist” by Robert Douglas-Fairhurst, and “Charles Dickens” by Claire Tomalin, recounted an anecdote in Ms. Tomalin’s book in which Dostoyevsky told of meeting Dickens. While others have also written of such a meeting and of a letter in which Dostoyevsky was said to have described it, some scholars have questioned the authenticity of the letter and whether the meeting ever occurred.
I know I've been harping on this but there's a big and important issue with modern journalism's indifference to getting the facts right. The difficulty involved in checking a story has decreased by orders of magnitude and yet, even at our best papers, Twenty-first Century reporting is often less accurate than Twentieth Century work. Part of the problem is he belief that you're in the clear when you publish something that obviously wrong if you later add a weaselly some-people-disagree disclaimer at the bottom.

But enough scolding. Go read the Naiman piece. You will not find anything else like it.

Sunday, April 14, 2013

Coding boot camp

Interesting story both from an educational and labor-economics standpoint. More to come on this one.

From the AP:
Instead, he quit his job and spent his savings to enroll at Dev Bootcamp, a new San Francisco school that teaches students how to write software in nine weeks. The $11,000 gamble paid off: A week after he finished the program last summer, he landed an engineering job that paid more than twice his previous salary.   
“It’s the best decision I’ve made in my life,” said Shimizu, 24, who worked in marketing and public relations after graduating from the University of California, Berkeley in 2010. “I was really worried about getting a job, and it just happened like that.” Dev Bootcamp, which calls itself an “apprenticeship on steroids,” is one of a new breed of computer-programming school that’s proliferating in San Francisco and other U.S. tech hubs. These “hacker boot camps” promise to teach students how to write code in two or three months and help them get hired as web developers, with starting salaries between $80,000 and $100,000, often within days or weeks of graduation.

“We’re focused on extreme employability,” said Shereef Bishay, who co-founded Dev Bootcamp 15 months ago. “Every single skill you learn here you’ll apply on your first day on the job.”

These intensive training programs are not cheap — charging $10,000 to $15,000 for programs running nine to 12 weeks — and they’re highly selective, typically only admitting 10 to 20 percent of applicants. And they’re called boot camps for a reason. Students can expect to work 80 to 100 hours a week, mostly writing code in teams under the guidance of experienced software developers. “It’s quite grueling. They push you very hard,” said Eno Compton, 31, who finished Dev Bootcamp in late March. Compton is finishing his doctorate in Japanese literature at Princeton University, but decided he wants to be a software engineer instead of a professor.