Friday, May 25, 2007

Not Getting the Signal

In terms of relationships, when we start out we usually deal with asymmetric information. That is to say, I truly don’t know what the other person is thinking. It’s kind of like contract negotiations.

So, the best anyone can do is to look at the signaling to try and receive the best information. So, as far as I understand it from my economics classes in college, I have to ask:

  • How much effort (or cost) did it take for me to receive this signal?

  • What would make this signal not important? That is to say, at what point do I or the other person each get a better offer that we would then take?

  • Do I trust this signal?

I believe those are the questions for signaling.

So, when a friend of mine tried to tell me that one of his wife’s friends was someone whom I should go out with, I had to think about this like an economist.

What were the signals? Well, none. All of those questions above revolve around some kind of intent. Simply put: I’m signaling _______ because _______ is what I want. I had met her a few times before in a friendly setting, and from all the signals I was seeing, I had nothing that this girl wants.

Not only that, but we need to remember that actions speak louder than words. Just like how an economist would say, “They voted with their pocketbooks.” The market will tell you what people want. And from my friend’s short telling of this young lady’s history, I could tell I was not the catch she envisioned. It happens; people want different things.

Even my good friend Will - well versed now in psychology - told me:

It all comes down to what one finds attractive. If, in this point in her life, she finds someone attractive that you’re not or don’t plan to be it’s not going to work out.

It seems as though my friend has a different idea of what his wife’s friend needs despite from what she wants. It doesn’t take a graduate degree in psychology or economics to figure out I is not the product she’s in the market for. But it’s important that we give these small economics lessons to ourselves and our friends.

Thursday, May 24, 2007

Rally Italia

The WRC finished its 7th round in Italy on the island of Sardinia this past weekend, where we saw Sebastien Loeb have a slight off that damaged his suspension where he would later retire on the stage. Marcus Grönholm picked up the lead from there and held on to win.

Elsewhere in the field, Chris Atkinson was running in the top eight until he hit a rock and had to retire his Subaru Impreza. And while mentioning Atkinson’s run in with a rock, another rock in the road took out the feel good story of the year, Jari Mati Latvala.

Petter Solberg finished fifth deciding to consolidate his position on the final day in his Subaru rather than push harder to try and overtake his brother, Henning, ahead of him.

The drivers standings thus far:
1. M. GRÖNHOLM (FIN) 55 Pts
2. S. LOEB (F) 48 Pts

3. M. HIRVONEN (FIN) 44 Pts
4. D. SORDO (E) 28 Pts
5. H. SOLBERG (N) 20 Pts
6. P. SOLBERG (N) 20 Pts
7. J. LATVALA (FIN) 12 Pts
8. C. ATKINSON (AUS) 12 Pts

The constructor’s championship thus far:

1 BP-Ford World Rally Team 99
2 Citroën Total World Rally Team 78
3 Stobart VK M-Sport Ford Rally Team 37
4 Subaru World Rally Team 34
5 OMV Kronos Citroën World Rally Team 25

It is beyond close up top for the drivers, even Miko Hirvonen is in the thick of the battle for the driver’s championship. He can thank his unlikely win in Norway, and his podium finishes in all rallies this year to his good standing. Grönholm and Loeb continue to fight it out, and I think that battle will continue for the rest of the season. Sordo has also done an decent enough job backing up Loeb as a team mate. We need to remember that he had started out as a tarmac expert, and his performance this past weekend in Italy show that he’s matured.

Petter Solberg and Chris Atkinson have turned their season into a long test to finish testing the car, taking notes to apply for the next model year’s Impreza.

The constructor’s championship shows the same story as the driver’s. Hirvonen’s better teammate performance (as opposed to Dani Sordo’s) is what has allowed the Ford Rally Team to stay ahead of Citroën. Unless Sordo picks it up, Ford will retain the constructor’s championship that it won last season.

Females Sharks Don't Need Males

Well, for those that scoff at my fear of never finding a wife as irrational…they are probably right. But it still doesn’t take anything away from this piece of science news.

The takeaway:

Research on the perished pup found that it had no paternal DNA. Additionally, it possessed half of its mother’s genetic diversity. Combined, the data indicates the mother gave birth through a non-sexual mode of reproduction known as automatic parthenogenesis.

It may be, in fact, only a matter of time before I become outdated. Thanks for nothing, Darwin.

Working Wives Enjoy Lasting Marriages

Working wives enjoy lasting marriages. Well, at least it’s correlated for sure. Whether they are happier or not is a different story all together.

The takeaway:

The main shift was away from breadwinner-homemaker marriages to what the authors call "egalitarian marriages." In them, husbands and wives share decision-making power more equally and housekeeping and child-care duties more equitably.

Indeed, some studies have found that marriages in which the wives work aren't necessarily happier even if they are more stable.

That last part I made sure to include because there is also some research out there that shows while families are happy that they may have a child, the next child they have doesn’t necessarily make them happier.

Tuesday, May 22, 2007

More on Fundamentalism

Mikey K:

Greetings treasured friend of the east coast.

I just finished watching a documentary and I was wondering if it was one you had seen - "Jesus Camp." It's about Evangelicals/Christian Fundamentalists and how they're raising an "army" of Christian youth. Being that you're one of the most intelligent friends I have, and certainly one of the most religious, I was intrigued to hear your thoughts. If you've not seen it, I highly recommend it. Let me know.


Hi Kevin,

I have not seen Jesus Camp, however I had been fully aware of it since it’s release quite some time ago. I was always a fervent supporter to anything that brought attention to the fundamentalist psyche that has so tainted our country. Don’t believe me? Ask Andrew Sullivan, or read his book.

I have blogged before about fundamentalism. Once again, what I have seen personally and what I understand Jesus Camp has shown to others is that fundamentalism is pervasive, and found in places that seem, and probably are harmless. But, how harmless can a thought be? Or an ideology?

I grew up thinking Catholicism was some great evil that was so restrictive and ideological on its own. Boy was I wrong, because in certain respects I believe The Vatican to be much more open-minded. For example, Pope John Paul II said that the Catholic Church was open to the theory of evolution. However, the hierarchy of the church can be intolerant in other places. But what I have seen from fundamentalism is a hi-jacking of what it means to be a Christian.

Let us just take a look at tolerance. I see none of it from fundamentalists. Fundamentalism is about crusading, and as Sullivan wrote in his book, crusades are not about persuasion, but about coercion. Sullivan also wrote about what it would be like for non-Christians in a “divinely sanctioned order” (that is to say, if Rick Santorum had the government he hopes for):

The guarantee of minority religious freedom, in other words, would no longer be constitutional protection, but majority benevolence.

That is not the country I thought my parents immigrated to.

Kevin, I will leave you with a short story, something that I witnessed not but a few days ago. In my Bible study, I was listening to my friends describe their church service and they told me that they were encouraged to speak in tongues.

Now, do me a favor, and actually come with me to wikipedia to examine what’s going on here. And this is the problem of fundamentalism. First, there is a literal interpretation, and as even wikipedia informs us, in translation from Greek, Paul did not write the word “unknown” in front of the word “tongues.” But it can be argued, and probably will by fundamentalists, that it’s just semantics. In any case, there are a few things to consider when Paul wrote speaking in tongues.

First, while Paul encouraged people to speak “in tongues,” he meant for people to do so as to speak to God. It is meant for NO ONE ELSE. This proves to me what I had always thought about fundamentalism, which is that it’s more for themselves than others. When you see this, it is merely for their image. So as to say, “I am a better Christian than you; I speak in tongues.”

Second, Paul also indicates that not all Christians do, or are to, speak in tongues. Yet, here I am, hearing this story from my friends that they are so encouraged to speak in tongues. Why? What’s the motivation? How does speaking in tongues lead people to God? How does this help anyone in anyway?

As a Christian myself, I will not discourage the practice, per se, but I will say this: We have come as a society, a civilization, to the point of such clear ability to say how we feel in an articulate manner, even about topics such as God and religion. I see that the only reason for anyone to speak in tongue and to do so publicly is solely for the purpose of publicity, not God.

And I think that in the end that will be fundamentalisms downfall. Their actions and beliefs are about themselves, their fears, and their un-Jesus-like intolerance of others, not God. Don’t believe me again? Read up on the debate for the bill on immigration.

Your friend,
Mike K.

Another View on F1 Teams

In relation to my previous post on what a team needs in order to win in Formula 1, Grand has a perspective on what kind of team can win a championship.

The takeaway:

The crux of the matter is how the team is run and whether it is run directly from Japan or whether the European end of the operation is left to manage its own affairs and reporting back to Japan on a regular basis. Traditionally in F1, teams which are run direct by car manufacturers tend not to work very well as the attitudes needed to be successful in F1 are very different to those needed to run a car company.

Monday, May 21, 2007

Another View on College

Here is another view on college from the New Yorker via Ben Casnocha.

As I have written about college before (just do a search for “college” on my blog), I still cannot get over the fact that parents pay for their children’s college “education.” Don’t believe me?

Listen to Bryan Caplan on the subject:

Most people who criticize our education system complain that we aren't spending our money in the right way, or that ideologues-in-teachers'-clothes are leading our nation's children down a dark path. While I mildly sympathize with some of these complaints, they often contradict what I see as the real problem with our educational system: There's simply far too much education going on. The typical student burns up thousands of hours of his time learning about things that neither raise his productivity nor enrich his life. And of course, a student can't waste thousands of hours of his time without real estate to do it in, or experts to show him how.

Sunday, May 20, 2007

Rally Argentina

In case anyone thought I forgot about the Rally Argentina a few weeks ago, I didn’t. It merely took me forever to find the time to watch the coverage.

The rally followed the gist of the season for the most part. Sebastien Loeb in his Citroen C4 finished first, Marcus Grönholm’s Ford second, and Miko Hirvonen third in his Ford as well. Petter Solberg ran well but was forced to retire with a mechanical failure.

Solberg’s Subaru teammate, Chris Atkinson, finished 7th after a tumultuous rally where an inspiring drive on one part of the day was be followed by a bad car setup. While I can’t be sure of what he said, I’m pretty sure Chris Atkinson commented at the end of one stage, “We’re just wasting our time if it’s going to be like this.”

The rest of the leader board had the usual smattering of Ford drivers such as Henning Solberg and Jari Matti-Latvala.

The Rally Sardigna just happened over this weekend, and I’ll try to report on that by Thursday night. In that post I’ll also try to give everyone a recap as to where we stand in terms of the drivers and constructor’s championships.

Thursday, May 17, 2007

Spanish Grand Prix

While Kimi Raikonnen retired his Ferrari, the Spanish Grand Prix this past weekend was quite normal up front.

My favorite team, Toyota, saw both of its cars retire. Trulli had what he referred to as a “stupid” fuel pump problem that stalled him at the beginning of the race, forcing the field to scrap a lap of the race. Trulli started from the pit lane, but did eventually retire. Ralf Schumacher retired after some 40-odd laps due from body damage to his Toyota, which left him relatively uncompetitive.

Another disappointment was for American Scott Speed in his Scuderia Toro Rosso Ferrari, who did tremendously well in terms of pace all weekend long, including qualifying. Unfortunately, a tire blow-out left him to retire during Sunday’s race.

However, I must admit that there were two tremendously bright spots in the weekend. Super Aguri Honda got their first championship point with Takuma Sato’s 8th place finish. And the brightest note of all to me was Red Bull Renault’s David Coulthard finishing in a strong 5th place.

The economist has gotten the better of me. I had to sit myself down on Sunday night and realize that the comments from many internet forums may be right. The question is regarding how a team designs a car. For example, it has become popular opinion that Toyota and Honda subscribe to their own corporate ideology as to design a car using a group of engineers as a team. Now, other teams don’t disagree with this, but using Red Bull as an example, you can see that they also believe in having one person become an integral character in their car. That person for Red Bull Racing this year is Adrian Newey.

Toyota had tried a big superstar engineer two seasons ago with Mike Gascoyne. And in my opinion, it worked, but Gascoyne left at the beginning of the season last year. Why? Well, a lot of people said it was because Toyota could not keep going along with that genius-engineer-guy mentality. And if I understand the Japanese work paradigm properly, it makes sense for there to be a clash. Heck, a part of me wants to ask Ben Casnocha (whom I believe knows business methods about as well as anyone) if it is part of the Japanese work ethos to revolve around working only as a team.

In any case, does it mean that in Formula 1, to be a successful team you must subscribe to not having a good team of engineers, but rather, a superstar engineer or aerodynamicist? It seems as though the case for superstars is a hard one to compete against. Therefore, being in Formula 1, it would make sense that just being a good team and having a lot of funding would in the end not be good enough.

(picture of David Coulthard thanks to Grand and The Cahier Archive)

Wednesday, May 16, 2007

More on Climate Models

Arnold Kling has many times written on his doubts of climate models, but this article from Discovery News is what keeps everyone else (including me) on the fence and erring on the side of caution.

The takeaway from the Discovery article:

Many politicians and climate skeptics have criticized computer models as erring on the side of predicting temperatures that are too hot and outcomes that are too apocalyptic with global warming. But Druyan said the problem is most computer models, especially when compared to their predictions of past observations, underestimate how bad global warming is. That's because they see too many rainy days, which tends to cool temperatures off, he said.

Let me remind the three people that read my blog though, that Arnold Kling doesn’t say climate science is false, but that it is inconclusive. Kling knows that there are some very adverse effects from CO2 levels and the like, but he is merely skeptical as to the rate of environmental degradation, as well as how much of that degradation is man made or cyclical. While I know so many people would disagree with Kling (and at times I do too), I welcome any attitude that says, “Please, let me see more evidence.”

Wednesday, May 09, 2007

Honey Production

A reader points to this article and asks for my comment. Apparently the price of honey has increased because honey bees have been mysteriously dying.


Beekeepers throughout the United States have been losing between 50 and 90 percent of their honeybees over the past six months, perplexing scientists, driving honey prices higher and threatening fruit and vegetable production.

So, what comes to my mind first is to wonder if this is an externality from an act of ours, such as commerce and/or farming. Caird E. Rexroad said the bees are facing stresses such as “migratory stresses, mites, pathogens and pesticides.”

Naturally, from the article, it’s difficult to simply point the finger at any one area and say therein lies the problem of honeybees. Not even the experts have a good idea for the next step.

So, let me ask that we all not to rush to judgment. If we were to heed Rexroad’s advice right now to its fullest, I would have to ask what other externalities would develop from trying to control our pathogens and pesticides.

However we can go through at least one economic thought experiment. We use pesticides in order to plant our own food in the US. But here’s a caveat, I’ve already stated in the past that I (and other well-respected economists) dislike agriculture subsidies. Also, I’m assuming here that bee/honey farmers don’t get those subsidies. So, what if the US were to stop subsidizing as much to farmers, and therefore the US farmed less and used pesticides less? Then, if pesticides are the stress that they are on bees, that act alone would start to help our honey bee production. But as I said, that assumes bees see a lot of pesticides and that the bee/honey farmers don’t get subsidies.

Externalities, one of the reasons why economists exist, and one of the things economists hate having to deal with.

Tuesday, May 08, 2007

Matt on Oil

Here’s my good friend, Matt, on the feeble idea of a one day boycott on gasoline for May 15th that he knows about.

The take away:

Even still, this thinking has its own flaws. As soon as demand returns to what it was prior to the protest, the point of equilibrium between supply and demand will rise once more, in turn causing the price of gas to rise to what it was before the protest took place.

I appreciate the intentions of the protest. Unfortunately it will serve no purpose in the end other than to inconvenience you as a driver and a consumer.

And yes, I agree.

To add my own bit of commentary, it’s important to remember that while the price oil is changed by our demand, OPEC operates as a cartel and strives to affect the world price of oil. That is to say, OPEC has the ability to tighten its production and increase price. I believe that's what happens when the demand for a good is inelastic.

Monday, May 07, 2007

Competition and Monopoly

Charles Wheelan discusses the postal service here. John Stossel discusses school choice here.

Sometimes I still get floored when I see and read the comments and/or hate mail that some writers receive. For example, if you read some of the comments left from Wheelan’s article, the consensus from all the people who didn’t rate it well was: “Why write about this? There are so many other bigger problems.”

Apparently not even the people who left the comments realize that Wheelan is a writer that has to deal with competition. Why write about something that everyone else is already writing about? Not only that, but why don’t the readers read another article. They complain as if Wheelan somehow wasted their time, and forced them to read his article. But I have absolutely no idea how he may have wasted readers time when he blatantly said in the title that he would write about the United States Postal Service. They knew what he was going to write about, so why didn’t they read something else?

It is the people who leave those kinds of comments that make books like this possible.

Wednesday, May 02, 2007

Night of the Furies

I have to say that I dig the latest album by The Rosebuds, Night of the Furies. Like the duos two prior albums, Night of the Furies varies in tempo, but it also has a unifying theme around relationships.

Ivan actually blogged at one point that:

Some real drums sound like machines (!!!) and some machines sound like machines.

So, needless to say, there is more of a “synth feel” to this album than prior, but when you listen to their albums in succession, you can feel the progression. My favorite tracks just to name two are: Cemetery Lawns and Get Up Get Out.

Car Songs

New York Times blogger, Micheline Maynard, writes about songs to listen to in the car, or rather that are car specific. She mentions “92 Subaru” by Fountains of Wayne, one of my favorite songs of late.

I wonder how many people out there have their own lists of songs that are car specific. By the way, I hope your life isn’t as bad as to find Carrie Underwood’s “Jesus Take the Wheel” absolutely necessary to listen to. If your life is in such dire straits, I recommend turning the radio off and putting yourself in the company of your best friends.

Just a few off the top of my head:

  • Fountains of Wayne – 92 Subaru (you could also pick Survival Car)
  • BT – Ride
  • Gary Numan – Cars
  • The Beach Boys – I Get Around (also, many other songs to pick from The Beach Boys)
  • Cake – Stickshifts and Safteybelts (a few others by Cake that are car specific or use cars as metaphors)

Warsh Reviews Stock Option Backdating

David Warsh has a very well put editorial on his weekly about stock option backdating. When I read it, I can’t help but feel like I’m watching Frontline, which I think is a great characteristic.