Archive for October, 2009

Signaling, Value, and Common Room Refridgerators

One of my guilty pleasures is reading My Life Is Average, a spinoff of FML. Take this one, for example:

This weekend, I put my fridge out on the street with a “Free” sign. No one wanted anything to do with it. Then on a whim I replaced the “Free” sign with a “$50″ sign. Next time I looked out on the street it was stolen. MLIA.

Oh, MLIA. You’re so much better than FML. The economics of this one are pretty simple. A “free” sign indicates that the refrigerator really worth anything, so no one’s willing to take it. The $50 sign says, ” hey, this thing is worth something. It’s worth stealing.” And with no security to protect it from being stolen, voila. It’s gone the next morning.

But let’s say you don’t want your things stolen. There are two ways of preventing this from happening.

1) Make it hard to steal. That’s what safes, locks, and armored trucks are for.

2) Decrease the incentive to steal. Make your stuff seem worthless.

One example comes from a site I also really enjoy reading, Lifehacker. Lifehacker is, in a nutshell, a quirky and nerdy site that’ll teach you clever uses for binder clips, point you to free downloads and applications to boost your productivity, and give you pointers, tips, and shortcuts to making life more efficient and cheaper — all with a hint of McGuyver (turning binder clips and rubber bands into a cool pencil holder, for example). One of their tips is a great example of signaling: The uglified camera.

What a great example. An uglified camera makes it look, besides aesthetically unpleasing, that it wasn’t very well cared for. It gives the impression that the owner didn’t really care for the camera, and therefore it’s not worth a whole lot. Maybe worthless enough that it really isn’t worth stealing.

Is this the best defense against protecting your camera? Of course not. Method 1 is. Keep your camera in your pocket. Uglifying your camera can help if you accidentally misplace it, but there is of course no substitute for security. But sometimes security isn’t always there.

Here at Georgetown, for example, there’s one kitchen for every floor of the freshman dorm. In each kitchen there’s a communal refrigerator/freezer. No one has a freezer in their own room (due to university restrictions on what can be kept in your room), so most frozen foods are kept in the communal freezer.

One day, I saw a sign taped to the freezer door that said something along the lines of:

To whoever took my ice cream, my mother spent $10 on that at Whole Foods to get it for me because she knows I like it. That meant a lot to me and I hope you will have the heart to go to my room and reimburse me for it. — [Room number]

I doubt whoever took the ice cream was the kind of person to go back and give the poor girl $10. The kind of person to take ice cream is not the kind of person to do that sort of thing. But I’m willing to bet the girl just put the ice cream in the freezer without a little thought to how to stop people from stealing it. This is the situation in which the first method — security — of preventing theft is not available.

I would have put the ice cream in a paper bag. Paper bags in the freezer are inherently less attractive than tubs of ice cream. But people can be curious, and someone looking to steal something will most definitely look inside the paper bag. So I would label it something, something to make the would-be thief think it’s something unappetizing. “Preston’s ground beef.” Most would-be thieves aren’t looking to steal ground beef, and probably aren’t willing to look inside when there are other parts of the refrigerator to explore.

This isn’t a guarantee. Ice cream in the common room is pretty risky. A smart thief will think to look inside. But it’s better than just leaving it in the freezer for all to see.

So I gave a little thought to how I would store something in the communal fridge. I’d just bought some squid and managed to harvest the ink after cooking the rings. Squid ink, for anyone who knows how to cook, is extremely valuable and makes for a great meal.

Usually someone would label their food and say “do not touch” in hopes that no one would steal it. But that only works if people are nice. If not, a post-it note that says “do not touch” really says, “This thing is worth stealing, worth it enough that I labeled it.” So instead of putting a note on my container of squid ink that said “Do not touch Preston’s squid ink,” I just let my tupperware container of squid ink sit, unmarked and unguarded, in the common room refrigerator. It drew no one’s attention and no one knew that something so valuable was inside.

Days later, I treated myself to some great squid ink ramen.

Its better than you think

It's better than you think

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Markets in Everything

Georgetown sophomore is hiring a personal assistant:

As my PA you will receive an email once a day by 9:00 am with a task list for that day and a time estimate for each task. Important tasks will be bolded on the list and must be done that day (even though everything on the list should theoretically be finished on a daily basis) …

PA example tasks -Organize closet -make bed -Drop off / pick up dry cleaning -Drop me off / pick me up from work -Do laundry -Fill up gas tank -bring car for servicing -schedule appointment for haircut -Pay parking tickets -manage electronic accounts -shopping and running errands -other random tasks.

Preference will be given to applicants who are comfortable with city driving (car will be provided) and who are available when I need to be picked up and dropped off for work. Preference will also be given to Georgetown undergrads for convenience.

My favorite comment:

I’m not sure it’s legal to pay someone for 30 minutes to do your laundry when they must commit 90 minutes to do the job. Solidarity [Georgetown Marxist group] should get in on this.

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How an Econ Student Goes Busking

I’ve been talking a lot lately — ranting, actually — about politics . Health care, climate policy, and whether or not Obama deserves the Nobel Peace Prize are all incredibly interesting topics to be sure (if you’re an economist).

But they’re not fun. Lately I’ve been losing track of the fun side of economics. I’ve been letting the political economic side of me take over the fun economic side of me. Part of it is I’ve been doing a lot of political trouble-making lately with my campus group Hoyas for Liberty. But this idea has been kicking around my head for a while, and it’s probably a lot more interesting than why Cap and Trade isn’t economically efficient.

You know how everyone’s been through different phases of their childhood where they wanted to be an astronaut,

firefighter, or a doctor? I went through the same phases (except with Pokemon trainer, violin teacher, and paleontologist). But now I’m pretty sure I know what I want to be: a professor.

I want to be this guy now -- not so far off from my first dream.

I want to be this guy

I’m not really sure what it is. Maybe I’m just scared of a normal private sector job. I’ve always liked being in school, and I’ve always loved to learn (a cliche, but true). It just feels like the natural thing for me to do. But being a professor and writing those papers and molding the minds of future generations just seems… exciting.

But you always need a Plan B if things don’t work out the way you want them to. My Plan B is… street performing. Okay, maybe it’s not Plan B (maybe Plan D or E or F…) but it’s not the worst job in the world.

The first time I went street performing was in April, when I asked a very sweet and cute girl to prom (in what might be described as an over and unnecessarily dramatic fashion). Long story short, I serenaded her as a street performer.

Help me take a cute girl to prom

"Help me take a cute girl to prom"

As it turns out, I was looking for a job at the time — and busking paid pretty far better than any other job I could find. I’d found my summer job. Every few days I’d take the bus down to Seattle’s Pike Place Market, open my case, and hope for tourists to drop a dollar or two into my case.

One difference between street performing and a regular job is the risk and irregularity involved in street performing. Most of my friends that had jobs that summer would go to work knowing how long they’d be working for, and at what rate they’d be paid at the end of the day. Not so for a street performer: Every day, I could go out and expect to play for 2-3 hours that day, but exactly when and where (some places paid better than others) was a mystery. My pay was completely subject to the whims of my audience. How much I got paid would depend on how well I was playing, how many tourists there were, their moods, what kind of competition I had that day, and a host of other factors.

Or, look at it this way: the reason why street performing is a risky business is that you offer your product with no guarantee of being paid back. In fact, each individual audience member has absolutely no financial incentive to give you money. Whether or not one person gives a street performer money is not going to influence whether or not he keeps playing.

In fact, now that I think of it, what this really is, in theory at least, is the prisoner’s dilemma. Look at the following table:

You\Them Pays Do not pay
Pays Busker plays, but you have to pay Busker plays, but you have to pay
Do not pay Busker plays, you don’t have to pay Busker does not pay

Imagine you and a group of people are watching a street performer. You all like him, and you would be willing to pay to keep hearing him play.

If everyone says, “alright, I’ll pitch in a dollar,” the busker keeps busking. Everyone’s happy, but a dollar poorer.

But people are naturally selfish (self-interested, if you prefer). People are going to think, “alright, everyone else is paying, which means the busker will keep on playing. Even if I don’t pay up, I can still enjoy the music.”

But there’s a trap here when too many people think this way. At some point, if too many people don’t pay — they “deviate” or “shirk” — the busker stops playing, and no one gets to enjoy the music. In fact, because everyone acted selfishly, everyone’s worse off. Economists call this the prisoner’s dilemma — when people acting in their own self-interest makes everyone worse off.

The greatest trick of the street performer is not the music they perform or the magic they can show you. The greatest thing the street performer does is to get people to give them money against their financial self-interest.

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The Nobel What Prize?

Imagine my surprise this morning when I woke up and read USA Today.

Press secretary Robert Gibbs awoke President Obama with a phone call just before 6 a.m. to tell him he had won the Nobel Peace Prize.

Let’s take a look at the short history of this very peaceful President.

January 22nd: Same Rhetoric as Bush

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
Changefest ‘09 – Obama’s Inaugural Speech
www.thedailyshow.com
Daily Show
Full Episodes
Political Humor Ron Paul Interview

February 18th: Obama approves Afghanistan troop increase

Another 5,000 troops will be deployed at a later date to support combat troops, bringing the total to 17,000 the Defense Department said. A senior administration official confirmed the total.

September 9th: Obama sends 1,000 more troops to Iraq

Though the Iraq War has long since become an after-thought amid Obama Administration claims that the “drawdown” in on track, the Pentagon is reporting today that Secretary of Defense Robert Gates has approved a request to send about 1,000 additional troops to Iraq.

September 15th: Obama considers military strike in Iran

The U.S. should begin preparing crippling sanctions on Iran and publicly make clear that a military strike is possible should the Iranian government press ahead with its nuclear effort, a bipartisan policy group said.

Also September 15th: US Sends 3,000 Troops to Afghanistan (Along with 14,000 “trigger pullers”)

Top US defense officials say that roughly 3,000 additional troops, which are classified not as combat troops but rather “combat enablers,” will be deployed to Afghanistan in the coming days.

September 22nd: Obama Wants to Renew Patriot Act

The Obama administration promised Congress on Tuesday to negotiate stronger privacy protections for Americans under terrorism surveillance but insisted on retaining current authority to track suspects and obtain records.

Liberals on the House Judiciary Committee were left unsatisfied, clearly wanting the administration to go further and pledge to curb what they consider abuses of the Bush administration.

October 8th: Troops depressed and disillusioned

American soldiers serving in Afghanistan are depressed and deeply disillusioned, according to the chaplains of two US battalions that have spent nine months on the front line in the war against the Taleban.

I mean, I thought the Chinese political dissidents on the 20th year anniversary of Tiananmen Square were gonna get the prize but, oh boy. Turns out you have to escalate wars to win the peace prize.

(To be cross-posted at YAL)

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Numbers Lie: Denial of Claims

The President said this about a month ago:

More and more Americans pay their premiums, only to discover that their insurance company has dropped their coverage when they get sick, or won’t pay the full cost of care. It happens every day.

Who, though, is the largest denier of medical claims in America?

I’m just sayin’.

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“What Essential Elements Should be in the Health Reform Bill?”

Georgetown University’s bookstore recently had an essay contest about health reform. The requirement was a 300-400 word response to the following question:

What essential elements should be contained in the federal health care reform bill?

Here was my response (after the jump)

Read the rest of this entry »

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