The Economics Category Archive

Welcome to the Economics archives. The posts are listed in chronological order. Click the post title to read more.

November 17th, 2008

Stuart Explains Television: Kota, the Triceratops

What the fuck. I thought the Japanese had cornered the market on completely worthless toys. I will now list my complaints with this toy.

      1) It’s a robotic rocking horse – THAT DOESN’T ROCK. Your kids are better off with a saddle stapled to a sawhorse.
      2) I give any child about 30 minutes to completely destroy this (see points 3, 4, & 5 for reasons it should be destroyed).
      3) It gets all happy when you pet it’s face. Have we learned nothing from Jurassic Park? Humanizing animals of any sort makes them fearless against their human masters. I believe this goes for dinosaurs as well.
      4) In addition to my last point, I feel the need to stress how children should not be used to treating robotic toys as anything other than future menaces to society and humankind. Robots, although they may someday rule all of humanity, are not yet our evil metallic overlords and we should be doing everything we can to stave off that day. After Skynet takes over, I would rather be blown to bits by a sexy T-X than gnawed to pieces by Kota the triceratops.
      5) Is he humping the triceratops? I guess this is the equivalent of a RealDoll for toddlers.
      6) At $299, you might as well let an Xbox raise your children. Let’s face it, if you were considering buying your kids a Kota, an Xbox will be doing a better parenting job anyway.

Abby the Atheist has some remarks about Kota as well.

November 13th, 2008

Britain: “We Need A Hot Beef Injection.”

Health
Shortage of Sperm Donors in Britain Prompts Calls for Change
By DENISE GRADY
Published: November 12, 2008

The donor shortage may be due in part to a change in the law in 2005, which took away donors’ anonymity.

Among the gems in this article are:

He said sperm were also being imported, mostly from Scandinavia.

Dr. Mark Hamilton, chairman of the fertility society and an obstetrician at the University of Aberdeen, said, “Really, we should be getting our own house in order rather than relying on importing sperm from other countries.”

The editorial also suggests that the nation consider “sperm sharing,” in which fertile men whose partners needed in vitro fertilization could become sperm donors for other women, and the donation would help pay for the fertilization.

I may be wrong, but “sperm sharing” doesn’t sound like something that is normally discussed in the New York Times, or any other mainstream news outlet. This is a great example of a news article that bring up more questions than it answers. Is there a huge international sperm trade? The Swedes must have truckloads of sperm just sitting around, waiting for export. Can it be harvested and sold on the black market like kidneys and livers?

Must. stop. thinking. about. this.

November 8th, 2008

Stuart Explains Television: ShamWow.

I have a unique relationship with television. Having lived most of my life without one, I am more easily transfixed by flashy graphics and fast talk. Most people that know me are aware of this.

This also brings up my fascination with commercials. I like to think there is a dialog between myself and the television. I often talk to the person on the screen and answer rhetorical questions – this make commercials either a) somewhat sensible or; b) all the more ridiculous. I question the advertising team’s motives behind characters, and try to decipher the wording and the script. Why is the Nasonex (R) spokesperson a bee, and why does he have a terrible Spanish accent? I get the obvious bee/pollen/allergy connection, but the accent? Is Nasonex (R) able to alleviate allergy symptoms AND sex you up Antonio Banderas-style?

Here is my latest: ShamWow. i give this commercial 5/5 “head-ons,” for an exceptional level of annoying.

Transcript (italics are for my response):

Vince: Hi, it’s Vince with ShamWow.
Me: Hi Vince!
Vince: You’ll be saying “Wow” every time you use this towel. It’s like a shammy, it’s like a towel, it’s like a sponge. A regular towel doesn’t work wet; this works wet or dry. This is for the house, the car, the boat, the RV. ShamWow holds twenty times it’s weight in liquid. Look at it! It just does the work! Why do you want to work twice as hard?
Me: If I have to work twice as hard, I just don’t work at all.
Vince: Doesn’t drip, doesn’t make a mess… wring it out. You wash it in the washing machine. Made in Germany – you know the German’s always make good stuff.
Me: Like national socialism?
Vince: You can cut it in half – use one as a bath mat, drain dishes with the other one, use one as a towel.
Me: That’s three halves, Vince. Better brush up on our 4th grade math.
Vince: Olympic divers use it as a towel. Look at that – completely dry [wipes arm].
Me: You must be sweaty as hell if your arm was wet AT ALL.
Vince: Put a wet sweater [on it], roll it up – it dries your sweaters. Here’s some cola. Wine, coffee, cola, pet stains…
Me: Unless it holds an entire box of wine, it’s of absolutely no use to me.
Vince: Not only is the damage going to be on top – there’s your mildew – that is going to smell.
Me: You’re right. After spilling cola or wine on my carpet, I would be crazy not to spray it with something. I’ll just suck 90% of it out with a towel, and live with the rotting stench and obvious stain.
Vince: See that? Now we’re going to do this in real time. Look at this – put it on the spill, turn it over – without even putting any pressure, fifty percent of the cola – right there. You following me camera guy?
Me: What is he, retarded? You’re standing in one place. Except for your overly enthusiastic shrugging, I think he’s got it well in hand. This is the type of job robots should be doing.
Vince: The other fifty percent – the color – starts to come up. No other towel is going to do that. It acts like a vacuum, and – look at this – virtually dry on the bottom. See what I’m telling ya? ShamWow – you’ll be saying “wow” every time.
Me: Terrible tag-line.

[people talking about their ShamWows]

“I can’t live without it! I just love it!”
“Oh my gosh. I don’t even buy paper towels anymore.”
“If you’re going to wash your car or any type of vehicle, you’d be out of your mind not to own one of these.”
“All I can say is – Sham-WOW.”
Me: What has Vince done to you? I hope it didn’t involve any probing.

[Back to Vince]

Vince:You’re going to spend twenty dollars a month on paper towels anyway.
Me: Maybe $5, tops.
Vince: You’re throwing money away.
Me: No I’m not
Vince: The mini ShamWows are for everything – everyday use.
Me: If that’s for everything, why do you get different sizes?
Vince: This lasts ten years, this lasts a week [holds up sponge]. I dunno – it sells itself.
Me: Why are you here then, genius? Take your hands-free mic and get the hell off my TV.

[Ordering information]

I explain: ShamWow is a towel. It holds more water than a paper towel. This is amazing, but not if you have to soak up oil, harsh cleaning products, or the leftovers from last night’s hedonistic blowout. You will still end up having to keep paper towels around for things you just don’t want to re-use.

Buy this, and you are retarded.

November 1st, 2008

the ghost of merrill lynch

the official sarcastigate ‘what the fuck were you for halloween’ thread:

Robert, checking in here.

October 29th, 2008

Doctor, My Eyes!

Pepsi would not discuss what it’s paying for the revamp, but experts estimate the cost for a top firm to work five months at north of $1 million. But that’s just the beginning. The real cost, said an expert, is in removing the old logo everywhere it appears and putting new material up. For Coke or Pepsi, when you add up all the trucks, vending machines, stadium signage, point-of-sale materials and more around the world, it could easily tally several hundred million dollars, the expert said.

The new logo is a white band in the middle of Pepsi’s circle that loosely forms a series of smiles: A smile will characterize brand Pepsi, while a grin is used for Diet Pepsi and a laugh is used for Pepsi Max. The new logo is Pepsi’s 11th in its 110-year history. Five logos have been introduced in the past 21 years, with the last update in 2002.[...]

“It’s tilting the whole brand presentation from a classic expression of uniqueness and quality into something that is much more humorous, almost flippant,” said Tony Spaeth, an identity consultant. “It worries me that it is less durable, less permanent and classic. It comes across as more of a campaign idea than an enduring brand expression.”

“This seems to be a really good solution. It feels like the same Pepsi we know and love, but it’s more adventurous, more youthful, with a bit more personality to it,” said Chris Campbell, executive creative director at Interbrand. “In theory, what they’re doing sounds like a really clever solution to link together a family of brands.”

Brand Consultants are so full of shit.   I’m surprised the great Bailout of 08 didn’t have a logo.  Plenty of evidence that the (M)Ad Men that were helping to pitch that idea.

October 20th, 2008

Idiots Out Wandering Around

What is the IEM?

The IEM is an on-line futures market where contract payoffs are based on real-world events such as political outcomes, companies’ earnings per share (EPS), and stock price returns. The market is operated by University of Iowa Henry B. Tippie College of Business faculty as an educational and research project.  

Who can participate in the IEM?

The IEM is operated for research and teaching purposes. All interested participants world-wide can trade in our political markets. Other markets–such as the earnings and returns markets–are open only to academic traders.

Are the participants playing with real money?

YES. Trading accounts can be opened for $5 to $500. Participants then use their funds to buy and sell contracts. Traders therefore have the opportunity to profit from their trades but must also bear the risk of losing money.

Is the IEM regulated?

The IEM is an experimental market operated for academic research and teaching purposes. The IEM is not regulated by, nor are its operators registered with, the Commodity Futures Trading Commission or any other regulatory authority.

Why would anyone operate a not-for-profit real-money market?

The IEM is operated by faculty at the University of Iowa Henry B. Tippie College of Business for educational and research purposes.

As business educators, we are concerned with preparing our students to be intelligent market participants. We and many of our colleagues at other institutions integrate the IEM into our courses. Students in these courses learn first-hand about the operation of financial markets and as a result become more well-informed traders in their future market interactions.

As business researchers, we are interested in market and trader behavior. The IEM provides a rich source of data for our research.

How does the IEM safeguard my money?

The IEM is operated under the auspices of the University of Iowa. You write your check to the University of Iowa and the funds are deposited to a University of Iowa account. When funds are withdrawn from your account, the University of Iowa accounting group (a group independent of the IEM) writes a check and mails it directly to your last known address. As a university operation, the IEM is subject to audits by university and state auditors.

Can I try out the IEM without investing money?

YES. Login to the IEM and follow the directions on the screen to log into the practice market. You will be able to do everything a trader can do, except trade in our real-money contracts.

October 20th, 2008

On the meaning of the US futures market

In the last few weeks, Intrade.com, which is based in Dublin, had consistently given John McCain as much as a 10 percentage point edge in his chances to be elected president compared with other large online overseas betting sites. These include the British-based Betfair.com, as well as the Iowa Electronic Markets, a research project at the University of Iowa that allows bets of $500 on election results.

The political explanation — that someone was trying to game the system to give Mr. McCain some momentum — has the advantage of at least appearing rational to economists. Increasing a candidate’s perceived standing would be something of value to offset the irrational decision to waste money buying a share in Mr. McCain for more than the absolute minimum price.

On Thursday, the chief executive of Intrade, John Delaney, responded to allegations that there had been market manipulation — in essence, that somehow Mr. McCain was being favored by artificial means.

Mr. Delaney conceded there had been erratic behavior — including spikes in the direction of Mr. McCain and away from Barack Obama “by up to 10 points.” And he said “trading that caused the unusual price movements and discrepancies was principally due to a single ‘institutional’ member on Intrade.”

“The surprising thing is not that there was some manipulation, it is that it was sustained,” said Forrest Nelson, who teaches at the University of Iowa and has followed Intrade as well.

These developments, he said, go against his instinct that a large market like Intrade with millions of dollars in bets — as opposed to the total $250,000 wagered at the Iowa markets — would be less likely to be an outlier in its odds for candidates.

David Rothschild, a Ph.D. candidate in business and public policy at the Wharton School at the University of Pennsylvania, has tracked these markets. He said of the institutional trader on Intrade: “If their job was to hedge bets, they were not doing a very good job at gaining these positions at a minimal cost. They are overpaying for these positions. I don’t know if they are doing it to manipulate the market, but they are not doing a very good job at minimizing their costs.”

The political explanation — that someone was trying to game the system to give Mr. McCain some momentum — has the advantage of at least appearing rational to economists. Increasing a candidate’s perceived standing would be something of value to offset the irrational decision to waste money buying a share in Mr. McCain for more than the absolute minimum price.

Continue Reading: NY Times

October 16th, 2008

THE ERASURE OF MAN

One thing in any case is certain: man is neither the oldest nor the most constant problem that has been posed for human knowledge. Taking a relatively short chronological sample within a restricted geographical area–European culture since the sixteenth century–one can be certain that man is a recent invention within it. It is not around him and his secrets that knowledge prowled for so long in the darkness. In fact, among all the mutations that have affected the knowledge of things and their order, the knowledge of identities, differences, characters, equivalences, words–in short, in the midst of all the episodes of that profound history of the Same–only one, that which began a century and a half ago and is now perhaps drawing to a close, has made it possible for the figure of man to appear. And that appearance was not the liberation of an old anxiety, the transition into luminous consciousness of an age-old concern, the entry into objectivity of something that had long remained trapped within beliefs and philosophies: it was the effect of a change in the fundamental arrangements of knowledge. As the archaeology of our thought easily shows, man is an invention of recent date. And one perhaps nearing its end.

If those arrangements were to disappear as they appeared, if some event of which we can at the moment do no more than sense the possiblity–without knowing either what its form will be or what it promises–were to cause them to crumble, as the ground of Classical thought did, at the end of the eighteenth century, then one can certainly wager that man would be erased, like a face drawn in sand at the edge of the sea.

From Michel Foucault: the final two paragraphs of The Order of Things [Les mots et les choses] (1965)

THE PROBLEM WE ADDRESS

Today, 70% of all consumer time online is spent viewing content created by other consumers. As exciting as this development is, the explosive growth of social media and user-generated content has created a significant problem for marketers, publishers and advertisers all of whom rely on business tools and strategies that were created to monetize an Internet more closely resembling Henry Luce’s magazine model than the Internet that we know today. To make matters worse, the legacy advertising technologies that marketers today rely on generally fail to tap the unique opportunities afforded by social media and user generated content. The result: advertisers are disillusioned with the promise of social media but are still longing for a solution that properly addresses the significant audience (and obvious engagement) represented by the explosion of social content.

Media6° is the solution to the “social media problem”.

THE SOLUTION THAT WE PROVIDE

Our patent pending algorithms and methods connect a brand’s existing customers with user segments composed entirely of consumers who are interwoven via the social graph. These bespoke Media6° segments are both completely customized for each advertiser and enormously scalable. They reflect high degrees of homophily, the tendency of like-minded individuals to cluster with other people who strongly resemble them.

These Media6° audiences, sharing powerful demographic and psychographic traits, have been proven to respond to advertising messages at rates dramatically higher than other targeting alternatives.

Media6° is the ideal partner for brand marketers seeking large audiences displaying the highest levels of response, engagement, word of mouth and collective behavior.

CONSUMERS

Media6° believes that the best advertising solutions are those built from the ground up to protect consumer privacy. To that end, we are committed to these principles with regard to our interaction with consumers:

We do not collect or use any personal information about any consumer.

We do not attempt to discern the content or subject matter of any content page.

We help consumers to readily opt-out of Media6° cookies both at our site and through industry programs managed by the Network Advertising Initiative (NAI).

From the website of Media6°, a marketing firm specializing in online advertising.

Let’s break down what Media6° actually does. It’s fascinating, it’s brilliant, and it amounts to no less than the erasure of man.

Media6° (note the Stanley Milgram reference in their name) works with companies who want to advertise on the web. They’re in the business of collecting data, basically, which they then use to strategically place advertisements. In order to collect that data, they place 1 x 1 px squares on pages across the web, but most importantly, they place them on social networking sites like myspace, facebook, and linkedin. They don’t do so through any insidious means: they purchase advertising space from those sites, and when those sites go to retrieve an ad from the ad server, they report identifying information via the cookie that Media6° has embedded, as this is how cookies work.

They then collect information about where this individual user travels, and when they’re on a social networking site, this allows Media6° to see that person’s local social network by getting the cookie information from those users, too. Sociologists have found that people have between five and fifteen people with whom they actually associate as friends, i.e., more than acquaintances. The rest of a person’s friend list basically operates like a rolodex, but obviously, it binds a little more than that since it’s an interactive and semi-public bond (this is probably worth another essay). That means when we say network, we’re really talking about five to fifteen people. Here’s the reason for collecting the data, from a short article written by Media6° co-founder David Honig:

In fascinating research conducted in 2004, Chris Volinsky,the director of statistical research at AT&T Labs Research, undertook a study with Foster Provost, a New York University business professor, and Shawndra Hill, then an NYU graduate student and today a professor at the Wharton School. What these researchers discovered was remarkable: Any person in contact with an existing customer of a firm is three to five times more likely to respond to a message from the firm. Birds of a feather do indeed flock (and buy) together.

Even more significant, the researchers recorded these results in a direct-mail channel that involved neither an explicit nor an implied endorsement by one consumer to another – à la the troubled Facebook Beacon. In essence, the researchers found that by analyzing which customers communicated with each other, using inbound/outbound pairs on the telephone grid, they could identify “network neighbors” in the telephone social graph.

If they found one network neighbor to have responded to a particular direct mail offer, then sending the same offer to his network neighbors resulted in a three- to fivefold lift above any targeting technique not informed by this network-neighbor data. The researchers explained the results this way: “Social theory tells us that people who communicate with each other are more likely to be similar to each other, a concept called homophily …. Linked consumers probably are like-minded, and like-minded consumers tend to buy the same products.”

In other words, Media6° uses cookies on social networking sites to identify a person’s network. Those same cookies, when placed in the checkout page of a company’s website, can tell Media6° when one of their user IDs has bought a product. Then when someone in that user ID’s network visits a website populated by Media6° advertisements, the ad server pulls the advertisement for the product purchased by someone else in the network–that is to say, it pulls the advertisement that will be most effective in selling a product, as seen in the excerpt above. Also worth noting is that Media6° doesn’t advertise on social network sites because people are much more likely to tune out banner ads in that context. They collect data there and advertise elsewhere. Media6° is quite open about all this, and in addition to offering an opt-out link on their homepage, they provide a Relevant Reading section on their website, which is where I found David Honig’s article linked to above.

Now I want to note a couple things. First, I’ve been using the pronoun “they” to describe Media6°, and in some sentences this is appropriate, and in others, probably not. No person–no human–is actually looking at these cookies. Moreover, no computer program is looking at any personal data on anyone’s myspace page or even gathering anyone’s name. This is a computer running a program that takes the user ID information gathered by the embedded 1 x 1 px squares, runs it through an algorithm that makes sense of that data, and then eventually uses that to inform an ad server which ad to place on a page when a certain user ID visits. That’s it. All of the information that those of us using social network sites fill our pages with, whether sincere or tongue-in-cheek, is completely irrelevant to Media6°. While this in no way does away with the importance of demographic information for other methods of advertising, the most effective way to advertise products in 2008 does away with actual people and only sees them as nodes in a network.

Please don’t understand this as hyperbole. I mean this with complete sincerity and as much as Foucault did when he made his prediction: We are witnessing the erasure of man. I don’t say this fearfully or even as a negative evaluation. I’m not saying man is going to disappear in a vernacular sense, and to completely understand what I’m saying would require a rigorous recapitulation of The Order of Things, which while tempting is not something I’m going to do here. If I believed in an epochal view of history and thought there were epistemic breaks, I would be forced to say that at this moment we are witnessing such a transformation, and it means nothing less than the extinction of the anthropos.

[Please note: I'm not a tech guy; I'm a theory guy. If I've made any errors in explaining precisely how Media6° operates, don't hesitate to correct me. This is the web, of course, and revisions are easy.]

October 15th, 2008

The Infinite Improbability Drive, and your stock portfolio.

From http://www.argocons.com

From http://www.argocons.com

Via the Digest for Semiological Transcoding, which seems to have gone on an extended break.

January 12, 2008
Fun Definitions from New York Magazine and H2G2

Stat-Arb: Statistical arbitrage, a.k.a. quantitative trading, a.k.a. “black-box trading.” The computerized trading of thousands of stocks based on a set of models manned by “guys with a lot of physics and hardcore statistics backgrounds who come up with ideas about models that might lead to excess return and then they test them and then basically all these models get incorporated into a bigger system that trades stocks in an automated way.”

Black Box: The computers that do the trading.

These definitions sounded vaguely familiar to me, and confirmed my long-held suspicion that, not only does life imitate art, but so too does day trading imitate science fiction –

Infinite Improbability Drive (From The Hitchhiker’s Guide to the Galaxy): Finite levels of improbability could easily be generated using an electronic brain and a strong Brownian motion producer (say, a cup of hot tea); yet scientists lacked the means to create a drive that could produce the infinite improbability field required to allow a ship to travel anywhere instantaneously. It was generally concluded that such a drive was virtually impossible.

Eventually, a student (left to sweep up the lab after a particularly unsuccessful party) reasoned that if such a machine were, in fact, a virtual impossibility, then it must also logically be a finite improbability. After working out exactly how improbable, he fed that value into the finite improbability generator, gave it a really hot cup of tea, and managed to generate the infinite improbability generator out of thin air, thus violating the laws of cause and effect. After winning the Galactic Institute’s prize for extreme cleverness, he was later lynched by other scientists who had been trying to make the generator for years, and who finally worked out that what they really could not stand was a smartass.

Ever since I took an Intro to Econ class many years ago (and never took an econ class again), I’ve come to the conclusion that any science that attempts to derive solid outcomes from equations that cannot possibly have a 100% outcome is essentially science fiction. The only statistical certainty is that failure is going to happen sooner or later, and then we’ll have to start all over again.

Yes, the black boxes described are essentially finite probability drives, or something like that.

EDIT: I should add that my main focus in college was Sociology, which admittedly, is not always very accurate. I have nothing against using statistics and generating opinions and theories based off of strong correlations and such, but we have to be honest with ourselves when in comes to statistics.

October 13th, 2008

Fuck Damien Hirst; this here’s a bargain.

Your very own rhinestone-encrusted skull, just $24.95.

We drink Jim Beam. RSS Feed.