Sunday, March 30, 2008
Saturday, March 29, 2008
The post hoc ergo propter hoc fallacy translates into "after this, therefore this." Here's a good joke to show you what I mean.
A 30 year old Gentile man falls in love with a nice Jewish girl and wants to marry her. She says that in order to marry her he must get circumcised. So the man goes to a Jewish friend and asks him if the circumcision has any negative side effects. The Jewish man says, "Well, I was only eight weeks old when I had mine, so I can't remember if it hurt. But I do know that afterwards I couldn't walk for a year!"
The burden of proof in a civil court is to prove that the defendant's actions were the proximate cause of the plaintiff's injuries and the actions were more probable than not. In other words, all of plaintiff has to prove is that the defendant could have seen that his actions would probably hurt someone. In the movie, Civil Action, attorney Jan Schichtmann can prove the relationship between the dumping of toxic chemical, TCE, into the water in Woburn, Massacuhetts, with this probablity. In a strawman fallacy, a new fiction novel by John Grisham, The Appeal, illustrates how the courts can be influenced by special interest groups.
My law teacher used to say that everyone has a gut feeling for the truth. That's why judges say, "All evidence is evidence including what the jury believes." This feeling is why attorneys are given preemptive challenges to a juror. So much of law relies on gut feelings. That's why jurors are not allowed to take notes during testimony. Given the casual relationship among cause and effect and how juries process testimony, is it any wonder why there are the Stella Awards?
Friday, March 28, 2008
"To some of you, this is spare change. To us, it's our livelihood," said Wisconsin eduction support professional, Maureen Socha. She was speaking to the Wausau School Board about a living wage, while holding a clear plastic bag with coins. The quote was taken from the April, 2008, NEAToday, a publication for teaching association members.
The publication then heralds the work of the association in raising wages over a 30 year period and cites average teacher pay. The publication lists the average teacher pay in 1979 was $16,715 compared to $52,842 in 2008. Other comparisons are made with stamps, gas, homes, eggs, and milk.
As an association member, I thank by collective bargaining unit daily for their work representing members, contract maintenance, and negotiating our master contract. These volunteers spend countless hours after work helping members who don't even greet the union reps who they don't even know. I wonder if our union is making an error in economic logic when they negotiate. Since the 2008-2009 is a negotiation year, I have been thinking about the master contract. I Think more teachers would appreciate the union if the union asked for a raise in the real wage instead of the nominal wage. Using a real wage will allow educators like Maureen Socha to see that her wage is more than keeping up with inflation. Why do educators, who value education the most, lack the fundamental basics of economics? The NEA should insist that wages be tied to the CPI so that an increase in the inflation rate doesn't eat away at a teacher's nominal wages.
The publication also cites a high turnover for teachers with working conditions given as the main reason for leaving the profession. I think the NEAToday misses the point again by failing to isolate the right variables in making gross inductive statements from survey data.
Henry Ford learned a long time ago that paying an efficiency wage will retain employees who work in adverse conditions. An efficiency wage is a wage that is higher than the employees alternate choices. The employee will remain in employment at a school that pays an efficiency wage since it will cost her too much to leave. An efficiency wage will reduce adverse selection and moral hazards and eliminate market asymmetries.
Every year I hear veteran and rookie teachers vow to make "this year the best year ever." Then everyone does exactly the same thing as they did last year. To do the same thing over and over and expect a different result, is the comedian's definition of insanity. Let's tie our wages to the CPI and end the insanity of teachers begging for more money.
Wednesday, March 26, 2008
The most oft-cited example of this fallacy originated with Amos Tversky and Daniel Kahneman:
Linda is 31 years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in anti-nuclear demonstrations.
Which is more likely?
Linda is a bank teller.
Linda is a bank teller and is active in the feminist movement.
85% of those asked chose option 2. However, mathematically, the probability of two events occurring together (in "conjunction") will always be less than or equal to the probability of either one occurring alone.
Tuesday, March 25, 2008
Monday, March 24, 2008
Sunday, March 23, 2008
Saturday, March 22, 2008
On Second Street, where parking is "free" for three hours, there is not one handicap parking space. The nearest parking space for those who need special accommodations, is behind Ace Hardware store. Individuals using these spaces are far removed from the downtown area. So why are there no handicap parking places in downtown Muscatine. I offer a couple of explanations.
(1) Businesses have special interests. To have a handicap parking place in front of the pawn shop would be inefficient. In my observations, the parking spots reserved for those who need accommodations, are seldom used. To dedicate this space in front a downtown business would divert business away from the pawn shop. (2) The parking spaces have to be bigger, but Second Street is a narrow street. To have handicapped parking might actually make parking downtown a hazard to those with special needs. (3) The city only can do what's important now. So snow removal is important now. Repairing potholes are important now. So parking takes a back burner.
A fallacy of logic has to do with consistantcy. If something isn't consistant, then it's illogical. Most citizens want a law uniformly enforced. When a law isn't enforced equally, people wonder about the motivation for the law. Does the parking law in question contribute more benefits to society than costs? If so, then it's a good law.
(1) People's choices are constrained by their income. By the time they finally get to the checkout counter, they've spent their disposable income. (2) By the the the impluse items are placed on sale by the checkout counter, the items have reached diminishing utility. In other words, the items are worthless or they would have been already sold. (3) Consumers are rational and know that the items are impluse items and don't want to fall for that old trick. (4) Blockbuster's checkout services are so slow that by the time a customer can checkout, the impluse has been replaced by reason. So customers rationally weight the costs and benefits and decide not to buy. (5) Blockbuster is employing a two tier pricing system trying to capture the consumer's surplus. This is like the theater charging a high price for popcorn. So Blockbuster has captured the consumer's surplus with the high price of their movies and there's no surplus left to be spent on trinkets and impluse items.
I have bought stuff at the checkout counter on impulse. What I'm saying is that as a strategy to move merchandise, placing discounted items near the checkout is a poor strategy. A better strategy would be to enhance the ambiance of the goods by giving them away to those who buy instead of rent movies.
Friday, March 21, 2008
Wednesday, March 19, 2008
When I was trying to sell a CD my economics class produced last year, the only comments we heard was that the CD was crappy. Were consumers basing the quality of our CD on the price?
Tuesday, March 18, 2008
In Predictably Irrational, Dan Ariely, argues for what behavior economists call self-herding. Self-herding simply means that we believe something is good or bad on the basis of our past experiences. So buying the Economist simply becomes a habit and the relative costs and trade-offs soon are forgotten. As you get elevate to a higher indifference curve, other consumption bundles becomes rational. So you pay more for the magazine. This book is highly recommended.
Sunday, March 16, 2008
Saturday, March 15, 2008
Monday, March 10, 2008
The March 10, 2009, Time, on page 17, has a blurb The Potato Panic. According to Time, the price of a bushel of wheat has reach $12. The article thinks that the $100+ of crude oil, an input into the manufacture of wheat is a cause. The high cost of food has caused the inflation rate in Saudi Arabia to hit 6.5%. Seems to me that both countries have the mutual incentive to keep costs low as both are economically tied. For those who think that OPEC is raising prices to hurt consumption capitalistic westerners, should rethink their argument.
Sunday, March 09, 2008
Last June Muscatine High School was in a head-on collision course with a tornado. As we huddled in the halls with our heads covered, many students had their Zunes dialed into the 93.1, our local news radio channel. They were able to trace the path of the tornadoes around the city. We learned what's it's like to be in a tornado and some meteorological facts. But, did we become experts because we survived a tornado?
simply because I'm a survivor doesn't make me an expert. Yet, survivors are often called upon to give their opinion as fact. Take for example, our school improvement team. Recently, they visited Adlai Stevenson HS in Chicago, Illinois. They spent the day learning about the Pryamid of Interventions and block scheduling. Since they experienced the day at this model high school, does that make them an expert to testify? More data must be obtained and analyzed empirically before decisions are made. To rely on two or three people's experiences is to commit the fallacy of composition.
Saturday, March 08, 2008
At an the Monday, March 3, 2008, in-service, the faculty was given a survey which showed with empirical data that 60% of the faculty believes that all students can learn at a high level. Only 20% did not believe the statement. The conclusion is that the majority is right.
I believe you can lead a horse to water but you can’t teach him the backstroke. I don’t believe that all students can learn at a high level. The problem with using a survey like the one our faculty was given is that it lacks a clear standard of definition of “high level.”
For example, suppose you say that vegan pizza is good and I say that vegan pizza is bad. What is the relative worth of our words? If I list things that are “bad” I would include the Iraq war, African civil war, Gang violence, and vegan pizza. Where on that list would the pizza fall? I could make a list of things I think are good. Perhaps this list includes benevolence, philanthropy, and kindness. Where does the pepperoni pizza fit? So when teachers are discussing a “high level” of learning, they are using what relative benchmarks? The survey results are invalid and unreliable.
When attempting to change the school, survey data is often relied upon to make the change. Many times teachers are allowed to give their opinion. The collective opinion is given the weight of authority. Many of my colleagues are indeed experts in their discipline and pedagogy. Even experts make mistakes which should not stop us from seeking their opinion. But change at the high school has to come from reliable metrics and not survey data which is largely anecdotal.
Friday, March 07, 2008
Thursday, March 06, 2008
Dr. Eric Berne of Transactional Analysis fame, Games People Play, postulates that everyone needs a certain amount of stokes both physical and mental in order to live. Kelley Morgan, a co-worker years ago, used to call these strokes "skin hunger." Skin hunger describes the proximity that students stand to each other, the constant touching, the text messaging, the clogging. Kelley used to say that "You'll find more acceptance in this group than anywhere else." It's no wonder that the most eclectic group of students are found in the hall between classes. Each student in this crowd is rationally seeking to maximize their utility and gain as many strokes as possible. Is it possible that these students are not receiving the stokes they need from teachers? One of the buzz concepts that I hear from our administrative team is that teachers need to build "Rigor, Relevance, and Relationships." When teachers fail to build relationships with students, the students transfer the cost to third-parties by clogging the hall.
Some of the students might have deep emotional problems with relationships. Tyler Cowen in Discover Your Inner Economist, opines that students might be late for class for fear that they will arrive before their friends. These students take the asymmetrical arrival times personally. The students who arrive early will wonder why their friends are late. These students reason, "Did my friend have something more important to do than talk to me? Did my friend abandon me?" So in order to protect their ego, students who clog the artery of the halls, might cling to their peer groups as security. To arrive early without their friend is interpreted as painful rejection. It is therefore rational to remain in the hallway.
Neoclassical economics predicts that individual actors will maximize their utility or pleasure. By waiting in the hallway, many opportunities to gain strokes or utility might arise. Maybe, Juan is waiting for Mary to walk by to ask her for a date. Maybe Juan wants to talk to his friends about a assignment before class or finish eating before going to class. In order to maximize his utility, Juan will wait to the last second before bolting to class. So Juan, and many others, will wait in the hall exerting a cost on innocent third parties.
In order to alieve the congestion problem, property rights must be assigned or a Coase Theorum must be sought. Until someone "owns" the hallway it'll continue to be oversued to the point where marginal benefit equals marginal cost.
Tuesday, March 04, 2008
The right way to build a sidewalk is to not build the sidewalk at all. People will choose a path to the front door that minimizes their cost and maximizes their benefit. The paths that have worn out the grass or packed down the snow are the most popular paths. Choose to build the sidewalk on those paths since the paths don’t lie and appear to be the most efficient entrance to the building for the most people.
The way to build a sidewalk is to look at what people do and not what they say. The same approach could be used to determine the best schedule.
Most people would choose to eat today and diet later. In their choice, they have weighted the costs and benefits in two different time periods or intertemporal choice. If that situation sounds contrived, try this. Suppose you are considering buying something but you’re short of cash. You can borrow the money or use your credit card. In this case you chose to spending money now and forgo consumption later. You might think that the benefit of consumption now is greater than the cost of not consuming later. Teens do this all of the time. They watch a television show then do homework. Or they go to work then come home late and try to study.
We face hundreds of these decisions daily. Do you buy or rent? Do I marry or stay single? Rational consumers consider both present and future time periods when making choices.
Now, put yourself in the shoes of a teenager at a party where there’s alcohol. Should the teen drink now or wait until the teen turns 21? The teen has to weigh both costs and benefits in making this intertemporal decision. Suppose that the teen thinks there’s no way he’s going to get caught or become addicted. In addition, suppose the benefits of being cool and fitting in with his peers is great. I believe that when teens are faced with this choice, they will choose to drink.
Recently, Bob Weaton held a community forum on what the administration is doing to curb teen drinking. I applaud him for his proactive approach to attempting to solve this long time a problem. I don’t think the problem can be solved with changing the tastes and preferences of the demand curve. Instead, teens must be encouraged to avoid the parties altogether.
Tim Harford states in his book, The Logic of Life, that people make decisions by considering the present and the future. So if a teenager is at a party and is offered alcohol, the teen will weight the moment’s pleasures with the future’s costs. The teen most likely will drink just like the reveler on Christmas Eve will eat.
For Mr. Weaton to curb teenage drinking, he’ll need to change the incentives the teen faces when making choices at the moment. Information will help. Information about how alcohol will hurt them or impair driving might influence their choice. I tell a story about a frog who gives a spider a ride. But to truly influence choice, teens need to be removed from the party so there’s no choice to make. In other words, the teens should not even be at the party. This is like not carrying your credit card with you when you shop or not turning on the television until your homework is complete.