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  <title><![CDATA[economics | High Variance]]></title>
  <link href="http://highvariance.net/blog/categories/economics/atom.xml" rel="self"/>
  <link href="http://highvariance.net/"/>
  <updated>2018-06-29T17:19:14-04:00</updated>
  <id>http://highvariance.net/</id>
  <author>
    <name><![CDATA[Doug McKee]]></name>
    
  </author>
  <generator uri="http://octopress.org/">Octopress</generator>

  
  <entry>
    <title type="html"><![CDATA[Economics and Data Analysis]]></title>
    <link href="http://highvariance.net/blog/2014/03/09/economics-and-data-analysis/"/>
    <updated>2014-03-09T00:00:00-05:00</updated>
    <id>http://highvariance.net/blog/2014/03/09/economics-and-data-analysis</id>
    <content type="html"><![CDATA[<p>This post has moved to <a href="http://teachbetter.co/blog/2014/03/09/economics-and-data-analysis/">Teach Better</a>.</p>
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  <entry>
    <title type="html"><![CDATA[Exploiting Irrationality]]></title>
    <link href="http://highvariance.net/blog/2014/01/30/exploiting-irrationality/"/>
    <updated>2014-01-30T00:00:00-05:00</updated>
    <id>http://highvariance.net/blog/2014/01/30/exploiting-irrationality</id>
    <content type="html"><![CDATA[<p><img class="right" src="/images/hv-floss.png"></p>

<p>When I was growing up, none of the several clocks in the house told the correct time. My mother would set them all between 5 and 30 minutes fast in an effort to fool herself into leaving the house when she was supposed to. I thought this was completely insane. Why not just wake up early enough to do what you needed to do, and then do that? Why play these games with yourself when pure rationality would suffice?</p>

<p>The answer (of course) is that my mother is far from completely rational, and this system worked for her in a way that my proposed system just didn’t. And while I like to think that I’m not as crazy as my mother, I’m not an automaton either. It’s taken me a long time to give in to that and start exploiting some of my foibles for good.</p>

<p>A few weeks ago, I read <a href="http://www.macworld.com/article/2085007/the-iphone-habit-apps-that-help-you-keep-your-new-years-resolutions.html">an article</a> by my productivity sensei (<a href="http://macsparky.com">David Sparks</a>) where he recommended an iPhone app called <a href="http://habitlist.com">Habit List</a> for folks trying to kickstart good habits. There’s <a href="http://en.wikipedia.org/wiki/Habit">some scientific research</a> that says if you can somehow get yourself to do something regularly for a few weeks, it becomes a lot easier to continue doing it. There’s also some <a href="http://en.wikipedia.org/wiki/Candy_Crush">evidence</a> that games can be addictive. In a nutshell, Habit List makes doing mundane things into a game. By the time you’re bored with the game, the habit has been formed.</p>

<p>Since I installed Habit List, I’ve managed to floss every day except one (thanks stomach flu!). My exercise program has been less successful, but that’s more the fault of the cold weather and that same stomach flu than a failure of the app. You can bet that I’ll be plugging in some more easy-to-ignore-but-good-for-me chores soon.</p>

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  <entry>
    <title type="html"><![CDATA[Complementarities of Literature and Music]]></title>
    <link href="http://highvariance.net/blog/2014/01/19/complementarities-of-literature-and-music/"/>
    <updated>2014-01-19T00:00:00-05:00</updated>
    <id>http://highvariance.net/blog/2014/01/19/complementarities-of-literature-and-music</id>
    <content type="html"><![CDATA[<p>Some things just go well together. I have friends who like to select <a href="http://winefolly.com/tutorial/wine-with-fish-pairing-guide/">just the right wine</a> to go with their meal. Cookies always taste better with <a href="http://www.gotmilk.com">milk</a>. And of course a PB&amp;J sandwich is much better than a plain peanut butter sandwich or a plain jam sandwich. Economists are good at coming up with fancy names for obvious concepts, and we call these <a href="http://en.wikipedia.org/wiki/Complementary_good">complementary goods</a>.</p>

<p>Just because I don’t listen to music while I read doesn’t mean this idea can’t be applied to literature and music. Some <a href="http://www.songfacts.com/category-songs_inspired_by_books.php">songs</a> or albums are inspired by good books, and listening to one makes you appreciate the other that much more. Even better is when a musician or band’s work creates a mood that perfectly matches an author’s vision. I’ve recently found the perfect example.</p>

<p>As regular readers of this site know, I am a huge fan of <a href="http://en.wikipedia.org/wiki/Robert_E_Howard">Robert E. Howard</a>’s <a href="http://en.wikipedia.org/wiki/Conan_the_Barbarian">Conan</a> stories. Conan himself is strong, principled, and fun-loving. He does all the things we want to do but are unable to because of either physical, legal, or sometimes moral constraints. To read Conan’s savage adventures is to be immersed in a fantastic and vividly portrayed land of magic and mayhem.</p>

<p><a href="http://en.wikipedia.org/wiki/Amon_Amarth">Amon Amarth</a> is the white wine to Conan’s fish. They are a Swedish <a href="http://en.wikipedia.org/wiki/Melodic_death_metal">melodic death metal</a> band whose songs are rich and powerful tales of battles between mortals and gods of the north. The drums, guitars, and vocals are fierce–just like Conan. Listening to their music on headphones is the perfect way to make a winter trip to the grocery store into an epic quest for sustenance. The fact is that words cannot do them justice. I hereby present to you the truly awesome Amon Amarth: </p>

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  <entry>
    <title type="html"><![CDATA[Helping Old Churches Connect with the Community]]></title>
    <link href="http://highvariance.net/blog/2013/03/16/helping-old-churches/"/>
    <updated>2013-03-16T00:00:00-04:00</updated>
    <id>http://highvariance.net/blog/2013/03/16/helping-old-churches</id>
    <content type="html"><![CDATA[<p><img src="/images/hv-trinity-church.jpg" alt="Trinity Church on the New Haven Green" title="Trinity Church on the New Haven Green" /></p>

<p>Every morning we drop the kids off at day care and walk about 5 blocks to our offices. In those 10 minutes I walk by
<a href="http://www.trinitylutherannh.org/">Trinity Lutheran Church</a>, <a href="http://trinity-baptist.org/">Trinity Baptist Church</a>, and
<a href="http://www.stmarys-priory.com/">St. Mary’s Church</a> (Catholic).  Just a block off our route are the
three big churches on the New Haven Green: <a href="http://www.trinitynewhaven.org/">Trinity Church</a>,
<a href="http://www.newhavencenterchurch.org/">Center Church</a>, and <a href="http://www.newlights.org/">United Church</a>.  All these old churches are
pretty much empty during the day and even on Sundays they don’t get nearly the traffic they used to.</p>

<p>Even with all the excitement about the new Pope, the Catholic Church in particular seems to be in decline.  While membership has held steady at about 25% of the US population since the 1950’s (largely due to the influx of Latino immigrants), the fraction of members attending mass every Sunday has dropped from 80% to less than 25% over the same period.  This has led to huge numbers of parishes closing and lots of hand-wringing on the part of priests and bishops.<sup id="fnref:1"><a href="#fn:1" rel="footnote">1</a></sup></p>

<p>How has this happened?  The economist in me says a big part of the
answer is competition from newer more exciting denominations and
religions.  Fundamentalist churches are doing well.  The Mormon church is growing like crazy.  Around the world Pentecostal and Baha’i faiths are siphoning off members.  It also seems that more and more Americans have issues with some of the conservative stances of the Catholic church on birth control, homosexuality, and evolution/creation.  Of course, many of the popular new mega-churches are also quite conservative and liberal views haven’t helped the more progressive older denominations.<sup id="fnref:2"><a href="#fn:2" rel="footnote">2</a></sup></p>

<p>The financial cost of losing active members is larger for some
denominations<sup id="fnref:3"><a href="#fn:3" rel="footnote">3</a></sup>, but I believe the major concern within most
denominations is a loss of relevance in the community.  I also think most churches don’t want to adapt their principles to gain larger market share.  Instead, they’d like new ways to reach out to the community and let them know what churches have to offer.  And while I personally am not interested in joining a parish, I do like the idea of other people going somewhere once a week where they are reminded to be nice. </p>

<p>I believe these churches should reach out to their communities by renting out their buildings as office space during the week. They would do it in such a way that it could be converted back and forth in a few hours and so have no effect on weekend services.  Imagine office partitions and pews on wheels.  If big arenas can have basketball games during the day and hockey at night, this kind of conversion must be easy.</p>

<p>While these churches are beautiful on the outside, the interiors are often breath-taking and always unique. This would induce serious corporate demand. Bigger companies could rent the whole space and break it up into cubicles that could  slide in on Monday morning and out on Friday afternoon. Another option would be to turn the <a href="http://www.kencollins.com/glossary/architecture.htm">sanctuary</a> into an espresso stand and substitute tables and comfy chairs for the pews in the <a href="http://www.kencollins.com/glossary/architecture.htm">nave</a>. Who wouldn’t rather work there than a cookie-cutter Starbucks or Starbucks-imitator?</p>

<p>This would work out great for the churches too. They would give up almost nothing and get a captive audience for subtle evangelization. The stained glass alone would be a great advertisement for returning on Sunday. The cash infusion to the church would pay for the required capital investment and probably put a fair bit more into the coffers.</p>

<p>In economics there is a concept called a Pareto improvement. This is transaction or change or reallocation of resources that makes at least one person better off without making anyone worse off. It might sound like sacriledge to even talk about turning holy spaces into coffee bars, but it sure seems like a Pareto improvement to me.</p>
<div class="footnotes">
  <ol>
    <li id="fn:1">
      <p>Msgr. Charles Pope at the the Archdiocese of Washington has a couple terrific blog posts about this subject <a href="http://blog.adw.org/2010/12/is-the-bottom-really-falling-out-of-catholic-mass-attendance-a-recent-cara-survey-ponders-the-question/">here</a> and <a href="http://blog.adw.org/2010/11/more-church-closings-so-what-is-god-teaching-us-and-how-will-we-respond/">here</a>.<a href="#fnref:1" rel="reference">&#8617;</a></p>
    </li>
    <li id="fn:2">
      <p>Unitarian Universalists have been holding steady at around half a million since the 1960’s though there was a bump right after the Unitarians merged with the Universalists. (<a href="http://en.wikipedia.org/wiki/Unitarian_Universalism#Number_of_members">wiki</a>)<a href="#fnref:2" rel="reference">&#8617;</a></p>
    </li>
    <li id="fn:3">
      <p>The Catholic Church can handle declines in contributions better than most since, <a href="http://www.time.com/time/magazine/article/0,9171,833509,00.html">according to Time Magazine</a>, the Vatican is worth between 10 and 15 billion dollars.<a href="#fnref:3" rel="reference">&#8617;</a></p>
    </li>
  </ol>
</div>
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  <entry>
    <title type="html"><![CDATA[The Neutral Podcast: A for Entertainment, B for Effort, and C for Economics]]></title>
    <link href="http://highvariance.net/blog/2013/02/12/neutral/"/>
    <updated>2013-02-12T00:00:00-05:00</updated>
    <id>http://highvariance.net/blog/2013/02/12/neutral</id>
    <content type="html"><![CDATA[<p>I drive a 2002 Honda Civic. It’s an automatic and even though the interior is smeared with a thin layer of toys and crumbs, it hasn’t been vacuumed in months. It could not be less of a “driving machine” or more of a “people mover.” And yet, my favorite new podcast (<a href="http://neutral.fm">Neutral</a>) is all about cars and the tech behind them.</p>

<p><a href="http://marco.org">Marco Arment</a>, <a href="http://hypercritical.co">John Siracusa</a>, and newcomer Casey Liss have teamed up to tell folks on the Internet what they drive, what they would like to drive, what everyone else should drive, and most importantly the reasons behind each in excruciating detail. In just four episodes, I’ve learned about dual clutch transmissions, the appeal of white cars, pricing of used Acura NSX’s, and how hard it is not to generalize from small samples even when we know it’s wrong.</p>

<p>When I was in college, I read <em>Car and Driver</em> and <em>Road and Track</em> religiously. Even though I couldn’t afford a car at all, I could tell you the difference between the latest models of BMW, Audi, and Volvo. So it makes me really happy that a bunch of nerdy guys who now have a bit of money and who have been keeping up better than me can now own nice cars. (Actually, only Marco and Casey are in this situation–John still drives an Accord while he waits for his kids to finish elementary school and middle school and high school and college. It’s going to be a while for John.) </p>

<p>I really only have the tiniest complaint about the show and it starts with a comment Marco made while defending his choice to pay (about) $500/month to lease a “nice” car instead of $250/month to lease an “adequate” car. He said that meant he must get twice as much value from the nice car to make it worthwhile. A reader graciously wrote in to correct his logic, but clearly it didn’t stick because Marco proceeded to wave his hands and say the argument was “semantics.”</p>

<p>Price is not the same thing as value. People buy a thing when the price is <strong>less than or equal to</strong> the value they get from that thing. This value (or benefit) is often much higher than the price. The difference between the value and the price is called the consumer surplus. When deciding between purchasing two things (like a nice car and an adequate car), what matters is which one has the higher consumer surplus. In Marco’s case, that means he needs to get at least $250 additional value from the nice car–that’s almost certainly much less than double the value he would get from the adequate car.</p>

<p>Part of being a nerd is sweating the details and getting stuff right. No one wants to ship buggy products and they shouldn’t ship buggy podcasts either. I’ll give them the benefit of the doubt since <em>Neutral</em> is still a 1.0.</p>
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