Monday, September 30, 2013

Charter schools

Okay, this piece in Forbes about the money to be made in charter schools is really pointing out the potential hazards of these sorts of movements.  It is not that they can't necessarily improve outcomes (at least in a theoretical sense) but that there can be a lot of potential to shift the focus from educating students to making profits.  It is a classic principal agent situation as the person paying (the government) is not the person receiving the services (the students). 

Consider:
Nor does the evidence show that charters spend taxpayers’ money more efficiently. Researchers from Michigan State and the University of Utah studied charters in Michigan, finding they spent $774 more per student on administration, and $1,140 less on instruction.
About the only thing charters do well is limit the influence of teachers’ unions. And fatten their investors’ portfolios.
In part, it’s the tax code that makes charter schools so lucrative: Under the federal “New Markets Tax Credit” program that became law toward the end of the Clinton presidency, firms that invest in charters and other projects located in “underserved” areas can collect a generous tax credit — up to 39% — to offset their costs.
So basically they are hiding the costs of operation in tax credits (reducing tax revenue) to look like they are efficient.  I think it would be helpful to everyone if we counted tax expenditures as a form of spending.  So how is this plan to earn profits via education working out?  Just how good is this plan?
So attractive is the math, according to a 2010 article by Juan Gonzalez in the New York Daily News, “that a lender who uses it can almost double his money in seven years.”

or the salary of the CEO of one of the few publicly traded Charter School companies:
The story also revealed CEO Ronald Packard collected a salary in 2011 — $5 million — nearly double that of the previous year. And that his bonus is linked not to student performance, but to enrollment.

So the real issue here is that costs are not especially transparent and outcomes, on average are not especially wonderful:
Too bad the kids in charter schools don’t learn any better than those in plain-vanilla public schools. Stanford University crunched test data from 26 states. About a quarter of charters delivered better reading scores, but more than half produced no improvement, and 19% had worse results. In math, 29% of the charters delivered better math scores, while 40% showed no difference, and 31% fared worse.
Unimpressive, especially when you consider charter schools can pick and choose their students — weeding out autistic kids, for example, or those whose first language isn’t English. Charter schools in the District of Columbia are expelling students for discipline problems at 28 times the rate of the district’s traditional public schools — where those “problem kids” are destined to return.
So, even ignoring peer effects, these look like similar outcomes (the bias will be towards public schools doing worse because they cannot refuse students as easily).   

So I think two issues arise as matters of policy from these sorts of discussions.  One, it is hard to imagine why we need to disassemble a working system just to create lucrative investment opportunities.  Two, teacher job security and salary become much more salient as issues if they are compatible with decent student outcomes (one average, anecdotes will exist in all directions). 

I am not against innovation in education.  But I tend to be suspicious of drastic transformations of complex systems as they are hard to implement.  Nor is it reassuring that a business magazine is pointing this area out as a profit making opportunity.  Insofar as we have data, it isn't all that reassuring when we compare costs and benefits.   

h/t Mike the Mad Biologist and thanks to Mark Palko for comments

Saturday, September 28, 2013

Weekend blogging -- the political cartoons of Dr. Seuss

As TPM pointed out, Ted Cruz made an odd choice when he invoked Theodor Geisel, a lifelong liberal who served as a political cartoonist for the left-wing PM.

Here at West Coast Stat Views, we're always hunting for an excuse to waste time looking at cartoons, so...

































Which was also an reference to an earlier and very successful ad campaign












Friday, September 27, 2013

Hunger, homelessness and the George Foreman Grill

In the recent discussion of food stamps (see here, here, and here), one of the recurring points was that the price of food available in an area often played a relatively small role in the problem, particularly compared to the difficulties associated with not having access to flexible transportation or a decent kitchen.

Which brings up one of this blog's favorite villains, the dangers of having policy debated and decided by an economically and regionally homogeneous group. It's not just a case of not seeing things from other perspectives; it's a case of not seeing things from other perspectives and not knowing that you're doing it. When a well-meaning CEO recently tried to live on a SNAP budget for a week, he screwed up the easy part, but more importantly, he skipped the hard part, not because he was trying to cheat but because things like having a car were simply part of his world. 

I've been focusing on transportation, but having an adequate kitchen can be as or more important. I heard an interview with a man who had just gotten off the streets who explained it with the following example: if have a kitchen, you can get a dozen eggs for less than two dollars and have breakfast for a week; if you have to go to a restaurant, that same money will get you one egg sandwich. 

This 2004 NPR story illustrates the point beautifully and it also shows the resourcefulness people can show under difficult circumstances. 
So many immigrants, homeless people and others of limited means living in single-room occupancies (SROs) have no kitchens, no legal or official place to cook. To get a hot meal, or eat traditional foods from the countries they've left behind, they have to sneak a kind of kitchen into their places. Crock pots, hot plates, microwaves and toaster ovens hidden under the bed. And now, the latest and safest appliance, the appliance that comes in so many colors it looks like a modern piece of furniture: the George Foreman Grill. It is, quite literally, a hidden kitchen.
...
This story also led us to the streets. We called our colleague, Steve Edwards at WBEZ, to see if he could help us locate any hidden grills in Chicago. He contacted The Chicago Coalition for the Homeless, which in turn put us in touch with Jeffrey Newton. Jeffry has been homeless or in shelters most all his life, from boy's homes, to reformatories, to prison by age 17. Then he moved out on the streets, where every day he goes "trailblazing" — looking for food, shelter, work, the resources he needs to make it through the day.

Jeffry learned to cook from his grandmother. He feels an urge to cook, especially for other people — under the overpass on Chicago's Wacker Drive; on a George Foreman Grill plugged into a power pole; with a hot clothing iron to toast a grilled cheese sandwich.

We also called Glide Memorial Church in San Francisco's Tenderloin District. We knew they would know. They offer a stunning array of services to the poor, to those in recovery, to those needing assistance, both spiritual and physical.

Pat Sherman lived for quite some time in SROs with no kitchen, where cooking was forbidden. She now has a home and works in Glide's walk-in program. Sherman — whose recipe for "Hidden Beans & Rice" is linked to above — was quite ingenious when it came to cooking. Her Crock-Pot doubled as a pencil holder and a flower pot — nothing that would arouse suspicion. When nobody was around to check, she would slow-cook her beans while she went to school, then come home to a hot meal.

Thursday, September 26, 2013

Reactions to DeLong's piece on Global Warming

I am sure that this section will be roundly ignored, but it was the most interesting to me
Even half a generation ago, economists interested in global warming like Thomas Schelling saw natural justice to this argument, and expected the North Atlantic to finance the carbon-neutral industrialization of the Global South--an environmental Marshall Plan for the 21st century. Global politics has not been kind to such dreams. I do not know of a way to represent a number as small as the probability that the next generation will see large-scale transfers from the North Atlantic to the Global South to fund its carbon-neutral industrialization.

But it may well be that continued inaction on dealing with global warming itself has mammoth antiegalitarian distributional consequences for the world. There are 2 billion peasants in the great river valleys of Asia from the Yellow to the Indus. Few of them have the human capital or the relationship chains needed to do well in the cities of Asia. For most of them, the economically valuable asset that they have the land that they farm--the land that requires for its economic value that there be enough melting snow off the Tibetan plateau but that the snow not melt too quickly. Global warming means either more or less snow on the Tibetan plateau. Why the governments of East Asia and South Asia are not now screaming about the consequences for their 2 billion peasants of global warming seems to me explicable only as the result of a strange kind of political myopia. To wait for large-scale transfers from the North Atlantic to begin carbon neutral industrialization in East Asia and South Asia seems to me likely to be viewed by historians a century from now as a classic dog-in-the-manger story.
I think that there are two levels that I really like this argument.  One, probably not surprising, is the public health argument.  The biosphere is under a lot of pressure -- pushing on it hard right now is likely to result in all sorts of adverse public health outcomes as things like water supplies become more constrained.  I think that the economic value argument (the melting snow makes the land economically valuable) is less salient than the potential for human suffering if there is a loss of food and clean water in this area.  DeLong doesn't address this directly, but I presume it is subsumed into the consequences of the economic changes. 

The second, though, is to think about the net present value of improved renewable energy sources.  Even with a modest discount rate, the development of improved solar, wind, or water energy production is huge because it extends the likely window of exploitation far into the future.  It is plausible that there might not be petroleum used as fuel in the future; the horizon over which the sun will stop providing energy likely exceeds the expected lifespan of the human race.  Heck, even Nuclear, with known disadvantages, has a much longer time horizon for viability.  This creates a real value to investment in these technologies as small improvement in efficiency could well pay large dividends. 

Of course, Mark would point out that existing technology is also potentially helpful as well

Netflix, the Emmys and the power of a happy narrative -- inevitable Motley Fool edition

This is getting sad.

As mentioned in a previous post, those journalists who cover either media or business or both have completely invested in the narrative of Netflix as visionary game changer. As a result they are compelled to put a positive spin on even the worst news such as this weekend's Emmy awards.

I had assumed it was inevitable that Motley Fool would join in. I had not realized, however, that they would actually join twice in the space of as many days, or that their efforts would be so, well, pathetic.

The first, "Why Netflix is still a buy," is merely embarrassing. Though it has a deadline of September 24, no mention is made of the Emmys. Instead we get a standard line about things looking great in Canada and about how people sure do watch a lot of television. All of which simply serves as a come on for one of Motley fool's promotional videos.

It's the second, though, that manages to exceed even Motley fool's standard of you've-got-to-be-kidding.In "Netflix Just Took Another Step Closer to Becoming HBO,"  Tim Beyers makes a full bore run at painting defeat as victory, favorably comparing House of Cards' Emmy performance to that of The Sopranos. Doing so requires grouping basically meaningless Creative Arts Emmys with the majors, underplaying the relatively low prestige of the directing Emmy and completely ignoring the fact that, based on reputation alone, David Fincher (Seven, Fight Club, Zodiac, and The Social Network) was always the favorite to win this category just as Martin Scorsese had been the favorite two years ago.

One of Motley Fool's favorite strategies is to pick a hot company like Netflix or Disney and relentlessly talk it up. Unlike the traditional pump-and-dump, the goal isn't to drive up that individual stock (it's hard to move a Disney); instead what's being pumped is the idea that you're losing money by not being in. This frame of mind makes readers receptive to buying MF's investment books and $199 newsletters even though, based on their columns, they have little to offer other than conventional wisdom and questionable analysis.

MF may not provide the worst investment advice you'll find...






But you can find better places to spend your money.

Wednesday, September 25, 2013

Why insurance is essential

This post gets to the heart of the reason why I consider the "insurance" piece of health insurance to be the less important part.  Being able to get favorable rates at the time of a medical emergency is far more important.  Consider: 

Lab testing is a vital part of modern healthcare, and can be a valuable tool in helping to diagnose many conditions and illnesses. But they can also be costly, especially if patients don’t pay attention to where their tests are being done. This can even be a problem for those with ‘comprehensive’ insurance, such as Mr. Marcovitz, when their insurer decides after the test is performed that they won’t cover a certain procedure. His story turned out OK, but most self-pay patients would likely have been stuck with a $2,000 bill for a test that they should only have paid $375.
It is fine to argue over whether statins should be covered by insurance, as a patient can actually get price quotes.  But it is less obvious that this is viable after being shot.   It is this emergency care piece of medical care that makes it impossible for a patient to comparison shop prices.  Heck, our ambulance system is completely set up for getting people to care fast and a seriously injured patient is simply not going to be able to bargain.  Imagine the "pay X now or go to hospital Y and pay Z, but on the way you will have irreversible heart damage due to a delay in treatment for your myocardial infarct".

Since the bargaining power in US medicine is entirely with insurers (private or government) this is actually a rather big deal. 

h/t The Incidental Economist

Tuesday, September 24, 2013

Getting a handle on the paradox of hunger in a country of abundant cheap food

Andrew Gelman has a good SNAP discussion going over at his blog. He also raises an interesting point about the implied statistical content of the previous posts on the subject. The following is a quick attempt (almost entirely dictated into my smartphone while walking to the bank) to make a few preliminary stabs at framing the problem:

We start with household diets. These are collections of individual diets. In some cases we can get economies of scale by combining these while in other cases it makes more sense for them to differ at certain points (for example, if one member is gluten intolerant or is on a low sodium diet). Just to standardize our terms, let's say that each days diet consist of four meals breakfast, lunch, dinner, and a snack. We measure the quality of each of these meals based on three metrics: nutrition, appeal, and how filling it is. Note, these metrics are not weighted symmetrically – a low score in any one of these areas is more bad than a high score is good. Therefore the first objective is to keep any of these metrics from falling below a satisfactory level. After that is achieved the secondary goal is to maximize these three.

Each meal consist of one or more dishes. Each dish consist of one or more ingredients. Everything interacts. One dish may go badly with another. A light dinner might be more acceptable after a heavy lunch.

These ingredients have to be purchased and prepared under various constraints. These include but are not limited to money, time and access.

The ingredients are bought at various stores. Each store is associated with certain time and transportation costs. For each ingredient, there are a wide range of factors that need to be considered before deciding a purchase. These include the quality of the dishes that can be prepared from these ingredients, the cost of the ingredients, how perishable these ingredients are, how easily they can be stored, and their versatility. To further complicate matters, these factors are sometimes dependent on what other ingredients are available, where they are being purchased and the quantities being bought. For example:

The quality, based on the previous listed metrics, of a dry breakfast cereal is dependent on the presence of milk;

The cost of a given item may be cheaper at one store but only if bought in large quantities;

If the constraint of only being able to shop at one store is added, shoppers may be forced to pay a premium price for being able to get all of the items needed for a given dish (99 cent store shoppers run into this problem frequently).

Now add to that the complexity that comes from the huge number of items that potentially may be included in our analysis and the wide range in personal situations.

Here are some examples of the latter:

An individual with a car in an urban area can probably select from a dozen or more stores and visit 2 to 4 of them in the space of an hour;

Outside of a few areas will served by public transportation, an individual in that same area without a car might only have a choice of three or four stores and might require a full 90 minutes to visit just one;

An ambulatory person in good health might be able to shop a 2 mile radius on foot;

The radius for a senior using a walker might be three blocks;

A working parent might find him or herself so time constrained that any shopping trip that takes more than an hour represents a severe sacrifice.

Finally add to that the need to put every meal on the table every day despite the fact that food consumption can be difficult to predict.

Just to be clear, we are talking about big effects here with substantial policy implications. Inappropriate or overly simplistic analyses can easily lead to disastrously wrong conclusions, but I'm not really the person to say what the appropriate approaches are. Maybe there's an epidemiologist in the audience with a suggestion or two...





The enormous difference that $4.45 a day can make

While on the subject of food stamps, you should check out the latest Paul Krugman column. He does a great job spelling out some of the touchstone points of the debate:
Still, is SNAP in general a good idea? Or is it, as Paul Ryan, the chairman of the House Budget Committee, puts it, an example of turning the safety net into “a hammock that lulls able-bodied people to lives of dependency and complacency.”

One answer is, some hammock: last year, average food stamp benefits were $4.45 a day. Also, about those “able-bodied people”: almost two-thirds of SNAP beneficiaries are children, the elderly or the disabled, and most of the rest are adults with children.

Beyond that, however, you might think that ensuring adequate nutrition for children, which is a large part of what SNAP does, actually makes it less, not more likely that those children will be poor and need public assistance when they grow up. And that’s what the evidence shows. The economists Hilary Hoynes and Diane Whitmore Schanzenbach have studied the impact of the food stamp program in the 1960s and 1970s, when it was gradually rolled out across the country. They found that children who received early assistance grew up, on average, to be healthier and more productive adults than those who didn’t — and they were also, it turns out, less likely to turn to the safety net for help.






Netflix, the Emmys and the power of a happy narrative

I probably should have been more explicit about this but the Netflix thread* always consisted of two intertwined sub-threads: The first was a discussion of the business model and methods and how they fit in with the larger television industry; the second concerned the media narrative and the way journalists and pundits found ways to justify the story they wanted to tell.

Last night something big happened to both of those threads. For perhaps the first time in recent memory, the Emmys actually mattered.

To understand the impact on the first thread, you have to take a detailed look at the most likely business model for Netflix. Most likely here does not mean most commonly given. That would be that Netflix hoped to bring in enough additional subscribers to justify the hundred million dollars they spent on House of Cards. Even the numbers from Netflix don't seem to support that claim and as certain shrewd observers (such as Mark Rogowsky and Rocco Pendola), some of the numbers we get from Netflix are questionable.

The far more credible model was that the company was as interested in the prestige and PR value associated with the perception of having a critical and commercial hit. Thus if House of Cards brought in an additional $50 million through new subscribers and decreased churn and also provided the indirect benefits from reputation then the deal made financial sense.

At this point it's useful to step back and compare the way Netflix developed original programming to what we might call the HBO model, also practiced by FX, USA, TNT, and AMC. The HBO model normally starts by hiring a collection of respected B-list talents such as David Chase, Timothy Olyphant, or Louis CK and finding promising C-list talents such as James Gandolfini or Jon Hamm. This increases the risk of failure on the individual show level but it produces a good aggregate ROI and it makes you look like a genius when someone people have never heard of becomes the next big thing.

Netflix took largely the opposite approach with H of C, spending lavishly for hot property, an A-list star and and the director of such films as Seven, Fight Club, Zodiac, and The Social Network. As mentioned before, this expense is difficult to justify strictly in terms of subscribers and churn but it could make sense if the show generates sufficient publicity and has a substantial brand effect.

This is where the Emmy's come in. For a network show an Emmy is not that big of a deal. It can give a nudge to an on-the-bubble series but it generally doesn't translate to a big bump in absolute numbers. It is, however, a valuable branding tool and, more importantly, it's an indicator of branding success. Thus, when AMC was trying to rebrand itself a few years ago, that first award for Mad Men really was a big deal.

Under these circumstances, there's no way that Netflix is happy about the results of these weekend's awards. They wrote huge checks to get House of Cards and Arrested Development (without even managing to acquire all the IP rights). They plastered LA with "For Your Consideration" ads. For all that, they had a poor showing in the nominations and a worse showing on Sunday. After all this effort they got a couple of meaningless "Creative Arts" Emmys (casting and cinematography) and the second tier major, directing (which, given David Fincher's reputation, was almost a given).

Ideally, when a company has devoted this kind of resources to a goal and that goal doesn't pan out, the company will at least reexamine its strategy and tactics, but Netflix isn't really in a position to do that and one of the reasons for that inability to react involves the other thread.

Netflix stock is running very high at the moment and Reed Hastings, Theodore Sarandos and other high ranking people at the company have raked in huge amounts of money in large part because of a pervasive and overwhelmingly positive official narrative. The admission that the model needs work could easily end up costing these executives tens of billions of dollars.

More importantly, the journalists covering the story are working very hard to see to it that Hastings never has to make that admission.

Here's the Wall Street Journal:
If Hollywood wasn't already taking Netflix seriously, it is now.

The streaming video service scored a win at the TV industry's Emmy Awards on Sunday night as David Fincher took the best director prize for political drama "House of Cards." It marked the first victory in a major category for an online video distributor.

The Emmy win could boost Netflix's prestige in Hollywood as an outlet for high-quality original series and further encourage writers, producers and actors to consider Netflix projects at a time when competition for talent among TV networks is as fierce as ever.
You can argue that the Emmys don't matter, but you can't argue that Netflix's one win in a category no one cares about constituted a good night. (Unfairly or not, TV is not considered to be a director's medium. Fincher didn't even show up to collect the statue.) However, we have reached the point in the journalistic narrative process where response is not all that dependent on the nature of the stimulus. Anything short of complete disaster will prompt cheerful, bullish stories. That's what the narrative calls for.

p.s. I dictated much of this using my smartphone. I believe I got all of the homonyms but I apologize if some slipped by me.

* Among others:

Edging away from the genius hypothesis

Netflix can never be the next HBO

Curiously, agressively anti-social

Two quotes about Netflix, presented (almost) without comment

House of Cards -- either already in the black or seriously underperforming

Monday, September 23, 2013

What do the extremely old ultimately die of?

From this article (fascinating throughout):
Professor Coles has done 11 autopsies on supercentenarians and finds that most die of congestive heart failure secondary to “systemic TTR amyloidosis”, a thickening of the blood. The rest tend to inhale food particles and get pneumonia. It is not really clear why women live longer than men; probably something to do with their having a different cocktail of steroid hormones.
It seems that the cardiovascular system is the final point of vulnerability if one makes it past 110 years of age without dying of cancer. 

h/t Tyler Cowen

Of course, tuition is out of control. Just look at what they pay these people

From Yahoo:
That's what some fellow educators in Pittsburgh and around the country are asking, after an 83-year-old adjunct French professor at Duquesne University died earlier this month with no health insurance, no heat in her home and, for the first time in 25 years, no job.

Last spring, Duquesne told Margaret Mary Vojtko that it would not renew her teaching contract that paid her about $10,000 a year. Vojtko, who was battling cancer, had very high medical bills, could not afford to keep heating her home and had been sleeping in her office at the school. 




Sunday, September 22, 2013

For epi people, this This American Life is of special interest

If you work in health, you've probably been hearing about the concerns about Tylenol for years now but you'll still want to check out this report from TAL, if only for the larger policy questions it raises.

Counter-example

David Friedman has an interesting counter-example to my claim that the state is essential to enforce claims for damages.  He brings up Icelandic law, which is an area of interest to me due to my passion for European history (my leisure reading right now is Trevor Royle's book on the War of the Roses). 

I am not sure that the Icelandic example would scale to the modern United States of America, nor do I think we necessarily want all of the knock on effects.  But it has the virtue of being a viable approach that lasted for multiple centuries (which is about the most we can say of any modern state). 

If you want to try some leisure reading, he has a book on the topic of alternative legal structures that is in development.

P.S. In the annals of small worlds, I used to be a very involved member of the SCA.  The notion of a self organizing society built around ideals is a lot more rational when you've seen the interesting things that the SCA has managed. 

Saturday, September 21, 2013

Weekend blogging -- "The Great Man Votes"

We've been seeing a lot of examples recently of disproportionate voting power, largely as a result of the GOP's decision to compensate for a shrinking base through higher participation (something which raises serious questions about stability but that's a subject for another post). These examples got me to thinking about the 1939 film The Great Man Votes in which the fate of a large city's election comes down to one precinct split so evenly that one last uncommitted registered voter will determine the outcome.

Even without the political science element, the movie is worth checking out. It's a solid picture with another fine late John Barrymore performance. Barrymore should have been reduced to mumbling his lines and dozing off between them but somehow the decay never made it on camera.

And if the basic plot sounds a bit familiar...




Friday, September 20, 2013

Trade reducing labor share of income: paradigm changing if true!

This will be very important if it turns out to be true:

One thing that they find is that the headline decline in this indicator is actually a bit overstated due to technical issues with the treatment of self-employment income. About a third of the total decline, they think, can be attributed to miscalculation. The blockbuster finding, however, is that the remainder is very heavily concentrated in industries that are newly composed to import competition. In other words, the labor share of national income has fallen because many more industries are exposed to foreign competition in a way that's systematically advantaged the owners of capital.

Now go to a rust belt town with this finding, and people are going to say: "That's news?! What the heck is wrong with you economists?!?!"
The reason that this is so important is that the moral basis for things like free trade agreements is the argument that, in aggregate, everybody is better off.  We feel badly for those people who lose their jobs in the process, but it is in everyone's interest to improve the aggregate standard of living of all Americans.  Now there has always been a bit of a paradox between this position and the success of industrial policy in places like Japan.  I have generally accepted the argument that there might be important differences between a nascent economy and a mature economy.  Maybe protectionist policies are good for improving wages when there is a lot of room for "catch-up growth".

But if the game has been rigged so that free trade reduces the labor share of income then that is a completely different issue.  Wealth in the US is much more skewed than income, so the goal of an ownership society is actually further away than an affluent middle class society would be. 

This also can have knock on effects as well.  So, for example, creation of charter schools to introduce competition might reduce teacher wages while creating a new source of a return on capital via a private school network.  For the same money you get richer capitalists and poorer teachers.  I am not saying that is the goal of the movement, but it is worth thinking for a moment as to why this form of competition is pushed so vigorously. 

Mark, any follow-up thoughts? 

I know Ron Shaich's heart is in the right place, but...

I'm afraid I'm going to have to take a couple of shots at this:
Panera Bread CEO Ron Shaich is spending a week trying to feed himself on $4.50 a day.
Shaich took the challenge to find out what it's like to live on food stamps. He's blogging about the experience on LinkedIn.

The average person on food stamps receives $4.50 per day in assistance, according to The New York Times.
...
When Shaich went shopping with his weekly budget of $31, he was surprised that he couldn't afford coffee, fruit, yogurt, or milk.

Shaich ended up settling on a daily breakfast of cereal without milk, a lunch of lentils and chickpeas, and a pasta dinner. He bought carrots to snack on in between meals. 
Instead of the intended message that being poor is hard, the takeaway is that rich people aren't very good with money. For starters, a competent shopper with a reasonable range of stores should be able to put together the meals and snacks described here for $3.00, maybe $3.50, certainly leaving enough in the budget for some milk for you cereal and a cup of coffee.

Wondering how he got his numbers I ducked into a Ralph's and checked some prices. (For those of you unfamiliar with the chain, Ralph's is the SoCal division of Krogers, not high end but generally more expensive than Wal-Mart which is generally more expensive than Food-4-Less which is generally more expensive that the 99 cents only stores.) The first thing I noticed was that he appears to have bought considerably more than a week's worth of food in some of his categories. When I looked at comparable boxes of cereal and pasta and bags of beans, I saw servings estimates totaling considerably more than seven. For instance, it appears that he bought 13 servings of lentils and 26 servings of chickpeas. Admittedly, suggested serving sizes can be somewhat unrealistic, but still...

More troubling than the shopping, though, is the meal planning. Shaich seems to know nothing about eating on the cheap. Consider the following from his blog:
I had already understood that coffee, pistachios and granola, staples in my normal diet, would easily blow the weekly budget. ... When I could afford something like cereal, it was of the “off-brand” variety, and won’t require a spoon, as I ended up leaving the milk at the register.
The parts about coffee and milk are particularly strange. House brand coffee costs about a nickel a serving and even many of the nicer brands will come in under ten or fifteen cents. For a quarter you can really go to town. The milk I checked was $1.79 for a half gallon. That's less than a quarter a serving (if you buy a gallon, it's less than twenty cents a serving).  Shaich describes doing without these things as a real hardship but doesn't seem to realize that they're in his budget.

This same lack of knowledge is probably one of the reasons why the menus presented here are so bad -- unappealing, nutritionally uneven, unsatisfying, and completely lacking variety (why eat the same thing every day?). With exception of dried beans and to a degree pasta (prepared foods are always borderline), all of the staples of budget cooking are missing. No potatoes, rice, oatmeal, chicken, eggs or my oft-neglected favorite, popcorn. Alton Brown once pointed out that the use of popcorn as a cold breakfast cereal predates corn flakes. That piece of information alone could have knocked a couple of dollars off of  Shaich's weekly budget.



Shaich's shopping list is filled with questionable to disastrous choices. An example of the latter would be spending more than ten percent of his weekly budget ($3.50) on cheese, a food which, though tasty, is not particularly filling or protein rich. To put this in context, Ralph's was selling name brand chicken for eighty-eight cents a pound and, though I didn't check the price of eggs there, I know that down the street at Trader Joe's a dozen extra large go for a buck eighty (and for two-fifty you can also get a bottle of the surprisingly good wine formerly known as "Two Buck Chuck"). Chicken and eggs are both remarkably versatile and can provide lots of protein for little money. Someone who runs a restaurant chain ought to know this.

I realize I'm being hard on the man but there's a bigger issue at stake. Shaich is the good twin to that jerk on TV insisting there's no hunger in America because you can buy a hamburger for a buck. Their intentions couldn't be more different but still both base their arguments on the same fallacies.

Hunger and food insecurity are not simply the result of a lack of cheap food. For an adult with a car, a decent kitchen, a good refrigerator, lots of time, good organizational skills and no special dietary needs, it is not only possible to eat a filling, nutritional diet on four dollars a day; it can even be fun for a while in much the same way that camping can be fun. (Try Googling "99 cents store gourmet.")

The fun goes away quickly, though, when conditions start deviating from that ideal. As with so many other aspects of poverty, eating on a microbudget is living on a butte -- every misstep can lead to a nasty fall. Shaich does hit on this concern: "When is my next meal? How much food is left in my cabinet? Will it get me through the week? What should I spend my remaining few dollars on? What would I eat if I had no budget at all?" Living on this kind of budget means constantly being one unlucky break away from disaster. A crushed carton of eggs, a gallon of milk gone bad, an unreliable refrigerator, or just a mistake in planning at the wrong time can leave parents going without food so that the kids can eat.

Even if the worst doesn't happen, it's a life of constant stress, the kind of stress we're now learning can have particularly devastating effects on kids and their ability to succeed academically and professionally.

It should be noted that Ron Shaich has done a great deal to address the problem of hunger and food insecurity in this country and he deserves a world of credit, but in this latest effort, he's simply not helping.

Thursday, September 19, 2013

The need for a state

Via Bradford DeLong here are some historical perspectives on the need for a state:

Adam Smith: Withering away of the state? Private profit-making rights-enforcement organizations? Have none of you ever taken a trip to the Scottish Highlands? Have none of you ever read about the form of society that used to exist there? In the Scottish Highlands David Friedman's dream of a society without a state, in which justice was administered by private profit-making rights-enforcement organizations, was a reality. And what a reality! The private profit-making rights-enforcement organizations were called "clan lords" and their henchmen. In the Highlands, everyone was seen as either a clan member to be helped, a clan enemy to be killed, or a stranger to be robbed. With such insecurity of life and property, the system of natural liberty could not operate to create prosperity, and life was... what is the phrase?...

Thomas Hobbes: Nasty, brutish, and short.
and

Davey Hume: Exactly. That is the key problem of governance: mighty, but limited. It is only after the state has been established and the memory of what life was like in the Highlands disappears that people can even begin to forget why the state is necessary. Under security of property, people begin to view each other--even total strangers--as possible partners in mutually-beneficial acts of exchange. The oxytocin levels in their bloodstreams rise. They feel mutual sympathy toward each other. They feel bound by the moral law, and no longer kill clan enemies or rob strangers even when they can do so in perfect safety... 
I think that this sort of problem of fading memory is common.  The regulations that make fires less likely (or that establish fire departments) seem less useful in a world in which they are highly effective and so we don't see the day to day need for the intervention. 

A good medical example is vaccination.  At one time people were (correctly) terrified of these diseases and the death, disability, or disfigurement that they could cause.  In a world where there are a lot of measles vaccinations being given (and where we have all forgotten the polio/smallpox/measles epidemics) it can be easy to ask the question: "why do we subject our children to the risks of being vaccinated" (given that these risks may not be zero).  Of course, when vaccination stops, the same diseases may quickly come back.  And, even so, it might not be easy to get all children vaccinated because the consequences are not fully realized until it is way too late. 

In the absence of a state, I don't really see a clear solution to the free rider problem.  Even enforcement of damages presumes somebody (i.e. a state actor) to enforce the claim to damages (or a rather brutal enforcement process at the point of a gun).  Since people may forget just how bad the previous era really was, it can be hard to prevent things from deteriorating.   

But it isn't a problem just limited to the state, itself, but it shows up in many successful areas of human intervention where the intervention is a victim of it's own success. 

Mark added as a private comment that this can be extend to a lot of different areas.  He gave the examples of bedbugs and economic insecurity, both of which are on the rise because we don't have the urgency of prevention that we used to have. 

Wednesday, September 18, 2013

Excellent comment alert

There is a new conservative plan to replace the Affordable care Act. One piece of this plan is to:
For example, allowing insurers to sell policies across state lines would invite a “race to the bottom.” In time, all insurance would originate from states with the least regulation. The policies will be cheaper. But they’ll also be skimpier. They’ll be great if you’re young, healthy, or wealthy enough to afford to fill in the coverage gaps. They’ll be terrible if you are older, have a chronic condition, or, again, if you’re low income.
These are all legitimate problems.  But the one that actually seems the most salient is in the comments:

I cannot understand why conservatives support turning health insurance into interstate commerce, which would then be subject to federal regulation. You would think they would prefer to leave it in the hands of state insurance regulators. 
This is actually a really good point.   If you put health insurance into the national market (and not a state by state individual market) then it is, by definition, interstate commerce and the role of the federal government as a regulator is clearly derived. 

This seems to be the opposite of a small government solution. 

Ways of Measuring Wealth

A recent exchange between Matthew Yglesias and Andrew Gelman got me thinking. Here's Yglesias' original comment:

I think rich businessmen would be happier if we could go back to 1950s-style, more egalitarian distribution of pre-tax income. The richest people around would still be the richest people around, and as the richest people around they would live in the nicest houses and drive the nicest cars and send their kids to the best schools and in other respects capture the vast majority of the concrete gains of being rich. But they’d also have a much better chance of gaining the kind of respect as civic and national leaders that they crave. They want to be seen as the “job creators” and the heroes of the economy, not the greedy exploiters of the masses. But in order to have heroes of the economy, you need a broadly happy story about the economy—one where living standards are rising across the board and prosperity is broadly shared.
And here's Gelman's response:
This is an appealing argument but I’m skeptical. My impression is that, back in the 1950s, the culture heroes included sports starts, authors, broadcast and movie stars, etc. Some politicians and union leaders too, and various others. But nowadays, lots of rich people are heroes of one sort or another: Steve Jobs, those guys at Google, various gossip about tech billionaires, Donald Trump. Even the supervillians at Goldman Sachs get some respect—it’s kinda cool to be a supervillian. There’s the Forbes list of billionaires. Not to mention Michael Bloomberg and Mitt Romney. And it’s not just cos these rich guys have done cool things like Google maps. Warren Buffett is a hero too, mostly from doing a very good job at accumulating money.

If you’re superrich and your goal is to be viewed as a hero, I’d say that the current era from the mid-90s through now has been a good time to do it. They call this the New Gilded Age for a reason. In contrast, I have the sense that the 1950s was a great time to get respect for local rich guys: the owner of the local factory, the proprietor of the local newspaper, etc. Back then, if you were running a moderate-sized business, you could be a real big shot.

I’m not quite sure how this could be studied more systematically but maybe it’s worth looking in to.
This is very much a first draft, but just to get things started, let's think about money in the following ways: traditional; relative; impact (Really need to come up with an adjective for this); ordinal; 'disposable'; perceived and perceived value (not crazy about these terms, but we can always come up with something better later).

I have to be careful with the word relative here (most of these are, in some sense, relative). In this case, I mean relative to some cost of living measure for that person for household. For example, this might entail normalizing or otherwise adjusting for region and might also take into account factors such as what your stage of life is, what your health and healthcare needs are, and what your family situation is.

In a distinction that is sure to piss certain people off, I think of impact as a libertarian metric. It measures the increase in choices that additional money creates. This is, as I believe we have discussed before, a function of both where you start and where you end up. The impact of going from 5,000 to 10,000 a year is unimaginable to anyone who has never been destitute; going from 10,000 to 20,000 while huge is not as big; going from 20,000 to 40,000 while big is still less than the former jump, and so on.

Ordinal is also a somewhat relative measure since where you rank depends on the group to which you're being compared. As Gelman alluded to earlier, being the richest person in town can have special significance even if it doesn't require that much absolute wealth.

Perceived wealth could be perceived by the holder or we could be talking about the perception of some group which the holder is either a member of or which affects him or her.

Perceived value would basically be the thing Gelman is talking about, how much we value a given level of wealth. There's an obvious compared-to-what problem here that, I think, would be best suited to a multivariate approach. We would look at the relationship between perceived wealth and things like how attractive/likeable/respected a person is, how much people would like to meet that person, how much they'd like to trade places, etc. Given the desire not to appear shallow, it might be a good idea to supplement traditional methods like surveys with something like implicit association tests.

Obviously all of these metrics are correlated and in some situations one can undoubtedly be substituted for another, but that does not mean that they are interchangeable. That leaves us with two big questions: one which metric or metrics are most appropriate for a given problem; and what are the best way of measuring these different concepts of wealth, but there are some data gathering steps we can start while we're grappling with those questions.



Tuesday, September 17, 2013

Health Care Costs

I recommend this video (warning: eight minutes long) that talks about health care costs in the United States.  In particular, that we spend more government money per capita than Canada does (Canada ensures basically everyone) and only manage to insure 28% of the population is staggering. 

Also of great note is how this complex problem really does not have a simple solution and/or explanation. 

They also mention the incidental economist, which is always a sign of good taste.

The General Grant quote I was looking for earlier

I've got a post coming up on price discrimination and the role information plays in the process. One of the things that came to mind was this anecdote from the Memoirs of Ulysses S. Grant, which describes his experiences as an eight-year-old horse trader and illustrates what happens when the seller knows too much.
As he told the story, there was a Mr. Ralston living within a few miles of the village, who owned a colt which I very much wanted. My father had offered twenty dollars for it, but Ralston wanted twenty-five. I was so anxious to have the colt, that after the owner left, I begged to be allowed to take him at the price demanded. My father yielded, but said twenty dollars was all the horse was worth, and told me to offer that price; if it was not accepted I was to offer twenty-two and a half, and if that would not get him, to give the twenty-five. I at once mounted a horse and went for the colt. When I got to Mr. Ralston's house, I said to him: "Papa says I may offer you twenty dollars for the colt, but if you won't take that, I am to offer twenty-two and a half, and if you won't take that, to give you twenty-five." It would not require a Connecticut man to guess the price finally agreed upon. This story is nearly true.





Monday, September 16, 2013

D&D Monsters

This list is a pretty representative list of the most unique and popular Dungeons and Dragons monsters.  I am a little surprised none of the creepy monsters made the list (green slime, ear seekers, rot grubs) but these are the ones you'd see in the novels. 

Not sure that Bacharach shouldn't have split this into to two but both halves are worth reading anyway

Via Thoreau, Jacob Bacharach has has an excellent albeit somewhat disjointed post that hits on a few of our ongoing threads. It starts out as a beautifully cynical insider's view of MBA programs then jumps (a bit abruptly) to a blistering take down of Joel Klein's efforts, working with the Rupert Murdoch family of companies, to sell tablet computers to school districts.

Here's a taste:
And in any case, when you look at the sales pitch, you see the same old clich├ęs about the workplace of tomorrow peddled as the great social inflection point whose crisis-borne arrival necessitates the adoption of these critical tools that just happen to cost $199 a pop. The simple fact of that traditional dollar-short-of-an-even-hundred commercial pricing model ought to tip you that something may be slightly crooked here, the transformative promise more marketing than prophecy. “Robin Britt, the Personalized Learning Environment Facilitator (PLEF)”—no, really—leaps Ballmer-like to the front of the room and engages in a little future-is-nowism for the crowd:
I've been meaning to write about the tablets-in-the-classroom movement for awhile, particularly since the recent blow-up in here in LA. It represents one of the most notable of the many cases where ddulites and movement reformers intersect with predictably disastrous results.

For the record, disadvantaged students would much better off if we gave them laptops running Ubuntu rather than the latest tablet. It's worth noting that the latest snag in L.A. schools Supt. John Deasy's iPad initiative came because no one thought to budget money for keyboards. (Deasy isn't really a think-things-through kinda guy. Unfortunately, he's in a think-things-through kinda job.)

General Grant on the U.S.-Mexican War

I came across this in the course of researching a post on another topic. I don't want to imply  an analogy between Syria or even Afghanistan or Iraq -- these are very different situations -- but it's still worth that in what we generally think of as a jingoistic age, you could find a range of nuanced views.

From The Personal Memoirs of Ulysses S. Grant.
Generally, the officers of the army were indifferent whether the annexation was consummated or not; but not so all of them. For myself, I was bitterly opposed to the measure, and to this day regard the war, which resulted, as one of the most unjust ever waged by a stronger against a weaker nation. It was an instance of a republic following the bad example of European monarchies, in not considering justice in their desire to acquire additional territory. 
It's worth noting that Grant's friend and publisher, Mark Twain, was also a vocal critic of imperialism.

Sunday, September 15, 2013

Fiscal responsibility

As we get further into the debt conversation, I think this is worth remembering:
People have largely forgotten about this, but back in the 1999–2001 era instead of complaining about the deficit being too high conservatives were obsessed with the need to prevent the national debt from getting too low. The reason was that they feared that there might not be enough "on-budget" debt for the Social Security Trust Fund to buy, which would lead the Social Security Trust Fund to act like the Canada Pension Plan and start investing in equity and other financial vehicles. This, according to Alan Greenspan and others, would rapidly put us on the road to serfdom.


But as sovereign wealth funds are spreading from Persian Gulf petrodictatorships to oil-free dictatorships (Singapore) and oil-rich democracies (Norway) and now even America's friendly next door neighbor Canada, I think it's time to rethink this opinion.
And also this:

But the larger point here, surely, is that Rehn has let the mask slip. It’s not about fiscal responsibility; it never was. It was always about using hyperbole about the dangers of debt to dismantle the welfare state. How dare the French take the alleged worries about the deficit literally, while declining to remake their society along neoliberal lines? 

In a sense I think we should be mad at the Austerity advocates for hopelessly confusing the debt issue.  Debt is bad but increased taxation is always worse seems to be the argument.  But by trying to confuse the issues they are merging two very different propositions.  High taxation can be bad but the evidence for this is much weaker than for government financial crisis due to debt loads. 

But it becomes impossible to talk about the debt without getting drawn into the quagmire of the appropriate level of taxes.  But it is notable that the argument against running a surplus appears to be bogus (the disaster of paying off the debt seems to not be a disaster elsewhere).  The level of taxes in the United States is low relative to other first world countries -- that makes it hard to argue that small tax increases would immediately lead to disaster. 

This is making me want to be almost dismissive of the deficit.  Not because the debt wouldn't be lower in my ideal world, but because all of the action is about the size and scope of government (and a strange argument about whether government should be intrusive at the federal or state level).  These are interesting arguments, to be sure, but they are only distantly related to the question of fiscal responsibility.

Saturday, September 14, 2013

Weekend blogging -- "Zatoichi and the Chess Expert"

Not chess as we think of it (though it does qualify as a first cousin).






Still how can I not post a link to a film where a blind master swordsman meets up with a mysterious chess-playing samurai (and one of the best of the series to boot).




Tuesday, September 10, 2013

Dilbert

This Dilbert comic strip shows that Scott Adams still has it.

But how often is the cost-benefit equation for work and reward really put this cleanly?

Still more Motley Foolishness

In the pursuit of a couple of threads about the business of media, I find myself frequently clicking on links to Motley Fool posts and almost always regretting it. Here's how I summed up my reaction earlier:
MF specializes in overexcited, often under-informed posts usually focusing on hot topics that have strong emotional associations of success or (more rarely) failure. All of which is designed to get readers anxious and eager enough to shell out $199 a piece for various newsletters.
One part of that formula is the BIG HEADLINE!/small story. The pattern here is to start with a wildly overstated headline then scale back to a much more modest actual claim in the article. On top of that, even the modest claim is weakly supported only by very optimistic arguments.

Recent examples:

This Marvel Movie Has "Winner" Written All Over It
(about the upcoming Guardians of the Galaxy)

and

Why Disney's "Agents of S.H.I.E.L.D." Could Be Bigger Than "The Avengers"

If you read the first, you go from Guardians having winner written all over it to it being "an interesting mix of characters that under the guidance of director James Gunn could result in a potent Marvel movie." In this context, I'd read "winner" to be above average for a film in the larger Avengers franchise or at least a 300 million dollar box office. From there we go the the more modest and far more vague 'potent.'

Left out is the fact that the director, while promising, has only directed two features, Slither and Super, neither of which appear to have broken even. Add to that the fact that introducing large numbers of unfamiliar characters is problematic, and that one of these characters is named Rocket Raccoon (a joke that wasn't good even when the reference was fresh).

Likewise, after claiming that the new Shield television show could be bigger than the Avengers, the article never actually argues for anything more than it possibly being a successful show that's good for the network. Once again, even that fairly limited claim is not well supported. No reason is given why the show should be more successful than something like Young Indiana Jones (another TV spin-off of a hit franchise) or that, if it is successful, that success will be somehow more important to ABC than the success of a Castle or a Dancing with the Stars. It should also be noted that while Joss Whedon has been the creative force behind many critically acclaimed TV show, he has never, to my knowledge, been involved with an actual hit. (And no, having a long run on the CW does not count).

Just to be clear, I have every reason to believe that these shows will be entertaining and have a reasonable shot at success. The people at Marvel have a good track record and have shown themselves to be smart about playing a long game.

What I am saying is that Motley Fool has not presented any arguments to show one way or another that these projects will be successful enough to move the stock. What MF is doing is trying to create a emotional state such that you will be eager to start playing the market and you will subscribe to one or more of their newsletters. As far as I've been able to tell, that's pretty much all they try to do.

I have two problems with that approach. First, they appear to be selling a product of little value. Second, and this is the kicker, they are encouraging people to engage in what is for most of us a highly risky behavior.

I have no way of knowing whether or not Guardians of the Galaxy will break box office records or if Agents of S.H.I.E.L.D will be the top rated show next year. If they are hits, I couldn't tell you whether or not that success has already been anticipated by the market and priced in to the stock. These analysts might be right about Disney stock or they might be wrong. Given the arguments we've seen so far I have no reason to guess one way or the other. However, given the cost and risk involved, I would be reluctant to make an investment based on one of these guys' monthly newsletters.

Monday, September 9, 2013

Charter Schools and Hedge Funds

A Wall Street trader draws an interesting analogy:
Survivorship bias
In statistics, this is a textbook case of what is known technically as “survivorship bias”—otherwise known as “ignoring data that makes you look bad.” This statistical fallacy opens up enormous opportunities for people with flexible ethics and an entrepreneurial bent. It is a mainstay of the hedge fund industry, for instance.  Hedge fund indices routinely appear to outperform simple, non-fee generating investment strategies like index funds by neglecting to include funds that closed down, and take funds out of the index whenever they stop reporting performance (hint: no fund fails to report good performance!).

R u hot or not?
Some funds, which shall remain nameless on the advice of counsel, improve quite a bit on these crude methods. They recruit new traders continuously, and give them a bit of capital. After a few months, the ones that make money are trumpeted to investors as the next hot thing, while the ones that don’t are quietly fired and never mentioned again. In this business model, what the traders actually do is irrelevant, as long as they are cheap and willing to sign leonine contracts. In fact, buying monkeys and letting them flip coins to predict market direction would work even better, though this might make the game a bit too obvious.

Repeat as necessary
The parallels to the emerging charter school paradigm are obvious. You start a lot of charters. Some do better than public schools, some do worse, but overall they underperform. You shut down the bad ones. Now repeat the analysis with the non-terrible ones. Improvement!  Except that the students unfortunate enough to attend these terrible school don’t just disappear (we hope – let’s not give charter schools any ideas!). However, they do disappear from the CREDO study, and that seems to be good enough for the charter sector and its advocates to proclaim this a success story.
I haven't seriously dug into the CREDO data so I can't vouch for the rest of the trader's analysis but it looks reasonable and it reinforces a point I've been making for a while: there are a lot systemic factors which favor charter schools and which furthermore tend to bias the data in these schools' favor. In other words, given the conditions charters operate under, we would expect them to outperform public schools even if they were pedagogically identical due to factors like selection, volunteer and placebo effects and even if the schools were performing identically, we would expect the charters to look better due to factors like attrition and survivorship. Add to this some non-trivial cases of data cooking and you can see where this leads.

Even with these factors, charter school performance has been tepid, at best. I don't see that as an argument for abandoning the experiment, but it does mean that the standard the-more-charters-the-better narrative is no longer viable and movement reformers like Arne Duncan have got to mark to market if they expect to be taken seriously.

Saturday, September 7, 2013

Weekend blogging -- sometimes the least conventional covers turn out to be the most faithful

The standard approach to "You Rascal You" would be a band dressed Thirties-style in white tuxedos against an Art Deco background fronted by a vocalist with a mock-menacing bass voice but a cheerful demeanor, figuratively (and perhaps literally) winking at the audience to let them know it's all in good fun.

Played straight, without the winking, the effect is very different.









Friday, September 6, 2013

If you have to ask, you should use the door marked "Morlock"

An NYC High Rise Is Putting In Separate Entrances For Rich And Poor Renters

A luxury high-rise apartment in Manhattan’s Upper West Side is set to have a so-called “poor door” — a separate entrance for low-income residents receiving subsidized housing.

The 33-story building — 40 Riverside Boulevard – being developed by Extell Development Company will have 219 condominiums selling for more than $1 million each.

But by including 55 affordable housing units on the first few floors renting at a starting price of $845 a month, the developer could get a tax break, according to the West Side Rag.

With this disparity between the million-dollar condos for purchase versus the units for rent at a phenomenally low price for Manhattan, the developer decided to design the building with separate entrances for those who own condos and those who rent at a price below market value. As one might expect, this “rich door,” “poor door” situation doesn’t sit well with some.

Thursday, September 5, 2013

Excellent Point Alert

Via Thoreau, we have a comment on Dean Dad's latest post:
I graduated three decades ago with an engineering degree, and in spite of all the talk about the shortage of technical skills, less than 20% of my graduating class got jobs in their field.

I thought then, and I still think now, that "skill shortage" is management-speak for "shortage of skilled people willing to work for what we want to pay them". I also note that the rhetoric about needing to pay enough to attract good people stops as soon as you get below upper management level…

 Thoreau goes further:

Hiring cheap workers on the lower rungs is always, always justified as necessary for the business to survive, as it paying exorbitant salaries to failed managers.
There really is a disconnect here.  It is not necessarily that senior management salaries are wrong.  it is more that it is odd that senior salaries are going up at the same time as other salaries plummet.  Given the cost of managers, they would seem to be the best candidates to outsource -- all things being equal. 

But we have a mystical faith that strong leaders are necessary for a business to prosper but that we can get cheap on the lower levels.  However, there are some organizations (say militaries) with very objective success metrics where the officers are often seen as less important than the non-commissioned officers (Britain would be an example of this).  The NCOs provide the low level guidance required to ensure excellence. 

Are we sure corporations are different? 



Wednesday, September 4, 2013

This is a really big deal

From Yglesias
Most low-income Americans aren’t poor at all by global standards, so evidence from successful anti-poverty programs in the developing world are difficult to apply to domestic poverty. That’s why it’s so telling and fascinating that a study on the cognitive downsides of poverty would find identical results in New Jersey and Tamil Nadu. Much work on domestic poverty rightly emphasizes the idea of skills and “human capital” needed to navigate a complicated modern economy. This naturally leads to a focus on education, whether in the guise of various school-reform crusades or the push to bring high-quality, affordable preschool to more households. But adults need help, too, and the perception that poor adults—as opposed to presumably innocent children—are irresponsible often leads to reluctance to treat adults as adults who are capable of deciding for themselves how best to use financial resources.
This paternalistic notion that we should be relatively stingy with help, and make sure to attach it to complicated eligibility requirements and tests, may itself be contributing to the problem of poverty. At home or abroad, the strain of constantly worrying about money is a substantial barrier to the smart decision-making that people in tough circumstances need to succeed. One of the best ways to help the poor help themselves, in other words, is to simply make them less poor.

The causal ordering here is really important.  We see this dilemma with other variables that are difficult to randomize.  So, for example, it isn't 100% clear if lack of exercise contributes to obesity or if being heavy makes one less likely to exercise.  It can make a big difference in public policy if the causal arrow reverses direction (or if there is a positive feedback loop that goes between the two variables).

In this case, there seems to be evidence that making a stingier and more complex welfare state increases the long run poverty via decreased decision making due to financial stress.  If this is borne out in other context then it totally changes the optimal policy responses to poverty. 

I didn't realize that it was OK to overstate numbers by an order of magnitude if it made for an interesting conversation

I'm going to try to get back to this and connect it with some other threads. For now though, consider it one more data point in the ongoing story of the challenges faced by people who try to correct falsehoods once they've made their way into the mainstream.

From Marketplace:
Could it possibly be true that watching videos on my smartphone uses as much electricity as two refrigerators?

“This is an example of a claim that sounds interesting, but really has no basis in fact,” says Jonathan Koomey, a research fellow at the Steyer-Taylor Center for Energy Policy and Finance at Stanford University.

Koomey has devoted years of his professional career to fighting this refrigerator analogy. It first came up more than a decade ago, by the same author, then making the claim that a Palm Pilot used the same electricity as a fridge.

Koomey says fighting it again now is pretty frustrating, “I’d rather not have to spend time rehashing this stuff.” But, the claim is back. So Koomey is back; figuring out just how much electricity goes into making and using my smartphone.

By his calculation, it’s about 60 kilowatt-hours.

Mark Mills, a senior fellow at the Manhattan Institute, and the author of the phone-equals-refrigerator claim, estimates it’s closer to 700 kilowatt-hours.

Mills is author of a report called The Cloud Begins with Coal, sponsored by the mining and coal industries. He says he wants to get people thinking about how much electricity these devices use. And he doesn’t think the controversy around the refrigerator analogy distracts people from his bigger point.

“The debate makes it an interesting conversation, like we’re having,” says Mills.

He stands by his calculations and his main assertion: “It is accurate: it uses a lot of electricity. Now if someone were to say, it’s not equal to a refrigerator or equals half a refrigerator or a tenth of a refrigerator, that’s still a big number.”

Tuesday, September 3, 2013

Epidemiology example in tech

This post is a great example of epidemiological reasoning:

When people compare the stability of Linux and Windows, they may be biased a couple ways. First, Linux is more often deployed on servers and Windows more often on desktops. So they may unintentionally be comparing Linux servers to Windows desktops. Second, they may be thinking that Linux users’ computers are more stable than Windows users’ computers, which is probably true. Linux users typically know more about computers than Windows users. They are more able to avoid problems and more able to fix them when they occur.
You see central issues in epidemiology of trying to form comparable comparison groups and trying to disentangle environmental factors.  The higher knowledge base for the Linux users is directly comparable to the healthy user effect (more informed individuals are more likely to use preventative therapies).  The differences between server versus desktop is a great example of differences in the population.  If drinkers are also more likely to smoke, sleep less, and so forth then you may well see more problems unrelated to the exposure itself. 

Epidemiology is everywhere. 

Monday, September 2, 2013

Movies! -- some thoughts on television's second best classic movie channel

One of the things I've noticed following this antenna TV over the past few years is that the quality of reporting on television tends to be very strong in Chicago, strong in LA, pretty good in Atlanta and terrible in New York, a ranking that tracks fairly well with the importance of the industry in each town. I don't have much first hand knowledge of Milwaukee but I'd imagine that, given the proximity there's a fairly strong shared culture with Chicago. 

That would explain why Duane Dudek of the Milwaukee Journal Sentinel not only covered a terrestrial superstation but actually took the time to get quotes from Neal Sabin, the Ted Turner of over-the-air television.
The channel called MOVIES! is a partnership between the Chicago-based Weigel chain and Fox Television Stations. The channel will reach over 40% of US TV homes when launched, said Neal Sabin, president of content and networks for Weigel.

He said the films will be presented in a "movie lovers' kind of manner," with 12 minutes of commercials per hour and with no editing for length.

Which means a movie will end "when it's over," he said. The service is "a little Turner Classic movies, it's a little AMC and it's a little ME-TV in the way we present the films," Sabin said.

Films will often be presented in showcases, he said, such as female-oriented films on Saturday night and Westerns every morning "because that's a genre that isn't in most places."

"And every night in prime time, there will be an iconic movie or iconic movie star in the movie."

Films are from the Fox studios library, plus two other yet to be named studios.

The first prime-time movies Monday will be "Silent Movie" (1976) and "High Anxiety" (1977), starring and directed by Mel Brooks. 
It's obvious both from reading press materials and from watch the station that despite the fact that it runs on Fox stations, shows Fox movies and is probably financed by Fox money, Movies! is very much a Weigel operation and it shares the underlying philosophy that have made ThisTV and METV so much fun:

Try to find something good. Failing that, find something interesting. Failing that, find something different.

The big difference between Movies! (yeah, I'm getting tired of the exclamation mark too) and the earlier Weigel efforts, particularly the otherwise similar ThsTV is budget. Though ThisTV found a number of creative ways of working around a lack of resources, sometimes even making a virtue out of their limitations (such as their Tarantinoesque art-house/grind-house vibe), but there are obviously some programming choices that the channel wouldn't make if they had the option of showing something better. Movies! is Weigel operating largely without financial constraints. 

Turner Classic Movies was the reason I went over to rabbit ears in the first place, or, more precisely, it was the last straw. I'd been growing increasingly pissed off with cable for years, the inconvenience of installation (I moved frequently), the poor customer service, the opaque pricing and bait-and-switch offers, the failure to improve value even though viewing alternatives (online and DVD) were constantly getting better. I kept telling myself, next time I move I'm going to get my TV online and over the air but what finally tipped the scale was when my provider bumped TCM to a more expensive tier. After that, I looked at my cable listings and asked myself "what am I getting here that I can't get online or via DVD? The answer was "not much."

TCM remains the gold standard for movie people, but Movies! pulls off a surprisingly respectable second. It can't match Turner's commercial-free format (though twelve minutes an hour is quite reasonable) or catalog, but they do have a good catalog and they do dig deep enough to present an interesting cross-section. This week, which is fairly representative, features films ranging from Lawrence of Arabia to Mothra, recognized classics like John Ford's Rio Grande, interesting oddities like Elvis Presley's two best reviewed dramatic films (one directed by Don Siegel, the other written by Clifford Odets), notable work by stars like Clark Gable, Dick Van Dyke, Janet Leigh, Burt Lancaster, Peter Lorre, Gary Cooper, Rita Hayworth, William Holden, Richard Widmark, Richard Boone, Sean Connery, Richard Harris, James Coburn, James Caan, Charles Bronson and others, loads of effective little genre pictures and guilty pleasures like the Zatoichi remake Blind Fury, Ray Harryhausen's creatures in Mysterious Island and the Grand Guignol of Hush, Hush, Sweet Charlotte.

Movies! and the other terrestrial superstations raise some interesting business and media questions but those can wait till later. For now I just want to say that, speaking as someone who has wasted a big chunk of his life watching TV, even if you gave me unlimited cable, I'd still keep a set of rabbit ears around for the Weigel channels. Like TCM and Cartoon Network, they show what happens when you hand television over to smart people who love the medium.