Saturday, October 30, 2010

value of time, continued

Ok let me try to clarify this.

Basically, my point is that your wage rate at your job does not define the value of your time. It's the marginal overall utility rate of your best option. I didn't focus on this explicitly because it's not a point of contention. The only point of contention is with the simplistic economic argument that goes something like this: "It's silly to do something unpleasant that saves you $x/hour when you could work an extra hour instead and make $y>x." There are many things that go into determining whether that trade-off is worth it, but all else equal, it's still fundamentally an invalid argument because of the discrete choice set in salary/workload for most people.

Some caveats to that specific point about discreteness:

First, as Vinci pointed out, your salary isn't the only payoff you get from work. Working an extra hour for "free" could increase your future promotion prospects or successes enough to be worthwhile (this is obviously very relevant to graduate students who make hardly any money but work constantly...) This is very true and applicable to many people. Yet still, the wage rate is not the correct comparison, it's the marginal present discounted return to effort. You can try to estimate that, but approximating by wages is very wrong.

The same thing applies to any other utility that you derive or lose from working. If you really love your job, by all means, work the extra hour. And if your income really is a continuous choice, if you're a self-employed carpenter for example, this isn't an issue (but farther down, something else is.)

Second, a couple people commented that over a person's lifespan, any discreteness in the income choice set is negligible. Well, I don't believe that's true at all, since it's costly to switch jobs lots of times and the possible income/work tradeoffs we can choose after deciding approximately what we want to do for a living and realizing our strengths and limitations are quite restricted. But maybe over a reeeeally long time span... But that means that when deciding whether to take a cab or walk, you're supposed to look ahead for sixty years and decide how to change your career path and effort level and other forms of consumption and leisure at each point in time to earn an additional $30. Of course no one realistically does that, for many perfectly legitimate and non-psychological reasons that I won't bother to enumerate. When faced with a choice between abandoning a simplistic model and rescuing it with heroic self-evidently wrong assumptions, I'll go with the former. (Anti-behavioralists please take note.)

Of course, even if the choice set is discrete even in the long run, long-term considerations are relevant to the extent that we do have an approximate idea of what our future income will or could be. We don't make decisions completely in isolation, we decide whether eating out once a week is something that's worth it in general. If we really want to be able to do that, it makes sense to go for a higher salary job. But, I assumed away these non-marginal decisions by considering a person who had already chosen their salary as close to optimal as possible (which for many people, ie the people who originally motivated my argument, such as people working 39 hours per week at a fixed hourly wage, is still very far from optimal). I certainly encourage thinking about these marginal decisions non-marginally, but only because it's very hard to estimate our true valuations when the quantities in question are very small.

I also apparently encourage marginal usages of the word 'marginal'. But never uses of the word marginal to mean 'of secondary importance'. Hmm, that last 'marginal' was at the crucial margin; 'marginal' doesn't make sense as a word anymore...

Anyway, I think this is really the core of the disagreement. Economists apparently think that our choices of income are much more continuous than they really are. (Yeah I'm so sure of my opinion on that one I'm not even saying that they think our choice set is more continuous than I think it is, but more than it is in reality =)

While the following isn't a point of contention, it was a large point of confusion (my fault for not being clear). I said that it was possibly reasonable to choose less work even if the total time spent on trivial low-wage tasks is more than the unit of work/salary you can increment by. That's just saying that utility from work is the sum of wages and subjective experiential utility, which for me decreases drastically after a certain point. You have to pay me a hell of a lot more than 50% extra to work 60 hour weeks than 40. Even if I love my job (which I do, currently), my enjoyment is concave in hours worked. If I've just spent 80 hours doing research, I'd rather vacuum the apartment or change the oil in my motorcycle than work 81, even though I obviously chose my job over being a maid or mechanic. This is of course extremely obvious/intuitive, but it does not fit into economic toy models that ignore subjective utility or allow for only one kind of work and one kind of leisure.

Anyway, to sum up, your value of time is determined by a whole lot of things and is definitely not well approximated by your wage rate, or even necessarily by your utility-rate of work. Your wage rate does of course affect your value of time in other ways, most importantly I would guess by affecting your marginal value of money itself. Someone making $100 an hour is likely hardly affected by spending $30 on a cab; that's not true for someone making minimum wage. That's true even if the minimum wage guy loves his job and the other guy hates it just enough so that their utility-rate of work is exactly the same.

Please let me know if I'm relying on any more implicit assumptions that I should spell out =)

Thursday, October 28, 2010

books

Holy crap I actually read three novels in a row.

Fortress of Solitude, by Jonathan Lethem - Beautiful book. Wordsmithery is rarely so good to make the book on its own merits, but I lost count of the times in this book when I thought to myself, wow, that is the most perfect and poignant description of that situation possible. Also, the characters are real and compelling and complex, which is always enough for me to love a book. AND, it takes place in Brooklyn in the same area where I lived for a year before moving to Berkeley, and then in part 2, it takes place in Berkeley. Knowing every place-name and place-connotation always makes a book exceptionally vivid, but even if you have no familiarity with either place, definitely read this book.

The Brothers Karamazov, by Fyodor Dostoyevsky - Eh. Certainly good, but I had high expectations and they weren't met. I do love novels that are more about ideas than events, but that wasn't enough to make me love this one for two reasons. First of all, the ideas are mostly theological in nature and therefore of no interest to me. Inexistent things have no intentions to question, and of course without god there is still morality. The Grand Inquisitor chapter, in particular, did not jump out at me; I preferred the family meeting with Father Zossima and the devil's visit in Ivan's delirium. Second of all, while I would have happily read a 300 page version, 900 was far too long. I was sated before the drama even started.

The Book of Illusions by Paul Auster - Very engrossing book. I was instantly and permanently emotionally invested in the story and could hardly put it down. Several parts were downright heartwrenching. I'm sure the full extent of the symmetries and symbologies would be more obvious to someone who understands literature, but there were so many intertwined layers repeating the same themes and conflicts that at the end I felt like I'd digested a fully satisfying work of art. I read it for book club and for the first time I can remember, finished it weeks before the night before the meeting.

Sunday, October 24, 2010

value of time

One thing I always disagree with in cost-benefit analysis that economists like to provide to justify every day-to-day decision they make is the value of time calculation. They say something like "I make $100,000 a year for my full-time job so the value of an hour of my time is about $50". Therefore, I'd rather hire someone to install a new sink in my bathroom than do it myself, and I'd rather give away a box of old stuff to goodwill than take the time to sell it for only a few dollars."

BS. Pretty blatant BS, in fact, that is nonetheless such a convenient justification for taking the easy way out that it has caught on like wildfire among the general populace that otherwise usually fails spectacularly at economic reasoning. (I firmly believe that if the law of supply and demand were really taught well to every schoolchild, many of the biggest political problems we fight like cats and dogs about would vanish into thin air...)

Here are a few people that it is valid for: very successful rich people who are constantly bombarded by small speaking and writing requests that they can never possibly accept all of. Here are a few people that it isn't valid for: everyone else.

I make a fixed salary per year, no matter how much I work (beyond some minimal acceptable level of course...) I can take on extra jobs and make more, but those are at minimum several-month commitments for several thousand dollars. I absolutely can not say "I'm going to pay a mechanic to change my oil and go work for an extra hour at a higher wage rate to make up for it." My choice set in income level is very coarsely discrete.

Having chosen my work commitments at approximately the level I want to cover the expenses I need and desire, the opportunity cost of any extra time I have is only the enjoyment I would derive from another activity. And frankly, if I didn't spend the summer repainting my car, I would've spent most of that time reading books or papers or blogging or twiddling my thumbs. The time sink was much more enjoyable in the long run.

For another example, it's kind of a pain to sell books on amazon.com. You have to print the shipping information, wrap them, stand in long post office lines, mail them, confirm shipment online, and then amazon takes a big cut of the revenue. I probably make around $5 or $8 an hour doing it. But that's a few bucks an hour that I wouldn't otherwise have, earned with time I would have otherwise used making no extra income.

You say I could skip all of these little money-saving tasks that each take an hour but add up to a month of work over a year, and take on another month-long research assistant position? Yeah, maybe so. But after having done that, the marginal benefit of each little task is still greater than the marginal cost. And, I don't want another job. If I did, I would have approximated my work/income bliss point at a higher level to start with.

A closely related phenomenon is the laziness about very minor things that save very minor amounts of money. In this case, people aren't choosing not to do things because "their time is more valuable", but are choosing not to do some nitpicky thing simply because the annoyance of doing it outweighs the benefit. I do things like go to the city intentionally during rush hour to avoid the bridge toll, carry around my free refill containers if I'm going to be back at the same place later, go out of my way to be at that same place later, always always always take home leftovers (other people's too if they let me...), cook my own rice instead of getting a side with the take-out, etc. My boyfriend always says "Is it really worth it? You can buy another drink later for a dollar. The rice is only 85 cents extra. French fries are gross when they're old. Wouldn't you pay that tiny amount to avoid all this trouble?" Well, no, those tiny insignificant expenses are exactly what add up to a shocking part of your paycheck. Same as buying coffee at a coffee shop every day instead of investing in a French press, or picking up a paper to read on the commute instead of carrying around a book, or buying a piece of pie just to use the free wifi somewhere instead of going to the library. Instead of thinking, would I pay $3 to avoid going to the library? Ask "Would I pay $1000 per year to always work at this coffee shop instead of the library?"*

Ok, that's my frugality rant of the week and my anti-idealistic-economics-logic rant of the year.

*Nitpicky point for the economists: I'm not saying that MB=MC isn't the equation you should be using, I'm saying to make sure you're accurately estimating that equation.

Friday, October 22, 2010

Education Nation


Turns out (*shock*) Oklahoma isn't a great place to learn math. Below, blue means "states that do better in 8th grade math".


List of caveats: Yes there's more to education quality than test scores. But this national comparison site is a fantastic first step. And Oklahoma does very slightly better in reading and in elementary school. And yes, I got a great education in Oklahoma, thanks primarily to the existence of OSSM, along with a few wonderful individual teachers and administrators who cared about individual students' circumstances and refused to cater to the lowest common denominator. If every teacher and principal and school counselor was like that, there'd be no problem at all, budget crisis or not.

Wednesday, October 20, 2010

Eppur Si Muove

So many times I've taken people out for their first time to look through a telescope, and when they take a first peek they complain "I think something is broken, everything keeps moving, I can't hold it still..."

"That's the Earth. It's rotating."

"WHOOOAAAAAA"

It's amazing how something we've known since early childhood can be so mindblowing to witness.

A little less mindblowing, just because we see it daily on a time lapse basis, is the movement of shadows. But it's still pretty darn cool to see in fast-forward. This (incredibly awesome, stolen from Dan, thank you =) video is 3 1/2 days compressed into 12 minutes and during the day I first thought "huh what is that big piece of equipment slowly moving across the construction side" before realizing it was a shadow of the building. Pretty cool.

Tuesday, October 19, 2010

self-fulfilling beliefs

I forgot the point that I started with when writing the last thing and went off on an unexpected tangent. (It's a good thing I'm not a writer - I'd have to actually plan and edit things... Hmm maybe there is an open niche for a nonfiction Faulkner. See look at this, an unnecessary parenthetical comment is already too long of a tangent to legitimately be in parentheses anymore.)

Anyway... If you believe you hold more control over your life than someone else, you exert more effort controlling your life since you believe the payoffs to that effort will be higher, and lo and behold, you end up having more control over your life than that other person. Self-fulfilling prophecy.

Same thing applies to beliefs about yourself. "Fake it 'til you make it" doesn't just apply to fooling an audience you're trying to impress, it also applies to fooling yourself.

And according to a new study, people who believe that self-control is not a limited resource have much more stamina than others. And no, it's not just that those who have lots of stamina believe in unlimited willpower: groups of experiment participants were exogenously manipulated with information suggesting (or not) the limitations of willpower, and that information determined their later stamina.

Cool.

Monday, October 18, 2010

overestimating control, continued

It's true that underestimating the role of fate or external forces, and likewise overestimating the power you hold over your life outcomes, is a good way to be successful in those outcomes. If you overestimate the expected marginal utility of actions, you will do more of those beneficial things, and end up better off in terms of those actions.

You might object that this extra success isn't worthwhile in total happiness, since you expended 'too much' effort (just as with noise traders who overestimate returns, they end up richer but less happy.) But I think other behavioral biases point towards too little action even more strongly than overoptimism leads to too much action, so there's really no downside to believing too little in luck.

One overwhelming factor is of course present-bias. Even people who know that something is worthwhile put off doing it. Unless you are naive enough to fall victim to the "if it's worth doing, do it right, tomorrow" logic*, overestimating the positive impact of something can only help you overcome procrastination.

But even beyond that, happiness is a very psychological thing that you can't measure in terms of income and hours of effort. After the fact, I don't remember the unpleasantness of a task; in fact, if it was a beneficial task that I had unusual foresight to undertake, I'll feel good about having done it. The happiness from that lasts a long time and far outweighs an ephemeral cost. Beyond that, people are confirmatorily biased. If I did something that I expected to be beneficial, I'm going to insist on being happy about it afterwards even if objectively the outcome didn't measure up to my expectations.

Of course, since I personally believe I hold a great deal of control over my fate, I could believe this argument itself as a result of confirmation bias... ah the pitfalls of self-study.

*I don't really think this possibility is relevant. If you overestimate benefits, you do so for everything, not just the more costly and more long-run-beneficial of two possible actions. By the way, for any noneconomists reading, I meant the vocabulary "naive" "worth doing" "do it right" and "tomorrow" in a technical sense, so don't jump on me if your intuitive interpretation is something else =)

Saturday, October 16, 2010

Kinshasa Symphony

My whole life "documentary" had a negative, boring connotation in my mind. I'm not sure why. I strongly prefer nonfiction books, after all, and come to think of it, all of the best movies I've seen recently have been documentaries. (Fast, Cheap and Out of Control, Grizzly Man, Man On Wire, and now Kinshasa Symphony.)

It isn't even about preferring to learn something about the real world by hearing a true story, or by the default increased plausibility of a true story, as is the case with books. On film, especially films whose topics are chosen based on the emotional intensity of the story, sincerity is crucial and impossible to write or fake. If I'd read Grizzly Man as book, I'd have though that guy was a nut and hurting his cause more than he was helping, and wouldn't have cared much about his story. But when, on screen, his voice cracks as he talks about his killed fox companion or he rages against the national forest bureaucracy trying to stop him or his eyes show how simply overcome he is by love of those animals, the story lodged itself in my memory in a way no actors or invented words could compete with.

Anyway, Kinshasa Symphony is an amazing movie about a group of amateur musicians in one of the most chaotic and poor cities in the world learning Beethoven and Bolero with homemade instruments or violins strung with old bicycle brake wires. I'm crossing my fingers that it'll be available on netflix; if so, definitely see it. For now it's only being shown in a couple film festivals, but the slideshow and news article about it here is almost as good.

Of course the story is phenomenal, but maybe more important is that it's the perfect context to convey the struggle of living in Kinshasa to Westerners. I'm sure Congolese musicians of all genres face the same obstacles (except the lack of peer respect), not to mention anything else that they fight for on a daily basis, but Americans and Europeans understand what goes into performing Carmina Burana better than those other things. And beyond the technical know-how, it's simply easier to empathize with a familiar culture. This kind of film may be better for raising concern for Congolese than any reports of mass murder, perpetual civil war, or rape and plunder.

I hope it's mass-released. Movies like Hotel Rwanda lose out to romantic comedies because we intellectually want to see them, but not hedonistically. The same doesn't apply to a beautiful, uplifting, even funny, story like Kinshasa Symphony.

Monday, October 11, 2010

introversion, shyness, and antisocialness

Every introvert is quick to clarify the difference between introversion and shyness. That topic has gotten plenty of attention. Shy people have difficulty gathering the courage to interact socially in the way that they want to, regardless of whether they want to interact with big groups for long periods (extroversion) or with a couple friends over lunch (introversion). Introverts may or may not have any such hindrances, but find social interaction exhausting. For that reason they tend to prefer small groups to large, close friends to acquaintances, and shorter, low-key activities to partying all night. They need lots of time alone to recharge.

So it's clear that introversion isn't the same as shyness. But less mentioned is that introversion is also not the same as antisocialness. My dictionary defines antisocial as "contrary to the laws and customs of society; devoid of or antagonistic to sociable instincts or practices" and "not sociable; not wanting the company of others". The combination of those things sums it up pretty well I think, and is clearly not the same thing as introversion.

I'm very introverted. Sporadically shy too, but definitively introverted. But, I love people. I love my friends and I love hanging out with them. Just not all the time; after a few hours out with people I need to get home to solitude for the night and next day. A full weekend of social activities leaves me exhausted to the point of depression. I love talking to people, but it takes so much energy to crawl out of my head enough to carry on a conversation I frequently avoid having to try. But that's temporary! I can't eat more than a couple bites of chocolate either but I definitely love the stuff. And I certainly am not antagonistic towards sociable instincts or practices (although sometimes perhaps inadvertently devoid of them...)

I don't quite understand the confusion between shyness and introversion, but it's clear that introverts will sometimes seem antisocial to an outside observer. My point is therefore to avoid jumping to conclusions about people. Someone who accepts 1 in 5 invitations to hang out may be antisocial but more likely just doesn't have the energy for more than one (and is thrilled about that one). And someone who avoids talking to you may not like you, but more likely is too caught up in their thoughts to force a conversation at the moment (and would love to talk to you another time).

One of the best life guiding principles I know of is Hanlon's razor: "Never attribute to malice that which is adequately explained by stupidity." Likewise, never attribute to antisocialness that which is adequately explained by introversion.

Wednesday, October 6, 2010

forgetting what you read

I was thinking about exactly this today, and Freakonomics referenced an essay on the subject.

In high school I knew I was awful at remembering details from the books and stories assigned in literature class. I aced the concept questions and essays on literature exams and bombed the specifics. But I figured that was because I hated most of what we were forced to read; I could certainly remember the stuff I wanted to remember, right?

A couple years later, I realized that even the one book that I truly loved from literature class was 100% gone from my brain. I know the title, and author, and that's it. I think maybe part of it was in Arizona? I'd have to ask my roommate, the fictionphile with 80% of her brain devoted to those fictional details I like to believe are a waste of neurons...

So over time I've tried to figure out the answers to the questions Stephen Dubner raises. The writing I remember is nonfiction, pure and simple. Specifically, conceptual nonfiction (ie physics, not stamp collecting).

Also, since I started writing down impressions of every book I read several years ago, I've noticed a dramatic improvement in my memory for all kinds of books. Maybe not all the plot details, but everything I like to believe is actually important to understanding the essence of the book.

I think the unifying characteristic is mental reanalysis. Conceptual nonfiction is automatically thought-provoking (to me at least) and begs for interpretation within a large organized framework. Those frameworks stick really well to grey matter. (But species of flowers or authors of economics papers? There's no hope.) And fiction? It seems that intentionally evaluating strengths and weaknesses of books and comparing them to others is enough analysis and structure to commit them to memory.

The bigger puzzle to me is how other people's brains must work differently from my own to have such different memories. Can fictional plots really be the things that someone's subconscious is primarily preoccupied with, rather than categorization and synthesis of, well, everything? Or something else entirely that I can't fathom?

Saturday, October 2, 2010

24 accents

This guy is freaking amazing:



(via MR)