Showing posts with label Book reviews. Show all posts
Showing posts with label Book reviews. Show all posts
Sunday, July 24, 2011
The Believing Brain
Michael Shermer talks about his theory of the brain as a ‘pattern believing machine’. Put simply, we first believe in patterns subconsciously, then add logical explanations post hoc. This partly explains why debating passionate people on their topic of choice often leads each person more entrenched in their beliefs than afterwards, since logic doesn’t govern our already held subconscious beliefs.
He has a book exploring the idea in more detail, and if you want another brief take on his theories you can read one of his articles here.
And the conclusion from one reviewer -
Having presented the case that we form beliefs on the basis of unconscious, often irrational processes, and that all our argumentation in support of these beliefs is then added post hoc and subject to a wide range of cognitive biases which he lists and explains, Dr. Shermer leaves us in a near-hopeless state. The human condition, according to this perspective, is one of deep-rooted, biased subjectivity and perpetual, unresolvable conflict between believers with different sets of beliefs.
Wednesday, May 4, 2011
Economics, Real Estate and the Supply of Land
As a general rule, economists relying on supply and demand curves without properly discussing the assumptions that sit underneath their graphs can be ignored.
Alan Evans' book Economics, Real Estate and the Supply of Land is an effort to refute Ricardian notions of land supply and rent, and offer an alternative neoclassical theory of land supply. The arguments in this book are taken by many who believe that reducing government involvement in town planning will decrease the price of housing. Evans’ reasoning is questionable to say the least, and supported by elaborate graphs with often biased assumptions and interpretations.
One of Evans’ aims is to refute the Ricardian proposition ‘that the price of land is high because the price of corn [read: houses] is high, and not vice versa’.
To do this he constructs a model economy with a fixed land supply where two agricultural uses compete for land – potatoes and corn. In the figure below we see his construction of this economy on the left, with demand for corn inverted so that the intersection of corn and potato demand determines the equilibrium share of land devoted to each crop, and the equilibrium rent of land at point A.
He then proceeds to add a demand shock to potatoes ‘for some reason’. The new blue line represents the new increased demand for potatoes which enables potato growers to bid up prices for land previously grown for corn and reduce the amount of land used to grow corn. He concludes with the following -
Now it is quite clear that the increase in the rent of land is not caused by the increase in the price of corn. Exactly the reverse is true. The price of corn has risen because the price of land has risen.
...
The rent for land is not solely determined by the demand for the product.
His conclusions are wrong.
First, it is still quite clear that at the new equilibrium the price of land for corn is still determined by the new higher price for corn. You could just as easily argue that every time a potato grower buys land from a corn grower he decreases the output of corn and the price of corn rises, thereby leading to an increase in the rents of land available for growing corn.
Second, he fails to notice that all he has done with the model is to demonstrate the inflation mechanism following an increase in money supply for one purpose. He increases total demand (potatoes plus corn) but shifts preferences towards potatoes so that corn demand is constant. The end result of his demand increase is to increase all prices in the model economy – potatoes, corn and rent.
Followers of Say would jump straight to this conclusion. You can’t simply increase total demand in the economy – demand is comprised of supply.
An actual demand shock, which models a change in preferences from corn to potatoes, is shown in the right hand side figure. You will notice that total demand remains constant and therefore the rents for this fixed quantity of land also remain constant.
So no, land rents do not determine prices. Prices determine rents.
Another example of poor reasoning is when Evans argues against a 100% land value tax. He argues that a tax of that nature would ‘freeze’ land development because there would be no incentive for a owner of agricultural land to sell his land to a developer for housing development, since he would not capture any of the value uplift. The rent achieved by the owner of the land will remain the same as when it is rented to the farmer – zero.
Yet in chapter 8 he argues that the value of land grows in anticipation of future higher value uses. In these cases, when the site is genuinely worth more as housing, the tax would be at a rate that reflects that higher value, and not the agricultural value. Therefore, the owner of the land will be facing a tax on the land value for housing while only receiving rents at agricultural values. As the city expands and the value of his land for housing surpasses the value for agriculture, he has a great incentive to sell or develop immediately to avoid losses.
Although I don’t support a 100% land value tax, I do support shifting the tax burden towards land and fixed rights to natural resources.
What we do learn from this book is that even the experts are prone to bias that affects their ability to apply objective logic and reason.
Alan Evans' book Economics, Real Estate and the Supply of Land is an effort to refute Ricardian notions of land supply and rent, and offer an alternative neoclassical theory of land supply. The arguments in this book are taken by many who believe that reducing government involvement in town planning will decrease the price of housing. Evans’ reasoning is questionable to say the least, and supported by elaborate graphs with often biased assumptions and interpretations.
One of Evans’ aims is to refute the Ricardian proposition ‘that the price of land is high because the price of corn [read: houses] is high, and not vice versa’.
To do this he constructs a model economy with a fixed land supply where two agricultural uses compete for land – potatoes and corn. In the figure below we see his construction of this economy on the left, with demand for corn inverted so that the intersection of corn and potato demand determines the equilibrium share of land devoted to each crop, and the equilibrium rent of land at point A.
He then proceeds to add a demand shock to potatoes ‘for some reason’. The new blue line represents the new increased demand for potatoes which enables potato growers to bid up prices for land previously grown for corn and reduce the amount of land used to grow corn. He concludes with the following -
Now it is quite clear that the increase in the rent of land is not caused by the increase in the price of corn. Exactly the reverse is true. The price of corn has risen because the price of land has risen.
...
The rent for land is not solely determined by the demand for the product.
First, it is still quite clear that at the new equilibrium the price of land for corn is still determined by the new higher price for corn. You could just as easily argue that every time a potato grower buys land from a corn grower he decreases the output of corn and the price of corn rises, thereby leading to an increase in the rents of land available for growing corn.
Second, he fails to notice that all he has done with the model is to demonstrate the inflation mechanism following an increase in money supply for one purpose. He increases total demand (potatoes plus corn) but shifts preferences towards potatoes so that corn demand is constant. The end result of his demand increase is to increase all prices in the model economy – potatoes, corn and rent.
Followers of Say would jump straight to this conclusion. You can’t simply increase total demand in the economy – demand is comprised of supply.
An actual demand shock, which models a change in preferences from corn to potatoes, is shown in the right hand side figure. You will notice that total demand remains constant and therefore the rents for this fixed quantity of land also remain constant.
So no, land rents do not determine prices. Prices determine rents.
Another example of poor reasoning is when Evans argues against a 100% land value tax. He argues that a tax of that nature would ‘freeze’ land development because there would be no incentive for a owner of agricultural land to sell his land to a developer for housing development, since he would not capture any of the value uplift. The rent achieved by the owner of the land will remain the same as when it is rented to the farmer – zero.
Yet in chapter 8 he argues that the value of land grows in anticipation of future higher value uses. In these cases, when the site is genuinely worth more as housing, the tax would be at a rate that reflects that higher value, and not the agricultural value. Therefore, the owner of the land will be facing a tax on the land value for housing while only receiving rents at agricultural values. As the city expands and the value of his land for housing surpasses the value for agriculture, he has a great incentive to sell or develop immediately to avoid losses.
Although I don’t support a 100% land value tax, I do support shifting the tax burden towards land and fixed rights to natural resources.
What we do learn from this book is that even the experts are prone to bias that affects their ability to apply objective logic and reason.
Monday, June 14, 2010
The Big Short: Inside the Doomsday Machine
Lewis's book provides a fascinating insight into the minds and mischief of the characters shorting the sub-prime mortgage market during the US real estate bust and general GFC calamity.
I found the unintentional insights into herd behaviour eye opening. The players shorting the market almost couldn’t believe that the price to insure sub-prime mortgage backed securities was so low when by their analysis, they carried so much risk. They spent an achingly long time trying to figure out if there was some critical piece of information missing from their analysis. If there was, it might explain the apparently irrational behaviour of the counterparty to the bets. But the more they searched, the more they realised that it was a simple matter of ignorance that kept the sub-prime security holders in the game.
It took a strong will to bet such grand sums against the markets, and for those behavioural economists looking for insights into our predictable irrationality this book offers a thorough exploration of the personality differences amongst the characters in this ill-fated market.
I found the unintentional insights into herd behaviour eye opening. The players shorting the market almost couldn’t believe that the price to insure sub-prime mortgage backed securities was so low when by their analysis, they carried so much risk. They spent an achingly long time trying to figure out if there was some critical piece of information missing from their analysis. If there was, it might explain the apparently irrational behaviour of the counterparty to the bets. But the more they searched, the more they realised that it was a simple matter of ignorance that kept the sub-prime security holders in the game.
It took a strong will to bet such grand sums against the markets, and for those behavioural economists looking for insights into our predictable irrationality this book offers a thorough exploration of the personality differences amongst the characters in this ill-fated market.
Wednesday, June 9, 2010
The Noble Lie?
In his book The Noble Lie: When Scientists Give the Right Answers for the Wrong Reasons, Gary Greenberg challenges conventional wisdom to suggest that many social vices have become labelled as diseases, without evidence, but for the betterment of society. His book delves into the grey areas of science, politics and philosophy, conveying a line of reasoning that presents a picture of positive self-delusion on a grand scale.
This review summarises some of the challenging points in the book.
For instance, Greenberg explains how alcoholism's transition from vice to disease was a welcome one, especially following Prohibition. It was long viewed as an allergy, though the specific allergen persistently failed to appear. Even today, neither its disease-nature nor any possible cures have manifested themselves. Regardless, people are happy to accept the idea that addiction is a medical illness, perhaps, Greenberg suggests, because of our ambivalence towards the role of pleasure and our uncertainties about free will and self-determination. “With the disease model we have an answer,” he writes, “one that has the imprimatur of science; addiction isn't wrong, it's sick.”
In the absence of scientific proof that addiction is a disease, is it wrong for medical professionals to perpetuate the idea? Not necessarily, Greenberg says – there are times when what is scientifically wrong, or at least uncertain, is morally right. “There can be no doubt that the disease model has helped millions of people. If a made-up disease can be of such immense value, then we must consider the possibility that the truth is not what it's cracked up to be. Perhaps, in the republic of medicine, the fiction that addiction is a disease is a noble lie.”
Sometimes the noble lie works the other way round. In a chapter on homosexuality, Greenberg shows how humane concerns first led people to prefer a medical to a criminal definition, but conflict followed concerning the disrespect a medical definition implied toward what should perhaps be viewed as a free life choice. In 1973, following the Stonewall riots and the start of the gay rights movement, the American Psychiatric Association deleted homosexuality from the Diagnostic and Statistical Manual of Mental Disorders (DSM), a move decided not by scientific facts but by political and moral attitudes. “It may be the first time in history that a disease was eliminated by the stroke of a pen,” Greenberg writes.
Tuesday, April 13, 2010
The plastic brain: a theory of human experience
Norman Doidge has written a book that encapsulates the latest research in neuroplasticity and delivers it to the curious mind in an intellectually stimulating and satisfying read. The Brain that Changes Itself: Stories of personal triumph from the frontiers of brain science, is a book that had me raving to family and friends after each chapter. I could only put it down to ponder the significance of the subject matter to human society before reading on. I want to take this opportunity to highlight a few titbits that stuck with me.
Early on, we find out that our brains can use almost any input as a sense. A lady who has lost her sense of balance (her vestibular function), and couldn’t stand straight and felt dizzy as soon as she turned her head or her focus of vision. Her brain learnt to take the electronic impulses of a plate under her tongue, power by a gyroscope, as a new vestibular system, and she learnt to balance again. In fact, there was a residual effect even after the device was removed. She learnt to balance again without the sensory input from our balance organ.
Sensory input, including pain, is not a one way street from the skin, nose, tongue or ears, but a two way street that also leads from the brain to the organs. That’s why phantom pain of amputated limbs can still persist. But can you see pain?
One of researchers we meet, Vilayanur Subramanian Rmachandran, demonstrates that we can. He primes the brain to associate the visual input of light touches and taps on a tabletop, with touch input onto our hands. The subject puts one hand under the tabletop and the researcher taps the table top in sync with tapping of the subject’s hand under the table. When the tapping or stroking of the tabletop moves to the left, the stroking of the hand also moves to the left. He can trains a subjects brain to associate the surface of the tabletop with the surface of their hand. Soon, the subject can ‘feel’ the touch on the tabletop without the hand being touched at all. And the result of his intensive experiments are very interesting.
Ramachandran has wired subjects to a galvanic skin response meter that measures stress responses during the table experiment. After stroking the tabletop and a patients hand under the table until his body image included the tabletop, he would pull out a hammer and bash the tabletop. The subjects stress response went through the roof, just as if Ramachandran had smashed the subject’s actual hand.
The underlying plasticity theory presented in the book explains many other psychological and social theories. Is encompasses so much existing knowledge you wonder why we haven’t thought of it before (we had thought of it, just couldn’t provide evidence because for so long you could only examine the brains of dead people). Plasticity explains why our childhood experiences cement our adult personalities, and how learning actually occurs in the brain – why it take so much repetition to learn a task or some facts, then once they are learned, you find it hard to forget. For parents there are plenty of insights into childhood behavioural patterns, and how to break or reinforce them, and insights into why toddlers are sponges for information. The saying “Give me the boy for seven years and I’ll give you the man” has a neuroplastic explanation.
You also gain insights across such broad psychological topics as pornography addiction, and encounter the 'plastic paradox', which explains why we become so habituated even though out brain is able to fundamentally restucture itself.
After reading this book you may become absorbed with amazing feats of the human brain, like echo location (and an interesting case here), and blind people seeing with their tongue through the assistance of video inputs.
This book with radically change your understanding of the world.
Early on, we find out that our brains can use almost any input as a sense. A lady who has lost her sense of balance (her vestibular function), and couldn’t stand straight and felt dizzy as soon as she turned her head or her focus of vision. Her brain learnt to take the electronic impulses of a plate under her tongue, power by a gyroscope, as a new vestibular system, and she learnt to balance again. In fact, there was a residual effect even after the device was removed. She learnt to balance again without the sensory input from our balance organ.
Sensory input, including pain, is not a one way street from the skin, nose, tongue or ears, but a two way street that also leads from the brain to the organs. That’s why phantom pain of amputated limbs can still persist. But can you see pain?
One of researchers we meet, Vilayanur Subramanian Rmachandran, demonstrates that we can. He primes the brain to associate the visual input of light touches and taps on a tabletop, with touch input onto our hands. The subject puts one hand under the tabletop and the researcher taps the table top in sync with tapping of the subject’s hand under the table. When the tapping or stroking of the tabletop moves to the left, the stroking of the hand also moves to the left. He can trains a subjects brain to associate the surface of the tabletop with the surface of their hand. Soon, the subject can ‘feel’ the touch on the tabletop without the hand being touched at all. And the result of his intensive experiments are very interesting.
Ramachandran has wired subjects to a galvanic skin response meter that measures stress responses during the table experiment. After stroking the tabletop and a patients hand under the table until his body image included the tabletop, he would pull out a hammer and bash the tabletop. The subjects stress response went through the roof, just as if Ramachandran had smashed the subject’s actual hand.
The underlying plasticity theory presented in the book explains many other psychological and social theories. Is encompasses so much existing knowledge you wonder why we haven’t thought of it before (we had thought of it, just couldn’t provide evidence because for so long you could only examine the brains of dead people). Plasticity explains why our childhood experiences cement our adult personalities, and how learning actually occurs in the brain – why it take so much repetition to learn a task or some facts, then once they are learned, you find it hard to forget. For parents there are plenty of insights into childhood behavioural patterns, and how to break or reinforce them, and insights into why toddlers are sponges for information. The saying “Give me the boy for seven years and I’ll give you the man” has a neuroplastic explanation.
You also gain insights across such broad psychological topics as pornography addiction, and encounter the 'plastic paradox', which explains why we become so habituated even though out brain is able to fundamentally restucture itself.
After reading this book you may become absorbed with amazing feats of the human brain, like echo location (and an interesting case here), and blind people seeing with their tongue through the assistance of video inputs.
This book with radically change your understanding of the world.
Friday, March 19, 2010
Book review: Embracing the Wide Sky
Autistic savant Daniel Tammet wrote this gem, and yes that means he has ‘rainman' like mental skills. In fact, he learnt Icelandic (his 11th language) in the week prior to being interviewed for an Icelandic television program.
Tammet takes us on a surprisingly entertaining journey through the current research on how our brains operate - how they remember, how they learn language, logic and mathematics. He proposes a very simple overarching theory about our brain functionality which can ultimately explain déjà vue, memory distortion, information overload, the difficulty learning a second language (there’s no reason to believe it gets harder with age, but only our first language is stored in the ‘language area’ of the brain, while second languages are stored elsewhere), why words, phrases or physical settings prompt unconscious memory retrieval associated with that stimulus (for example, why moving students form one classroom where they learned material to another for examinations has a negative impact one their ability to recall what they’ve learned), and why the typical English speaking adult can remember the meanings of more than 45,000 words.
His theory starts by debunking absolutely the idea that our brains work like computers – that we store and retrieve memories and use some kind of software to manage the data. Our brains are instead a simple instrument that uses in-built pattern recognition to re-create memories each time they are 'retrieved' - there is not memory bank to speak of. This pattern recognition system is a variant on Noam Chomsky’s theory that the brain has a built in system of grammar, and that a rules can allow a brain to quickly learn any language (as all languages conform to the basic rules of grammar in the human brain). The problem of course is that repeatedly re-creating memories can lead to an actual creation of something entirely new. I will never trust eyewitness evidence again.
These in built ‘grammatical’ rules even allow us to perform complex mathematics. Tammet explains his own mathematical ability as simply applying the grammar of mathematics. He sees a number and gets a feeling if it is prime, just as we see a new work for the first time and know, due to the pattern of letters, whether it could be a real english word, and possibly induce its meaning. We know instinctively that qwrsh is not a word, just like Tammet knows that 12391 is prime.
He compares the beauty of our built in system of information arrangement and recreation to the dewey decimal system:
Dewey's system is a marvel of organization, but I have given detailed examples here in order to make an important philosophical as well as practical point. Information is meaningless unless it can be made sense of, and to do that it requires an internal system of thought and ideas that can provide context and relate it to other information we have already learned
Ultimately, Tammet proposes that his autistic brain indeed functions like all others, but in a highly connected way. He uses the same inbuilt grammar of the mind for mathematics and language but in a highly connect way. He is not different, just enhanced in this way.
Sunday, December 20, 2009
Summer Reading
The past few weeks I’ve somehow found time to read. Here are a few interesting titles that I would recommend.
Christopher McDougall has written an intriguing story amidst a lesson in human evolution which will leave you inspired. The following things have happened to me since reading this:
- I run more
- I run bare feet whenever possible
- A pair of these are on my Christmas wish list
- I like to talk about human evolution and rabbit skeletons a lot more than I used to
I don't want to give away too much, but I can’t recommend this book enough – READ IT!
I’ll admit that I am a Richard Dawkins fan. In this book you get a break from his famous anti-religious crusade which was popularised by his documentary Enemies of Reason, and book The God Delusion. Instead, you get an easy to read account of the emerging evidence for evolution, and a theoretical discussion that crafts often complex and counter-intuitive ideas into accessible analogies.
If you are short of dinner party discussion topics, you will find everything you need this festive season – from how the skull of almost every mammal is made up of the same 28 bones (in a rigid structure), or how the bizarrely long detour of the laryngeal nerve in the neck of the giraffe is exactly what we’d expect from evolution.
Those with a thirst for knowledge and an interest in evolution should read this book.
I was expecting a lot from this book and after reading, felt that I was deceived by the title. While George Soros may be a spectacularly successful investor, this book is actually about his theory of reflexivity.
Soros’ theory can be a little philosophical. Its starting point is fallibility, which is the idea that our understanding is always imperfect because we are part of reality, a part cannot understand the whole. He says “The human brain cannot grasp reality directly but only through the information it derives from it.” To translate, there is no such thing as perfect information – the necessary precondition for perfect markets.
What is important in this book is that Soros shows how much economic reasoning is fallacious because money is assumed to be neutral far too often. One of his key messages is that the state of financial markets has a tangible impact on the real economy. Of course, this idea itself is not new.
But his ideas for improving the stability of the economy appear logical. On the premise that the market is imperfect, and that regulation is imperfect, he suggests that governments set stronger boundaries for financial institutions – I interpret it as a bounded market. By setting known boundaries to market behaviour he also hopes to avoid the moral hazard inherent in many financial institutions. The fact that big banks know they can’t be allowed to go broke increases the propensity for risk taking.
Soros believes that there was a bubble riding on a super-bubble, which will both burst in time (it reminded me of Wave Theory). Of course, like always, the timing can be a problem.
For those budding detectives this book is quite interesting. It is essentially a lesson in the psychology research of author Sam Gosling on behaviour residue. What makes this book interesting are the experiments that show how good we are at intuitively knowing the personalities of people from the bedrooms, offices, cars, and websites.
For example, researchers photographed cars and their owners separately by the side of a toll booth, and asked students to match up car and driver – and they were bloody good at it! From a waist up photograph and a single external photo of the car, people could guess the personality and lifestyle of the person, and match it with the car that they thought reflected those characteristics. Quite amazing when you realise how difficult it is to deconstruct how we achieve this miraculous feat.
Thursday, November 12, 2009
Unthinkable
I read a book that opened my mind recently. It is probably not on the best seller lists (is #53,525 rank in Amazon a best seller?). It is called The Unthinkable: Who survives when disaster strikes – and why.
This book examines the human response to fear in crisis situations and is presented in a very easy to read, non-scientific, yet analytical way.
The book is structured around the three phases of fear that people pass through – denial, deliberation, action.
Author Amanda Ripley weaves a story linking known human responses to evolutionary psychology. For example, the paralysis some people feel during fear is explained by people searching for a subconscious response. The less familiar people are with their environment, the longer it might take to finish searching for a learned response and start being able to think rationally again.
Ripley tells the tale of a school shooting survivor who ‘played dead’ on the ground and was the only one in the classroom not be killed that day. I was shocked, because I had often thought playing dead might be a great way to survive a crazed shooting spree.
While I probably won’t do the book justice, I want to try and summarise some of the main points that stuck in my mind.
1. If you are going to rescue a drowning person, you should yell and scream at them as you approach. Many rescuers are themselves dragged into the water by troubled swimmers desperately grabbing at them. You need to get their attention - swearing and threatening not to save them if they touch you is the recommended approach – and by doing so, you lead them into an obedient state of fear. Which leads me to my next point.
2. People are mostly very obedient in a state of fear. If they do not have a plan of action that they are confident about, they will latch on to any suggestions by others. In many situations, people have been observed evacuating buildings like obedient lemmings.
3. People are on the whole fairly calm in an emergency situation. In some cases it is due to denial, some cases due to paralysis of fear (their mind is whizzing away but can’t find a pre-programmed response to the emergency)
4. People who undertake heroic actions, risking their own lives for others, generally do not make a conscious rational decision. They often say that images of their families pop into their mind, and the thought of facing them knowing they cowardly watched people dying springs them into action. Although some reference to evolutionary psychology is made, as males with no children are by far the greatest heroes.
5. Overconfident people, who are a pain in the backside during normal times, are far more likely to survive a disaster. This is simply due to their ability to breeze through the denial stage and make a decision, no matter how poor, and follow it through with confidence (this reminds me of advice by Bear Grylls – that the secret to survival when stranded in the wilderness is to have a plan and act on it, rather than waste time thinking about it).
6. The victims of disaster are play the key role in determining the survival rate. First response teams such as fire fighter and medics generally arrive too late to make a major difference.
What makes this book so interesting is that the explanation of the human response to fear actually provides a solid theory for why different survival rates are seen in different disasters. For example, QUT researcher David Savage has statistically examined determinants of survival on the Titanic, and found that social behaviour, herding, and following the orders of dominant people probably led to high rates of survival for women and children. But in his study of another maritime sinking found that young fit male staff had the greatest survival chance. This boat sank in a mere 8 minutes.
Ripley’s explanation would be comprise a number of factors
a) there was no time for a group leader to emerge
b) in the absence of leadership, many people where struck by paralysis of fear
c) those with the most confidence, maritime experience, and physical fitness got through the denial and deliberation stages much faster
d) any hero behaviour may have not been successful
I can’t recommend this book enough for anyone who has wondered how they might react in a crisis, a natural disaster, or fire. It should be compulsory reading for legislators who deal with emergency plans, and for anyone involved in the first response team – the medics, firemen, police, and rescue teams.
This book examines the human response to fear in crisis situations and is presented in a very easy to read, non-scientific, yet analytical way.
The book is structured around the three phases of fear that people pass through – denial, deliberation, action.
Author Amanda Ripley weaves a story linking known human responses to evolutionary psychology. For example, the paralysis some people feel during fear is explained by people searching for a subconscious response. The less familiar people are with their environment, the longer it might take to finish searching for a learned response and start being able to think rationally again.
Ripley tells the tale of a school shooting survivor who ‘played dead’ on the ground and was the only one in the classroom not be killed that day. I was shocked, because I had often thought playing dead might be a great way to survive a crazed shooting spree.
While I probably won’t do the book justice, I want to try and summarise some of the main points that stuck in my mind.
1. If you are going to rescue a drowning person, you should yell and scream at them as you approach. Many rescuers are themselves dragged into the water by troubled swimmers desperately grabbing at them. You need to get their attention - swearing and threatening not to save them if they touch you is the recommended approach – and by doing so, you lead them into an obedient state of fear. Which leads me to my next point.
2. People are mostly very obedient in a state of fear. If they do not have a plan of action that they are confident about, they will latch on to any suggestions by others. In many situations, people have been observed evacuating buildings like obedient lemmings.
3. People are on the whole fairly calm in an emergency situation. In some cases it is due to denial, some cases due to paralysis of fear (their mind is whizzing away but can’t find a pre-programmed response to the emergency)
4. People who undertake heroic actions, risking their own lives for others, generally do not make a conscious rational decision. They often say that images of their families pop into their mind, and the thought of facing them knowing they cowardly watched people dying springs them into action. Although some reference to evolutionary psychology is made, as males with no children are by far the greatest heroes.
5. Overconfident people, who are a pain in the backside during normal times, are far more likely to survive a disaster. This is simply due to their ability to breeze through the denial stage and make a decision, no matter how poor, and follow it through with confidence (this reminds me of advice by Bear Grylls – that the secret to survival when stranded in the wilderness is to have a plan and act on it, rather than waste time thinking about it).
6. The victims of disaster are play the key role in determining the survival rate. First response teams such as fire fighter and medics generally arrive too late to make a major difference.
What makes this book so interesting is that the explanation of the human response to fear actually provides a solid theory for why different survival rates are seen in different disasters. For example, QUT researcher David Savage has statistically examined determinants of survival on the Titanic, and found that social behaviour, herding, and following the orders of dominant people probably led to high rates of survival for women and children. But in his study of another maritime sinking found that young fit male staff had the greatest survival chance. This boat sank in a mere 8 minutes.
Ripley’s explanation would be comprise a number of factors
a) there was no time for a group leader to emerge
b) in the absence of leadership, many people where struck by paralysis of fear
c) those with the most confidence, maritime experience, and physical fitness got through the denial and deliberation stages much faster
d) any hero behaviour may have not been successful
I can’t recommend this book enough for anyone who has wondered how they might react in a crisis, a natural disaster, or fire. It should be compulsory reading for legislators who deal with emergency plans, and for anyone involved in the first response team – the medics, firemen, police, and rescue teams.
Monday, November 2, 2009
Business stripped bare
This book is Richard Branson’s latest eye opener into the world of Virgin. The one man publicity machine takes the reader on a tour of his business philosophy and how the philosophy actually works in the realms of the Virgin empire.
I am a fan of Branson and the Virgin empire, for the most part because the company seems to bring competition to formerly uncompetitive markets. Virgin Blue is a classic case study – it revolutionised air travel in Australia. The budget carriers in Europe had already been vigorously competing for some years, and it was only a matter of time before the same thing happened down under. But without Virgin, would we have waited another 5-10 years for air travel competition?
Virgin is already in the mobile phone market worldwide, with India a growth area for them. Their entry to this market was launched on the back of simple pre-paid phones with simple prices. I have mentioned before how the complexity of phone and internet plans only benefits the supplier, and it seems that Virgin’s move into the mobile phone market was pinned on price competition rather than price confusion.
They are even moving into financial services and banking.
Richard tells how the Virgin group is now in the business of ‘branded venture capital’. They look to team up with emerging players and offer not only funding, but the goodwill of the brand to go with it. It works for them, but has the major risk that all businesses are exposed to the reputation of the brand. Some bad publicity could take a real toll.
But I’ve been thinking. What other industries need a shake up? I have a shortlist:
1. Real estate agents – no price competition there. Somehow the industry acts as a cartel, setting commissions at the maximum legal amount. Maybe their slogan could be “Great service – even if it’s not your fist time”.
2. Supermarkets – the entry of Aldi to the market was significant. But there is still plenty of room for a new entrant here.
Any other ideas?
I am a fan of Branson and the Virgin empire, for the most part because the company seems to bring competition to formerly uncompetitive markets. Virgin Blue is a classic case study – it revolutionised air travel in Australia. The budget carriers in Europe had already been vigorously competing for some years, and it was only a matter of time before the same thing happened down under. But without Virgin, would we have waited another 5-10 years for air travel competition?
Virgin is already in the mobile phone market worldwide, with India a growth area for them. Their entry to this market was launched on the back of simple pre-paid phones with simple prices. I have mentioned before how the complexity of phone and internet plans only benefits the supplier, and it seems that Virgin’s move into the mobile phone market was pinned on price competition rather than price confusion.
They are even moving into financial services and banking.
Richard tells how the Virgin group is now in the business of ‘branded venture capital’. They look to team up with emerging players and offer not only funding, but the goodwill of the brand to go with it. It works for them, but has the major risk that all businesses are exposed to the reputation of the brand. Some bad publicity could take a real toll.
But I’ve been thinking. What other industries need a shake up? I have a shortlist:
1. Real estate agents – no price competition there. Somehow the industry acts as a cartel, setting commissions at the maximum legal amount. Maybe their slogan could be “Great service – even if it’s not your fist time”.
2. Supermarkets – the entry of Aldi to the market was significant. But there is still plenty of room for a new entrant here.
Any other ideas?
Sunday, September 20, 2009
Live anywhere and join the new rich
Timothy Ferriss’ book, The 4-hour Work Week, is definitely motivational, is full of practical ideas and tips. But after taking me on an exciting journey, it somehow it left me back where I began.
The premise of this book is there is no need to be trapped in the 9 to 5 drudgery, and that the life we want is waiting for us to come and grab it. We can stop wasting our precious time on menial tasks by becoming extremely efficient, and outsourcing much of our time consuming routine. By making your work ultra efficient, and mobile, you develop the freedom to see the world and fulfill your dreams. Simple.
I am economist, so the idea of maximising utility is no stranger to me. Timothy Ferriss, in my mind, is the ultimate homo economicus. He designs his life to fulfil his own goals, and ignores the need for social convention and traditional work routine – he should really be on the cover on of economic text book! But before I get into my thoughts on particular parts of the book, let me present some of my favourite quotes.
Retirement is worst-case scenario insurance
Less is not laziness
The timing is never right
Ask for forgiveness, not permission
Emphasise strengths; don’t fix weaknesses
And that’s all by the second chapter. One point I would like to develop is the distinction Tim makes between effectiveness and efficiency. Effectiveness is doing things that get you closer to your goals. Efficiency is performing a given task in the most economical manner. This idea resonated with me (I had never heard this distinction made before), as I believe I naturally think in terms of effectiveness.
Two other little gems from this book the 80/20 rule, and Parkinson’s Law. The 80/20 rule is a restatement of the non-linearity of our inputs and outcomes. For example, 80% of our output might come from 20% of our time, while 20% of sources might cause 80% of my problems. It allows one to optimise by isolating and eliminating (another key point of Tim’s) wasteful use of your time.
Parkinson’s Law dictates that a task will swell in (perceived) importance and complexity in relation to the time allocated for its completion. Just like those university assignments, a long deadline give too much time to think about the unimportant parts and delay hitting the key tasks in the head. Combining these two principles is the secret to heightened productivity. As Tim states:
Limit tasks to the important to shorten work time (80/20)
Shorten work time to limit tasks to the important (Parkinson’s Law)
Couldn’t agree more - but I've never been able to express it like that. As well of these little gems of advice, the book is packed with actual practical advice, such as email templates, examples of courteous phone messages explaining how you won’t be answering y our phone much anymore, and phrases to use when negotiating remote working arrangements with your boss. Oh, and there’s plenty of links to website dealing where particular issues covered in more detail.
In the end, I feel like I am already living the 'lifestyle design' mentality of the new rich espoused by Ferriss. While his advice is extremely helpful, and quite motivating, it leaves me back to the existential conundrum I had at the beginning. If we can have anything we want out of life, and I believe we can, what is it that I want?
The premise of this book is there is no need to be trapped in the 9 to 5 drudgery, and that the life we want is waiting for us to come and grab it. We can stop wasting our precious time on menial tasks by becoming extremely efficient, and outsourcing much of our time consuming routine. By making your work ultra efficient, and mobile, you develop the freedom to see the world and fulfill your dreams. Simple.
I am economist, so the idea of maximising utility is no stranger to me. Timothy Ferriss, in my mind, is the ultimate homo economicus. He designs his life to fulfil his own goals, and ignores the need for social convention and traditional work routine – he should really be on the cover on of economic text book! But before I get into my thoughts on particular parts of the book, let me present some of my favourite quotes.
Retirement is worst-case scenario insurance
Less is not laziness
The timing is never right
Ask for forgiveness, not permission
Emphasise strengths; don’t fix weaknesses
And that’s all by the second chapter. One point I would like to develop is the distinction Tim makes between effectiveness and efficiency. Effectiveness is doing things that get you closer to your goals. Efficiency is performing a given task in the most economical manner. This idea resonated with me (I had never heard this distinction made before), as I believe I naturally think in terms of effectiveness.
Two other little gems from this book the 80/20 rule, and Parkinson’s Law. The 80/20 rule is a restatement of the non-linearity of our inputs and outcomes. For example, 80% of our output might come from 20% of our time, while 20% of sources might cause 80% of my problems. It allows one to optimise by isolating and eliminating (another key point of Tim’s) wasteful use of your time.
Parkinson’s Law dictates that a task will swell in (perceived) importance and complexity in relation to the time allocated for its completion. Just like those university assignments, a long deadline give too much time to think about the unimportant parts and delay hitting the key tasks in the head. Combining these two principles is the secret to heightened productivity. As Tim states:
Limit tasks to the important to shorten work time (80/20)
Shorten work time to limit tasks to the important (Parkinson’s Law)
Couldn’t agree more - but I've never been able to express it like that. As well of these little gems of advice, the book is packed with actual practical advice, such as email templates, examples of courteous phone messages explaining how you won’t be answering y our phone much anymore, and phrases to use when negotiating remote working arrangements with your boss. Oh, and there’s plenty of links to website dealing where particular issues covered in more detail.
In the end, I feel like I am already living the 'lifestyle design' mentality of the new rich espoused by Ferriss. While his advice is extremely helpful, and quite motivating, it leaves me back to the existential conundrum I had at the beginning. If we can have anything we want out of life, and I believe we can, what is it that I want?
Tuesday, April 28, 2009
On Andrew Bolt
I must say that until recently I have had little exposure to the writings of Andrew Bolt. A short snippet of him on telly once seemed to highlight for me that this guy was a headline grabbing voice of the extreme ‘right-wing’ (whatever that is anyway) political agenda. However in the past few days I have been reading his blog, and now finally have read his book Still not sorry. And I must say, although he can fall into the trap of making illogical assertions, just as can the left on many occasions, he writes quite a bit of commonsense that seems to raise much less publicity. His book provides snippets of his basic opinion on particular issues, so let me please take the time to highlight this commonsense on various issues.
1. Australia is divided into the ‘elites’ who get much of the air time, and whose opinions are out of step with the average Aussie. The elites believe that people need such things as racial sensitivity training, and as a group give a disproportionately loud voice to left wing agendas. The majority of us think things are pretty good and we just like to get on with enjoying life.
I must say that the more exposure I’m having to many academic and intellectual types trying to make a difference to policy, the more I am beginning to see the total disconnection with reality of many of these said ‘intellectuals’.
2. Australia is a great country, and we shouldn’t sacrifice our fundamental freedoms and opportunities for fringe issues of minority interest groups.
Many of the problems we face in Australia today are, in comparison to the rest of the world and to recent history, very trivial. Economic research is a good guide. These days economists can theorise about happiness coefficients, gender implications of armed conflict. If there were real issues to tackle, economists would not get sidetracked like this. Compared to historical standards we are living in a utopia. The message from Andrew Bolt is that we should get some perspective and be thankful for the opportunities provided to us in our society.
3. Racism is not the issue it is made out to be, and we could do much better if we didn’t promote policy based on race, gender or any other ‘ist’ feature.
Along these lines, there has been further frustration for me this week. The Wild Rivers Act allows the government to protect the natural flow of waters courses if they meet certain criteria for being natural environments. No problems there, it is the type of policy I think delivers tangible benefits. But Indigenous leader Noel Pearson had now started complaining that the legislation will lock up land from development, taking away opportunities for local indigenous communities. But most indigenous groups surveyed by the department found widespread support. So what is the real opinion of indigenous people in the Cape?
I think our mistake here is to segregate people by race. Can’t they just be two opinions of groups in the Cape? Why should race imply a set opinion about a policy?
In France it has been illegal for quite some time to classify people by race. The government does not even collect statistics about racial identity (since gathering that data is illegal). This, I believe, should be the target for us. If we can’t classify people by race, we can’t write racist policies.
The French elite are typical targets of Bolts critique. They say such things as, ‘Every time we want to study the divisions of society we are accused of dividing society’. That is exactly the point.
Bolt also stole my idea about irrational women in positions of power – about 7 years before I had it! I have recently attended a workshop with Australian academics and experts on environmental economic assessment, and was shocked at the illogical and often conflicting theories that underpin sociology – a discipline, that from my experience, is populated with highly ‘educated’ middle aged women who believe in astrology and alternative medicine. Are these ‘elites’ the people we want advising our decision makers?
4. Help people help themselves.
Bolt also repeatedly claims that handouts are not long term solutions to poverty. There is nothing controversial here. While we as a society have decided that in times of need people who cannot support themselves will be supported by the rest of us, no one believes that this support CAUSES, or provides incentives to, those who are provided with it to begin to look after themselves again. Economists know that such support inadvertently provides incentives to not return to work. So why should we continue to throw good money after bad in supporting communities such as Palm Island?
Where Bolt gets himself into strife is when he allows himself to effortlessly drop his evidence-based critical line of argument and get down in the gutter, spruiking pro-Howard pro-liberal rhetoric, when there are obvious flaws in both Green and LIberal sides of the argument. He lets fly with ‘facts’ without citations, which actually quite bugs me, as it is easy enough to find ‘reliable’ evidence both ways in the world of grey that is politics.
1. Australia is divided into the ‘elites’ who get much of the air time, and whose opinions are out of step with the average Aussie. The elites believe that people need such things as racial sensitivity training, and as a group give a disproportionately loud voice to left wing agendas. The majority of us think things are pretty good and we just like to get on with enjoying life.
I must say that the more exposure I’m having to many academic and intellectual types trying to make a difference to policy, the more I am beginning to see the total disconnection with reality of many of these said ‘intellectuals’.
2. Australia is a great country, and we shouldn’t sacrifice our fundamental freedoms and opportunities for fringe issues of minority interest groups.
Many of the problems we face in Australia today are, in comparison to the rest of the world and to recent history, very trivial. Economic research is a good guide. These days economists can theorise about happiness coefficients, gender implications of armed conflict. If there were real issues to tackle, economists would not get sidetracked like this. Compared to historical standards we are living in a utopia. The message from Andrew Bolt is that we should get some perspective and be thankful for the opportunities provided to us in our society.
3. Racism is not the issue it is made out to be, and we could do much better if we didn’t promote policy based on race, gender or any other ‘ist’ feature.
Along these lines, there has been further frustration for me this week. The Wild Rivers Act allows the government to protect the natural flow of waters courses if they meet certain criteria for being natural environments. No problems there, it is the type of policy I think delivers tangible benefits. But Indigenous leader Noel Pearson had now started complaining that the legislation will lock up land from development, taking away opportunities for local indigenous communities. But most indigenous groups surveyed by the department found widespread support. So what is the real opinion of indigenous people in the Cape?
I think our mistake here is to segregate people by race. Can’t they just be two opinions of groups in the Cape? Why should race imply a set opinion about a policy?
In France it has been illegal for quite some time to classify people by race. The government does not even collect statistics about racial identity (since gathering that data is illegal). This, I believe, should be the target for us. If we can’t classify people by race, we can’t write racist policies.
The French elite are typical targets of Bolts critique. They say such things as, ‘Every time we want to study the divisions of society we are accused of dividing society’. That is exactly the point.
Bolt also stole my idea about irrational women in positions of power – about 7 years before I had it! I have recently attended a workshop with Australian academics and experts on environmental economic assessment, and was shocked at the illogical and often conflicting theories that underpin sociology – a discipline, that from my experience, is populated with highly ‘educated’ middle aged women who believe in astrology and alternative medicine. Are these ‘elites’ the people we want advising our decision makers?
4. Help people help themselves.
Bolt also repeatedly claims that handouts are not long term solutions to poverty. There is nothing controversial here. While we as a society have decided that in times of need people who cannot support themselves will be supported by the rest of us, no one believes that this support CAUSES, or provides incentives to, those who are provided with it to begin to look after themselves again. Economists know that such support inadvertently provides incentives to not return to work. So why should we continue to throw good money after bad in supporting communities such as Palm Island?
Where Bolt gets himself into strife is when he allows himself to effortlessly drop his evidence-based critical line of argument and get down in the gutter, spruiking pro-Howard pro-liberal rhetoric, when there are obvious flaws in both Green and LIberal sides of the argument. He lets fly with ‘facts’ without citations, which actually quite bugs me, as it is easy enough to find ‘reliable’ evidence both ways in the world of grey that is politics.
Thursday, October 9, 2008
Flow
Contemporary economists know that money doesn’t buy happiness. I take that back. Economists have trouble even defining money or happiness. But they can use stone-age tools (aka the art of regression) to ‘prove’ to us what most societies have known for millennia.
This, however, is a problem. Traditional economic thought has at its core the concept of utility - the thing that individuals try to maximise, and that we as a society should also strive to maximise. In effect, it is their best attempt at defining happiness. Economists are now struggling to get past this fundamental happiness contradiction. I would like to add some thoughts from psychology that may help our understanding, and reveal the underlying evolutionary explanation of how happiness is achieved.
I will preface this blog by saying that the majority of the views I am sharing actually come from a book called Flow: The psychology of optimal experience, by Mihaly Csikszentmihalyi. He breaks down happiness into to components – pleasure and enjoyment. Pleasure by itself will not provide us with happiness. It is the type of experience we have when we do not invest psychic energy in an activity. It is passive. Pleasure may come from watching a movie, walking in the park, admiring a work of art, listening to music. Enjoyment on the other hand requires the investment of psychic energy. The flow experience is how one gains enjoyment, and it comprises eight components:
1. Confronting tasks that we have a chance of completing
2. Concentration
3. Clear goals
4. Immediate feedback
5. Removes awareness of worries and frustrations
6. Provides a sense of control over one’s actions
7. Concern for the self disappears
8. The sense of time is altered
Clearly, a life without confronting tasks and clear goals is inherently unrewarding. But this is exactly the goal of much of societies development in the past century. The goal has been to make life easy, with no confronting tasks, and give us more choice, and as I have suggested earlier, this ‘choice-overload’ leads to less clear goals.
Surprisingly, Csikszentmihalyi found that people experience flow more often at work than during leisure time. It is easy to imagine many working environments where the first 4 components of flow are readily available. Other places people experience flow is when playing computer games. In fact, the game design field is probably the greatest user of the principles of flow. You know how you start with easy levels. You acquire greater skills, and are then confronted with more challenging tasks. All the way, there is plenty of feedback, and two hours have gone by in a flash. Edward Castranova has written about how people are shifting from their real lives, into online gaming worlds in search of flow.
One of the most interesting parts of flow is that to continue to have flow experiences, you need increasing complexity of challenges, and of skills to meet them. As a society , we have basically taken away much of the challenge of living, and also taken away many of the skills necessary to learn in order to live. Many people cannot cook themselves a meal from fresh ingredients. They cannot mend their own clothes, repair their houses, cut their own hair, clean their own house – what skills do we have?
I would to propose an evolutionary explanation for this desire for flow. In essence, those who sought more challenges, and reached them, were rewarded. You can imagine a tribe of early humans seeking out new lands in the face of increasing numbers of predators. The reward for this desire to rise above challenges, and persevere until new lands are found, would be greater reproduction and survival rates. Those early humans who did not have this desire to confront challenges, would ultimately perish before they could reproduce.
The ironic part of all this, is that flow often occurs in the times of most hardship. Csikszentmihalyi found that many prisoners of war, and people who have were faced with major physical disabilities, actually experienced flow more often than those of us living cushy urban lives in the 21st century. While we may find much pleasure in our comforts, this will not bring us happiness.
So what can we do to increase flow? We need to acknowledge that the most vital part to this story is that flow actually is self-determined. You can actually learn to be happy. External factors play no role. It is how you interpret your external environment that determines your happiness.
With all this great detail about human motivation and happiness, I still wonder why economists seek explanations use outdated concepts like utility to explain our actions. By sticking with this underlying theory they are stuck with trying to see whether factors such as wealth, number of children, marital status, age or any number of external circumstance or events can provide happiness. They pursue this even though they know can never prove a casual link. I guess reality and economics don’t mix sometimes.
This, however, is a problem. Traditional economic thought has at its core the concept of utility - the thing that individuals try to maximise, and that we as a society should also strive to maximise. In effect, it is their best attempt at defining happiness. Economists are now struggling to get past this fundamental happiness contradiction. I would like to add some thoughts from psychology that may help our understanding, and reveal the underlying evolutionary explanation of how happiness is achieved.
I will preface this blog by saying that the majority of the views I am sharing actually come from a book called Flow: The psychology of optimal experience, by Mihaly Csikszentmihalyi. He breaks down happiness into to components – pleasure and enjoyment. Pleasure by itself will not provide us with happiness. It is the type of experience we have when we do not invest psychic energy in an activity. It is passive. Pleasure may come from watching a movie, walking in the park, admiring a work of art, listening to music. Enjoyment on the other hand requires the investment of psychic energy. The flow experience is how one gains enjoyment, and it comprises eight components:
1. Confronting tasks that we have a chance of completing
2. Concentration
3. Clear goals
4. Immediate feedback
5. Removes awareness of worries and frustrations
6. Provides a sense of control over one’s actions
7. Concern for the self disappears
8. The sense of time is altered
Clearly, a life without confronting tasks and clear goals is inherently unrewarding. But this is exactly the goal of much of societies development in the past century. The goal has been to make life easy, with no confronting tasks, and give us more choice, and as I have suggested earlier, this ‘choice-overload’ leads to less clear goals.
Surprisingly, Csikszentmihalyi found that people experience flow more often at work than during leisure time. It is easy to imagine many working environments where the first 4 components of flow are readily available. Other places people experience flow is when playing computer games. In fact, the game design field is probably the greatest user of the principles of flow. You know how you start with easy levels. You acquire greater skills, and are then confronted with more challenging tasks. All the way, there is plenty of feedback, and two hours have gone by in a flash. Edward Castranova has written about how people are shifting from their real lives, into online gaming worlds in search of flow.
One of the most interesting parts of flow is that to continue to have flow experiences, you need increasing complexity of challenges, and of skills to meet them. As a society , we have basically taken away much of the challenge of living, and also taken away many of the skills necessary to learn in order to live. Many people cannot cook themselves a meal from fresh ingredients. They cannot mend their own clothes, repair their houses, cut their own hair, clean their own house – what skills do we have?
I would to propose an evolutionary explanation for this desire for flow. In essence, those who sought more challenges, and reached them, were rewarded. You can imagine a tribe of early humans seeking out new lands in the face of increasing numbers of predators. The reward for this desire to rise above challenges, and persevere until new lands are found, would be greater reproduction and survival rates. Those early humans who did not have this desire to confront challenges, would ultimately perish before they could reproduce.
The ironic part of all this, is that flow often occurs in the times of most hardship. Csikszentmihalyi found that many prisoners of war, and people who have were faced with major physical disabilities, actually experienced flow more often than those of us living cushy urban lives in the 21st century. While we may find much pleasure in our comforts, this will not bring us happiness.
So what can we do to increase flow? We need to acknowledge that the most vital part to this story is that flow actually is self-determined. You can actually learn to be happy. External factors play no role. It is how you interpret your external environment that determines your happiness.
With all this great detail about human motivation and happiness, I still wonder why economists seek explanations use outdated concepts like utility to explain our actions. By sticking with this underlying theory they are stuck with trying to see whether factors such as wealth, number of children, marital status, age or any number of external circumstance or events can provide happiness. They pursue this even though they know can never prove a casual link. I guess reality and economics don’t mix sometimes.
Subscribe to:
Posts (Atom)