Guns Don’t Kill People, People Kill People?

spartan117gw_gun_vs_sword

I’ve heard or seen this cliché forever and never gave it much thought until now. I’ve generally thought to myself, “That may be true to some degree, but guns increase people’s capacity or ability to kill.” When I see the cliché mentioned online, I often see talk that people would be killed in alternative ways (knives, bombs) if guns were banned and links to random crimes where 7 people were stabbed to death. Now, I’m going to present an absurdity I heard in class. Let’s replace guns in the cliché with lawnmowers.

Lawnmowers don’t mow lawns, people mow lawns.

This statement is true in the same way the titular statement is. It is true that the lawnmower would mow no lawn if a person was not involved. But, how much lawn would someone with the intent to mow a lawn be able to mow without a lawnmower? Probably .01% of the amount? Just as lawnmowers increase people’s ability to mow lawns, guns increase people’s ability to kill other people. Think about it this way…

Let us suppose I am out on the street with the intent to kill someone in front of me that is equal in size. These are some ad hoc guesses of mine.

Probability I kill them with my bare hands – 1%
Probability I kill them with a knife – 20%
Probability I kill them with a gun – 95%

These probabilities will decrease exponentially if I want to kill two people or more with my bare hands or a knife (fighting two people is hard), but decline only slightly with a gun.

Probability I kill two people with my bare hands – .1%
Probability I kill two people with a knife – 2%
Probability I kill two people with a gun – 90%

It gets to a point that only guns can kill in large numbers

Probability I kill ten people with my bare hands – 0%
Probability I kill ten people with a knife – .01%
Probability I kill ten people with a gun – 40%

But, besides this point, guns’ probabilities don’t waver between people of different means as much. This is an example…

Probability I kill someone who weighs 50 pounds more than me with my bare hands – -10% (they kill me instead)
Probability I kill someone who weighs 50 pounds more than me with a knife – 5%
Probability I kill someone who weighs 50 pounds more than me with a gun – 92%

Guns relax constraints on who can kill and raises their ability to kill. I could go on…

Are Barbarians Responsible for the Industrial Revolution?

I’ve been thinking about the Great Divergence the past few days and I came up with an idea that is a little different, perhaps crazy. My idea is basically that Europe was taken over by foragers late in its history whereas China was a society of farmers for thousands of years and continues to be largely descendants of farmers. I’m just spitballing and I know this idea is all conjecture, non-rigorous, etc., but I just wanted to write it down. My idea is a synthesis of a few disparate thoughts I agree with…

1. Biology has some degree of influence on broad outcomes. Ideas about genetic heritability from Gregory Clark, Bryan Caplan, Garett Jones, etc. have greatly influenced my thinking; although controversial, their methodology and results seem valid to me.

2. Robin Hanson’s idea of forager/farmer values. Foragers have liberal/modern values and farmers have conservative/old world values because of the nature of farming (stationary) vs. foraging (roaming/nomads) and farming leads to things like wealth accumulation and inheritance. Here is a link. I’ll excerpt some key thoughts (Type A are foragers and Type B are farmers)…

“Type A folks care less for land or material possessions, relative to people. They spend more time on leisure, music, dance, story-telling and the arts. They are less comfortable with war, domination, bragging, or money and material inequalities, and they push more for sharing and redistribution. They more want lots of discussion of group decisions, with everyone having an equal voice and free to speak their mind. They deal with conflicts more personally and informally, and more prefer unhappy folk to be free to leave. Their leaders lead more by consensus…

TYPE *B* folks travel less, and move less often from where they grew up. They are more polite and care more for cleanliness and order. They have more self-sacrifice and self-control, which makes them more stressed and suicidal. They work harder and longer at more tedious and less healthy jobs, and are more faithful to their spouses and their communities. They make better warriors, and expect and prepare more for disasters like war, famine, and disease. They have a stronger sense of honor and shame, and enforce more social rules, which let them depend more on folks they know less. When considering rule violators, they look more at specific rules, and less at the entire person and what feels right. Fewer topics are open for discussion or negotiation.”

According to Robin Hanson, the industrial revolution aligns with forager notions of equality and sexual behavior and the modern world is reestablishing many forager norms. I’m not sure if he says this, but when I think about the areas of the world that are the most conservative/religious/etc. on different margins; they are often the areas where farming has been established for the longest period of time: the Middle East and China. For instance, the conflict between the US and the Middle East might be in a sense a clash of forager and farmer values/norms.

3. I always thought the idea of White Supremacy was a little ironic. White Supremacy proponents look down on other races as inferior and often as savages or unrefined. But, when you read about Roman, Greek, and others impressions of the various Germanic tribes, they thought exactly the same thing about the Germanic peoples (that they were barbarians, uncivilized) that Germanic descendants would later think about say Africans and Asians.

4. #3 leads me to a thought about a major difference between China and Western Europe. China had been a farming society for thousands of years (5000?) or so and there might have been selection pressures to make Chinese people more conservative and more farmer oriented over that timespan. This is perhaps where my idea is the weakest though as I don’t know as much about European history. From my naïve understanding, the populations of Western Europe (Germany, France, UK, etc.) are different than the populations in those areas during the Roman era with perhaps the exception of Germany. Most of the population in those areas today are descendant from various Germanic tribes that originated from Scandinavia and spread throughout Western Europe in different waves from 300 – 1000 AD. After the fall of the Roman empire, Western Europe was increasingly made up of people of the Germanic tribes. There’s also an implicit assumption here that the Germanic tribes were more forager oriented than say the Romans or the Chinese and that this made them genetically different (more forager/liberal oriented and less farmer/conservative oriented).

So my idea is basically that Western Europe was more inherently forager oriented than the Middle East and China. The next part of my argument is that perhaps to get to a point like the industrial revolution you need to meet a few conditions. First, farming is a necessity because you need to develop large populations to support the benefits of science. Just basic economics, but the return to a cure for cancer is much larger in a world of a billion people than a world of ten thousand people. Also, with a large population you are more likely to have geniuses and perhaps there are network effects where smart people make other smart people better (standing on the shoulders of giants or increasing returns to scale). But, the industrial revolution itself is a liberal revolution so although you need farming, the society that is at the frontier of farming, yet at the same time the most liberal will be the first to adopt the practices that would lead to the industrial revolution. England was a society that was able to piggyback on the farming advances of Rome and the Middle East, but it consisted of a population that was fairly new to these technologies and perhaps had not genetically adapted to them as much. In other words, they were foragers that adopted an already advanced level of farming.

I think about some of the cultural/political innovations that led to the industrial revolution and they seem to confirm my story of needing a more forager/liberal bent in the population: the protestant reformation, development of the scientific method, ideas of economics and the battle between self-interest and passion (I’m thinking of Hirschman’s The Passions and the Interests: Political Arguments for Capitalism before Its Triumph), ideas on liberty and democracy, etc. all seem to be fairly liberal revolutions.

Also, even when I think within Europe or within Asia it maps onto this forager/farmer map. Within Europe, I would label the UK, France, Sweden, and Germany as more forager/liberal and Italy, Spain, and Greece as more farmer/conservative oriented. Their economic development and ideas about women, leaders, and norms seem to map well onto the forager/farmer distinction and so do their historical populations. When I think of Asia, China seems more farmer oriented and Japan seems more forager oriented. Japan’s development of farming was rather late in contrast with China and the Japanese seem more liberal on many dimensions, although not all. My story could also be used to explain why the dark ages occurred and why there was a huge growth reversal in large parts of Europe after the fall of the Roman empire. There’s probably a lot more going on there though.

Does being authentic often imply you are a conformist?

I had a thought today about the relationship between “authenticity” and conformity.

First of all, there are many margins of “authenticity”; generally I think the standard view is that the poorer you are/more hardships you face = the more authentic you are and also that the more truthful/honest (inability to be affected by others) you are the more authentic you are. Another margin is that your authenticity is decided largely by your experience as a youth. Jay-z is authentic because he’s from Marcy projects; even though he’s been one of the richest media moguls since his early 20s. A person who is say the son of a wealthy industrialist, but fell on hard times is still defined by his experience as a spoiled teenager. In other words, he can’t truly relate to someone who grew up poor.

So those thoughts are kind of a primer. In music, the idea of wiggers and that white people who like rap music are posers has always really bothered me. This also applies to other groups like Asians. I grew up in the 90s when this idea was in full effect and it’s exemplified in a litany of movies, tv shows, and music videos. Think Jamie Kennedy. Implicit in the idea of wiggers is that white people should objectively like rock music first and foremost and that they would only like something like rap in a touristy semi-fake way. Rockism. In other words, you are white and you are supposed to like rock. That is your authentic self as a white person. I’m making this number up, but let’s say in the 90s you are that 5% of white persons that likes rap; society labels you a poser. You are pretending to like something you really don’t understand. Which led me to a thought that a big part of authenticity is what the average person in “your” group is supposed to like. You will be more authentic if you conform to what those in your group are supposed to like.

Here is a puzzle that I think makes my point clearer. I often find that it is inauthentic when people have very heavy accents. Unlike most, I think wow they are trying really hard to talk different. Yet, in society we often view those with the heaviest accents as the most authentic people from their group or area. Holding other things equal, those in the south with a heavier southern drawl are viewed as more authentic. People with a cockney accent are viewed as more authentic than someone without a cockney accent. Irish people with a heavy Irish accent are viewed as a more authentic Irish person. I view accents as kind of conforming the way you talk with what people in your area or tribe are supposed to talk like. People become more authentic by conforming to what is expected of them on a group level. Kind of disturbing. Maybe there is some human nature/genetics explanation for some speech patterns and that all Irish people talk a certain way, but I find that very hard to believe. When you visit a big multinational corporation in Ireland and a similar one in America; they basically speak the same robotic non accenty English (I’ve heard this referred to as Citibank English). Anyways, that’s my thought and I know there is more to authenticity than that. But, being authentic because you are acting how you are supposed to act is disturbing to me.

General Musings

1. One of the issues I get worked up about – concept of addiction. This post is about the ineffectiveness of Alcoholics Anonymous. Link

2. This is a presentation disputing that the “Hot hand” in basketball is a fallacy. I often think to myself why are sports analytics so untouched by simple game theory. The results of this paper seem totally obvious to me.

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3. Ross Douthat wrote an article about the conservative surrender in regards to gay marriage. Link

This article brings up some issues I want to expound on.

It has always confused me why libertarians/conservatives have this kind of unquestioning attitude regarding the freedom of people to offend. For example, people like Gavin McInnes or Adam Carolla often rail on and on against political correctness, support Paula Deen, support Duck Dynasty, or support Chick-Fil-A’s right to be against gay marriage.

First of all, oftentimes freedoms are mutually exclusive. My freedom to yell at you precludes your freedom to walk around undisturbed. Libertarians often mention things like the Non-aggression principle and that as long as you don’t use aggression or violence then it is okay. But the problem as I see it is that there are many, many ways that people can be harmed besides being punched in the face or having their radio stolen.

The funny thing is is that both Adam Carolla and Gavin McInnes also go on and on about how Los Angeles is a shitty place to live and sometimes yearn for yesteryear when people were more civilized and kids didn’t talk back. But, how did yesteryear come about when youngsters respected their elders? Well, I would guess the norms were different. Inherently, when norms were different means that when someone violated the norms of the times then there were costs or consequences involved. That is a big part in producing those norms; the disapproval or other costs of not conforming to the norm. In the 1960s if a 15 year old said, “Fuck you!” to the local hardware store owner there would be a much bigger difference in social consequences versus today. What I am saying is that to get back to the 1960s would require a kind of political correctness about manners or behavior.

In a way it is no different than today when a majority of people want to live in a world where gay people aren’t called faggots. We want to live in a world where it’s not funny to joke about slavery (Paula Deen). To get to this world means that when people violate norms, then there are big social consequences. Duck Dynasty’s freedom to expound on slavery comes at the cost of other people’s freedoms as well. I never hear talk about the benefits of political correctness. Yes, it curtails people’s individual freedoms, but it also can give others freedom as well. We just care less today on the margin of respecting your elders, but more about things such as racial equality and gender equality.

I also think about transaction costs and bargaining. We can’t negotiate these things because there are too many people involved and other indirect factors. It would be hard to get 50,000 people that were offended by Duck Dynasty to each pay $1 to negotiate with Duck Dynasty to change their behavior. The lowest cost solution for all these multiple norms violations is to just impose social consequences on all violators; judgment, sneering, and financial penalties.

I will say that this kind of thing is a grey area and it’s hard to calculate exactly how much people are offended versus how much joy the person doing the offending is getting or how much that freedom is worth. But, just like in the 1960s, freedom of speech didn’t mean that you could really say whatever you wanted to, whenever without some kind of social consequence. A 10 year old in 1960 couldn’t go up to a mother and tell her that she was fat and that her children were ugly and dumb without facing severe consequences even if that consequence is limiting his freedom.

4. This Freakonomics podcast on learning a second language was pretty interesting. Link

Some snippets from transcript with my thoughts afterwards…

DUBNER: Saiz is from Barcelona and he’s an economist at MIT, where he teaches urban planning. On today’s show we’re asking about the return on investm…ent of learning a foreign language and, wouldn’t you know it, Saiz has calculated exactly that. He tracked about 9,000 college graduates to see how a foreign language affected their wages. He was surprised by what he found.SAIZ: Yeah, unfortunately, and I have to say, of course, because I try to speak three, I was pretty disappointed, and actually we found a very, very small return. What we did find is that after controlling for a host of characteristics, and using, a lot of experimental research designs that are basically trying to compare people who are identical for everything except for the second language, we did tend to find a premium in the labor market of about 2 percent of wages. In other words, if you speak a second language, you can expect to earn, on average, and that’s across many, many different people, on average you can be expected to earn about 2 percent higher wages. To contextualize this, think about your income or your wage being about $30,000, then you would expect to earn about $600 more per year….

SAIZ: I can tell you that there’s research in other countries. Actually the findings in the United States do contrast with what other people following the same methodology found in Turkey, in Russia and in Israel. In these three countries, actually speaking English, which would be the second language, was associated with a substantial return of around 10 to 20 percent. So it’s really I think English speaking countries where that effect is relatively low. And again I think the explanation is very clear. English is the lingua franca….DUBNER: This is Bryan Caplan, at George Mason University.

CAPLAN: All of this study seems to totally fail to teach people how to fluently speak foreign languages. So we can actually see in the data is that under 1 percent of Americans have learned to speak a foreign language very well in school. And this is very well according to them. And since people tend to exaggerate how good they are at things. If under 1 percent claim that they learned to speak a foreign language very well in school, then God knows how many actually did.

I want to highlight two points of the podcast that Dubner doesn’t make explicit. He doesn’t talk about the actual return from learning a second language by the public school system. Because under 1 percent of Americans actually have learned a foreign language from school and then even those 1 percent only get a 2% increase in wages, the ROI is extremely bad. The ROI would be something like under .02%.

Another thing to take away that Dubner doesn’t say out loud is that it’s pretty rational from a cost-benefit analysis why Americans don’t speak other languages or know about other cultures. On the other hand it is very profitable for non-Americans to learn English and about American culture. I guess you can use this idea to defend American ignorance.

Depreciation,Nostalgia and Personal Freedom

I want to talk about this last Freakonomics podcast, about how Japanese homes are disposable.

http://freakonomics.com/2014/02/27/why-are-japanese-homes-disposable-a-new-freakonomics-radio-podcast-3/

It presented some crazy data I was unaware of… the insane depreciation rate in Japan for homes and also for cars and other goods…

“It turns out that half of all homes in Japan are demolished within 38 years — compared to 100 years in the U.S. There is virtually no market for pre-owned homes in Japan, and 60 percent of all homes were built after 1980. In Yoshida’s estimation, while land continues to hold value, physical homes become worthless within 30 years. Other studies have shown this to happen in as little as 15 years.”

Listening to the podcast made me go down a road of thinking about the concept of nostalgia…

“The economic incentives to build a house that will one day be resold don’t exist in Japan because of housing depreciation. And this means that a client is free to build a house according to their own personal preferences and their own idiosyncrasies.”

My thought after listening to the podcast is that…
Nostalgia in a sense is antithetical to “true” personal freedom. If you want to build anything you want or create anything you want; the idea that something in the past is very valuable will limit you in many ways. It’s kind of a tradeoff in that the more you value the classics or greats, the less innovative or original you yourself will be.

“The houses that are built today exceed the quality of just about any other country in the world, at least for timber buildings. And so there’s really no reason that they should drop in value and be demolished.”

The podcast goes on to give specific reasons for the high depreciation rate in Japan such as WWII and earthquakes, but I do not find those that plausible as that should not affect cars and other goods. Also, I’ve always advanced my idea that Asians are less nostalgic or less nature-worshippy than Europeans by the strange fact that the majority of super cities (population > 20 mil.) are in places like Asia or South America and I don’t think there are any in Europe and maybe one in the United States. So my inclination is that it is culture or a preference based explanation. The Japanese are really different. I know Japan has a higher depreciation rate than even other Asian countries, but I would guess that maybe Asians as a whole have a higher depreciation rate than others. When I think about it anecdotally; it seems right to me.

Buddhism: The Organized Religion for Atheists

I’ve been thinking about China lately and to me one of the most singular aspects of Chinese civilization compared with other developed civilizations is the relative unimportance of religion throughout its history. In fact, if you take the broad sweep of Chinese history the must influential system of belief is without a doubt Confucianism. There are some Westerners/history teachers who consider Confucianism a religion, but it seems a misrepresentation and a broad use of the term “religion”. I don’t have much new to say on this debate so I’ll just quote the wiki on Confucianism.

Confucianism is definitively non-theistic. Confucianism is humanistic, and does not involve a belief in the supernatural or in a personal god. On spirituality, Confucius said to Chi Lu, one of his students, that “You are not yet able to serve men, how can you serve spirits?” Attributes that are seen as religious—such as ancestor worship, ritual, and sacrifice—were advocated by Confucius as necessary for social harmony; however, these attributes can be traced to the traditional non-Confucian Chinese beliefs of Chinese folk religion, and are also practiced by Daoists and Chinese Buddhists. Scholars recognize that classification ultimately depends on how one defines religion. Using stricter definitions of religion, Confucianism has been described as a moral science or philosophy.

I think about the circumstances of pre-modern China which consisted of a mostly illiterate population, largely agrarian, extreme poverty, wanton violence, and a semi-Malthusian state of affairs with not much growth on the horizon. If societies must have organized religion because people are credulous, uneducated, and do truly live awful lives where even a story that it will all be better when you die gives solace then I argue Buddhism is a great choice. It is the best choice if most of the ruling class/educated are pretty much atheists already. My thesis is basically if you had a society full of atheists and they were forced to choose a religion for the rest of their people or “co-sign” then that religion would be something like Buddhism.

Some pros of Buddhism are its innate non-violence and a non-proselytizing nature. Perhaps sects of Buddhism have been adapted for semi-violent goals such as Shaolin Monks or Zen Buddhism by Samurai warriors. I must say I am ignorant of some Buddhist history, but I do not recall any war ever being fought because of Buddhism. I also do not recall any religions being persecuted by Buddhists for adhering to that religion (Religions were persecuted by “Buddhists”; use nuance here.). Also, when I think of Buddhism’s spread to other countries in East Asia; the story is always that someone from Japan visited China and brought Buddhism back. It’s never that Buddhist emissaries from China spread Buddhism to Korea. It also seems to me that Buddhism was relatively less influential in the politics of China than the Catholic Church was in Europe. Buddhism just does not hold as large or as important part of Chinese history as other religions did to their respective countries. To me this stems from the tenets of the religion. It is not really a religion about worshipping a god or about salvation/sin. It is more internal and is not concerned with others; perhaps libertarian in a sense. It is also very adaptable/amenable to other systems of thought such as Confucianism, folk religions, and even Christianity.

Now the reason why I say the Chinese rulers or people chose Buddhism is because of the many religions that have passed through China with very little impact. Almost all of the world’s large religions have passed through and none have taken hold the way Buddhism has (especially during the Yuan dynasty); maybe it’s just cultural. I’d like to think it’s because the Chinese people knew better. There have also been multiple folk religions in Chinese history; I would include Daoism in here, but these were smaller or local and have always taken a backseat to Buddhism. Now, it is true some parts of China are muslim and some parts would later become Christian (this is much later in Chinese history), but these were relatively small compared with Buddhism. And Buddhism had perhaps a first mover advantage (I find this a weak argument as Daoism predates Buddhism and Korea is a counterexample of Buddhism losing ground to Christianity/Catholicism). If there is such a thing as a marketplace of religion; I argue the Chinese people chose Buddhism.

When I was growing up with relatives that were in some sense Buddhist; I noticed that when they did all the ritualistic things like burning incense, praying, burning money, or going to temple it was drastically different than Americans. The main difference is that most of my relatives or other people I saw didn’t really believe in what they were doing. They did those things ritualistically, but they never believed that when they burned money for their relatives that actual money was going to go to them in the after life. At least not in the same way that a Christian actually believes that Jesus Christ was resurrected. When I talked to regular “Buddhists” I found that almost none of them really believed in the supernatural aspects of it. Perhaps it is similar to secular Jews. The most striking example of the Buddhists not really believing aspect to me is how I can’t think of a single child of these Buddhists being a Buddhist themselves. In America, in my personal experience I have barely met any Chinese/Japanese/Korean second-generation Buddhists if not zero (I think this is also true for a few other religions, Hinduism). When Buddhists leave China, their children are inevitably not Buddhist or at least just perform ritualistic things. I read a post online awhile back that I can’t find anymore, but it said that in America the majority of Buddhists are non-Asian and I think the percentage of Chinese Buddhists was shockingly low because of the following generations being almost entirely non-Buddhist.

So to sum it all up; the two systems of thought that dominated Chinese history were Confucianism and Buddhism and both lacked religious fervor. China seems like the place in the world where religion had the least impact of any society. Am I wrong?

If not, I’d like to give a high five to my Chinese ancestors; you were the only ones.

Various musings, mostly economics

Haven’t posted in awhile because of school plus kids. Just wanted to write down a few thoughts floating around in my head. I’m prefacing this post with the caveat that I’m a semi-amateur at economics so let me know where I’m wrong.

1. It’s always bothered me how conformist say Apple consumers tend to be or as I’m realizing currently, how libertarians can also be extremely conformist (especially on margins they deem unimportant like art/music/clothes/taking drugs/fun). I’ve also posted this on Twitter and Facebook; here’s my thought.

Groups who are non-conformist relative to the general population (Scientologists, skaters, “punks”, Apple consumers) or to what they consider out-groups have extremely high in-group conformity. And I think it’s almost a literal tradeoff. The more you think you are different from the average person (parents, middle America, etc.), the more you will conform unquestionably with those like-minded; maybe even more-so than the average person is a conformist on issues like football or crime. Now this is a general statement. There are definitely outliers, but I’m talking about the average non-conformist.

2. In economics classes it has always bothered me when we talk about utility functions and preferences. The classic examples are apples and oranges or something like guns and butter where a consumer prefers more of one good over the other and the consumer can rank these things. But, when I think about the real world and especially with my background of being Chinese-American from the SGV (feeling a bit like an alien would feel about American culture) it just strikes me how a huge majority of my preferences are not even preferences for most Americans. One thing to note is that I’m not really talking about how some people’s goods can be bads to other people (country music, ballet, horror movies, etc.)

I’m interested in how 50% of my preferences aren’t even known things to say someone in Kentucky. Now I know this can be handled with classical utility theory, but what I am trying to get at is… In real life the difference between people of different cultures isn’t that Americans prefer 6 bananas over 4 carrots, whereas Japanese prefer 5 carrots over 3 bananas; it’s that I prefer Wong Kar-Wai movies, Karaoke, and Hainan Chicken to someone else’s preference for Hockey, dirt-bike racing, and MMA. Many of people’s preferences aren’t even ranked or known by other people. In class when we talk about preferences though it’s always like this guy prefers more oranges than this other guy who prefers more apples. All I am saying is life isn’t really like that. I prefer things which aren’t even in other people’s utility functions and that is the norm.

3. Finally, it also bothers me when teachers talk about different types of non-monetary costs such as transaction costs, time costs, opportunity costs, etc. and fail to highlight the vast magnitudes of these things. When I hear professors talk about time costs/opportunity costs for example it might cost one person twenty percent more to do an activity because he makes more money and his time is more valuable. But, when I think of things in life these cost differences can be gargantuan.

What got me thinking about this; after high school I worked as tech support at EarthLink and dealt with people of varying skill levels. There are regular things in life for example setting up a twitter account, that would take my grandfather half a day to setup and more time to even understand. My grandfather could also pay someone say $50 to set it up for him and teach him how to use it whereas it would take me 5 minutes and no money. The same can be said for something like an oil change; a mechanic can do it for $5 in 10 minutes by himself whereas say someone else would have to wait an hour at Jiffy Lube and pay $50. A vast amount of things in life between people with different skills and different wages are like this. And it makes a huge difference in all those non-monetary costs; it is not a small 20% difference in many cases. The magnitudes are important and money doesn’t smooth all these things out.

4. I’ve been reading a history book on Taiwan, Forbidden Nation: A History of Taiwan, and thought this passage on P. 92 was interesting and about things I was unaware of.

“For most of their centuries of existence the triads have been seen primarily as Chinese nationalist organizations, usually dedicated to restoration of the Ming dynasty. Their criminal activities have often had a Robin Hood revolutionary flare. It is only in the last century that triads have become exclusively criminal gangs. Both Sun Yat-sen and Chiang Kai-shek were triad members. Chiang, indeed, started his career as a hit man for the Green Gang, which controlled drug trafficking in Shanghai in the 1920s and 30s.”

The movie Shanghai Triad might have been referencing KMT and Chiang Kai-Shek. Also, eerily similar to Stalin and the original Bolsheviks.

Advertising and Ideas as Consumption Goods

The way that economists think about advertising is somewhat mystifying to me. Now, I’m a first year grad student in economics so I may be ignorant of debates that have happened already. But, from what I’ve come across in papers and talking to other students it seems there are two ways economists look at advertising. One idea is that advertising provides information or product differentiation to consumers and the second is that advertising is a complement to the good. To expand on complements I’m going to reference a Tyler Cowen post…

As I understand Becker’s work (with Kevin Murphy) on the topic, individuals consume “social images” or “self-images.” Having Nike shoes gives you the “benefits of being cool” if a) you actually have Nikes, and b) the ad links Nikes to a cool image for your relevant peer group. The standard economic theory of complements then applies for analyzing ads. – See more at: http://marginalrevolution.com/marginalrevolution/2006/04/did_gary_becker.html

Some real life examples of the simplistic nature of economic conceptions of advertising/ideas are…

I’ve been going to a few economics seminars at GMU and have heard other graduate students/professors talk derisively about concepts like fair trade and local/slow food movements. For instance, I overheard two PHD students have a conversation around the idea that local food could never be as high quality as mass produced agribusiness type food. I thought, well it’s not necessarily true that mass produced food must be higher quality (it could be a trade off of quality for price for instance), but more importantly I thought they viewed the whole thing in the wrong way. The way they are viewing it and the way many economists also view it is they only think or care about final goods. These PHD students are saying local food is bad because it produces say an inferior orange to agribusiness’ higher quality orange. But, consumers don’t just care about the orange itself; they also care about how the orange was produced and the idea of local food. I think economists might challenge my claim and say that’s just product differentiation, but I think that misses the point. The way I view it consumers aren’t really consuming different types of oranges, they are actually consuming oranges plus the idea of local food regardless of the quality of the oranges. I reread a Chuck Klosterman essay, It Will Shock You How Much It Never Happened that is a much better written illustration of the point…

PespiCo Incorporated has interesting problems. Around the same time they were making Pespi less cynical, PepsiCo made a packaging change to another of their products, Tropicana Pure Premium orange juice. For whatever reason, PepsiCo changed the orange juice carton: Instead of an orange with a protruding straw, they featured the more literal image of a glass of orange juice. Immediately, orange juice drinkers lost their shit (not all of them, but enough to get attention). They were outraged; they could not believe that Tropicana had altered this essential image of an imaginary orange you could suck. A few weeks later, Tropicana switched back to the original design. This reversal was covered in the February 22, 2009, edition of The New York Times, and the angle of the story was that PepsiCo was dealing with its own version of Coca-Cola’s infamous 1985 introduction of New Coke. However, there was at least one major difference that was mentioned in the story parenthetically, almost as an aside
(There are, it should be noted, significant differences between the two corporate flip-flops. For instance, the Tropicana changes involved only packaging, not the formula for or taste of the beverage.)
The orange juice was the same. As far as I can tell, the size and shape of the container itself was also identical—the only alteration was the picture on the carton. People were appalled because the same product (at the same price) was being presented to them in a slightly different way. If you’re a person involved in the profession of advertising, this kind of scenario is the apotheosis of your vocation. It illustrates a rarified level of consumer appreciation: People aren’t just buying something because of the advertising—they feel like they are buying the advertising itself. An essential piece of what they desire is the image on the carton, even though that image is only there to get attention and inform you of what’s inside. It has nothing to do with juice. It almost never does. This happens all the time: LeBron James does not sell Nikes; buying Nikes allows people to buy “LeBron James” (and whatever that’s supposed to mean outside of itself ). That cliché has been understood by advertisers for generations, or at least since Michael Jordan killed off Converse in the eighties. But—right now, today—everyone knows that this is how the game works. So how can a trick work when everyone knows it’s a trick? Because the trick is the product.

That last two sentences basically encapsulate the idea. There might be a quibble in that Klosterman confuses advertising and branding as the same thing; still I think the point stands and a different story could be told about just advertising. If we were to think about local food, fair trade, and many other green products in this way (that consumers are consuming those ideas) then I think it makes a lot more sense why people make the choices they do. Consumers of fair trade might be wrong about the end results of buying fair trade (distributional income effects), but the same could be said on a whole host of dimensions on many products (homeopathic drugs, vitamins, therapy, AA, etc.) But, economists don’t see anything wrong when people buy emergen-c and think it will cure their cough; I am just saying consuming fair trade goods might be similar and that ideas are not just information or a complement. Advertising and ideas are goods in and of themselves.

Update: I forgot to mention that I have seen something a little similar to this idea in Virginia Postrel’s book The Power of Glamour: Longing and the Art of Visual Persuasion, but I haven’t had time to read it yet.

Pop Culture Thoughts

Spoiler: I just watched the last Homeland and I really hope they are not going down the 24 route of blaming everything on some convoluted EWG (Evil White Guy) plot. If I know anything about writing tells; I would guess that Dar Adal or Senator Lockhart are behind the CIA terrorist bombing to reform the system or shock the populace into action. I hope I’m wrong.

I just listened to the new Sky Ferreira album and I like some songs, but it was kind of surprising how sugary pop it was. Some tracks I swear if I didn’t know that Sky Ferreira was indie I could imagine being told they were Katy Perry songs.

I read that terrible review from the Washington Post about the new Arcade Fire album. It sounded to me like when I hear jocks make fun of hipsters/artists and how pretentious they are; all the while not really understanding anything. Or when nerds boil down sports to some very technical aspects and miss the whole story or emotions. Anyways there were some lyrics for some of the songs on Reflektor that I really enjoyed and I thought had some contemplative truth to them. Excerpt from Here Comes the Night Time(about Haiti)…

Say, heaven’s a place
Yeah, heaven’s a place and they know where it is
Do you know where it is?
It’s behind the gate, they won’t let you in
When they hear the beat, coming from the street, they lock the door
If there’s no music up in heaven, then what’s it for?

Now the preachers they talk
If you’re looking for Hell, just try looking inside
Here comes the night time, the night time
Here comes the night time, the night time
Here comes the night time, the night time
Here comes the night time, the night time

Some thoughts on American and Chinese food

I’m just experimenting and doing a blog post as an audio podcast. The volume is kind of low and I’m new to this so it’ll get better next time. Also I recorded this about 2-3 months ago.