Behavioral Psych Ops?

Here is an interesting read on the team of behavioral economists in Camp Obama. I've read "Predictably Irrational" (one of the books mentioned) and loved it. I've bought copies for all my friends. It's a fun read, not sure if it was intended to be a keystone to Big Government Policy, but hey that's not my call.

Here's the the money quote of the article. After going on and on re: behavioral influences, and quickly disclaiming how paternalism can easily slide into a nanny-state, the writer adjusts:

But face it: Obama is right. Our emissions are boiling the planet, and most of our energy use is unnecessary. Our health expenditures are bankrupting the Treasury, and most of our visits to the doctor can be traced to unhealthy behavior. We do need to change, and we know it.

Ah, says who? Most reasonable people will admit that there is a "debate" on our "boiling emissions." Energy use, health expenditures...? As Mamet would say regarding a flimsy movie plot point, "We'll take your word for it."

My point -> "Nudging" people in the right direction sounds like a good idea. But in the end, it's a just a nudge, and last I checked it's a free country brotha. The beauty of America is that someone can sit at a bar with a cigarette and a beer eating a bacon cheeseburger knowing it's absolutely not the best thing for their health - and do it anyway. When the government starts paying for health care, then it's in everyone's interest to prevent this from happening. But it's also in our interest to live life the way we see fit.

A good buddy of mine - who didn't smoke, wasn't obese, didn't binge drink, ate healthy, and was pretty fit - died of cancer at age 23. Not sure how changing his behavior would have changed the outcome of his battle.

I'm not advocating defeatism, but just freedom. It's very possible the next generation will live the right life - and die from diseases we yet not know. As the great Coach Wooden said, "the worst thing you can do for those you love, is to do the things they can do for themselves." Everyone has it in their power to take care of themselves. To think otherwise, well, that's defeatist.

Behavioral economists have another bias they call the "overconfidence bias," which means we're a little too confident in our beliefs.

This one is conveniently left out of the article. Let's see if this team of psychologists guiding the nation's policies practice what they preach. Or in the case of overconfidence, don't.

Go see The Hangover...

Then read my essay on bachelor parties. Still holds!

Free Business Idea Friday

Disclaimer

Laundry coins by mail. For people living in apartment buildings with shared washer/dryers, who can't go to the bank because of work. Plus, who really wants to make a special trip to the bank just for coins?

Also applicable for work environments with vending machines.

Free Business Idea Friday Disclaimer

All business ideas presented here on Fridays under the title "Free Business Idea Fridays" are free of charge. The idea behind presenting them free is that the effort in creating said idea does outweighs the benefits of creation, but that the benefits of said idea in the marketplace are sufficient that if said User out there in the world, heretofore known as You, produce referred product or service, then said poster of the linked-to post, known as Me, would think it rather awesome. If, on such rare occasions that I renege on pursuing such philanthropic (read: selfish) pursuits, and deem the idea profitable (read: more selfish), I will immediately remove the post from this site (Google cache and waybackmachine notwithstanding). However, if You were savvy enough to note such profitability in said idea before me, impossible though not improbable, then You are justly rewarded with a headstart by the laws of all that is right and true for infinity and beyond.

Food nostalgia...

Feeling oddly nostalgic for childhood foods as of late ...







In related news, strawberry fluff? Wrong in so many ways...

What he did talk about…

What Mr. Sudjic did talk about about was the line between art and design. The very thin line.

He referenced product designers who painstakingly detailed every curve and button of say – a microwave oven, or calculator, only to have technological advancements turn these products into junk. Of course once they become junk, aka useless, aka, no longer serving their functional requirement – heating food; they can often then, and only then, become art. The example he gave was MOMA, which waited for a particular helicopter to cease production, before hanging it as art.

Kinda like how now a Commodore 64 can be considered art. Or how a few years ago Atari T-shirts were chic.

What occurred to me at the event was that our modern gadgets are like candy. They give a burst of joy, then quickly turn meaningless. Like how a super sour Japanese candy turns into regular sweet boring candy after just 30 seconds.

And for the first time in my life I thought about buying a watch. The watch buyer is consciously looking forward in time. They are buying an object they plan to keep. Some may value this watch to such a degree, that if they were ever captured by the Viet Cong, they would hide it up their ass and give it to Christopher Walken to pass on to their son.

But really, for the longest time, people bought a watch knowing that there will be advancements in watch technology, but not to point of having to replace the watch – unlike our gadgets in which we are pretty much forced (with consent) into upgrading and replacing.

Zocalo – the language of things.

Went to a Zocalo at the Getty last evening. The only thing better than visiting the Getty in the evening is visiting the Getty in the evening with free parking!

(Note: in an age of taxation, let’s not overlook the power of free parking.)

The lecture was with author, Deyan Sudjic, titled "Why Do We Lust For Objects?", based on his book.

I was actually pretty excited for this lecture because I was hoping to answer a question I’ve been thinking about for some time, namely – why do we lust for things?

Not exactly phrased like that of course, but I’ve always wonder when shiny objects became items of desire. Medievail stories are filled with lust for treasures and the Crown's jewels, and we can even trace currency back to Some Point in History, B.C.

For this, we know there was a transaction, say for 10 sheep.

Buyer: 10 sheep, please.

Seller: OK, that will be 25 sacks of those shiny things people in caves are always gabbering about.

Buyer: Ahhh, yeah, about those sacks.

Seller: Wha- what’s wrong?

Buyer: They’re heavy, man. It’s actually 27 sacks, as I gotta give 2 sacks away to the hunchbacks to help me carry them!

Seller: What can I say? Life sucks, man. Wheel ain’t invented yet.

Buyer: How about I give 25 sacks to the old Jew, and he gives me a parchment, and I give that to you? And you can get them whenever is convenient.

Seller: Are you havin' a laugh…?

Or something like that. So we know how currency started. But when did the lust for the shiny objects begin?

If only the evening titled as such at the Getty addressed it. Don't get me wrong, great time, but the question still remains...

The Optimizers (part I)

Professor Cockrum pointed to our laptops and said, “these things… they’re making your brains go soft.”


Tough love from a man worth countless millions, who donates his teaching salary back to the school. “All this optimization you’ve been taught, for what...?” he went on, “don’t get lost in the numbers!” That was his mantra - don't get lost in the numbers. This at a school that prides itself on “the numbers,” aka stressing math in the business curriculum. Not more than six months ago all this would have sounded provocative.


With the recent bubble burst now noone trusts the numbers. Consider that for the past decade the world's top banks hired the smartest math wizards, from MIT, Harvard, all PhDs no less, to create their "models." These models were used to allocate the bank's assets. To summarize Taleb, the strength of the model rests not on the numbers within it, but on the assumptions it rests upon.

(This is all pulled from Taleb's "The Black Swan," who explains it much deeper than I. I only offer a sampling here so one can get a flavor for where we're headed.)

Sorta like the foundation to a house. The model could be made of stucco, but if it rests on stilts overlooking the Gulf of Mexico, it loses to a hurricane. Take one assumption - that real estate values will always - always... always, go up. Not stay firm or hold its value. Or track inflation which it's historically done - providing an excellent "invisible" retirement piggy bank for middle-class Americans. No, not this at all. The mood during the bubble was that it would go UP - like Google stock...

And when it didn't, the models failed. And when the models by the smartest math wizards in the country failed, some parts of the bank failed. And depending on how much of the bank relied on the models, that part and then anything related failed. It was a snowball.

A few survived of course. This isn't to claim this is the only reason for what was, and is, a historic collapse which we may, or may not, ever recover from. But it's one reason. And part of it goes back to this idea of optimization.

The idea of optimization says that if you find a good deal, then you can use the combination of a high IQ and computer to make it perfect. In other words, it says you CAN have too much of a good thing.

For instance, let's take a simple allocation of stocks, stocks A and B. Let's assume the goal is risk versus return. This says you want to minimize your risk and maximize your return. Very sensible. This follows on our natural intuition to "have something for nothing."

Now lets' say you studied the market and trends, various rates of return, etc, and you discovered $10 of stock A plus $5 of stock B gave you a nice return for a fair amount of risk. Well, you could be satisfied with this result and try it out. Or you can begin plugging numbers in Excel, run a tool called Solver, and let Excel find in the very best "optimized" allocation - let's say it's $9.88889 of Stock A and $5.11111 of Stock B.

Note you didn't change anything from the first go. You didn't change your "approach" to allocating stocks. You just perfected it. This works when there is one correct answer, like an exam. Or in a competition. If the rules are the same, and I go with the first allocation and you go with the second - you win.

This is why they often call professional sports a battle of inches. If you gain 3 yards a carry, you punt. 3.4 - you carry on.

Of course this is all super-simplistic, but the point here is not think about allocation - it's to consider the idea of optimization. Imagine you now work at bank, you're a math whiz, the new nerdy girl from Stanford just kicked-ass from company C across the street. And people are wondering what's wrong with your model? Do you throw it out the window and start over? Or do you try to squeeze just a little bit more? After all, that's probably what she's doing...

On GM…

Here’s a suggested solution to the problem of GM. They should grant the hard-working unions 100% ownership of the company. The unions, after all, are the victims in this. They always are, poor guys, always on the wrong-end of things. These poor dudes give 110% each day only to have evil Wall Street and Management run their company into the ground – not to mention the selfish average American dolts craving their gas-guzzling SUVs. What were the hard-working union members to do in the face of this?

They should grant the unions 100% ownership of the company. They deserve it. Let’s not get caught in the details regarding bond-holders, who invested in what they thought was a “safe” investment. People put their family’s wealth, their children’s trusts, retirement money, aka the boring stuff on the line for safe investments, but hey they didn’t make any cars.

With 100% ownership, then, each employee would have incentive to create cars that people want, or even, go out in the market and convince people to buy the cars they really should want to buy because it’s good for Mother Earth. Once done, we would need a to symbolize this ownership, a way for the employee to prove they have ownership. Since it’s not cool to print paper anymore, it could be a .pdf, called “SOHI” for Symbol of Ownership for Hard-working Individual.

GM’s future earnings, if they have any, can then be dispersed to the SOHIs.

Now here’s an interesting part of all this – maybe, MAYBE, sometime in the future a SOHI owner will want to sell their .pdf to a non-hard-working non-union member. Anything is possible, this is America. Imagine the incentive for the entire company.

Of course we could just call SOHIs – stocks, and run GM like every other f’n company in the country.

Podcast Picks of the Day - Futures in Biotech and The Story

Futures in Biotech
Futures in Biotech 21: Science versus Cancer
Run Time: 1:06:11

Hosted by Marc Pelletier, Futures in Biotech is a podcast focusing on the latest breakthroughs in biotechnology. This episode featured Dr. Evangelos Michelakis, a doctor at the University of Alberta, and his discovery of how the cheap, common drug DCA could potentially destroy cancer cells. DCA acts to switch the unique metabolism of cancer cells back to normal, which in turn triggers programmed cell death (apoptosis). There are multiple disclaimers at the end of the episode regarding DCA and its testing. Dr. Evangelos’ provided excellent insight on how cancer cells metabolize differently from normal cells.

The podcast can be found on iTunes and here.



The Story
Listening for Amelia
Run Time: 51:38

Hosted by Dick Gordon, The Story is a daily weekday podcast featuring engaging stories from all walks of life. Amelia Earhart lost communication during her flight around the world on July 2, 1937. On the same day, Betty Klenck Brown was a 15-year-old Californian girl listening to her short wave radio for songs, which she planned to transcribe so she could sing the lyrics without having to purchase the sheet music. After turning the dial, a voice came over the speaker “This is Amelia Earhart. This is Amelia Earhart.” Betty transcribed every word that came through the radio. The transcription became a three-hour, harrowing, one-way distress communication from Amelia and her navigator.

Despite efforts by her father for government involvement, Betty’s journal of the incident stayed dormant for decades until a member of TIGHAR (The International Group for Historic Aircraft Recovery) came across her journal after hearing a story from Betty’s neighbor. Ric, a disbeliever in the Betty’s story at first, now believes Betty’s radio did pick up the Earhart distress call from the crash site as shown in clues in the transcription, communication snippets that could only have come from Earhart.

The podcast can be found on iTunes and here.