Send your love away (just for a bit)

My best friend (and partner, both in crime and otherwise) just came back from almost a month in Germany. By the end of the time, we both missed each other way too much, but now she’s back, I’m glad she went. Not just because she got to see her family and relax for a bit before going back to uni, but for the benefits to our relationship.

bis baldI think it’s a contrast thing. Although I’m always aware that I like spending time with her and enjoy her company, her sudden absence really drove home just how important she is to me. It meant that I was eagerly awaiting the date she was due to return, and has made this past week – since she’s come home – just wonderful. To quote Pippi Longstocking, “if you don’t [leave] you can’t come back, and that would be a shame.”

It’s similar with lots of things in life, I’m coming to realise. Take food. Recently I’ve become a big fan of Nassim Taleb‘s ideas about antifragility, one of which is the notion that our metabolism benefits from a less regular eating pattern than is typical in modern Western societies. So instead of having three square meals a day, you fast for one day and then eat more the next day. Apart from any biological benefits this may be conveying (I’m no nutritionist, so no guarantees or recommendations that anyone else try this), there is also the additional enjoyment of food consumed when you’re truly hungry.

So if you want to enjoy your food more, stop eating for a while. Feel like something else in your life is becoming mundane? Try living without it for a week. And to ensure that you fully appreciate how lucky you are to have your significant other, send them away (but only for a bit).

Tell-tale signs you’re an economist

…or you’ve spent too much time around economists

  1. You use the word ‘marginal’ in sentences
    • Worse sign: you don’t even notice when you’re doing so
  2. You’ve estimated your marginal rate of substitution between two goods (my most recent: coffee and chocolate bars)
  3. When you listen to political debates, all you can hear is the continual rent-seeking
  4. You’ve ever said ‘dwellings’ rather than ‘houses’, ‘households’ rather than ‘families’, or worst of all, ‘consumers’ rather than ‘people’
  5. You know at least half of the Greek alphabet (to be fair, this could also mean that you’re a mathematician or physicist)
    • Or you could be Greek
      • But then, you could also be a Greek economist (Greek economists  Greeks, Greek economists  economists, also Greek economists = economists  Greeks)
  6. You secretly attempt to track how many utils a given situation conveys
    • And if you disappear, your friends know that the calculation came out negative
  7. Something in the dark caverns of your mind shrieks ‘net present value!’ whenever you lend a friend money
  8. You collect data on your personal life
    • You time your route to work
    • Your cat’s pooping schedule is predicted to a narrow confidence interval (within 20 minutes of morning feeding, +/- 200 seconds)
    • Sports are reduced to statistics
    • There is an excel spreadsheet for your wardrobe items (sorted by function and then by price)
  9. Making lists gives you an inordinate amount of satisfaction

Any more ideas? Tell me in the comments!

How to fix the City to Surf: self-seeding incentive realignment

One of my two super-sisters (here’s the other one, for your YouTube enjoyment) has started her City to Surf training already, and has taken to it with a vengeance. Currently I hold the family record for that particular race, but as with most things, it probably won’t be long before one of my tougher, better-looking siblings wrests it from my grasp.

Self-seeding into the hottest group!Anyway, hearing about her exploits got me thinking about a problem I keep runni encountering in any race context, be it C2S, Parkrun, or whatever – misalignment of the incentive to self-seed accurately. Self-seeding refers to the pre-race ordering of participants relative to the starting line. Ideally, the fastest runners would start at the front, then the next fastest, and so on until those who are more socially- than athletically-inclined end up at the back, where they are usually happiest. If everyone self-seeded perfectly, then no-one would ever be stuck running behind a slower runner, and the whole pack would move with heart-warming smoothness.

Here’s the kicker, though: there’s (currently – stay tuned) no disadvantage in trying to get closer to the front of the pack than someone of your speed should be. Being overtaken by faster runners is no skin off your nose (apart from some potential ego damage, perhaps), and is certainly better than being stuck too far back and having to dodge slower-moving human obstacles. This creates the incentive to game the system, and leads to an inefficient outcome where a non-trivial number of runners will be dodging people regularly during the race.* To combat this, race participants who want to secure a decent spot in the line-up must either break social conventions by shoving and/or ‘subtly’ maneuvering around people, or by turning up earlier than they would otherwise.

So how do we fix this problem? For C2S with its high-tech timing technology, I have a solution that would be fairly easy to implement, although it would require a solid effort to convince participants of its utility. Runners are a fairly intransigent lot, have you noticed?

The solution: penalise people for the number of runners who started behind them (i.e. whom they self-seeded ahead of) who finish in front. There’s always plenty of uncertainty in how people will perform in a specific situation, so a generous penalty-free threshold could be allowed – say, 20 people who started behind you could finish in front of you before you were penalised. After that, though, start adding on time for each person you’ve slowed down by poor self-seeding. The penalty should start light but increase at an increasing rate, so that the most egregious offenders are punished the harshest. That way you bear some of the cost from your choices, and hence will have an incentive to err on the side of caution when choosing where in the pack you’ll start the race.

What do you think? Have an alternative solution to the problem? Tell us about it in the comments!

 

* I am aware of the existing C2S seeding system, which seems to work quite well overall. The problems I’ve described still exist within each of the starting packs, however, and can make a pretty big difference – take my word for it, speaking as someone who was stuck at the back of the red group in 2013…

Uninterested vs disinterested – a battle for meaning

Introduction to pedantry

Disinterested in the dictionary

When it comes to English, I am not a die-hard prescriptivist – my father is, heaven help him – but certain mistakes irk me disproportionately. Examples include affect/effect, could care less, and etcetera being pronounced as though the first syllable were ‘eck’. To be fair, although they annoy me I am still willing to forgive, as I’m convinced that they stem less from laziness as from a lack of familiarity with the minutiae of the language.

Nonetheless, my irritation must have an outlet, so today’s post concerns one of those incredibly widespread and unkillable errors: the conflation of ‘disinterested’ and ‘uninterested’.

Before we get into the details, I have a rule of thumb for success to share with you. If you are not sure which one to use, always use ‘uninterested’, and 90% of the time you will be correct. To a large extent, this is because ‘uninterested’ is one of the easiest ways to express the sentiment intended by the word, whereas ‘disinterested’ (used correctly) could easily be replaced with a better word. If that’s enough for you, great, otherwise keep reading for the definitions of the two words.

Meanings

‘Uninterested’ means ‘lacking an interest in something’, as in: he was completely uninterested in her justification.

‘Disinterested’ means ‘not influenced by considerations of personal advantage’ – i.e. impartial. As in: he was chosen as a judge as he was perceived to be disinterested in the case.

Two different meanings, expressing two different concepts.

Is all hope lost?

Unfortunately we are at the point where the two are so often interchanged that dictionaries have started to list ‘lacking an interest in something’ as a secondary definition for ‘disinterested’. Perhaps this battle therefore has a foregone conclusion, but I hope that you, gentle reader, will stand with me in defence of this (and other) useful distinctions in English.

More thoughts on Opal cards

Further to my previous post on Opal cards, I’ve had a few more thoughts on the topic:

  • Downside risk. If you buy a paper ticket, you’re set – got something to show to the ticket inspectors if they come a-calling, and even if you lose it the Sydney Trains staff are usually happy just to let you through the gates at the other end. With the Opal card, though, if you forget to tap off at the end of your journey (entirely possible at a station with no ticket gates), then you’re charged the full default fare, which’ll set you back up to $8.10 rather than the couple of dollars you were anticipating. If you forget a few times, there goes all the savings you made from the slightly cheaper fares.
  • Policing difficulty. Paper tickets are easy to check – they have the journey information printed on them. How do you verify that an Opal card has been tapped on? Unless Sydney Trains has made a significant investment to kit out transit officers with some sort of Opal readers, it seems like they’re relying entirely on the ticket gates as enforcement mechanisms. From what I’ve observed, they work well enough, but what about the stations without gates? Then again, I guess not every station need them for the system to work – the majority of commuters just need to use a gated station at least once in their journey.
  • Fashion. Apart from the other reasons I mentioned that people seem to like Opal cards, there’s also the trendy factor. There’s the novelty of using a newish technology for an otherwise mundane activity, and the card itself is fairly aesthetically pleasing. There are even Opal iPhone covers, for heaven’s sake! I suppose marketing the cards to probably Apple product-owning individuals is a good strategy – early adopters all over the place…

Opal card value proposition

Sydney has rolled out a new multipass transport system (think Oyster card, for those of you cognisant with London) that will be active on ferries and trains very soon. Makes sense that buses take longer to fit out with suitable equipment, but I would guess that the bus network will be integrated before long, too.

Opals and opal card

The marketing for Opal cards has been quite clever. Apart from doing an excellent job of ensuring that every commuter in the city is aware of the change, the terminology used to sell the value proposition reflects some top-notch behavioural economics.

The chief example of this is the weekly ticket pricing. For infrequent commuters, the logic of using an Opal card is easy – the fare is slightly discounted, and you’re saved the necessity of buying a paper ticket. The only downside is the free loan you’re providing the NSW government of however many dollars you preloaded on to the card. For more frequent commuters, however, the additional convenience of an Opal card is minimal, and the cost savings are debatable – between $1 and $3.40 compared to a regular weekly train ticket depending on how far you travel, but compared to a monthly you end up going backwards.

So instead of talking up the meagre (or negative) cost savings, the Opal card is billed as giving you FREE travel after eight journeys. That’s right: “all further travel until Sunday night is free“! To really light up those flashing neon signs in your head, it’s also called the ‘weekly travel reward’, as though you’ve earned it for your clever decision to obtain an Opal card and spend lots of time on public transport.

And boy howdy does it ever work. I’ve had people enthusiastically extol the benefits of the system to me and explain their brilliant plan to travel to work every day using Opal and then take a long journey on the weekend, haha! They get the double rush of using a new technology and also feeling like they are cheating the system in a legitimate manner.

Trouble is, as I alluded to before, if you make the same journey every day by public transport, you’re much better off buying a monthly or quarterly ticket (don’t go to yearly, it’s a step backwards on quarterly once you factor in your holidays) than using Opal. Yes, the new system is cheaper than weekly tickets, but since there’s no provision for travel frequency over time periods longer than Monday to Sunday, you’re spending extra money in the medium term.

So wake up, Opal sheeple, and smell the toilet carriage – despite the clever marketing, the new card is really just another ticketing scheme, and should be used in a financially intelligent way.

Play Magnus Chess App

I just downloaded a new chess app you should check out if you play: ‘Play Magnus’. As the name suggests, you play Magnus Carlsen – the twist is, you can do so for every year of his life from 5 until 23 (the present). So far I’ve beaten five-year-old Magnus and been too scared to try any older iterations.

Play Magnus app

Clever marketing, and great publicity for the world number 1. The app includes a link to his Twitter feed, which I assume will pay dividends for his follower count.

Two main thoughts:

  • It’s a bit gimmicky, really – without knowing any of the underlying mechanics, I would put good money on the whole setup revolving around a standard chess engine set to different ELOs for Magnus’s different ages. Then again, I guess it’s nice to be able to put a (young) face to what you’ve just played, rather than just a number.
  • Remembering that he’s only 23 (younger than I am) always makes me slightly depressed…

International Education Results – let’s not panic

If you remember back a month or two ago, there was a lot of fuss about Australia’s results in the latest results published by the Program for International Student Assessment (PISA). Don’t think that this is a new topic, though – the organisation publishes a new set of figures at the end of every year, so the story comes up again and again. It’s an easy piece to keep writing, really – if the results are positive, cue nationalistic pride in our education system along with a few articles about how this shouldn’t fool us into forgetting the disadvantaged students who are doing it tough, and if the results are negative, bash the Australian education model vigorously.

In all the articles I’ve come across on the topic, though, none has mentioned the first thing that occurred to me – everything can be statistical noise and mean reversion. Noise -> confounding factors influence the results, so the change in score can’t be fully attributable to a decline in education quality. Mean reversion -> even with a long-term upwards trend in educational quality, sometimes there are going to be particularly good and particularly bad years for test results. And mean reversion predicts that a really good year will be followed by a less-good year – same for bad years.

Australia's education results from PISA
Source: http://www.oecd.org/pisa/keyfindings/pisa-2012-results.htm

So any dip in national test results, rather than indicating a sudden erosion of educational standards or practices, is really just a natural consequence of our string of good years in the past. Instead of fretting about the difference between this year’s result and previous year’s, the level-headed commentator should take heart from Australia’s above-average results (we are easily above the OECD mean for each category) and concentrate on more important challenges such as how technology is transforming students’ future workplaces.

Monopoly rents from graduation

As a recent university graduate, I’m now ready to air my views on what I’ve seen and experienced within various institutions of higher education. First on my list: university monopolies.

A quick primer for those of you unfamiliar with the topic (actually, your days playing Monopoly might be more relevant than you think) or who are a bit rusty:

Characteristics of a monopoly market

  • Me and my honours supervisorOne seller. If instead there are only few sellers (but more than one), then it is an oligopoly.
  • Pricing power lies with the monopolist. They set whatever price they choose, and customers must either pay that price or do without.
  • Rent-generation. Monopolists earn abnormal profit – unless, that is, this is whittled away by a fixed cost (see below).
  • Inefficiency. Further to the above – the monopolist’s profit is surplus taken from consumers. Not all of the surplus, except with some effective price discrimination, but certainly consumers are left worse off than they would have been with a more competitive market. And more importantly, the loss to consumers exceeds the gain to the monopolist – thus the inefficiency.

 

And now, what exactly am I talking about in the context of universities? Here are a few of the areas in which unis have a monopoly:

University Monopolies

  1. Courses taken towards your qualification. Although there’s always the prospect of obtaining credit for subjects completed at other institutions (e.g. on exchange), most universities have some minimum amount of courses that must be completed ‘in house’. Certainly that makes sense – it would be odd if someone could obtain a degree from Harvard having only completed their terminal semester there – but it nonetheless gives the university a monopoly over at least the majority of your education.
  2. Textbooks. Again, not a perfect example, particularly given the efficient secondary markets that arise once a textbook has been used for multiple semesters, but certainly one that will resonate with students. For many courses, to decline buying the prescribed textbook is to risk failure, so the incredibly high prices become an unfortunate but inevitable aspect of student life.
  3. Participation in your graduation ceremony.
  4. Photos of your graduation ceremony.

The last two items on my (certainly incomplete) list prompted me to write this post.

To attend my university graduation, graduands were required to fork out $100. Now, I understand that there are costs associated with graduation – staff labour and gown are the two that spring to mind – but $100 seems far too high to accurately reflect the marginal cost of including me in the ceremony. I have a pretty large melon and as such it took about an extra minute to fit me with a mortarboard, so I’m willing to add that to the labour cost, but even if the stench from my ego was so bad that they had to have the gown specially dry cleaned after I’d worn it, I still can’t come to a figure higher than perhaps $30-40 for my marginal cost. Hence I’m left with the conclusion that the uni is using its monopoly power over graduation attendance to extract rents.

PhotographerAs to the photos: although graduands were free to take their own photos, there was a photographer on stage during the ceremony whose company also had a vast labyrinth set up just outside the graduation hall where smiling students and loaded parents could purchase photo packs. But the cost – wowee, and ouch!

To be fair, they offered a very nice and very professional service, with photographers who obviously knew what they were doing, but boy did you pay for the privilege. To make it matters worse, the photographers presence on the stage lent the whole operation the air of being promoted by the university. Behavioural economics tells us that if this is the case, people will typically adopt the option implicitly suggested by the organisation, rather than taking their own photos.

Quick word on price – a comparison of the prices charged by the photography company with those asked by Officeworks for the same service (in terms of the finished product, at least) dispels any illusions that cost is the issue here. At least, not unless the photographers are being paid extraordinarily good wages.

So this company must be making a motza out of fresh graduates. But the uni isn’t stupid, and can pick and choose which company gets the spoils. So my bet is that the university is charging the company a fairly hefty fee for allowing them to cash in on the monopoly action.

But why is this all so bad?

That’s the million-dollar question, innit? My objections are two-fold.

  • Morally: I’m just not so keen on squeezing students, particularly in a world in which a university education is fast becoming indispensable for earning a decent living. Even if it ends up being the students’ parents who are squeezed (which is pretty likely in the case of graduation photos), it still seems like an organisation taking advantage of an emotionally-charged situation (who can think about cost when your little baby has just graduated?!).
  • Economically: as mentioned above, monopolies are inefficient. I, for example, would have liked some professionally-done photos to remember my graduation, but I was far from willing to pay what was asked. (I was even unwilling to ask my parents to pay, that’s how wildly out of the ballpark I thought they were!)

So to alleviate one source of students’ suffering and to decrease economic inefficiency in the world, universities should relinquish some of their monopoly power. Lowering the price of graduation to better reflect the cost and allowing more competition in the graduation photos market would be two good starting points.