Forbes on Search

Forbes features a solid article on the search industry. Nothing revolutionary, but noting some of the obstacles keeping the small guys out of the game, why it's different from the search wars of old.

Mostly, the dataset of "the web" grows every year, and so becomes harder and harder for small, new players to index with time.

Some small, targeted search engines have emerged. Real estate, travel, sporting events... Seeing competition on that angle might have as much to do with grabbing a manageable dataset as it does with yielding more targeted results.

The Henry Louis Gates Jr. Arrest - An Oversimplification

There are two sides to every story and neither side is backing down. What follows are the facts of the case:

1. Henry Louis Gates Jr. arrived home tired after a long trip from China.
2. He found his door jammed and asked his driver to help him open the door.
3. A neighbor called the police reporting a potential break-in.
4. The police arrested Gates Jr. on the grounds of disorderly conduct.

This doesn't seem to be too hard to piece together:

A prominent Harvard history professor who is friends with the President, editor-in-chief of a premier African-American academic/cultural blog (The Root), and just finished shooting a documentary for PBS was tired after extensive travel, was mistaken by a nosy but impersonal neighbor, and arrested by a police officer lacking sufficient patience.

OR

To put it in "Thomas Terms":

(Ego^Fatigue) + Poor luck / Lack of Patience = MEDIA FRENZY

Google's War Plan

An insightful note discusses how free apps like the upcoming Google Wave fit into Google's overall strategy. Remarkable for a slashdot comment, the note is worth reading.

The basic outline is that Google is actively trying to drive down the marginal profits on a number of desktop apps. Google's offerings all work independent of platform. If you can change your OS without changing any of the apps you use, then the MS OS monopoly becomes far less entrenched.

This approach is intimately wedded to the ideas expounded by Chris Anderson in his article, Free!, recently expanded to a book, which argues that Moore's Law pushes down the costs of all the digital products we use, and examines the consequences.

The Course of Medical Bankruptcy: Why Getting Insurance at Work Doesn't

Harvard Law Professor Elizabeth Warren analyzes medical bankruptcy.

Surprisingly, most of those entering medical bankruptcy had health insurance which covered their problems at the beginning of their illness. Inevitably, such individuals lose their job halfway through their illness (perhaps due to their long absences from work, or an inability to continue heavy labor after developing a heart condition). Employment based coverage lapses. Attempts to secure new coverage, even after finding a new job, ultimately fail due to preexisting conditions.

Employer based health insurance is a very bad idea, regardless of how many payers are in the system. Denials due to preexisting conditions seem the other major source of trouble.

Maybe a public option will address these problems, catching those who are being pushed out of the system.

Is it sensible to believe something you can never observe?

Imagine a world, world A, where things proceed normally most days, but every so often, time freezes completely. There are no effects to this freezing of time. Outside observers from another world, world B, are able to witness this event, but unable to communicate it to the inhabitants of World A.

Is it reasonable on World A to believe that occasionally time freezes, to no lasting effect? The first instinct of a logical positivist or Bayesian might be, "no, it's senseless to assert something that cannot be verified, measured or observed and has no lasting effects." Despite my usual affection for these stances on epistemology, I think we can imagine a situation where we might reject this barrier to knowledge, after extending the original hypothetical slightly.

World A, we'll say, proceeds normally for 2 years, but then freezes for a full year every 3rd year. It resumes the pattern the following year, such that it is frozen on years 3, 6, 9 and so on. World B has a similar condition, in that time proceeds normally on it for 3 years in a row, but every 4th year, time freezes. You know this, because you are a scientist observing Worlds A and B from your world, World C.

One day, you build a device to communicate these findings to Worlds A and B. They reply that this is interesting news, as they have seen your world freeze itself on occasion. After working out the math,* it is ascertained that your world freezes every fifth year.

Someone is always watching to make observations for the next several decades, confirming the patterns of freezing in this new era of inter-world communication. And because there is an observer gathering evidence, leaving a lasting record, so far, we haven't caused any problems with those original rigid theories of epistemology.

One day, though, 60 years later, all the worlds freeze at the same time. In that 60th year, we have an event which no one in the system can observe. The event has no lasting effect on the system. And yet, this "system freezing" event seems perfectly reasonable for the inhabitants of the system to believe.

I'm still trying to recall the original source of this hypothetical, it is certainly not my own. I know it is somewhere in one of A. C. Grayling's texts on philosophy...

*No world would observe this simple pattern of the others directly, because the observer would miss a chunk of the observed world's pattern while the observer's world slept. The actual patterns, if interested, would be as follows, and you might imagine a sort of Copernican revolution as they attempted to simplify these patterns:

C watching A sees:
12 year cycle where A sleeps on years 3,5,8 and 10.
C watching B sees:
16 yr cycle, B sleeps yrs 4,7,10,13

B watching C:
15 yr cycle, C sleeps yrs 4,8,12
B watching A:
9 yr cycle, A sleeps yrs 3,5,7

A watching C:
10 yr cycle, C sleeps yrs 4,7
A watching B:
8 yr cycle, B sleeps yrs 3,6

Further Stimulus?

Obama is pushing for further stimulus. It might be good to trot out the arguments we saw on this back in January.

Princeton Economist Paul Krugman has laid out the numbers for his pro-stimulus analysis here. He relies on Okun's Law, which details the relationship between unemployment and GDP. It suggests we need a much larger stimulus than is in play (probably much larger than is politically feasible) to truly correct the economy. Krugman has suggested we need something close to a 2 trillion dollar stimulus.

Also from months ago, Kevin Murphy put forth the best anti-stimulus argument in the field. Freakonomics mentions here. Here's his argument from his slides:

A Framework for Thinking about the Stimulus Package

• Let G = increase in government spending
• 1-α= value of a dollar of government spending (α measures the inefficiency of government)
• Let f equal the fraction of the output produced using “idle” resources
• Let λ be the relative value of “idle” resources
• Let d be the deadweight cost per dollar of revenue from the taxation required to pay for the spending

When Will the Stimulus Add Value?

• The net gain is the value of the output produced less the costs of the inputs and the deadweight loss
• In terms of the previous notation we have: Net Gain = (1-α)G –[(1-f)G + λfG] –dG
• Net gain = (f(1-λ) –α–d)G
• A positive net gain requires that: f(1-λ) > α+d
• Difference of opinion comes from different assumptions about f, λ, α, and d

[Murphy's] View:

• α likely to be large
• Government in general is inefficient
• The need to act quickly will make it more inefficient
• The desire to spend a lot in a short period of time will make it more inefficient
• Trying to be both stimulus and investment will make it even more inefficient
• 1-f likely to be positive and may be large
• With a large fraction of resources employed (roughly 93%) much will be drawn from other activities rather than “idle” resources
• Ricardian equivalence implies that people will save to pay for future taxes reducing private spending
• λ is non-zero and likely to be substantial
• People place positive value on their time
• Unemployed resources produce value through relocation (e.g. mobility & job search)
• d is likely to be significant
• Wide range of estimates of d
• Estimates based on the analysis of taxable income imply d≈0.8
• With these parameters the stimulus package is likely to be a bad idea.

Both of these arguments seem persuasive, and both are somewhat technical, so I'm not really sure how to dig in and rectify them. I'll try.

Krugman believes that α is likely to be -.5, that for each dollar of spending, you get one and a half dollars of economic productivity. This assumption may seem strange based on Murphy's very common sense suggestions for why α should be positive and high, but Krugman relies on the "widely cited estimates of Mark Zandi." He suggests that d from payroll tax cuts can be close to .3, but that the value of business tax cuts are uncertain, suggesting maybe 0 deadweight loss from business taxes. He thinks that a high d on payroll taxes pushes for him though, because he's hoping to cut payroll taxes as part of his stimulus. Here's a key difference. It's implied from this reasoning that Krugman believes that you can't just crunch the numbers and follow the best dollar for dollar option, but that there's some value to spreading out the pain. If we can pay a little more in taxes when we're well off in a few years than we would have paid right now, then we'll be better off because we smoothed out the costs of this recession. That seems intuitive and reasonable. We should probably add some variable, s, to Murphy's equation to measure the value of smoothing costs over time. But we can just leave s out for now, as Murphy appears to believe s is 0, and realizing that Krugman's case might look slightly better to Krugman than this analysis implies, due to a high rating of s.

It's not clear what Krugman thinks about f, how much of the stimulus would target idle resources. But you could address f directly, if it was a major concern. You could provide tax rebates or subsidies to businesses who hire employees that are registered with the government as unemployed. The longer they have been on the rolls, the greater the stimulus. The risk here is greater overhead to police cheating, but you could lightly police the program, knowing that even if 75% of those stimulated were complying (much lower than tax compliance rates), you'd be on the right track of focusing your stimulus towards f.

Of course, you wouldn't want to target f if you believed λ was more substantial. But it's a hard sell that this high level of unemployment is a great boon.

So, plugging some numbers into f(1-λ) > α+d, the condition under which we get positive net gain, we have:
.75(1-λ) > -.5+0 (or replace the 0 with .3, if you use payroll taxes to finance it on the back end)

We weren't sure what λ was in Krugman's estimation, but I believe he thinks it is very low. With so many unemployed, that seems reasonable. Of course, it looks like Krugman would support the stimulus whenever λ < 1.66, a figure which seems unlikely (or we would pay large groups of people to never work).

My intuitions lie with Murphy on the right side of the equation, but with Krugman on the left, making the question of stimulus much closer than I originally thought, certainly much closer than the voices from the right and left make it sound.

Notably, these arguments are pretty much unchanged from before. Krugman's analysis kicks in whenever there's high unemployment, and Murphy's analysis applies in all conditions. It'd be interesting to see Krugman and Murphy debate the particulars of alpha, lambda, f or d. Or it'd be nice if anyone has revised their opinions about alpha, lambda, f or d by measuring the effects of the last stimulus.

I feel obliged to link to some articles against the stimulus by Forbes and Penn Jilette which were fun to read, even though they avoid the heavy lifting above. More than anything, I'd really like to see Murphy and Krugman debate the particulars of the variables above.

Health Care

Bill Moyers discusses health care with a former health insurance PR man.

NPR ran a special comparing care around the world a while back, some figures from that report are captured here.

I worry that outside of NPR, the picture of state funded care becomes really distorted. The Moyers interview cites Sicko, and seems to suggest that foreign state sponsored care is utopian. It also points to scare tactics used by opponents of national care who suggest state sponsored care can only be a horror story.

More of a middle ground is shown by the NPR figures. It seems like every country has its own solution with its own set of unique perks and problems. In Japan, you have universal coverage with some copay and increases to taxes (8%, including employer contributions), but you have doctor shortages and overuse of care problems. In France and Germany, you're looking at a 10-15% hit to wages to fund the programs. In the UK, costs are kept down through aggressive comparative effectiveness decisions. We can toss the US in here as just a different approach with different problems, coverage gaps and rising costs as well as low health care indicators. Cost per person for care is almost twice as high.*

I'm most attracted to the UK model, and I have real questions as to whether or not any more aggressive model could work when every decade or so the party in power will want the whole system to fail.

Those to the left of me seem attracted to a French or German model. Beyond my worries about getting a system to work under Republican administrations, I worry a lot about the costs. A high cost program would be funded through substantial wage taxes, which in turn lead to some combination of wage reductions and unemployment. Those effects disproportionately affect the poorest workers, the very group we are trying to help.

To the right of me, the current rhetoric has been attacking a public option for "rationed care." I'm surprised this is taking hold, since I always thought rationed care/refusal to cover certain procedures prompted the most public outrage in the current health care system. Moreover, unlike the outraged public, I think aggressively rationing care is essential to reducing the sort of wage effects that will most harm the working poor. I think rationing care through comparative effectiveness research helps us make better care decisions than we might on our own.

Several studies have shown that increased health care does not correlate with increased health outcomes. Some sources on this problem: Overcoming Bias discussion of largest health care cost study ever conducted, the RAND study, in parts one and two, which gave a bunch of random people free care and compared them to a bunch of similar people with pay care for several years. An NPR discussion of the lack of link between health care costs and results region by region. NPR report on drug coverage with conflicting results. The New York Times recently addressed this issue in the context of Prostate Cancer. No matter what the eventual plan, lets hope that increased cost effectiveness research is a big part of it.

*On costs:
When taken as a percentage of median income, the US expenditures on per capita healthcare are just over 10%, perfectly comparable to the income tax rates funding health care in other countries. Greg Mankiw explains how some cost differences are "artifacts of labeling". Cost comparisons are not as straightforward as they appear. Maybe this throws a wrench in my optimism over cost research.

Twitter Not for Teens

This isn't really news, demographics have consistently reported Twitter as a 20-30 something phenomenon.

I don't think it's very surprising either.

Twitter is best used as a news aggregator, and teens don't care about news. Also, unlike Facebook, no one will follow you on Twitter if you're not saying something valuable or linking to something interesting. I think teens need the false sense of relevance provided by services like Facebook, where you get to cram your thoughts down the throats of everyone you have ever met.

Three Sources of Awe

It's weird, but I'm a little amazed that these exist. Not Carl Sagan amazed, but I still think that characters you can stack on top of one another are a neat idea. ̼⌂̺͛ᴖ̲̿ᴥ̲̿ᴖ̺͛⌂̼

Unicode doggies aside, the stars still probably reign as the best source of awe sense ancient times:



(There are a lot of similar videos on youtube. I recommend those discussing the Hubble Deep Field, if you can track them down.)

Though the wonder of the Internet is starting to become a serious contender:


And the general pace of human progress is also worth a marvel or two:

More Research Suggesting Patents Do Not Encourage Innovations

I've blogged before about the Bossaerts et al paper that found improved productivity of a commons relative to a patent system, now more research joins that trend with a radically different study from Prof. Torrance of the University of Kansas School of Law.

Press Release.

The paper is being released under a Creative Commons license on SSRN, so everyone can access it.

Old Movies

We were wondering the other day whether or not some older films get hyped far beyond how good they are. I'm not sure, others seem to have fallen off the popular radar for no good reason.

In way of a small, completely unscientific sample, I recently saw four 'classics', and I was more or less split on them. They included a silent film, "Pandora's Box", war films "Bridge on the River Kwai" and "Paths of Glory", and finally "The Man Who Would Be King".

Pandora's Box: Silent film showcasing Louise Brooks. Louise Brooks is strikingly attractive, sure, but a cute girl does not make a film great on her own.* I don't think Pabst deserves heaps of acclaim for his direction of this droning epic. The director seemed constantly unsure of himself, lingering on scenes well after the action had gotten its point across. The audience doesn't need a 40 second shot of a girl kicking and banging her fists to get that she's pouting.

The Bridge on the River Kwai: Alec Guinness is absolutely great in this film. Still, gross historical liberties and a plot that goes well out of its way to make the British look like saps tanked the experience for me.

Paths of Glory: Kirk Douglas and Stanley Kubrick bring this one home with the help of maybe 9 other fantastic performances. A really deep film showing more aspects of war than any other three war movies combined. Characters and narrative are why I love film, and here they are at their absolute top.

The Man Who Would Be King: Adaptation of a Rudyard Kipling story, essentially a buddy film for Sean Connery and Michael Caine. It's set a century or more ago in the region of Kafiristan, the one area of Afghanistan that the Taliban could never completely control. The place has an interesting history worth reading more about. Performances from the two leads make it seem as though they'd been making films together all their life. A little lightness along the way, but it still manages to speak weightily about topics as deep as imperialism and human frailty.

Any other classics come to mind that are consistently overrated or overlooked? Maybe we can get a consensus one way or the other in the comments.

*Chungking Express makes you fall in love with a dark haired girl with a short haircut too, but there the cinematography is wild and thrilling, and the stories are good too. Or maybe Faye Wong's just better than Louise Brooks. Silent film fans, Asian film fans, FIGHT!