Sep 15

I recently read and enjoyed Super Freakonomics. The book was a worthy sequel to its predecessor, of course, titled Freakonomics.  Unlike most other books I’ve read, it’s tough to put in a few words what the underlying theme of this book is.

Instead, I’ll offer my take on a few of the anecdotes the book presents, and not assume that you are familiar with either the original book or the co-authors and their work.

Global Warming, not. If there is such a thing, its source isn’t any of the energy related fuels that are routinely blamed. Instead, it’s cows and the methane they produce. Increasing wealth across the world had shifted the demand from grain to meat and this shift is ultimately the cause. The Mount Pinatubo eruption? It actually helped cool the planet a bit, negating nearly a hundred years worth of observed warming. (I am not saying I agree with their conclusions, just sharing them. A number of scientists have spoken again these claims.)

Next, there is a discussion of suicide bombers and the criteria that one would use to discover them in a large population. Unfortunately, even a 1/10 of 1% false positive means that when analyzing a group of say 100,000 suspects, there will be 100 innocent people who are falsely accused. One factor in the data mining is that suicide bombers don’t buy life insurance, at least not until this book was published.

You drink just a bit too much at a party, and live just a mile or so from home, do you walk or drive? We are offered data that suggests it may be safer for you to drive, as you may have a lower chance of injury per drunk mile driven vs walked. (Disclaimer – Don’t do either. Get a ride from a sober person or call a cab.)

Last, a look at the impact of The Club (a metal anti-theft device that goes across a car steering wheel) vs LoJack (a hidden transmitter used to track a car after it’s stolen) and how the visible Club effectively says to move on to the next car, while LoJack has every thief wonder which cars are protected. Interesting way of comparing these two anti-theft devices.

You see, the chapters within the book skip from one seemingly unrelated topic to the next but still maintains an overall feel. Sort of an economist looking at the world through some strange glasses  and sharing his observations. Have you read this book, or the original? What did you think of them?


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Nov 07


Enjoy the weekend!

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Apr 01

I recently heard that iTunes was planning to raise the price of some popular songs from $0.99 to $1.29, and at the same time, some less popular songs would be reduced to $0.69. Makes sense to me. But from techdirt, “Oddly, the LA Times article claims that the new pricing scheme is “true to supply-and-demand economics,” but, as Gizmodo notes, that’s not true at all. The supply is infinite. So if it were true to supply-and-demand economics, the price would be free. The actual price is based on an artificially limited supply and a made up demand.” Huh? Let’s look at a supply demand graph;

Supply only goes up if the price is maintained, at a price of zero, the supply drops to zero as well (in theory). The Gizmodo quote confuses the medium (the bit going across the internet) with the product itself (the song). The supply of good music is certainly not infinite, you’d not listen to any and every bank or piece of music that came along. Just as their are bands whose concert tickets are scalped for many hundreds of dollars, their are also bands who don’t sell out their concerts. There is nothing that’s infinite, even clean water is not plentiful everywhere on earth.

I’ve heard of soda machines which contain temperature sensors. These machines are programmed to bump the price based on the temperature, rate of sales, and level the machine is full. iTunes seems to be the perfect venue for little known bands to offer their songs for a lesser amount, even free for a time, and for superbands to get a bit more money. But lets not kid ourselves, supply/demand is far from dead.


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Jun 13

I received enough email asking why I picked on Obama for what may have been a slip of the tongue regarding distribution of income gains. I think that our elected officials, whoever they are, need to speak with precision and when it comes to numbers, be close enough to exhibit an understanding of what they are discussing.

So, this past Tuesday, I hear Sen John Barrasso (WI) being interviewed by CNBC on the current gas price concerns. He offered that the average American uses 1500 gallons of gasoline each year. I’ll not split hairs to suggest that he meant the average driver, that was understood. But let’s think for a minute. 1500 gallons, even at 20 MPG (which is low, earlier, CNBC said the MPG was up to 30 MPG this year, which seemed high) that’s 30,000 miles per year. That just seemed wrong to me, so a few seconds with The Google and I found the Energy Kid’s Page, a site hosted by the department of energy. There, I found the number to be 500 gallons average with 12,000 miles driven by the average driver. This made a bit more sense to me, and this data was confirmed by the California Energy Commission, which states a US average of 464 gallons used per year. These numbers differ by less than 10%, but are far from the 1500 gallons the honorable Senator from Wisconsin stated.

The price of gas is high, painfully so. In any dialog about economics, it’s important to have your numbers right. Now, at work on Monday, I know that every dollar rise in gasoline impacts the average driver by $500 per year. I don’t aspire to the Cliff Clavin award, but I do want to know my facts before I quote them.

(I just found another beautiful New York Times graphic titled, “The Varying Impact of Gas Prices” illustrating the percent of one’s income going to gasoline purchases, across the country. Take a peek.)
Enjoy the weekend!


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