31 January 2013

"Positive Contagion"

Just for the record, I'm calling bullshit on Draghi's "positive contagion" claim.

Yes, the guy has done a much better job than I thought possible righting the ship, but Europe is still broad and fat and loose in the stays.

I'm not going to take time to lay out specifics, or even pull a quote from that article I linked to. I just want it in writing that I'm skeptical of this situation.

25 January 2013

Society != The State

Jaltcoh | John Althouse Cohen | The "acting alone" fallacy

I object to this move [in Obama's 2nd Inaugural], which seems to have become popular with Democrats in the past couple years, of equating "doing things together" with government. To suggest that anyone who'd like to see less heavy-handed government regulation thinks one person can do everything alone is a straw-man argument. It indicates a lack of understanding of how the private-sector economy works and how libertarians or conservatives actually think about economics. The private sector isn't just a bunch of people "acting alone." As Matt Welch pointed out in his critique of the speech, making and selling an object as basic as a pencil is such a complex endeavor that it takes lots of different specialists. No one person has the knowledge to accomplish that seemingly simple task; that's how decentralized knowledge is in society. [...] The idea that you're "alone" unless you're being directed by the government strikes me as dehumanizing and almost abusive.
I see Obama and a lot of other people on the Left demagoguing pro-market people as being loners, unwilling to cooperate with others in society. I reject this for exactly the same reasons Cohen does, and find it dehumanizing.*

(* Incidentally, this reminds me of some of the rhetoric I've encountered from the Counter-Reformation, English Civil War, etc. that stated you aren't a full person unless you have the benevolent guidance of the Pope/Archbishop of Canterbury/King/whatever to guide you. Acting without the blessing of the putative leader of a society is not, and has never been, the same as turning your back on that society itself. It also reminds me of more Eric Hoffer aphorisms than I have time to quote. Fine, fine. One quote from Reflections on the Human Condition which connects both of these thoughts: "Both absolute power and absolute faith are instruments of dehumanization.")

What I find interesting is that I've also heard Leftists critiquing markets with some variation of "what kind of psychotic system allows other people to determine the value of your work?" This position criticizes markets as being too responsive to other people in society and insufficiently focused on individuals. This is the polar opposite of Obama's statement, and yet one I bet he would also endorse. (In private, at least.)

This second critique is less commonly expressed, but I think it's the main reason that you see so many Leftists in Art and Academics. These are fields where the prevailing ideology is that the value of a work is completely independent from other people's opinion of it. I can respect this view, but I have no trouble holding the idea that there is a Platonic ideal value of a work simultaneously to thinking that there is another, socially-derived value that I can expect it to actually be priced at. The idea that a value might be determined based in large part on the opinions of buyers (i.e. other people) rather than being an inherent attribute of a thing itself is abhorrent to the Academic or Artistic mind.

I think that people making both of these critiques miss the beautifully social nature of markets. Literally nothing gets done in a market economy unless you can get dozens of people to cooperate voluntarily with you. You need suppliers, workers, managers, investors, and most of all consumers to agree to go along with your plans. Mr Obama's alternative is the State, where anyone with a badge gets to have their way. I favor markets precisely because I like society, I like cooperation, and I like heterogeneity. And yet I'm criticized for wanting to be alone, for wanting to fight, for wanting to homogenize.

(Via Coyote Blog)

Formal Fridays

WSJ | Andy Jordan | If You Really Want to Defy Conformity, Dress Up on Fridays

San Francisco — The trappings of a nonconformist workplace were on display recently at the headquarters of a startup here named Pulse: There was the foosball table, the containers of free M&Ms, the bottle of whiskey on top of the fridge.

And the guys standing around in suits and ties.

It was Friday, after all, and to truly defy conformity at some tech outfits on that day of the week, one must not wear jeans or flip-flops.
I'm ahead of the trend baby! My friends and I did Formal Fridays all through undergrad. Because if there's a place where "casual" is iron-clad law, it's a modern American campus.

24 January 2013

College Admin Costs: "Oh well, beyond our control" is not an acceptable answer

Asymmetric Information | Megan McArdle | Quote of the Day

From Arnold Kling:

This topic came up at lunch yesterday with Tyler Cowen. Could universities cut costs by firing half of their administrators? [...]

In universities, I would argue that the growth in administrators is symptomatic, not an independent cause. The problem is what is known in the software business as scope creep or feature bloat. [...]

Students want their college to be like an all-inclusive resort, with loads of different things for them to do at a nominal cost. But that means more administrators. So does the increasing regulatory burden for liability and discrimination laws: better have a diversity officer, a safety officer, and sexual harassment training, so that you can defend yourself in any sort of lawsuit. HR is getting more complicated every year: probably needs at least a VP-level role. And so on, and so on, and so on . . .

Anyone who works in the private sector can attest that this is not just happening at universities.

We might be able to cut college costs substantially if we slashed administration, but we can't slash the administration.
Yes. But.

Administrative costs are up 37% in a decade. It's not like colleges ten years ago didn't have liability or discrimination concerns. I'm pretty sure that when I filed my college applications in 2001, every one of those schools had a diversity officer, a safety officer, a sexual harassment officer, etc. It's not like colleges just discovered they could bundle services together this century. We need to turn back the clocks a decade, not roll slash colleges down to nothing but lecture halls and spartan barracks-like dorms.

If you want to get to the root of this, I think you need to look at the college-as-all-inclusive-resort thing. And more deeply than that: how is it that colleges are able to move further towards resort-mode than they were in 2001? I'd point the finger at open-ended promises by the government to loan out as much money as a kid wants to borrow to study any subject, anywhere they want. That's my go-to answer for most of what ails American higher ed though.

I also want to push back against this comment Kling makes:
I argued that administrators did not just descend on universities like a plague of locusts. In the economy as a whole, the ratio of middle managers to production workers is rising. You can see this by looking at the ratio of white collar workers to production workers in specific industries, such as automobiles.
This is true, obviously. College administrators are not marauding Norsemen sailing in to pillage our tuition money.

But the tooth-to-tail ratio has been changing in other industries because how we do work in other industries has changed. Your white-to-blue-collar ratio is going to change in Detroit because you're replaced a lot of the blues with robots. We've swapped stevedores for steel containers and wooden pallets, account clerks with adding machines for Excel spreadsheets. That hasn't happened in higher ed.

An American car factory, or shipping firm, or insurance agency, looks very different than the same enterprise in 1963. But American higher education runs pretty much the same way it did 50 or even 100 years ago, except with a lot more lifestyle bells-and-whistles for students, a lot more administrators, and a lot more debt.

Yes, yes colleges are different now in various ways. But look at it this way: how many man-hours did it take in 1963 to actually assemble the pieces of a car? A lot more than it does now, right? How many man-hours did it take in 1963 to educate a student through eight semesters of college? The actual classroom teaching, grading, lecture prep, &c. I'd wager it's about the same number of hours as it is in 2013. If the actual production hasn't changed, why should we think it's inevitable that the management of that production must change? Why should we expect it to change in the same way it has in industries that have been radically revolutionized?

PS McArdle argues in another post today that reformers will have to try to push down compensation to health care workers because that's where (a big chunk of) the money is. Doesn't the same apply to higher ed adminstrators?

PPS In looking for a chart to illustrate this post I've seen a lot of people give stats about admin costs per student. I'd make the same case against that that Mike Munger made this morning regarding measuring government spending per person. There's no particular reason that administrative costs ought to scale linearly with the number of students. Teaching costs? Sure. More students → more courses → more teachers. But once you have people to oversee your visual identity guide for official communications*
Which are pretty fascinating to read, by the way. Here's ND's and here's UMD's.
do you then need 10% more visual branding admins when you increase enrollment 10%?

The (Poorly Executed) Geography of Abortion Access

I love maps. I love geography and cartography and information visualization and GIS and everything about maps.

But sometimes they aren't the best way to look at something. Most maps give you a look at an effect measured by area, not by person. Sometimes that's good. Often it's distorting.

After the 2000 election I kept seeing maps like this, and invariably some Rightist would crow about how such a vast majority of America was red, as if square miles counted or elections were a tool for determining the opinion of parcels of land instead of citizens.

Here's a Lefist version of the same error.
The Daily Beast | Michael Keller & Allison Yarrow | The Geography of Abortion Access

Four decades after Roe v. Wade, the U.S. has 724 remaining abortion clinics. From the dearth of clinics through the country’s center to the states requiring in-person counseling, see some of the findings from our abortion map.

The Panhandle-Dakotas Divide

The clearest trend on the map is the dearth of clinics through the center of the country—from northern Texas through Kansas, Nebraska, South Dakota, Wyoming, and North Dakota. Roughly 400,000 women of reproductive age (between 15 and 44) live more than 150 miles from the closest clinic in this region. The county farthest away from an abortion clinic is Divide, N.D. All of these states except
The problem with this is that it's essentially indistinguishable from a population density map. You could relabel this "distance people must travel to get to ______" and virtually anything with about 500 to 1000 locations in the US would fit in that blank.

And that's how it should be. You know why there's a great big gap in the western Dakotas? Because nobody lives there. What do you want this map to look like, if not this? Should clinics be placed on a uniform cartesian grid? That would be insane.

This either needs to be re-done as a cartogram, or not done at all, because as is it provides negative information.

Site placement is a hard problem. Literally, it is computationally impossible to find optimal solutions for many types of problems. But there are numerous techniques for very good approximations. I would be far more interested in this as a piece of work if Keller, Yarrow, or whoever actually coded this took the effort to compute an ideal placement of abortion clinics based on population data and then compared it to the actual placement, rather than just giving me this population density proxy.

As is often the case, Randall Munroe has already made this point better than I can.

PS 400,000 women sounds like a lot, but there are over 61,000,000 women in that age range, so we're talking about less than three quarters of one percent of reproductive-age women. Add in the data point that less than half of women think "abortion should be generally available" (and probably much less than half in the low density/rural parts of the country we're talking about here) and this looks like a non-finding to me.

PPS The Bastiat Institute shows you how that first map really ought to look:

(Although this is for 2012, not 2000, the principle stands.)

Lotteries and Skew

Rhymes With Cars & Girls | Why people buy lottery tickets

Falkenstein on 'skewness':
There are several papers asserting that investors like positive skew to their returns. This is because empirically investors tend to be highly undiversified, and have a bias towards highly volatile stocks, and so they seem to want big lottery-type payoffs (incidentally, this is the exact opposite to what Nassim Taleb states is common, that people prefer payoffs that have high modes and low means–negative skew).
I don’t have a fancy model but I do have two cents. This preference for ‘skewness’ (positive convexity) is perhaps perfectly explainable as a hedge. Not a hedge to the rest of a financial portfolio (by assumption/observation, it clearly isn’t), but to life. The natural state of life is to be negatively-convex (in a lot of things).

You have a job. It pays you $X/year. Sure, maybe down the road you’ll be at 1.15X. But will you ever be at 100X? Clearly not. On the down-side though – you could simply lose your job altogether. [...] Individuals are naturally negatively-skewed – they’re already ‘bank-like’, and don’t necessarily want to be if they can help it. So, they buy lottery tickets. The financial markets offer many of them.
Empirical question: poor people buy more lottery tickets. Do poor people have more negative skew?

On the one hand, they have less of a safety net to fall back on in terms of savings, human capital, family, etc. On the other hand, they have less to lose. (If you're only marginally employed to begin with, losing your job is not as big of a blow; losing your lease is not as damaging as losing your mortgage, etc.)

I think it would interesting to take this skewness concept and run it through Prospect Theory. I have a feeling a lot of things that look irrational with regards to skew preferences would appear more reasonable if you didn't assume linear utility functions, equal weights on gains and losses, etc. (Which, for all I know, the "several papers" Falkenstein mentions may not assume. But I'm not taking the time to track them down and find out.)

23 January 2013

The Bernank, Lord High Wizard of Finance

Rhymes with Cars & Girls | He’s a savvy one, he is

Bernanke: QE successfully brings down mortgage rates

[...] So yes, it’s not surprising if QE ‘brings down mortgage rates’ anymore than it would be surprising if the Fed bought up tulips and then the price of tulips went up. The real question is, why should we want that.

Do we now think mortgages have been generally too hard to get in the past 10 years? Is that the Lesson Of The Crisis?
Let me offer a trivial re-phrasing of the effect than The Bernank is so proud of: QE made it harder for people to save up for down payments.  Hooray! Oh, wait. Never mind.

I suppose if you're thick enough to think the problem in the last ten years was "mortgages are too hard to get" then you're also thick enough to think that the problem also included "downpayments were too high."

I have been upset since literally the age of eight when people cheer every time some Grand Vizier brags about keeping interest rates low for mortgage borrowers. It always make me want to slap them and demand to know why they think borrowers deserve to win out over savers.

(Of course I know exactly why: there are more voters who want to spend Other People's Money on houses right now then there are voters who want to defer consumption until the future.)

22 January 2013

Debt Ceiling: I Think You're Skipping a Step

Now that we're in the tedious intermezzo between the Fiscal Cliff "Deal" and Debt Ceiling "Deal" I've seen about a thousand people make some form of this statement:
How dumb is the US Congress? How can you simultaneously order the Treasury to spend $X dollars, and yet also order them not to borrow the money necessary to spend $X dollars? Clearly this 'debt ceiling' thing is a big farce that should be wiped away so the US Gov't can spend $X immediately.
(0) Seriously? You're surprised that Congress is simultaneously commanding people to do both Foo and Not Foo? Where have you been? Didn't I just sit through an entire election cycle where both main party candidates were simultaneously promising to not raise taxes on the middle class and raise import tariffs? Have you not noticed how much money we spend on subsidizing people's food purchasing while also artificially raising the prices of food?

This is the United States Government we're talking about here. Why should they put their thumb on the scale when they could be putting each thumb on a different side, and botch things up coming and going?

(1) Okay, fine. Congress has passed two contradictory laws. Why are we assuming that the one that needs to go is the "Spend Less" one? If you're constrained to A XOR B = TRUE, then NOT A and NOT B are both legitimate options. How do you skip from "Can't do both A and B" to "Must do only A, not B"?

(2) Analogies between the federal budget and household spending are fraught with peril, but I think it's justified here. You know how most people spend their money? They just merrily roll along all month buying what the decide to, and then get to the end of the month and tot everything up to see how they did. Any half competent financial advisor will tell you to do it the opposite way around. First decide how much money you're going to spend, then divvy it up to decide how much to spend on each category.

If Congress got off their entitled duffs for a bit and passed an actual budget for the first time in god-only-knows, we could straighten all this out. "Hi, Congress? The is the US Treasury. You've got $X left to spend. If you could maybe write up a list of priorities... maybe divvy your spending up into different categories... make some decisions about what's more and less important... you know MAKE A BUDGET... that would be super."

(3) See, in particular, RWCG's Split the Difference method for debt ceiling catastrophe avoidance.

(4) Is ordering the fisc to spend $X but not to borrow the necessary funds actually as ridiculous as everyone is making it out to be? Landsburg argues (convincingly) that they're not, since Congress as a whole does not have a single, unified set of preferences vis-a-vis spending.

21 January 2013

Allocating Inauguration Tickets

Greg Mankiw's Blog: Allocating Inauguration Tickets

Background: The Congress allocates free tickets to the presidential inauguration, often by lottery. Some winners of the lottery try to sell them for thousands of dollars. Senator Schumer objects to the resale.

Question 1: When David, a lottery winner, sells his ticket to Ann, both David and Ann are better off. Who is worse off?
I've concluded that once of the primary differences between me and most people, especially leftists, is how we view Pareto improvements.

David and Ann are better off, but Betty, who didn't/wouldn't/couldn't buy a ticket is not worse off. I think this is a good thing. Many others interpret this lack of improvement to Betty's condition as a de facto harm to him.

(Perhaps oddly no one seems to feel this way about the people who didn't win the lottery in the first place. Their failure to win is not commonly seen as a loss. I suspect the difference might be that in the lottery, Betty et al. didn't benefit because of chance, rather than because of the agency of Ann and David. This just makes me want to re-read The Lottery in Babylon, but that will have to wait until I get home.)

No one raises their child this way. No one would encourage their kid to feel wounded if a classmate is bettered and they aren't. We don't accept such childish emotions from actual children; I don't know why we encourage them amongst adults.

(Image by Nicole Ginelli)

20 January 2013

The Fount of AI

Edge.org | Bruce Sterling | The Singularity: There's No There There

A Singularity has no business model, no major power group in our society is interested in provoking one, nobody who matters sees any reason to create one, there's no there there.
I'm also a big Singularity-skeptic, but I wanted to pass on an interesting observation I heard at a talk last year.

If anyone has both the motivation and means to give us Strong AI (a Singularity pre-req), it's either the folks in computational finance or marketing. When I first heard that I thought it was bonkers, but the more I've thought about it the more right I think it is. Chew on it for a while.

PS I'll bet good money that if we ever get Strong AI/AGI it won't be from the defense sector.

19 January 2013

Causation, wealth, and grades

Lion of the Blogosphere | I doubt that wealth causes low grades

The New York Times, today, is featuring an article which tells us:
Students from wealthy families are more likely than those from poor families to go to college, and those whose parents pay their way are more likely to graduate. But according to “More Is More or More Is Less? Parent Financial Investments During College,” a study by Laura Hamilton, a sociology professor at the University of California, Merced, greater parental contributions were linked with lower grades across all kinds of four-year institutions.
The implication from the article is that parental contributions cause kids to become lazy brats who don’t study. But I think this has the cause and effect wrong.

Smarter students get better grades. Students from wealthier backgrounds are more likely to get into top colleges even though they’re not quite as smart, whether it’s because they are legacies, because their parents paid for them to attend private schools that help to build up their curriculum vitae and leadership skills which colleges like, or because colleges blatantly favor students with wealthy parents because they pay full price and donate more money. Because students with wealthy parents get into the same college without being quite as smart as the middle class students at the same college, they will naturally tend to get lower grades.
(0) When it comes to social situations, the answer to the question "does causation run this way or that way?" is almost always some of both. You know what? Scratch that. It's always some of both.

The magnitude of A→B may drastically out weight that of B→A, or they may be evenly balanced, but if the situation is complex enough to warrant asking which one is the "real" effect, then it's vanishingly unlikely that the magnitude of either iz zero.

(1) To extend LotB's theory, students from richer families*
NB the study was not of family wealth, but of the percentage of costs the parents ponied up for
don't get grades that are as good because they don't have to. If Mom and Dad were willing and able to pony up a few hundred grand for college they're probably also able to get you into a not-shitty job. There has to be some non-zero amount of (potentially rationally) reduced motivation.

"Too Many Students, Too Few Jobs"

Asymmetric Iiformation | Megan McArdle | Too Many Students, Too Few Jobs

But let's not forget that there are lots of people out there exploiting students these days. A while back, I observed that academics tend to describe the job market as an improbably Dickensian welter of exploitation, a description which matches only one job market: their own. I asked why such a left wing environment had producedone of the most radically unequal and exploitative job markets in the country, which drew the following story from a reader:
The entry of new job applicants into this labor market has nothing to do with the availability of jobs. University administrators control how many tenure track jobs there are, but the faculty controls how many new graduate students there are. Faculty decisions about how many grad students to admit are usually based not on how many new PhDs they can place in jobs, but how many graduate assistants the faculty feel they need. I went to a fairly prestigious Midwestern university, and I entered the program with a cohort of 14 first-year grad students. In about my second or third year, the Department Chair and Director of Graduate Studies informed us that new cohorts would be smaller, 7-8 students at most, because they could not in good conscience admit students who they knew they couldn't place. After less than a year, the faculty were furious because there were not enough TAs to do all their grading for them. The next year, the incoming class of grad students went back up to 14.
Presumably, the marginal six or seven candidates were less likely to get a job than the first choices. The oversupply of graduate students in the humanities is much, much worse than the oversupply of lawyers. The odds of a PhD student from a third tier program getting a tenure track job approaches zero in many fields (and falling every year), yet the schools keep cranking them out.
(0) Yes. I agree. All you need to know about the academic job market stems from one fact: every single department out there will graduate more PhDs in a single year than they will hire new professors.

This is one of the (many) reasons I've decided to stay out of academia.

(1) Re: the sentence I italicized. I wonder if this is actually true.Yes, presumably the above-average student at appplication time will still be above-average when they hit the job market, but I would not be surprised if factors in the intervening years (specifically, choice of advisor) had a much larger affect. It would be easy enough to study.

I know my department keeps a "permanent file" for each student. The first section keeps a copy of the student's application and any admissions committee deliberations about it. The last section includes any information the department has about job status, which is usually considerable if the student tries for an academic post. Correlating the first and last sections would be pretty straight forward.

If I had to guess, the choice of advisor is the dominant factor in job placement. I think this is more true at top 25 departments, who are spoiled for choice in terms of applicants (i.e. they could fill their incoming class twice over with well-qualified students).

18 January 2013

regulate just my competitors > regulate everyone > regulate just me

Bloomberg BusinessWeek | Does Green Shipping Cost Too Much Green?

Businesses usually vehemently oppose rules that raise their costs.
This is the lead sentence from this article. I can only assume it was filed from an alternate universe.

Because in my universe business oppose rules that raise their costs, but are head-over-heals in love with rules that raise everyone's costs. Competing on price is hard. Far easier to lobby the government and get them to disallow competition in some dimension where that you don't want to fight in.

04 January 2013

Stories to watch for in 2013

Marginal Revolution | Tyler Cowen | Stories to watch for in 2013

5. The continuing rise of machine intelligence and the general recognition of such as the next major technological breakthrough.
I sure hope so. If so, it's good for the world. And great for me as I'm coming on the job market.

It's a very interesting list. Here are some things I would put on my list. (Unsurprisingly, it is tech-heavy.)
  1. The end of full-time, low-wage jobs in America because of health care regulation.
  2. Will lawmakers continue to (shockingly) embrace robotic cars, or will new regulatory/judicial hurdles be thrown up? How are we going to sort out the details?
  3. Same as previous, but with aerial drones. The tech capacity is there; how will the FAA/police/etc. respond?
  4. 3d printing: what happens next? Will there be entry level hobbyist models that will lead to the same revolution as the Apple II/TRS-80/Commodore 64? What new business models will emerge? What are we going to do about IP law and DRM? How about gun control?
  5. Will something go seriously pear-shaped with state & muni budgets/pensions/bonds. (Caveat: I've been expecting this for five years. No particular reason to think 2013 is finally the time.)
  6. Will Washington be able to can-kick our spending problem for another year, will they finally sort out some problems, or will the bond market decide they're no longer in the mood to keep giving congress more rope?

Resolutions: If you want to do X, then do X

You know what I don't like? All the quasi-news stories* I get bombarded with at this time of year about how to make your resolutions stick.

(* Sidenote: what do you call the things that are produced by newspapers, radio news programs, tv, etc. that are not news?)

There is no damned trick for keeping your commitments. You know how to keep your resolutions? Do the shit you say you're going to do.

You can gin up a whole stack of little tricks about calendars and to do lists and timing and positive affirmations and rewards and on and on and on, but there's no substitute for doing shit.

Lest you think I'm getting super-preachy now, I want you to know that you are not the intended audience for this post. I am. I am writing this so that one part of mind can yell at another part and tell him to Take Care Of Business. So...
To: The Lazy Part of Me

When you go to bed tonight, are you going to be glad you spent time doing that thing you're doing right now? Is that something you're going to be able to check off the list? Is that the highest priority way to spend the next X minutes? No? Then go Get Shit Done.

The Gets Shit Done Part of Me
My first instinct was to sign that "The Less Lazy Part of Me," but screw that noise. There is a part of me that's capable of kicking ass. Denying that only gives power to The Lazy Daemon. Last year I actually followed through on all the shit I said I was going to do. I learned to bake my own bread. I lost some weight. I learned some good stuff. I made some art I'm proud of. I read a ton of quality stuff. So now I just need to do that again. Onward.

PS I guess this actually makes this post one of those dumb little psychological tricks. What a quandary. Telling yourself in writing that there are no shortcuts or crutches for getting things done is itself a crutch. Screw it. I know it doesn't matter how many angry blog posts I address to myself, I know there's no substitute for doing the things I say I want to do.

02 January 2013

Not even a deal

My senior year of college some friends and I booked a vacation to Mexico. When we got there we found out the hotel had over-sold. (By about 50%, no less). Long story short, the manager tries to offer us four nights instead of seven, put us up in some shitbox motel two miles away for the other three nights, and give us some drink vouchers. He kept saying it was "a good deal."

I'll never forget my friend's response: "That's not 'a good deal,' asshole. That's not even a deal. A deal is you giving us what we were promised."

That's how I feel about our new fiscal cliff "deal."