Tuesday, August 30, 2011

Why Washington is Hollywood for ugly people

I first started using that phrase in Texas in the '80s. There's a needy quality that actors and politicians have, but there's also an element of caprice to any political career [just as there is for any struggling actor who beats the odds to become a star]. Both take a lot of talent and drive and discipline, but there's also the element of lightning striking.
--Clinton-Gore strategist Paul Begala, who may have coined the phrase "Washington is Hollywood for ugly people," on why the analogy is apt. HT: Justin Wolfers

Monday, August 29, 2011

Unintended consequences of shutting down Twitter

The mass media, including interactive social-networking tools, make you passive, can sap your initiative, leave you content to watch the spectacle of life from your couch or smartphone.

Apparently even during a revolution.

That is the provocative thesis of a new paper by Navid Hassanpour, a political science graduate student at Yale, titled “Media Disruption Exacerbates Revolutionary Unrest.” ...
 His question was, how smart was the decision by the government of President Hosni Mubarak to completely shut down the Internet and cellphone service on Jan. 28, in the middle of the crucial protests in Tahrir Square?

His conclusion was, not so smart, but not for the reasons you might think. ...

To put it another way, all the Twitter posting, texting and Facebook wall-posting is great for organizing and spreading a message of protest, but it can also spread a message of caution, delay, confusion or, I don’t have time for all this politics, did you see what Lady Gaga is wearing? ...

“The disruption of cellphone coverage and Internet on the 28th exacerbated the unrest in at least three major ways,” he writes. “It implicated many apolitical citizens unaware of or uninterested in the unrest; it forced more face-to-face communication, i.e., more physical presence in streets; and finally it effectively decentralized the rebellion on the 28th through new hybrid communication tactics, producing a quagmire much harder to control and repress than one massive gathering in Tahrir.”
--Noam Cohen, NYT, on the fear of Twitter being more dangerous to a government than Twitter itself

Saturday, August 27, 2011

Tim Cook's compensation

Apple filed a form 8-K with the SEC because of the changes in corporate leadership at the company. ...
In connection with Mr. Cook's appointment as Chief Executive Officer, the Board awarded Mr. Cook 1,000,000 restricted stock units. Fifty percent of the restricted stock units are scheduled to vest on each of August 24, 2016 and August 24, 2021, subject to Mr. Cook's continued employment with Apple through each such date.
This stock award is worth just over $383 million at current prices ...

In 2010, as COO, Tim Cook received $58 million in salary, bonus and other stock awards.
--Jordan Golson, MacRumors, on the rewards to being the top dog at Apple

Thursday, August 25, 2011

No detail too minor for Steve Jobs

One Sunday morning, January 6th, 2008 I was attending religious services when my cell phone vibrated. As discreetly as possible, I checked the phone and noticed that my phone said "Caller ID unknown". I choose to ignore.

After services, as I was walking to my car with my family, I checked my cell phone messages. The message left was from Steve Jobs. "Vic, can you call me at home? I have something urgent to discuss" it said. ...

Before I even reached my car, I called Steve Jobs back. I was responsible for all mobile applications at Google, and in that role, had regular dealings with Steve. ...

"So Vic, we have an urgent issue, one that I need addressed right away. I've already assigned someone from my team to help you, and I hope you can fix this tomorrow" said Steve. 

"I've been looking at the Google logo on the iPhone and I'm not happy with the icon. The second O in Google doesn't have the right yellow gradient. It's just wrong and I'm going to have Greg fix it tomorrow. Is that okay with you?"
--Vic Gundotra on why Apple products are so beautiful

In defense of New Haven

Thanks to the determined efforts of public safety professionals and the entire Yale community, crime on campus in 2010 was the lowest it has been in 20 years. Campus statistics for 2011 show a continued positive trend. Crime throughout New Haven is also much lower than twenty years ago – down 56% from 1990 to 2010. The U.S. Census shows New Haven had the largest population growth of any place over 100,000 in New England in the last decade and Bloomberg.com reports New Haven has the nation’s second highest apartment occupancy rate, topped only by New York City.

You should be aware that there have been dubious statistical “rankings” circulating about the crime rates in New Haven relative to other cities. One claim this summer received much play in the media, even though it is not a valid comparison.  DataHaven, a community nonprofit dedicated to quality public information, analyzed that “most dangerous” claim and stated: “Contrary to many reports, this is not an FBI ranking and it is not accurate.”
--Yale police chief Ronnell Higgins on New Haven's progress since the bad old days

When comparing places, good researchers define a city not as a municipality, but as the “place” where, by standard methodology, the majority of people live, work and shop. This can be done by neighborhood, by commuting radius, or by employment area, allowing researchers to standardize comparisons. A 2010-2011 ranking of the 350 largest comparable U.S. urban areas by CQ Press, using audited FBI statistics, is one example. Places such as Detroit, Flint, Baltimore and Memphis remain near the top of the list, while New Haven is ranked at 168 on the danger scale, similar to Salt Lake City, Boston, Honolulu, and Eugene, Oregon.
--DataHaven on New Haven's surprising kinship to Salt Lake City, Honolulu, and Eugene 

Joke freelancers

Liam McEneaney is a Brooklyn-based stand-up comic and a writer with a spot on "the fax list," which, despite the outdated reference, is still a term used for those who submit jokes on spec to late-night comedy shows. He estimates that since 2008 he has submitted about 1,100 jokes. Of those he has sold one, to the Weekend Update segment on "Saturday Night Live," which pays $100 per joke. ...

In New York's market for jokes, these are small-time exchanges—they provide their makers an ephemeral modicum of joy, as well as a possible introduction to more lucrative opportunities. A more steady and well-compensated form of freelance joke-writing is creating "batches" for in-demand comedians, who typically acquire two to three pages' worth of jokes, often collated by topic. Abraham Smith, 31, sold his first batch based on a "never-miss bit about the original Nintendo" that he'd been doing in his own act. "It always, always killed," he said. A comic he knew, who made a healthy living touring colleges, was "hot for it" and made an offer of $7,500 in the summer of 2004. ...

This year [another freelancer] was brought in to write jokes for a major televised awards show. She and three other writers came up with an estimated 1,500 jokes, from which the best were selected for use. This is part of what separates joke writers from regular people who are funny: the sheer quantity they must produce, under pressure, and on the regular.
--Lizzie Simon, WSJ, on the market for jokes

Math education students would actually use

Today, American high schools offer a sequence of algebra, geometry, more algebra, pre-calculus and calculus (or a “reform” version in which these topics are interwoven). ... This highly abstract curriculum is simply not the best way to prepare a vast majority of high school students for life.

For instance, how often do most adults encounter a situation in which they need to solve a quadratic equation? Do they need to know what constitutes a “group of transformations” or a “complex number”? Of course professional mathematicians, physicists and engineers need to know all this, but most citizens would be better served by studying how mortgages are priced, how computers are programmed and how the statistical results of a medical trial are to be understood.

A math curriculum that focused on real-life problems would still expose students to the abstract tools of mathematics, especially the manipulation of unknown quantities. But there is a world of difference between teaching “pure” math, with no context, and teaching relevant problems that will lead students to appreciate how a mathematical formula models and clarifies real-world situations.
--Sol Garfunkel and David Mumford, NYT, on practical math

Wednesday, August 24, 2011

What the Harvard English department is frequently asked

 Can I speak to a faculty member about a grammatical question?
Our faculty are not available to answer grammatical questions. Questions of this nature should be directed to your local library...
--Harvard University Department of English FAQ on an occupational hazard of being an English professor. HT: Ron Slate

Male puberty and stupidity

We’ve known for a while that girls have been maturing at a faster rate for much of the last 100 years, if not longer. Disease reduction and better nutrition are thought to be the biggest factors. But what about boys? Researchers have long thought they were maturing faster too. But lacking the obvious (monthly) data, the evidence proved tricky.

Now, a German researcher believes he’s found the answer by looking at, of all things, male teenage death rates. When girls hit puberty, they get their period. When boys hit puberty, they start doing stupid stuff, hence what’s called “The accident hump,” a spike in mortality rates that coincides with the peak of male hormone production during puberty. That hump it seems has been shifting to earlier and earlier in life.

The new study, by Joshua Goldstein, director of the Max Planck Institute for Demographic Research in Rostock, Germany, finds that the age of sexual maturity for boys has been decreasing by about 2.5 months each decade, since at least the middle of the 18th century.
--Matthew Philips, Freakonomics blog, on the dangers of male hormones

Monday, August 22, 2011

The market rate for British nannies

According to an article in The Times of London by Fiona Neill, the mega-rich Russians, Sheikhs and Chinese pouring into London in recent years have jacked up the cost of a British nanny. A British staffing agency called Imperial Nannies cited a Russian client who wanted to poach a nanny from another family. Their salary offer: $200,000 a year. ...

These aren’t the norm, of course. More typical in Britain are salaries of $75,000 a year – with free room and board. Usually that means a “a flat that is self-contained or on a separate floor, or at least a room with en-suite bathroom — in a desirable Central London borough, and almost always includes a car,” according to the article.

Some British nannies specify that they only fly business class — though many have use of the family planes. One nanny was given a new wardrobe by her Italian employer, while another was given a house by her Saudi patrons.
--Robert Frank, WSJ, on the reward for being Mary Poppins

The hidden god of secular morality

The day I became an atheist was the day I realized I had been a believer.

Up until then I had numbered myself among the “secular ethicists.” Plato’s “Euthyphro” had convinced me, as it had so many other philosophers, that religion is not needed for morality. ...

As the philosopher Louise Antony puts it in the introduction to a recent collection of philosophers’ essays, “Philosophers without Gods: Secular Life in a Religious World”: “Another charge routinely leveled at atheists is that we have no moral values. The essays in this volume should serve to roundly refute this. Every writer in this volume adamantly affirms the objectivity of right and wrong.”

But I don’t. Not any longer. ...

[C]ould I believe that, say, the wrongness of a lie was any more intrinsic to an intentionally deceptive utterance than beauty was to a sunset or wonderfulness to the universe? Does it not make far more sense to suppose that all of these phenomena arise in my breast, that they are the responses of a particular sensibility to otherwise valueless events and entities?

So someone else might respond completely differently from me, such that for him or her, the lie was permissible, the sunset banal, the universe nothing but atoms and the void. Yet that prospect was so alien to my conception of morality that it was tantamount to there being no morality at all. For essential to morality is that its norms apply with equal legitimacy to everyone; moral relativism, it has always seemed to me, is an oxymoron. Hence I saw no escape from moral nihilism.

The dominoes continued to fall. I had thought I was a secularist because I conceived of right and wrong as standing on their own two feet, without prop or crutch from God. We should do the right thing because it is the right thing to do, period. But this was a God too. It was the Godless God of secular morality, which commanded without commander – whose ways were thus even more mysterious than the God I did not believe in, who at least had the intelligible motive of rewarding us for doing what He wanted.
--Philosopher Joel Marks, NYT, on the foundation of morality

The role of defeat in Japanese game shows

The popularity of these Japanese-style shows will be affirmed on Monday night, when the two-hour season finale of the cult favorite series “American Ninja Warrior” — in which Americans compete for a chance to travel to Yokohama to take on the brutal obstacle course of the semiannual Japanese televised competition “Sasuke” — moves from the cable channel G4 to its sister network NBC. For one night at least, the course’s rope ladders, half-pipes and rolling barrels will be shown in network prime time, keeping company with the likes of “Hawaii Five-0” and “Bachelor Pad.”

This increased exposure for “American Ninja Warrior” — and by extension for “Sasuke” — comes despite the fact that these shows’ distinctive, addictive premise is a profoundly un-American one: a game in which nobody wins.

Almost nobody, that is. In 26 previous “Sasuke” shows, dating to 1997, each including 100 mostly Japanese competitors, only 3 men have successfully completed the obstacle course: one in 1999, one in 2006 and one in 2010.
--Mike Hale, NYT, on the Japanese game show mentality

Sunday, August 21, 2011

Why is the Tappan Zee Bridge unnecessarily long?

You would never look at a map of the Hudson River, point to the spot where the Tappan Zee Bridge is, and say, "Put the bridge here!"

The Tappan Zee crosses one of the widest points on the Hudson — the bridge is more than three miles long. And if you go just a few miles south, the river gets much narrower. As you might expect, it would have been cheaper and easier to build the bridge across the narrower spot on the river. ...

There was an alternate proposal for a bridge at a narrower spot nearby. The proposal was put forward by top engineers at the Port Authority of New York and New Jersey.

But that proposal was killed by New York governor Thomas E. Dewey. The New York Thruway was his baby; in a 1954 speech he proclaimed that it would be "the world's greatest highway." ...

The Port Authority — the body that proposed putting the bridge further south — had a monopoly over all bridges built in a 25-mile radius around the Statue of Liberty.

If the bridge had been built just a bit south of its current location — that is, if it had been built across a narrower stretch of the river — it would have been in the territory that belonged to the Port Authority.

As a result, the Port Authority — not the State of New York — would have gotten the revenue from tolls on the bridge. And Dewey needed that toll revenue to fund the rest of the Thruway.

So Dewey was stuck with a three-mile-long bridge.

Today, the Tappan Zee is in bad shape, and the State of New York is looking into fixing or replacing it. But none of the proposals would move the bridge to a narrower spot on the river. It's too late now: Highways and towns have grown up based on the bridge's current location.

We're stuck with a long bridge at one of the widest spots in the river. The repairs are expected to cost billions of dollars.
--David Kestenbaum, NPR, on the enduring legacy of political ego and turf wars. HT: Marginal Revolution

Saturday, August 20, 2011

Debt is the original building block of economic civilization

In the most remote recorded times, [anthropologist David Graeber] argues, it was debt, rather than money, that made society hum. The majority of cuneiform documents we have from ancient Mesopotamia relate to financial matters, and they show that by about 3500 BC the Sumerians had a uniform system of accountancy, the silver shekel. However, Graeber asserts, this denomination was less money in our modern sense (it hardly circulated) than a way for accountants to keep track of who owed what to whom. Debt, in other words, was the basic currency that got business done. Money of the portable kind emerged later, primarily in times and areas of conflict, when grab-and-go was a priority. ...

IDEAS: A lot of people think of barter, rather than debt, as the earliest kind of economy. But you write that pure barter economies never existed?

GRAEBER: As an anthropologist, it’s kind of a professional pet peeve. We’ve been looking for this mythical land of barter for the last 200 years, so we would have found it by now ... The spot trade, where it’s in the moment and you never see each other again, this is the opposite of any kind of exchange in primitive economies. In order to create the idea that life is just a series of exchanges we can all walk away from - a very antisocial notion of what people are about - you have to eradicate all obligations that people have to each other. ...

Credit money is the original form, and then you have this 1,000-year period where coins come mainly out of the building of empires and to pay soldiers, and then when the empires go, the coins do too. In the Middle Ages you go back to credit systems, very sophisticated in some times and places. Then we have another time of bullion money, since the 16th or 17th century, and that’s what’s going away now.
--J. Gabriel Boylan, Boston Globe, on debt trumping barter and money

Unkind coworkers might literally be killing you

The researchers tracked 820 adults for 20 years, starting with a routine health examination in 1988. The subjects worked in various professions, from finance to manufacturing to health care. ...

The number of hours a person spent at the office didn't affect his or her longevity, nor did the niceness of the boss.

Instead, the Israeli scientists found that the factor most closely linked to health was the support of co-workers: Less-kind colleagues were associated with a higher risk of dying. While this correlation might not be surprising, the magnitude of the effect is unsettling. According to the data, middle-age workers with little or no "peer social support" in the workplace were 2.4 times more likely to die during the study.
--Jonah Lehrer, WSJ, on the importance of good colleagues. Caveat: Correlation may not be causation.

Should professional schools penalize future part-time workers?

One survey of Yale alumni found that 90 percent of the male alumni in their 40s were still working, but only 56 percent of the female. A survey of Harvard Business School alumni found that 31 percent of the women who had graduated between 10 and 20 years earlier were no longer working at all, and another 31 percent were working part time. ...

But it is at this point that policy questions arise. Even at the current very high tuition rates, there is excess demand for places at the elite colleges and professional schools, as shown by the high ratio of applications to acceptances at those schools. ...

Suppose for simplicity that in an entering class at an elite law school of 100 students, split evenly among men and women, 45 of the men but only 30 of the women will have full-time careers in law. Then 5 of the men and 20 of the women will be taking places that would otherwise be occupied by men (and a few women) who would have more productive careers, assuming realistically that the difference in ability between those admitted and those just below the cut off for admission is small. While well-educated mothers contribute more to the human capital of their offspring than mothers who are not well educated, it is doubtful that a woman who graduates from Harvard College and goes on to get a law degree from Yale will be a better mother than one who stopped after graduating from Harvard. ...

[The] fact that a significant percentage of places in the best professional schools are being occupied by individuals who are not going to obtain the maximum possible value from such an education is troubling from an overall economic standpoint. ...

It would be unlawful discrimination to refuse admission to these schools to all women, for many women will have full working careers and some men will not. ...  A better idea, though counterintuitive, might be to raise tuition to all students but couple the raise with a program of rebates for graduates who work full time. For example, they might be rebated 1 percent of their tuition for each year they worked full time. ...

The real significance of the plan would be the higher tuition, which would discourage applicants who were not planning to have full working careers (including applicants of advanced age and professional graduate students). This would open up places to applicants who will use their professional education more productively; they are the more deserving applicants. Although women continue to complain about discrimination, sometimes quite justly, the gender-neutral policies that govern admission to the elite professional schools illustrate discrimination in favor of women. Were admission to such schools based on a prediction of the social value of the education offered, fewer women would be admitted.
--Richard Posner, Becker-Posner blog, on an educational policy question raised by low female labor force participation

Are professional degrees a bad financial deal for the median woman?

We find that the median female (but not male) primary-care physician would have been financially better off becoming a physician assistant in a primary-care field. This is partially due to a gender wage gap in medicine. However, our result is mostly driven by the fact that the median female physician simply doesn’t work enough hours to amortize her up-front investment in medical school. In contrast, male physicians work substantially more hours on average and the median male physician easily works enough hours to amortize his up-front investment. ...

This raises the issue of whether these findings bear any relationship to the NPVs for obtaining other professional degrees such as JDs and MBAs.

This is difficult to determine. Of course, both the MBA and JD require much lower up front initial investment than a medical career. On the other hand, there is substantial evidence that female doctors “drop out” of their professions less than women lawyers and (especially) women MBAs. For example, Herr and Wolfram (2008) find, in a sample of Harvard graduates, that 94.2% of MD mothers remain working in their late thirties, as compared to 79% of JDs and 72% of MBAs. The AMA Masterfile similarly shows very low attrition rates for young women doctors, approximately 3% of the 45-54 year old age cohort. Nonetheless, while our results are not driven by high dropout rates from the medical profession, they are driven by the shorter hours of female professionals.
--Keith Chen and Judith Chevalier, “Are women overinvesting in education? Evidence from the medical profession”

Labeled bottles make flying safe

At LaGuardia, my wife, a seasoned traveler, dutifully presented the see-through plastic bag containing a few small bottles of the approved size containing liquid. One was seized. It contained something she valued. Pointing out that it was regulation size, she got, “It ain’t labeled, lady.”

Supposing whatever possibly dangerous substance it contained had, say, “olive oil” written on it, I inquired, then would it be O.K.?


“Do you see anything a little stupid about that?” I asked in my sunniest manner. He appeared not to. He dropped the bottle into the barrel beside him.

“One more question. Do you ever feel a little funny about standing eight inches from a barrel full of possible explosives for the rest of the day?”

He went into that mode of looking into the distance, instead of at you. I leaned into his gaze, just for fun.

“Move on,” he sort of belched.

Security Theater. That fun house, LaGuardia.
--Dick Cavett, NYT, on magical security thinking

Thursday, August 18, 2011

Bling, Korean style

Like their peers in Japan and China, Korean women love luxury items. Here’s one way to gauge just how much: there’s a secondhand market for Chanel and other brand-name paper shopping bags.

Such transactions are easily found on second-hand online shopping sites, where brand-name paper bags are traded for as much as $30.

A glance at bags for sale today shows one seller with four different kinds of paper bags from Burberry to Louis Vuitton at price tags around 25,000 won ($23). Another seller has a Burberry paper bag on sale at a more modest price of 5,000 won.
--Jaeyeon Woo, WSJ, on longing for a touch of luxury. HT: Marginal Revolution

I'm shocked, shocked that we're tracking your Web-browsing history

Major websites such as MSN.com and Hulu.com have been tracking people's online activities using powerful new methods that are almost impossible for computer users to detect, new research shows. ...

Hulu and MSN were installing files known as "supercookies," which are capable of re-creating users' profiles after people deleted regular cookies, according to researchers at Stanford University and University of California at Berkeley. ...

Mike Hintze, associate general counsel at MSN parent company Microsoft Corp., said that when the supercookie "was brought to our attention, we were alarmed. It was inconsistent with our intent and our policy." He said the company removed the computer code, which had been created by Microsoft.

Hulu posted a statement online saying it "acted immediately to investigate and address" the issues identified by researchers. It declined to comment further. ...

Such tracking peers into people's Web-browsing histories to see if they previously had visited any of more than 1,500 websites, including ones dealing with fertility problems, menopause and credit repair, the researchers said. History stealing has been identified on other sites in recent years, but rarely at that scale. ...

Don Mathis, chief executive of Epic, says his company was inadvertently using the technology and no longer uses it. He said the information was used only to verify the accuracy of data that it had bought from other vendors. ...

Microsoft's Mr. Hintze said that the company removed the code after being contacted by Mr. Mayer, and that Microsoft is still trying to figure out why the code was created. A spokeswoman said the data gathered by the supercookie were used only by Microsoft and weren't shared with outside companies.
--Julia Angwin, WSJ, on profitable “mistakes” that were inadvertent but actively used

Stories economists tell

Pop economists (or, at least, pop micro-economists) are often making one of two arguments:

1. People are rational and respond to incentives. Behavior that looks irrational is actually completely rational once you think like an economist.

2. People are irrational and they need economists, with their open minds, to show them how to be rational and efficient.

Argument 1 is associated with “why do they do that?” sorts of puzzles. Why do they charge so much for candy at the movie theater, why are airline ticket prices such a mess, why are people drug addicts, etc. The usual answer is that there’s some rational reason for what seems like silly or self-destructive behavior.

Argument 2 is associated with “we can do better” claims such as why we should fire 80% of public-schools teachers or Moneyball-style stories about how some clever entrepreneur has made a zillion dollars by exploiting some inefficiency in the market.

The trick is knowing whether you’re gonna get 1 or 2 above. They’re complete opposites!
--Andrew Gelman on economic genres. HT: ACT

The bad and good news for doctors about malpractice lawsuits

Most doctors in America will be sued at some point during their career, a Harvard study released yesterday in the New England Journal of Medicine has found. Physicians who perform high-risk procedures, including neurosurgeons and obstetricians, face a near certainty of being named in a malpractice case before they reach age 65.

Yet a relatively small number of claims, about 22 percent, result in payments to patients or their families.

“Doctors get sued far more frequently than anyone would have thought, and in some specialties, it’s extremely high,’’ said Amitabh Chandra, an economist and professor of public policy at the Harvard Kennedy School and an author of the study. “In some sense, the payment is the least important part, because you can insure against it, but you can’t insure against the hassle cost.’’

The study looked at claims data for nearly 41,000 physicians from 1991 to 2005. The researchers found that 7.4 percent of physicians had a malpractice claim against them each year and that 1.6 percent had a claim that led to a payment each year.

The likelihood and outcome of lawsuits varied considerably across specialties. But the fact that even doctors in low-risk areas of practice, such as family medicine, had a 75 percent chance of being sued during their career is cause for concern, Chandra said. ...

Chandra and his coauthor, Dr. Anupam B. Jena of Mass. General, said they hope their study will dispel the fear that many doctors have of big payouts. Their study found just 66 claims that resulted in payments exceeding $1 million. Average claims by specialty ranged from $117,832 in dermatology to $520,923 in pediatrics.
--Chelsea Conaboy, Boston Globe, on malpractice litigation statistics

Wednesday, August 17, 2011

Evidence that Abercrombie isn't serious about the Situation

Jordan Yospe, a lawyer who handles product-placement deals in movies and television shows, said that if Abercrombie were serious about keeping its clothing off the Situation, it would have pursued legal options rather than offering him money.

“They could try to prevent the series from airing their intellectual property without their permission,” said Mr. Yospe, a lawyer at Manatt, Phelps & Phillips in Los Angeles. Logos and labels fall under fair-use law, he said, and shows have to get approval from the owner of the intellectual property to use them.

That’s why on so many low-end reality shows, brands are often blurred, Mr. Yospe said — the shows either could not or did not try to get approval. Abercrombie “could say, ‘Blur ’em,’ ” if they really wanted to sever the association, Mr. Yospe said.

However, in issuing a news release instead, Abercrombie seemed pleased to fan the flames.
--Stephanie Clifford, NYT, on the maximal-publicity option

Another analysis of the Buffett proposal's revenue implications

[Warren] Buffett called for two new tax brackets for high earners — for income above $1 million a year and another above $10 million. While Mr. Buffett’s proposal did not suggest a rate, the Tax Policy Center has estimated that a 50 percent tax rate on income over $1 million would raise $48 billion over the next decade.

But one of the biggest factors reducing the comparatively low tax rates on investment income is the 15 percent for dividends, capital gains and “carried interest,” the money paid to hedge fund managers and private equity investors. Eliminating the carried interest provision alone would raise $21 billion over 10 years, according to the Congressional Budget Office.

And restoring capital gains and dividend rates to the levels before the Bush tax cuts — when capital gains were taxed at a top rate of 20 percent and dividends were treated as ordinary income — would bring the Treasury an additional $340 billion over the next decade.
--David Kocieniewski, NYT

The upshot: a large tax increase on the $1 million+ earners plus carried interest generates $6.9 billion in extra revenue per year over the next decade, which is 0.4% of the $1.65 trillion deficit in 2011 alone. Increasing the tax rate on dividends and capital gains only generates $34 billion per year—which is a little bigger than what you get from the new tax brackets because this is a tax that is also paid by the middle class.

Tuesday, August 16, 2011

Anti-endorsement contracts

Teen apparel retailer Abercrombie & Fitch Co. is offering to pay Michael “The Situation” Sorrentino not to wear its merchandise.

The New Albany, Ohio company released a statement Tuesday evening titled “A Win-Win Situation,” in which it stated a “deep concern” over the association between Mr. Sorrentino and the brand. A&F offered up a “substantial payment” to Mr. Sorrentino “to wear an alternate brand.”

“We understand that the show is for entertainment purposes, but believe this association is contrary to the aspirational nature of our brand, and may be distressing to many of our fans,” the statement read.

The company also extended the pay-to-not-play offer to the other Jersey Shore reality stars and said it was “urgently waiting a response.”
--Elizabeth Holmes, WSJ, on blackmail money

UPDATE: In case there was any doubt, here's evidence that Abercrombie can’t be serious about this 

Monday, August 15, 2011

Do the super-rich really pay very little in income taxes?

Warren Buffett writes that the super-rich pay a smaller percent of their income in taxes than the middle class. Is this true?

I went to the IRS website to get its published statistics on tax returns. Table 1.1 shows aggregate federal income taxes paid by size of adjusted gross income. Download the Excel spreadsheet for 2009 here.

Here's an excerpt:

AGI Income tax as
% of taxable income
Income tax as
% of AGI (less deficit)
$1-$4,999 11.9% 4.8%
$5,000-$9,999 10.2% 2.6%
$10,000-$14,999 6.8% 2.3%
$15,000-$19,999 6.6% 3.0%
$20,000-$24,999 8.7% 4.5%
$25,000-$29,999 9.7% 5.4%
$30,000-$39,999 10.0% 6.0%
$40,000-$49,999 10.6% 6.8%
$50,000-$74,999 11.6% 7.7%
$75,000-$99,999 12.3% 8.5%
$100,000-$199,999 16.3% 11.9%
$200,000-$499,999 24.6% 19.6%
$500,000-$999,999 28.8% 24.4%
$1 mill-$1.5 mill 29.4% 25.3%
$1.5 mill-$2 mill 29.6% 25.6%
$2 mill-$5 mill 29.7% 25.8%
$5 mill-$10 mill 29.1% 25.4%
$10 mill+ 26.3% 22.6%

One can argue about whether the super-rich should pay more than they are right now, but it's just not true (on average) that they pay a lower percent of their income in income taxes than the middle class.

The table also shows us how much total income there is in each AGI category:

AGI # of returns Total AGI (less deficit),
$1-$4,999 10,447,635 $27,218,608
$5,000-$9,999 12,220,335 $92,407,278
$10,000-$14,999 12,444,512 $155,465,805
$15,000-$19,999 11,400,228 $199,017,560
$20,000-$24,999 10,033,887 $225,167,737
$25,000-$29,999 8,662,392 $237,994,230
$30,000-$39,999 14,371,647 $499,879,773
$40,000-$49,999 10,796,412 $483,088,798
$50,000-$74,999 18,694,893 $1,149,068,817
$75,000-$99,999 11,463,725 $990,337,913
$100,000-$199,999 13,522,048 $1,801,446,897
$200,000-$499,999 3,195,039 $905,347,402
$500,000-$999,999 492,568 $332,037,478
$1 mill-$1.5 mill 108,096 $130,149,237
$1.5 mill-$2 mill 44,273 $76,148,200
$2 mill-$5 mill 61,918 $182,986,391
$5 mill-$10 mill 14,322 $97,493,467
$10 mill+ 8,274 $240,133,885

Suppose we imposed a 100% tax rate on people making more than $1 million a year, and let's pretend that they wouldn't generate any less taxable income in response. (In reality, they would of course stop working altogether or hide their income in response to a 100% tax, so the government wouldn't be able to collect all that income.)

The government would then collect $727 billion from these people, which would be $549 billion more than it actually did. That would still not be enough to eliminate the $1.65 trillion federal deficit in 2011.

This is why Obama's so-called millionaires and billionaires tax hike proposal would have raised taxes on AGIs starting at $200,000 a year for singles and $250,000 a year for couples. There just isn't enough money available in the $1 million+ segment to close the deficit.

And this is why any deal that ultimately balances our budget will have to at least partially hit the upper-middle class (which I loosely define as households that make more than $50,000 a year, which is the top 36 percentiles), either through tax hikes or benefits cuts.
 --Rare original content from this blog's author. Original post draft mistakenly used 2008 numbers and said "million" when I meant "billion" dollars.

Sunday, August 14, 2011

Is access to plastic surgery a right?

But [Brazilian plastic surgeon Ivo] Pitanguy had long maintained that plastic surgery was not only for the rich: “The poor have the right to be beautiful, too,” he has said. ...

But Pitanguy’s remark raises yet another issue: Is beauty a right, which, like education or health care, should be realized with the help of public institutions and expertise? ...

[Pitanguy] argues that the real object of healing is not the body, but the mind. A plastic surgeon is a “psychologist with a scalpel in his hand.” This idea led Pitanguy to argue for the “union” of cosmetic and reconstructive procedures. In both types of surgery beauty and mental healing subtly mingle, he claims, and both benefit health. ...

We might ask: if you’re psychologically suffering, why not have psychological treatment? One doctor had this response: “What is the difference between a plastic surgeon and a psychoanalyst? The psychoanalyst knows everything but changes nothing. The plastic surgeon knows nothing but changes everything.” ...

[A]ttractiveness is a quality that is at least partially independent of other social hierarchies. For example, the rich and well-born are not always good looking.

Beauty is unfair: the attractive enjoy privileges and powers gained without merit. As such it can offend egalitarian values. Yet while attractiveness is a quality “awarded” to those who don’t morally deserve it, it can also grant power to those excluded from other systems of privilege. It is a kind of “double negative”: a form of power that is unfairly distributed but which can disturb other unfair hierarchies. For this reason it may have democratic appeal. In poor urban areas beauty often has a similar importance for girls as soccer (or basketball) does for boys: it promises an almost magical attainment of recognition, wealth or power.

In Brazil’s favelas many dreams for social mobility center on the body. N.G.O.’s offer free lessons in fashion modeling. Marriage is often seen as an out-of-reach luxury; seduction a means of escaping poverty.
--Alexander Edmonds, NYT, on beauty and justice

Friday, August 12, 2011

Classical piano playing and the four-minute mile

The four-minute mile seemed an impossibility until Roger Bannister made the breakthrough in 1954. Since then, runners have knocked nearly 17 seconds off Bannister’s time.

Something similar has long been occurring with pianists. And in the last decade or so the growth of technical proficiency has seemed exponential. ...

Some months ago I was speaking about the issue with the pianist Gilbert Kalish, who teaches at Stony Brook University on Long Island. He said that when Gyorgy Ligeti’s études, which explore new realms of texture, sound and technique at the piano, gained attention in the 1990s, they were considered nearly impossible. Only experts like the French pianist Pierre-Laurent Aimard could play them, it was thought. But now, thanks to greater familiarity, Mr. Kalish said, “my students at Stony Brook play them quite comfortably.” ...

A reason that pianists are getting technically stronger is that as in sports, teachers and students are just learning to practice the craft better, becoming better conditioned and getting better results. But as Mr. Kalish suggests, another reason is that pianists are rising to the challenges of new music that pushes boundaries.

This phenomenon should be seen in historical context. The first several decades of the 20th century are considered a golden era by many piano buffs, a time when artistic imagination and musical richness were valued more than technical perfection. ...

But audiences and critics tolerated a lot of playing that would be considered sloppy today. Listen to 1920s and ’30s recordings of the pianist Alfred Cortot, immensely respected in his day. He would probably not be admitted to Juilliard now. Despite the refinement and élan in his playing, his recording of Chopin’s 24 études from the early 1930s is, by today’s standards, littered with clinkers.

These days playing the Chopin études with comfort is practically an entry-level requirement for membership in the ranks of professional pianists.
--Anthony Tommasini, NYT, on the expanding technical frontier in piano playing

Thursday, August 11, 2011

California's high-speed train to nowhere gets more expensive

When the California High Speed Rail project was put before voters, its backers estimated that it would cost $33 billion. Fairly quickly thereafter, planners revised that estimate to $43 billion, a 25% increase.

But that seems to have been giddily overoptimistic. According to the Mercury News, the state now expects the first leg of California's high speed rail is to come in over budget. Waaaaaaaay over budget (H/T Reihan Salam):
The California High-Speed Rail Authority's new cost estimates released Tuesday show the initial stretch of construction between Merced and Bakersfield will cost $10 billion to $13.9 billion depending on how it's built. Project planners had previously pegged the section at $6.8 billion.
And this is the part that they're building first because it's so cheap--not a lot of expensive real estate (or angry, politically powerful neighbors in the way). The Mercury News says that if the whole project's costs blow up the way the first leg has, the whole project will cost somewhere between $63 and $87 billion. ...

Who's going to lose their job over this project? It was passed by initiative, so politicians aren't really on the hook. The people in charge of the cost estimates are all civil servants.
--Megan McArdle, Atlantic Monthly, on a terrible deal getting even worse

Wealth doesn't prevent bankruptcy

In a paper just published in the Review of Economics and Statistics (gated, free version here), Hankins, Hoekstra and Skiba argue that the rags to riches to rags story has a systematic component.

The authors link records of lottery winners to bankruptcy records. The use of the lottery is a great randomization device, although obviously it restricts the sample to people who play the lottery.

The central finding is this: people who win large amounts are just as likely to end up bankrupt as people who win small amounts. People who win a large amount, $50,000 to $150,000, have a lower bankruptcy rate immediately after winning but a higher bankruptcy rate a few years later so the 5-year bankruptcy rate for the big winners is no lower than for the small winners. Amazingly, by the time the big winners do go bankrupt their assets and debts are not significantly different from those of the small winners.
--Alex Tabarrok, Marginal Revolution, on bankruptcy being driven by the person, not the person's wealth

Thus, our findings suggest that skepticism regarding the long-term impact of cash transfers may be warranted.
--Hanka, Hoekstra, and Skiba

Wednesday, August 10, 2011

Spoilers actually improve the story

Although we’ve long assumed that the suspense makes the story — we keep on reading because we don’t know what happens next — this new research suggests that the tension actually detracts from our enjoyment.

The experiment itself was simple: Nicholas Christenfeld and Jonathan Leavitt of UC San Diego gave several dozen undergraduates 12 different short stories. The stories came in three different flavors: ironic twist stories (such as Chekhov’s “The Bet”), straight up mysteries (“A Chess Problem” by Agatha Christie) and so-called “literary stories” by writers like Updike and Carver. Some subjects read the story as is, without a spoiler. Some read the story with a spoiler carefully embedded in the actual text, as if Chekhov himself had given away the end. And some read the story with a spoiler disclaimer in the preface. ...

[Almost] every single story, regardless of genre, was more pleasurable when prefaced with a spoiler. ...

What this research suggests is that the lack of surprise was part of the pleasure: We like it best when the suspense is contained by the formulaic, when we never have to really worry about the death of the protagonist or the lovers in a romantic comedy.
--Jonah Lehrer, Wired, on the benefits of literary precognition. HT: Franklin Shaddy

The rise in scientific retractions

Since 2001, while the number of papers published in research journals has risen 44%, the number retracted has leapt more than 15-fold, data compiled for The Wall Street Journal by Thomson Reuters reveal. ...

Why the backpedaling on more and more scientific research? Some scientific journals argue that the increase could indicate the journals have become better at detecting errors. They point to how software has made it easier to uncover plagiarism.

Others claim to find the cause in a more competitive landscape, both for the growing numbers of working scientific researchers who want to publish to advance their careers, and for research journals themselves. ...

Retractions related to fraud showed a more than sevenfold increase between 2004 and 2009, exceeding the twofold rise in retractions related to mere error, according to an analysis published in the Journal of Medical Ethics. The analyst, Grant Steen, reached that conclusion after studying 742 medicine and biology papers that were withdrawn from 2000 to 2010. He said 73.5% were retracted simply for error but 26.6% were retracted for fraud.
--Gautam Naik, WSJ, on crime and punishment in science

Tuesday, August 9, 2011

Self-abnegation on Wall Street

As my last New Year's resolution, I had stopped selling people things I didn't think they should buy. For Lent, I had given up my New Year's resolution.
--Michael Lewis, Liar's Poker

Who wants Jewish lawyers?

Lisa Spitzer said that Google and her 96-year-old mother are responsible for the genesis of the Jewish Attorneys Network. A social worker with a Jewish background, Ms. Spitzer, who is chief executive of the network, began working in attorney referral before the Internet and stumbled upon the Jewish attorney niche only in the last year. “Google loves niches for searches,” she said. “I watched the analytics and saw that the search for ‘Jewish lawyer’ goes neck-in-neck with ‘Spanish-speaking attorney.’” ...

Based in Boca Raton, Fla., the network gets a surprising 75 percent of its inquiries from African Americans and only 5 percent from Jewish people, most of them Orthodox (it even has Arab clients). “I was kind of surprised myself,” Ms. Spitzer said. “I always ask callers, ‘Why a Jewish lawyer?’ They feel that the Jewish community, because of the agonies and past history, can relate to what they are going through, what it’s like to be an oppressed minority. They have a sense that a Jewish lawyer will stand up and not be afraid. They will tell me they remember the M.L.K. marches and who stood up behind them then.”
--MP Mueller, NYT, on a shared kinship of oppression

Monday, August 8, 2011

Why the Red Sox have Mariano Rivera's number

Uniquely, [Mariano Rivera] did all of it with one pitch, a low- to mid-nineties cut fastball... Depending on their role, most pitchers require a repertoire of two to four pitches to succeed, but for Rivera, that one pitch has been enough for him to compile an almost certain Hall of Fame career. ...

In 2004, not including the postseason, the [Red] Sox batted .250/.375/.375 (average/on-base percentage/slugging percentage) and handed Rivera a 4.22 ERA while the rest of the league could only muster .221/.271/.265, a 1.59 ERA. The year before that the Sox hit .356/.396/.467 (a 2.70 ERA); everyone else hit .209/.246/.265 (1.48 ERA).

Due to the unbalanced schedule, the Sox see Rivera quite often. ... Against the thirteen teams he faced fewer than six times [in 2004], he allowed an ERA of 0.45 in 40 innings; against the other three: 3.59 in 38.2. ... The trend held true in 2003 as well. ...

Interestingly, and contrary to the league norm, Rivera's success diminished the more often he saw a team. Most pitchers' ERAs improved the more familiar they were with a team and its lineup. ... Rivera's ERA decline is likely related to his reliance on a single pitch.
--James Click, Mind Game: How the Boston Red Sox Got Smart, Won a World Series, and Created a New Blueprint for Winning, on the cost of one-trick ponies

S&P's ratings quality

S.&P.’s bond ratings from five years ago would have told you almost nothing about the risk of a default today. They had no insight about the threats in European markets, nor about which countries in Europe were relatively more likely to default. (Norway, which remains among the most solvent countries in the world, had a AAA rating in 2006, but so did Ireland and Spain.)

By comparison, simply looking at a country’s ratio of net debt to G.D.P. would have been a better predictor of default. It wouldn’t have done well by any means: it only explains about 12 percent of default risk. Still, this simple statistical indicator does better than the S.&P. ratings. ...

In fact, the evidence from the past five years suggests that it may be worthwhile to adopt a contrarian investing strategy that specifically bets against S.&P.’s ratings. ...

Investors think, for instance, that France is 2 or 3 times more likely to default in the next five years than the United States based on France’s exposure to Greek debt. However, France maintains its AAA rating whereas the U.S. was just downgraded to AA+.
--Nate Silver, NYT, on S&P's sovereign track record

Mariano Rivera's kryptonite

Since Rivera became the Yankees closer in 1997, he is now 58 of 74 in all regular- and postseason save opportunities against the Red Sox, a save percentage of just .784. Against everyone else, the number is .904. The Red Sox have beaten Rivera 10 times in Boston and six times in New York, though, based on save percentage, Rivera's frustrations against them have been quite consistent: .778 at Fenway, .793 in the Bronx, .750 in the playoffs and .788 in the regular season.
--Tony Massarotti, Boston Globe, on reassurance during a financial meltdown

The biological consequences of Columbus

Earthworms, to be precise—especially the common nightcrawler and the red marsh worm, creatures that did not exist in North America before 1492. ...

Intoxicating and addictive, tobacco became the subject of the first truly global commodity craze. ... To feed the demand, English ships tied up to Virginia docks and took in barrels of rolled-up tobacco leaves. Typically 4 feet tall and 2½ feet across, each barrel weighed half a ton or more. Sailors balanced out the weight by leaving behind their ships' ballast: stones, gravel and soil. They swapped English dirt for Virginia tobacco.

That dirt very likely contained the common nightcrawler and the red marsh worm. ...

Spread today by farmers, gardeners and anglers, earthworms are obsessive underground engineers, and they are now remaking swathes of Minnesota, Alberta and Ontario. Nobody knows what will happen next in what ecologists see as a gigantic, unplanned, centuries-long experiment. ...

Much more direct was the role of the Columbian Exchange in the creation of Great Britain. In 1698, a visionary huckster named William Paterson persuaded wealthy Scots to invest as much as half the nation's available capital in a scheme to colonize Panama, hoping to control the chokepoint for trade between the Pacific and the Atlantic. As the historian J.R. McNeill recounted in "Mosquito Empires," malaria and yellow fever quickly slew almost 90% of the 2,500 colonists. The debacle caused a financial meltdown.

At the time, England and Scotland shared a monarch but remained separate nations. England, the bigger partner, had been pushing a complete merger for decades. Scots had resisted, fearing a London-dominated economy, but now England promised to reimburse investors in the failed Panama project as part of a union agreement. As Mr. McNeill wrote, "Thus Great Britain was born, with assistance from the fevers of Panama." ...

The Columbian Exchange continues to this day. The Pará rubber tree, originally from Brazil, now occupies huge swathes of southeast Asia, providing the latex necessary to make the tires, belts, O-rings and gaskets that invisibly maintain industrial civilization. (Synthetic rubber of equal quality still cannot be practicably manufactured.)

Asian rubber plantations owe their existence to a British swashbuckler named Henry Wickham, who in 1876 smuggled 70,000 rubber seeds from Brazil to London's Kew Gardens. Rubber-tree plantations are next to impossible in the tree's Amazonian home, because they are wiped out by an aggressive native fungus, Microcyclus ulei. Much as the potato blight crossed the Atlantic, M. ulei will surely make its way across the Pacific one day, with consequences as disastrous as they are predictable.
--Charles Mann, WSJ, on the biological consequences of 1492. Much, much more in the article.

One rating of S&P's competence

Look, I know these S&P guys. Not these particular guys — I don’t know John Chambers or David Beers personally. But I know the rating agencies intimately. Back when I was an in-house lawyer for an investment bank, I had extensive interactions with all three rating agencies. We needed to get a lot of deals rated, and I was almost always involved in that process in the deals I worked on. To say that S&P analysts aren’t the sharpest tools in the drawer is a massive understatement.

Naturally, before meeting with a rating agency, we would plan out our arguments — you want to make sure you’re making your strongest arguments, that everyone is on the same page about the deal’s positive attributes, etc. With S&P, it got to the point where we were constantly saying, “that’s a good point, but is S&P smart enough to understand that argument?” I kid you not, that was a hard-constraint in our game-plan. With Moody’s and Fitch, we at least were able to assume that the analysts on our deals would have a minimum level of financial competence.

I’ve seen S&P make far more basic mistakes than the one they made in miscalculating the US’s debt-to-GDP ratio. I’ve seen an S&P managing director who didn’t know the order of operations, and when we pointed it out to him, stopped taking our calls. Despite impressive-sounding titles, these guys personify “amateur hour.” (And my opinion of S&P isn’t just based on a few deals; it’s based on countless deals, meetings, and phone calls over 20 years. It’s also the opinion of practically everyone else who deals with the rating agencies on a semi-regular basis.)

Treasury has every right to be outraged. S&P mangled the economic argument so badly that they had to abandon it entirely, and then fell back on a political argument which they are in no position to make, and which isn’t even correct.
--Economics of Contempt giving S&P a rating. HT: Paul Krugman

Friday, August 5, 2011

How computer facial recognition will change society

Long the realm of science fiction, advanced technologies that identify faces now are emerging as the hottest entertainment gimmick, despite the potential for privacy concerns.

One of the latest is SceneTap, a free application for iPhone and Android smartphones released in recent weeks that displays real-time stats on the local bar scene. Based on information collected via face-detection cameras installed at participating bars, the app shows the number of people at the bar, the male-to-female ratio and the average age of patrons. ...

And hitting the market in time for the holidays this year are television set-top boxes that include facial-recognition cameras. The technology, developed by Palo Alto, Calif.-based Viewdle will be able to identify who is sitting in front of the TV then customize programming according to that individual, displaying most recently watched or recorded shows, for instance. Parents also could program the device to limit which channels their children can access. ...

Facial recognition has come a long way after years of false starts. On still frontal face images, the error rate of rejecting a legitimate claim—when the face image and name match—decreased to 0.29% in 2010, from a rate of 79% in 1993, according to a study by the National Institute of Standards and Technology. ...

While SceneTap doesn't ask for patrons' permission to capture their image, nobody sees the video feed, and the information isn't recorded, says Cole Harper, chief executive at SceneTap. He says that the company doesn't collect any personal information. The technology also doesn't link up to Facebook or match against publicly available photos on the Web to identify exactly who is entering the bar, or scan for more controversial characteristics like ethnicity.

"From a technology standpoint, I would be lying to say that is not possible. But there are a lot of bridges that need to be crossed," Mr. Harper says.
--Emily Steel, WSJ, on why facial recognition is more than a cool iPhoto gimmick. How long before retailers use the technology to track the customers coming into their stores, analyzing their behavior, and using the results to drive pricing and promotion strategies?

Thursday, August 4, 2011

Against cool stethoscope placement

To determine whether the “cool” or circumcervical placement of the stethoscope when not in use is as efficacious as the traditional placement in terms of transfer time to the functional position.

Measurement of time taken by 100 health care professionals in each group to transfer stethoscope to functional position.

Results and interpretation
The cool group was much slower than the traditional group, despite their younger years. This wasted time could translate into a substantial financial burden on Canada's health care system. ...

Assuming that 80% of these health care practitioners use the cool position and each of them uses his or her stethoscope 20 times on average per day, or 4800 times per year, then the time wasted per year could be as much as 273 869 hours (71.32 х 0.8 х 5200). At an average hourly earning of $75, the annual cost would be approximately $20.5 million. With the current shortage of health care resources, it might be advisable for the respective provincial ministries of health to consider appointing “stethoscope police” to enforce a return to the traditional placement. We do have some concerns, however, that the costs generated by the resultant bureaucracy would negate any positive financial benefit to the health care system.



--William Hanley and Anthony Hanley, "The efficacy of stethoscope placement when not in use: traditional versus 'cool'," Canadian Medical Association Journal. HT: AL