Month: November 2009

The “paradox of choice” is not robust

I missed this one while traveling, so I am grateful to the loyal MR reader who pointed it out to me:

… the psychological effect may not actually exist at all. It is hard to find much evidence that retailers are ferociously simplifying their offerings in an effort to boost sales. Starbucks boasts about its “87,000 drink combinations”; supermarkets are packed with options. This suggests that “choice demotivates” is not a universal human truth, but an effect that emerges under special circumstances.

Benjamin Scheibehenne, a psychologist at the University of Basel, was thinking along these lines when he decided (with Peter Todd and, later, Rainer Greifeneder) to design a range of experiments to figure out when choice demotivates, and when it does not.

But a curious thing happened almost immediately. They began by trying to replicate some classic experiments – such as the jam study, and a similar one with luxury chocolates. They couldn’t find any sign of the “choice is bad” effect. Neither the original Lepper-Iyengar experiments nor the new study appears to be at fault: the results are just different and we don’t know why.

After designing 10 different experiments in which participants were asked to make a choice, and finding very little evidence that variety caused any problems, Scheibehenne and his colleagues tried to assemble all the studies, published and unpublished, of the effect.

The average of all these studies suggests that offering lots of extra choices seems to make no important difference either way. There seem to be circumstances where choice is counterproductive but, despite looking hard for them, we don’t yet know much about what they are. Overall, says Scheibehenne: “If you did one of these studies tomorrow, the most probable result would be no effect.”

That's by Tim Harford.  In my view, the so-called paradox of choice is one of the most overrated and incorrectly cited results in the social sciences.  The full account is here.

How worried should we be about the deficit?

There have been many posts on this topic lately, start with Paul Krugman and Brad DeLong if you need to catch up.  Today I have a few simple points:

1. Even if "it is fine to borrow more" is the most likely scenario, it is not the only scenario.  Let's take a page from Marty Weitzman on climate change.  The worst-case scenarios matter too, because they can be very, very bad.  We need to think probabilistically about this issue.

2. Are there current intelligent discussions of the implied interest rate volatility embedded in current options prices?  If we are looking for market tests, why not start there?  Focusing on the point estimate of the market interest rate(s) discourages you from thinking probabilistically.

3. I know less about Belgium but I am not reassured by Krugman's point that "Italy can do it."  I and many other observers consider Italy's economy to be a basket case which will only get worse.  Nor is Japan in a satisfactory place, economically speaking.

4. Krugman writes: "Belgium is politically weak because of the linguistic divide; Italy is
politically weak because it’s Italy. If these countries can run up
debts of more than 100 percent of GDP without being destroyed by bond
vigilantes, so can we."

I would interpret this evidence differently.  A high deficit often is an unfavorable symptom of bad politics, even if you think the high deficit is economically OK on its own terms.  It's a sign that you have dysfunctional institutions and decision-making procedures, as indeed they do in Belgium and Italy.  I believe that the not-always-swift American voter in fact understands high deficits — correctly — in this light.  They don't hold theories about "crowding out," rather they sense something in the house must be rotten.  And so they rail against deficits, as do some of their elected representatives.  It's a more justified reaction than the pure economics alone can illuminate.

When water regularly overflows from your toilet, you want the toilet fixed, whether or not the water is doing harm.

Sweet Trade

Here is a fun, easy and effective experiment that instructors can use to illustrate the gains from trade.  The instructor puts chocolate bars ("fun-size") or other candy in bags, one bag for each student. (Alternatively, you can use the type of small items that you can find at a dollar store.  Filling the bags is where the most work comes in especially if you have a large class). Students open the bag and are then asked to write down how much they would be willing to pay for the bag's contents.  But before snacking, students are allowed to trade.  After a few minutes of trade, ask the students to write down their valuation again.  Voila!  Gains from trade.  With a few numbers pulled at random from the students you can do a back of the envelope calculation for the total increase in value.  The experiment doesn't take long and the students will appreciate the candy!

A hat tip to Randy Simmons who first introduced this experiment to me.

Markets in everything: department of yikes

This possibility had never occurred to me:

Racial attacks like the ones behind the
arrest of 32 suspects in Denver are part of a trend spreading across
the country, gang experts said Saturday.

As part of the trend, black gang members videotape the assaults in
trendy tourist districts and sell them on the underground market as

"They knock a young white guy out with one blow to see if his knees
will wobble and surround them and take their money," said the Rev. Leon
Kelly, who runs a Denver gang-prevention program. "It's a joke."

Here is the full story and I thank new reader Mark for the pointer.  By the way, am I wrong in thinking it a bit unusual how the words "black" and "white" are thrown around so casually in this story?

The lessons of “Climategate”

I've had many readers emailing me, asking what I think of the "trove" of emails unearthed from climate change researchers.  I'll admit I haven't read through the rather embarrassing revelations, I've only read a few media summaries and excerpts.  I see a few lessons:

1. Do not criticize other people in emails or assume that your emails will remain confidential, especially if you are working on a politically controversial topic.  Ask a lawyer about this, if need be.  "Duh," they will say to you.

2. The Jacksonian mode of discourse, or mode of conduct for that matter, can do harm to your cause, especially if you are otherwise trying to claim the scientific high ground.

The substantive issues remains as they were.  In Bayesian terms, if it turns out that many leading scientists do not practice numbers one and two, I am surprised that you are surprised.  It's very often that the scientific consensus "sounds that way."

In other words, I don't think there's much here, although the episode should remind us of some common yet easily forgotten lessons.

I should add that this episode will seem very important to you, if you conceive of the matter in terms of the moral qualities of "us vs. them."

Addendum: Robin Hanson offers a similar opinion.  I wrote my post before reading his, yet we come to the same conclusions I think.

On Bryan Caplan’s ethical intuitionism

Bryan offers the most extensive version of his view I've seen him blog.  On overall method and meta-ethics, I'm not so far from Bryan (and someday he will get a post in praise of him).  But I usually disagree with his applications of the method.  For instance he seems to argue that because employees are allowed to discriminate against employers, we should allow for a reciprocal right of employer discrimination.

My first objection is that we cannot judge an argument like this outside of a particular historical context.  In some cases employer discrimination rights may be fine, in others not.  I don't think ethical intuitionism, as could be represented by abstract reasoning from analogy. can do the hard work here.  Rather we must look to the history to understand the meaning and long-term effects of the discriminatory act under question.  In some cases the discrimination is effectively perpetuating a regime of evil and thus it is morally wrong.

Here is another part of Bryan's argument:

Suppose A and B be are dating.  A has an equally good outside option. 
B can't bear to live without A.  A therefore has some bargaining power
– vastly more than most employers, in fact.  Yet almost everyone thinks
it would be wrong to force A to stay with B.

If there is one intuition that many reasonable people have, it is that family and personal relationships are not, in moral terms, exactly like commercial or work place relationships.  I get nervous when I see ethical intuitionists serve up simple analogies across these various realms.  (In general I think Bryan creates too much license for analogical reasoning of this kind.)  This is also why I am not convinced by all of the arguments in Steve Landsburg's Fair Play.

My overall view is that ethical intuitionism settles many fewer issues than most of its proponents like to think.  That said, there is often nowhere else to go.  We somehow need to come to terms with two propositions at the same time:

1. We need to think more rather than less ethically.

2. The content of ethical philosophy tells us less, in reliable terms, than most people would like to believe.

Facebook rescission?

A Canadian woman on long-term sick leave for depression says she
lost her benefits because her insurance agent found photos of her on Facebook in which she appeared to be having fun.

Nathalie Blanchard has been on leave from her job at IBM in Bromont, Quebec, for the last year.

Canadian Broadcasting Corp. reported Saturday she was diagnosed with
major depression and was receiving monthly sick-leave benefits from
insurance giant Manulife.

…She said her insurance agent described several pictures Blanchard
posted on Facebook, including ones showing her having a good time at a
Chippendales bar show, at her birthday party and on a sun holiday.

The insurance company claims there is more to it than that.  Here is further information.

The practical value of economics as a science

I know of three very good books on the actual (or sometimes hypothetical) application of economic ideas to real world problems:

1. Alex Tabarrok's Entrepreneurial Economics: Bright Ideas from the Dismal Science.

2. Some other book I haven't read and can no longer remember.

There is now a third:

3. Better Living Through Economics, edited by John J. Siegfried.  It covers emissions trading, the EITC, trade liberalization, welfare reform, the spectrum auction, airline deregulation, antitrust, the volunteer military, and Alvin Roth algorithms for deferred acceptance.  The contributions are uniformly excellent and written by top economists.

Benton’s smoky ham and bacon

It's equal to the best I've had, including what I've sampled in Spain.  (I've also had especially fine ham in Slovenia.)  You can read about it and order it here.  It ships without incident or loss of value.  It's what David Chang uses in Momofuku and its affiliated restaurants, by the way.  It's not even very expensive.

Speaking of animal products, a few of you asked me a while ago how the eating of animals could possibly be morally justified.  My primary objection is to how we treat animals while they are alive, especially in factory farms.  The very rise and continuing existence of humanity is based on the widespread slaughter and extinction of other large mammals, not to mention other animals as well.  I'm not saying we should feel entirely comfortable with that, but rather a "non-aggression" stance toward other animals simply isn't possible, short of repudiating all of human civilization, even in its more primitive versions.  Everyone favors the murder of animals for human purposes, although different people draw the lines at different places.  I don't know of any good foundationalist approach to these issues, but at the very least we should be nicer to non-human animals at the margin and less willing to torture them.

At the policy level we should tax meat more heavily and regulate farms more strictly, for both environmental reasons and reasons of animal welfare.  I draw a line at where the life of the animal is "not worth living," but for me animal slaughter is not immoral per se

There are a few things you can do personally, including:

1. Buy less from factory farms.

2. Eat better meat and in turn eat less meat, substituting quality for quantity.  This is a common demographic pattern, so it shouldn't be too hard to mimic.

If you are a vegetarian, I think that is excellent.  If you're not, Benton's is a step toward both #1 and #2.

The culture that is Italy

The new (old) labor market idea — you can call it fifth best perhaps — is hereditary jobs:

It is a problem many a company faces in these tough times: how to
replace older – and costlier – workers with younger, cheaper ones.

Rome bank has what it thinks is the solution: to make the jobs
hereditary. Under a deal signed with unions this week, 76 employees of
Banca di Credito Cooperativo di Roma (BCC di Roma) must take early
retirement but they will get a choice: either take a payoff or leave
your job to your son or daughter (or indeed any relative "up to the
third degree", which would allow the post to be left even to
great-nieces and nephews).

The full story is here and I thank The Browser for the pointer.

The corn genome

I have many favorite topics which I don't blog much or at all.  One of these, taken from my time in Mexico, is the history of corn.  I very much enjoyed this recent article on the topic.  There is this good bit:

The sequencing revealed that an astonishing 85 percent of the corn
genome is made up of "transposable elements" — short stretches of DNA,
some perhaps descended from viral invaders — that show evidence of
having moved around in corn's 10 chromosomes at some point in
evolution. Their peregrinations provided the basis for new genes, or
the on-and-off regulation of existing ones…

And this:

Corn's diversity of traits has been largely maintained, despite a
century of intensive breeding. Modern corn produces cobs that range
from the familiar farm-stand variety to lopsided baseballs and fat
pencils and have a rainbow of kernel colors. Varieties of corn can have
a greater genetic difference between them than what exists between
human beings and chimpanzees.

And this:

Walbot, the Stanford geneticist, speculates that this unusual diversity
survived because corn cultivation spread along a north-south axis. That
exposed the species to a much greater variety of environmental
conditions — temperature, day length, rainfall, altitude — than if it
had spread along an east-west axis, as did wheat.

There is extraordinary genetic information and power in corn.  I am always willing to read another book on the history of corn and its breeding.

Is the Senate bill fiscally responsible?

Matt Yglesias writes:

The bill contains provisions that have front-loaded positive impacts on the deficit and also have provisions that have back-loaded positive impacts on the deficit. The bill, rather intelligently, seems to balance this out well leading to net deficit reductions in the short-, medium-, and long-terms. The bill by no means solves the considerable long-term fiscal challenges to the United States, but it does improve the situation. If people want to say that on balance they think the bill is a bad idea, that’s fine, but to do so is to oppose what’s far-and-away the most politically realistic way to enact non-trivial long- and medium-term deficit reduction in the 111th Congress.

I should coin a new MR term: the retreat into the relative.  As I understand it, the apparently fiscally responsible portions of the bill come from a) eventual cuts in Medicare spending, and b) rising taxes on some health insurance plans and they come later of course.  Few Congressional representatives are willing to do these things today, so should we predict they will be done in the future?  (The same problem plagues Waxman-Markey, by the way, so these back and forth rhetorical debates are becoming quite common.)  In my view, policies structured in this manner are simply another way of doing deficit spending.

To quote Matt, he writes of: "the most politically realistic way…to enact…deficit reduction."  That sounds powerful.  and in fact I agree with his claim as it is worded.  But if all the politically realistic options make our fiscal position worse rather than better (Congress likes to spend money more than it likes to inflict pain on voters)…well, this bill still makes the deficit problem worse.  Even it is the best of the realistic worsening options.  We should be wary of the retreat into the relative because all the options may be bad.  Nor should the phrase "building a framework" be translated into anything but "we are unwilling to do this now or anytime soon and thus we are engaging in more de facto deficit spending."

The fact that Republicans can (correctly) be blamed for making the bill worse does not constitute an argument that the current bill will make things, in fiscal terms, better. 

Citing inconsistencies of bill opponents ("but he didn't scream loud enough about [fill in the blank] way back when") does not help on this score either.

Another argument I have seen in MR comments is: if we can't solve this health care costs problem it won't matter, therefore we can spend more without making the problem in net terms worse.  That's a fallacy and you would never apply such reasoning while driving over the speed limit ("I'll accelerate right now, after all at some point I've got to slow down anyway.")  Think of it as a kind of Zen-like, reverse Sorites ploy: "It is adding stones which takes a pile away."  Or "Let us add stones.  The pile must disappear in any case."

Here is a numerical style guide (SG) for identifying future arguments in these veins, because they will recur when you have an activist government which wants to be very popular, combined with an under-educated, short-term oriented citizenry:

SG1. The retreat into the relative: "All the other options are even worse."

SG2. Blame the Republicans: "They made the bill bad, not us."

SG3. The critic is evil or inconsistent: "Your views are inconsistent, or you are morally questionable, so I can dismiss your worries."

From now on in the MR comments section you can just cite the appropriate number and spare yourself carpal tunnel syndrome. 

Addendum: Megan McArdle adds relevant comments and also here.

Badges? We don’t need no stinkin badges.

In pursuit of an Eagle Scout badge, Kevin Anderson, 17, has toiled for more than 200 hours hours over several weeks to clear a walking path in an east Allentown park.

Little did the do-gooder know that his altruistic act would put him in the cross hairs of the city's largest municipal union.

Nick Balzano, president of the local Service Employees International Union, told Allentown City Council Tuesday that the union is considering filing a grievance against the city for allowing Anderson to clear a 1,000-foot walking and biking path at Kimmets Lock Park.

"We'll be looking into the Cub Scout or Boy Scout who did the trails," Balzano told the council.

Story here. Hat tip to Modeled Behavior.